<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, 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>
<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,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $ 7,084,796 $ 7,050,721
Cash and cash equivalents 780,337 838,954
Other assets 10,814 7,782
----------- ------------
Total assets $ 7,875,947 $ 7,897,457
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 283,395 $ 100,490
Accrued real estate taxes 120,131 238,178
Unearned rental income 73,750 81,263
Due to affiliates, net 96,579 33,171
Deposits due to tenants 26,745 28,635
----------- ------------
Total liabilities 600,600 481,737
----------- ------------
Partners' capital
Limited partners (29,187 limited and equivalent units issued and
outstanding) 7,181,724 7,320,693
General partners 93,623 95,027
----------- ------------
Total partners' capital 7,275,347 7,415,720
----------- ------------
Total liabilities and partners' capital $ 7,875,947 $ 7,897,457
----------- ------------
----------- ------------
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The accompanying notes are an integral part of these statements
</TABLE>
2
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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,
------------------------- ---------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,215,647 $1,184,120 $612,523 $599,187
Interest 8,381 9,213 3,844 4,544
---------- ---------- -------- --------
1,224,028 1,193,333 616,367 603,731
---------- ---------- -------- --------
EXPENSES
General and administrative 424,229 119,220 287,102 48,104
Property operating 332,168 348,360 150,203 168,892
Real estate taxes 118,129 112,716 59,025 56,322
Depreciation -- 173,132 -- 87,626
---------- ---------- -------- --------
874,526 753,428 496,330 360,944
---------- ---------- -------- --------
Net income $ 349,502 $ 439,905 $120,037 $242,787
---------- ---------- -------- --------
---------- ---------- -------- --------
ALLOCATION OF NET INCOME
Limited partners $ 346,007 $ 435,506 $118,837 $240,359
---------- ---------- -------- --------
---------- ---------- -------- --------
General partners $ 3,495 $ 4,399 $ 1,200 $ 2,428
---------- ---------- -------- --------
---------- ---------- -------- --------
Net income per limited partnership unit $ 11.91 $ 15.00 $ 4.09 $ 8.28
---------- ---------- -------- --------
---------- ---------- -------- --------
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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 346,007 3,495 349,502
Distributions (484,976) (4,899 ) (489,875)
---------- -------- ----------
Partners' capital--June 30, 1996 $7,181,724 $93,623 $7,275,347
---------- -------- ----------
---------- -------- ----------
- ---------------------------------------------------------------------------------------------------
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,
-------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $1,203,212 $1,193,231
Interest received 8,381 9,213
Property operating expenses paid (357,412) (363,356)
Real estate taxes paid (236,176) (225,361)
General and administrative expenses paid (152,672) (108,753)
---------- ----------
Net cash provided by operating activities 465,333 504,974
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (34,075) (104,606)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (489,875) (489,875)
---------- ----------
Net decrease in cash and cash equivalents (58,617) (89,507)
Cash and cash equivalents at beginning of period 838,954 760,357
---------- ----------
Cash and cash equivalents at end of period $ 780,337 $ 670,850
---------- ----------
---------- ----------
- ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 349,502 $ 439,905
---------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation -- 173,132
Changes in:
Other assets (3,032) 3,886
Accounts payable and accrued expenses 182,905 (10,112)
Due to affiliates, net 63,408 5,583
Accrued real estate taxes (118,047) (112,645)
Unearned rental income (7,513) 58
Deposits due to tenants (1,890) 5,167
---------- ----------
Total adjustments 115,831 65,069
---------- ----------
Net cash provided by operating activities $ 465,333 $ 504,974
---------- ----------
---------- ----------
- ---------------------------------------------------------------------------------------------------
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, 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 June 30,
1996, the results of its operations for the six and three months ended June 30,
1996 and 1995 and its cash flows for the six months ended June 30, 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. On June 10, 1996,
the Partnership entered into a contract with Public Storage, Inc., the current
property manager of the Partnership's properties, for the sale of all the
Partnership's properties for an aggregate sales price of $17,150,000. This sale
is subject to the approval by the limited partners holding a majority of the
limited partnership units and certain other conditions and potential price
adjustments.
The Partnership anticipates sending proxy statements in August 1996 or as
soon thereafter as practicable for the purpose of advising limited partners of
the terms of the agreement and to solicit their consent of the proposed sale. It
is expected that, if approved, the sale will close before December 31, 1996.
Following the closing, the Partnership will make one or more cash distributions
to the limited partners. The bulk of the distributions are expected to occur
shortly after the closing with the remainder expected to be distributed within
twelve months after the closing, at which time the Partnership would then be
liquidated.
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, 1996 and 1995 were approximately $79,000 and
$58,000, respectively, and for the three months ended June 30, 1996 and 1995,
were approximately $49,000 and $23,000, 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 approximately $20,000 and $3,000 for the six months ended June 30, 1996
and 1995, respectively and for the three months ended June 30, 1996 and 1995
recorded approximately $12,000 and $1,000, respectively.
PBP and the two 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 June 30, 1996.
5
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C. Subsequent Event
In August 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 June 30, 1996.
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. On December 15, 1995,
the Management Committee of the Partnership determined to seek bids for all the
properties held by the Partnership. On June 10, 1996, the Partnership entered
into a contract with Public Storage, Inc., the current property manager of the
Partnership's properties, for the sale of all the Partnership's properties for
an aggregate sales price of $17,150,000. This sale is subject to the approval by
the limited partners holding a majority of the limited partnership units and
certain other conditions and potential price adjustments.
The Partnership anticipates sending proxy statements in August 1996 or as
soon thereafter as practicable for the purpose of advising limited partners of
the terms of the agreement and to solicit their consent of the proposed sale. It
is expected that, if approved, the sale will close before December 31, 1996.
Following the closing, the Partnership will make one or more cash distributions
to the limited partners. The bulk of the distributions are expected to occur
shortly after the closing with the remainder expected to be distributed within
twelve months after the closing, at which time the Partnership would then be
liquidated.
During the six months ended June 30, 1996, the Partnership's cash and cash
equivalents decreased by approximately $59,000 due to distributions to partners
and capital expenditures in excess of cash flow from property operations.
Distributions made during the three months ended June 30, 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 six months ended June 30, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
June 30,
--------------
<S> <C> <C>
Property 1996 1995
------------------------------------------------------------------------------------
Hempstead 86.4% 87.6%
Pasadena 86.4 86.9
Northwest Highway 85.6 90.1
I-35 89.9 91.8
Santiago 92.6 96.7
Reinli 92.9 95.1
------------------------------------------------------------------------------------
(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 decreased by approximately $90,000 and $123,000 for the six and
three months ended June 30, 1996 as compared to the corresponding periods in
1995 primarily for the reasons discussed below.
Rental income increased by approximately $32,000 and $13,000 for the six and
three months ended June 30, 1996 as compared to the corresponding periods in
1995. The increase is primarily due to higher rental income collected at Reinli
and Santiago as a result of an increase in rental rates at the two properties.
This increase was partially offset due to lower average occupancy rates at all
properties.
General and administrative expenses increased by approximately $305,000 and
$239,000 for the six and three months ended June 30, 1996 as compared to the
corresponding periods in 1995. This variance was
7
<PAGE>
<PAGE>
primarily due to the accrual of professional fees and other costs relating to
the anticipated solicitation of the consent of the limited partners for the sale
of the properties.
Property operating expenses decreased by approximately $16,000 and $19,000
for the six and three months ended June 30, 1996 as compared to the
corresponding periods in 1995. The decrease is primarily due to a reduction in
repairs and maintenance expense at all the properties except Santiago where the
repairs and maintenance expense was relatively flat.
Depreciation expense decreased by approximately $173,000 and 88,000 for the
six and three months ended June 30, 1996 as compared to the corresponding
periods 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 six and three months ended
June 30, 1996.
8
<PAGE>
<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
Registrant's Current Report on Form 8-K dated June 14, 1996, as
filed with the Securities and Exchange Commission on June 20, 1996,
relating to Item 5 regarding the Registrant's entering into a
contract of sale for all of the Registrant's properties.
9
<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: August 14, 1996
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd 1
and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000708320
<NAME> P-B Watson & Taylor 1
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 6-Mos
<CASH> 780,337
<SECURITIES> 0
<RECEIVABLES> 10,814
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,023,349
<DEPRECIATION> 5,938,553
<TOTAL-ASSETS> 7,875,947
<CURRENT-LIABILITIES> 600,600
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,275,347
<TOTAL-LIABILITY-AND-EQUITY> 7,875,947
<SALES> 0
<TOTAL-REVENUES> 1,224,028
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 874,526
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 349,502
<INCOME-TAX> 0
<INCOME-CONTINUING> 349,502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 349,502
<EPS-PRIMARY> 11.91
<EPS-DILUTED> 0
</TABLE>
