<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT #1
(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, 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: 0-12045
PRUDENTIAL ACQUISITION FUND I, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3173903
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, NY 10292-0116
- --------------------------------------------------------------------------------
(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 __
<PAGE>
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 4,008,121 $ 4,008,121
Buildings and improvements 30,904,348 30,859,999
Less: accumulated depreciation (16,517,090 ) (16,214,016)
Investment in joint venture, net 10,403,231 10,792,867
------------- ------------
Net investment in property and joint venture 28,798,610 29,446,971
Cash and cash equivalents 1,115,833 646,346
Deferred rent 472,789 499,599
Other assets 27,600 16,875
------------- ------------
Total assets $ 30,414,832 $ 30,609,791
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 441,730 $ 415,871
Tenant security deposits 17,846 16,192
------------- ------------
Total liabilities 459,576 432,063
------------- ------------
Partners' capital
Limited partners (70,124 units issued and outstanding) 29,955,256 30,177,728
General partners -- --
------------- ------------
Total partners' capital 29,955,256 30,177,728
------------- ------------
Total liabilities and partners' capital $ 30,414,832 $ 30,609,791
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended March 31,
-----------------------
1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 735,353 $798,018
Recovery of expenses 213,478 236,646
Interest income 10,747 1,412
Joint venture equity income (loss) 150,364 (80,704)
---------- --------
1,109,942 955,372
---------- --------
EXPENSES
Depreciation and amortization 303,074 401,393
Property operating 289,236 309,868
Real estate taxes 142,755 159,323
General and administrative 61,667 61,752
---------- --------
796,732 932,336
---------- --------
Net income $ 313,210 $ 23,036
---------- --------
---------- --------
ALLOCATION OF NET INCOME
Limited partners $ 259,643 $(11,046)
---------- --------
---------- --------
General partners $ 53,567 $ 34,082
---------- --------
---------- --------
Net income (loss) per limited partnership unit $ 3.70 $ (.16)
---------- --------
---------- --------
- --------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1994 $30,177,728 $ -- $30,177,728
Net income 259,643 53,567 313,210
Distributions (482,115) (53,567 ) (535,682)
----------- -------- -----------
Partners' capital--March 31, 1995 $29,955,256 $ -- $29,955,256
----------- -------- -----------
----------- -------- -----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended March 31,
-------------------------
<S> <C> <C>
1995 1994
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income received $ 751,476 $ 751,757
Recovery of expenses received 211,481 238,146
Interest received 10,747 1,412
Tenant security deposits received 1,654 146
Operating expenses paid (398,844) (317,199)
General and administrative expenses paid (66,996) (37,590)
Distributions from joint venture income 150,364 --
---------- ----------
Net cash provided by operating activities 659,882 636,672
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized property expenditures (44,349) (42,262)
Distributions from joint venture in excess of income 389,636 135,000
---------- ----------
Net cash provided by investing activities 345,287 92,738
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (535,682) (340,820)
---------- ----------
Net increase in cash and cash equivalents 469,487 388,590
Cash and cash equivalents at beginning of period 646,346 72,733
---------- ----------
Cash and cash equivalents at the end of period $1,115,833 $ 461,323
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 313,210 $ 23,036
---------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 303,074 401,393
Joint venture equity loss -- 80,704
Changes in:
Deferred rent 26,810 (39,051)
Other assets (10,725) (5,710)
Accounts payable and accrued expenses 25,859 176,154
Tenant security deposits 1,654 146
---------- ----------
Total adjustments 346,672 613,636
---------- ----------
Net cash provided by operating activities $ 659,882 $ 636,672
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(Unaudited)
A. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for annual financial
statements. In the opinion of management, all adjustments (consisting of only
normal recurring adjustments) considered necessary for a fair presentation of
the financial position of Prudential Acquisition Fund I, L.P. (the
``Partnership'') as of March 31, 1995 and the results of its operations and its
cash flows for the three months ended March 31, 1995 and 1994 have been
included. Operating results for the interim periods may not be indicative of the
results expected for the full year. It is suggested that these financial
statements be read in conjunction with the financial statements and footnotes
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.
B. Related Parties
Prudential-Bache Properties, Inc. and Prudential Realty Partnerships, Inc.
(the ``General Partners'') and their affiliates perform services for the
Partnership which include, but are not limited to: accounting and financial
management; registrar, transfer and assignment functions; asset management;
investor communications; printing and other administrative services. The amount
of reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. The approximate costs and expenses incurred on behalf of
the Partnership which are reimbursable to the General Partners and their
affiliates are:
<TABLE>
<CAPTION>
Three months
ended March 31,
--------------------
1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Prudential Realty Partnerships, Inc. and affiliates $ 14,600 $ 10,500
Prudential-Bache Properties, Inc. and affiliates 19,600 21,000
-------- --------
$ 34,200 $ 31,500
-------- --------
-------- --------
</TABLE>
Expenses payable to the General Partners and their affiliates (which are
included in accrued expenses) as of March 31, 1995 and December 31, 1994 are
approximately $64,000 and $41,100, respectively.
Prudential Securities Incorporated (``PSI''), an affiliate of the General
Partners, owned 165 limited partnership units at March 31, 1995.
5
<PAGE>
<PAGE>
C. Investment in Joint Venture
The Partnership has a 54% interest in a joint venture with an affiliated
limited partnership. Presented below is summarized financial information for the
joint venture:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Assets
Investment in property:
Land $ 4,422,957 $ 4,422,957
Buildings and improvements 29,609,932 29,615,596
Less: accumulated depreciation (15,890,072 ) (15,627,896)
------------- ------------
Net investment in property 18,142,817 18,410,657
Accounts receivable, net 575,671 407,437
Cash and cash equivalents 1,480,139 2,054,578
------------- ------------
Total assets $ 20,198,627 $ 20,872,672
------------- ------------
------------- ------------
Liabilities and partners' capital
Total liabilities $ 946,437 $ 901,073
------------- ------------
Partners' capital:
Prudential Acquisition Fund I, L.P. 10,351,039 10,739,520
Prudential Realty Acquisition Fund II, L.P. 8,901,151 9,232,079
------------- ------------
Total partners' capital 19,252,190 19,971,599
------------- ------------
Total liabilities and partners' capital $ 20,198,627 $ 20,872,672
------------- ------------
------------- ------------
<CAPTION>
Three Months Ended
March 31,
------------------------------
1995 1994
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Revenues
Rental income $ 675,806 $ 619,157
Recovery of expenses 282,788 327,667
Interest income 25,485 7,138
------------- ------------
984,079 953,962
------------- ------------
Expenses
Depreciation and amortization 262,176 643,826
Property operating 249,948 225,187
Real estate taxes 161,907 203,436
General and administrative 29,457 28,826
------------- ------------
703,488 1,101,275
------------- ------------
Net income (loss) $ 280,591 $ (147,313)
------------- ------------
------------- ------------
</TABLE>
D. Contingencies
On or about October 18, 1993, a putative class action, captioned Kinnes et
al. v. Prudential Securities Group Inc. et al. (CV-93-654), was filed in the
United States District Court for the District of Arizona, purportedly on behalf
of investors in the Partnership against the Partnership, PBP, PSI and a number
of other defendants. Plaintiffs alleged violation of Racketeer Influenced and
Corrupt Organizations Act (``RICO'') statutes, breach of fiduciary duty, fraud
and deceit and negligence, and demanded an accounting. Plaintiffs sought
unspecified compensatory, punitive and treble damages, and rescission, including
costs
6
<PAGE>
<PAGE>
and attorneys' fees, but the only relief sought against the Partnership was an
accounting. Defendants filed a motion to dismiss on December 22, 1993.
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, the Kinnes case, together with a number of other actions not involving the
Partnership, was transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceeding 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 the General Partners. The Partnership is not named as
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 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.
On November 28, 1994 the transferee court deemed each of the complaints in
the constituent actions (including Kinnes) amended to conform to the allegations
of the consolidated complaint.
PSI and the General Partners, along with various other defendants, filed a
motion to dismiss the consolidated complaint on December 20, 1994. That motion
is pending.
PSI and the General Partners believe they have meritorious defenses to the
complaint and intend to vigorously defend themselves against this action.
E. Subsequent Event
In May 1995, a distribution of approximately $623,000 was paid to the
partners for the quarter ended March 31, 1995. Limited partners received
approximately $561,000, which represents $8.00 per unit, and the general
partners received the remainder.
7
<PAGE>
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership has a real estate investment portfolio consisting of two
office buildings, a warehouse and an equity interest in a joint venture (the
``Joint Venture'') which owns two shopping centers.
The General Partners are in the process of listing the Partnership properties
for sale due to improved availability of capital and demand for certain types of
real estate. There is no assurance that these marketing efforts will be
successful. It is not expected that the Partnership's eventual total
distributions will equal the partners' initial investments.
Cash distributions from the Joint Venture, rental revenue from the
Partnership's directly-owned properties and interest earned on short-term
investments have provided, and are anticipated to continue to provide,
sufficient liquidity to meet expenses incurred by the Partnership and its
properties.
During the three months ended March 31, 1995, the Partnership's cash and cash
equivalents increased by approximately $469,500 primarily as a result of
distributions from the Joint Venture. The Joint Venture, in which the
Partnership has a 54% interest, has cash and cash equivalents of approximately
$1,480,100 at March 31, 1995 as compared to approximately $2,054,600 at December
31, 1994. This amount is anticipated to be sufficient to pay outstanding
liabilities, fund capital expenditures (including leasing commissions and tenant
improvements) at the Joint Venture properties and provide additional cash
distributions to the Partnership. Cash distributions to the Partnership from the
Joint Venture totalled $540,000 and $135,000 for the three months ended March
31, 1995 and 1994, respectively. The level of distributions of cash from the
Joint Venture is impacted by the operating results of the underlying properties
as well as the levels of cash reserves it maintains.
In connection with the capital improvements which are discussed below, the
amount of actual expenditures and their timing will depend on the success of
leasing efforts, the nature and timing of new leases and lease renewals, ongoing
evaluation of the need for the planned improvements and optimal timing of their
implementation as well as general market conditions.
Cash Distributions
Cash distributions paid to the limited and General Partners during the three
months ended March 31, 1995 totalled approximately $535,700, of which the
limited partners received approximately $482,100 ($6.87 per unit) and the
General Partners received the remainder. Cash distributions paid to the limited
and General Partners during the three months ended March 31, 1994 totalled
$340,800, of which the limited partners received $306,700 ($4.37 per unit) and
the General Partners received the remainder. These distributions represent
payments from cash flow from operations for the quarters ended December 31, 1994
and 1993, respectively.
The amount of cash generated by the Partnership from operations of the
directly-owned and Joint Venture properties and the amount expended or reserved
for capital improvements could affect the Partnership's ability to make future
distributions to the partners and the amount of the distributions that may be
made.
Capital Improvements--Directly-Owned Properties
For the three months ended March 31, 1995, the Partnership expended
approximately $44,350 on capital improvements, principally at One Executive
Center for tenant improvements. Projected capital expenditures for the
directly-owned properties for the remainder of 1995 are estimated at $324,000.
This includes approximately $226,000 in anticipated tenant improvements and
leasing commissions and $98,000 for improvements necessary to maintain the
properties. These capital improvements will be funded from undistributed cash
balances or cash derived from future operations.
8
<PAGE>
<PAGE>
Capital Improvements--Joint Venture
For the three months ended March 31, 1995, the Joint Venture, in which the
Partnership has a 54% interest, did not make any capital expenditures. Projected
capital expenditures for the Joint Venture for the remainder of 1995 are
estimated to be $215,000 which includes $161,000 in anticipated leasing
commissions and tenant improvements and $54,000 for improvements necessary to
maintain the properties.
Results of Operations
The Partnership's net income for the three months ended March 31, 1995
increased by approximately $290,200 as compared to the three months ended March
31, 1994. The major components of this change are discussed below.
Directly-Owned Properties
The Norwalk Industrial Park was 100% occupied as of March 31, 1995 and 1994.
Rental income at Norwalk for the three months ended March 31, 1995 decreased by
approximately $58,500 as compared to the corresponding period in 1994 primarily
as a result of an adjustment to properly reflect the impact of additional free
concessions given to its sole tenant in 1994. Operating expenses for the three
months ended March 31, 1995 were comparable to the corresponding period in 1994.
The Norwest Center property in Rochester, Minnesota was 89% and 88% leased as
of March 31, 1995 and 1994, respectively. No significant leases are scheduled to
expire during the next twelve months. Rental income decreased approximately
$8,300 for the three months ended March 31, 1995 compared to the corresponding
period in 1994 due to lower occupancy. Operating expenses for the three months
ended March 31, 1995 were comparable to the corresponding period in 1994.
The One Executive Center office property in Albuquerque, New Mexico was 100%
leased as of March 31, 1995 and 1994, respectively. During the next twelve
months, seven leases representing approximately 14% of the rentable area are
scheduled to expire. Rental income for the three months ended March 31, 1995 was
comparable to the corresponding period in 1994. Operating expenses for the three
months ended March 31, 1995 decreased by approximately $16,400 as compared to
1994 primarily as a result of a decrease in cleaning and utilities expense.
Depreciation and amortization for the three months ended March 31, 1995
decreased by approximately $98,300 as compared to the corresponding period in
1994 as several tenant improvements at One Executive Center were fully
depreciated during the first quarter of 1994.
Joint Venture Properties
As of March 31, 1995, Pine Island and Ridge Plaza were 93% and 80% occupied,
respectively, as compared to 89% and 80% as of March 31, 1994. In the third
quarter of 1994, a tenant who had signed a ten-year lease notified the Joint
Venture it would not occupy its space (approximately 10% of the leased space of
Ridge Plaza). The tenant is not making payments as required by its lease.
Negotiations continue with the tenant relating to a buy-out of the lease. Over
the next twelve months, three leases representing 6% of the rentable space are
scheduled to expire at Pine Island. There are no leases scheduled to expire
during the next twelve months at Ridge Plaza.
The Partnership's Joint Venture equity income increased by approximately
$231,100 for the three months ended March 31, 1995 as compared to the
corresponding period in 1994.
Total revenues increased by approximately $30,100 for the three months ended
March 31, 1995 as compared to the corresponding period in 1994 primarily as a
result of increased interest income and an increase in rental income at Ridge
Plaza due to the expiration of free rent periods for several tenants during the
first quarter of 1994.
Operating expenses for the three months ended March 31, 1995 increased by
approximately $24,800 as compared to the corresponding period in 1994 due to an
increase in the provision for bad debts.
Real estate taxes decreased by approximately $41,500 for the three months
ended March 31, 1995 as compared to the corresponding period in 1994 due to
lower assessments at both properties.
Depreciation and amortization expense decreased by approximately $381,600 for
the three months ended March 31, 1995 as compared to the corresponding period in
1994 primarily as a result of write-downs
9
<PAGE>
<PAGE>
during 1994 which lowered depreciation expense for subsequent periods. In the
first quarter of 1994, a vacated outparcel and related tenant improvements at
Ridge Plaza was demolished to provide for additional parking at the Joint
Venture's properties.
10
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--
This information is incorporated by reference to Note D 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--Not Applicable
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:
<TABLE>
<S> <C>
3 and 4 Amended and Restated Agreement of Limited Partnership(1)
Amendment to Limited Partnership Agreement dated as of January 1, 1987(2)
</TABLE>
b. Reports on Form 8-K--None
- ---------------
(1) Incorporated by reference to Prospectus dated July 1, 1983 as filed with the
Commission pursuant to Rule 424(b) under the Securities Act of 1933
(2) Incorporated by reference to Exhibits 3 and 4 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988
11
<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 Acquisition Fund I, L.P.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Robert J. Alexander Date: May 12, 1995
-----------------------------------------
Robert J. Alexander
Vice President
Chief Accounting Officer for the
Registrant
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential Acquisition Fund I LP
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000717319
<NAME> Prudential Acquisition Fund I LP
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Mar-31-1995
<PERIOD-TYPE> 3-Mos
<CASH> 1,115,833
<SECURITIES> 0
<RECEIVABLES> 27,600
<ALLOWANCES> 472,789
<INVENTORY> 0
<CURRENT-ASSETS> 1,616,222
<PP&E> 45,315,700
<DEPRECIATION> 16,517,090
<TOTAL-ASSETS> 30,414,832
<CURRENT-LIABILITIES> 459,576
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,955,256
<TOTAL-LIABILITY-AND-EQUITY> 30,414,832
<SALES> 0
<TOTAL-REVENUES> 1,109,942
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 796,732
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 313,210
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
