<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
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 0-13518
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1933081
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Seaport Plaza, New York, N.Y. 10292-0128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
Securities registered pursuant to Section 12(b) of the Act:
None
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Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark 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 _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Limited Partners for the year ended December
31, 1999 is incorporated by reference into Parts II and IV of this Annual Report
on Form 10-K.
Amended and Restated Certificate and Agreement of Limited Partnership,
included as part of the Registration Statement on Form S-11 (File No. 2-88785)
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, is incorporated by reference into Part IV of
this Annual Report on Form 10-K.
Index to exhibits can be found on page 9.
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business.......................................................................... 3
Item 2 Properties........................................................................ 4
Item 3 Legal Proceedings................................................................. 4
Item 4 Submission of Matters to a Vote of Limited Partners............................... 4
<CAPTION>
PART II
<S> <C> <C>
Item 5 Market for the Registrant's Units and Related Limited Partner Matters............. 5
Item 6 Selected Financial Data........................................................... 5
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... 5
Item 7A Quantitative and Qualitative Disclosures About Market Risk........................ 5
Item 8 Financial Statements and Supplementary Data....................................... 5
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...................................................................... 6
<CAPTION>
PART III
<S> <C> <C>
Item 10 Directors and Executive Officers of the Registrant................................ 6
Item 11 Executive Compensation............................................................ 7
Item 12 Security Ownership of Certain Beneficial Owners and Management.................... 7
Item 13 Certain Relationships and Related Transactions.................................... 8
<CAPTION>
PART IV
<S> <C> <C>
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................... 9
Financial Statements and Financial Statement Schedules............................ 9
Exhibits.......................................................................... 9
Reports on Form 8-K............................................................... 10
SIGNATURES................................................................................... 15
</TABLE>
2
<PAGE>
PART I
Item 1. Business
General
Prudential-Bache/Watson & Taylor, Ltd.-2 (the 'Registrant'), a Texas limited
partnership, was formed on November 14, 1983 and will terminate in accordance
with a vote of the limited partners as described below. The Registrant was
formed for the purpose of acquiring, developing, owning and operating
mini-storage and office/warehouse facilities with proceeds raised from the
initial sale of units of limited partnership interests ('Units'). The
Registrant's fiscal year for book and tax purposes ends on December 31.
On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all the properties held by the Registrant. On June 13, 1996,
the Registrant entered into a contract with Public Storage, Inc., the property
manager of the Registrant's properties, for the sale of all the Registrant's
properties. This sale was subject to the approval by the limited partners
holding a majority of the limited partnership units and certain other conditions
and potential price adjustments.
In accordance with a consent statement dated September 17, 1996, the limited
partners approved, on October 18, 1996, the sale to Public Storage, Inc. of all
eight miniwarehouse facilities owned by the Registrant and the liquidation and
dissolution of the Registrant. Seven of the eight properties which were under
contract were sold to Public Storage, Inc. and its affiliates on December 16,
1996. The Registrant received, in cash, gross sales proceeds of $16,000,000
reduced by certain selling expenses and prorations of approximately $433,000.
The gross sales price was in excess of the appraised value of the properties.
The Registrant continues to own the Hampton Park property located in Capitol
Heights, Maryland. In conjunction with the contract of sale of the Registrant's
properties to Public Storage, Inc. ('Public'), as described above, a Phase I
Environmental Site Assessment was performed in the first quarter of 1996 by Law
Engineering and Environmental Services, Inc. ('LAW'), which identified one of
the tenants as a potential environmental concern. As a result, the property was
not sold to Public.
LAW, at the request of the Registrant, performed a Phase II Environmental
Site Assessment which was completed in June 1996. Analysis of soil and ground
water samples collected at the site in this assessment indicated detectable
levels of tetrachloroethene ('PCE'). LAW, at the request of the Registrant,
reported the PCE release to the Maryland Department of the Environment ('MDE').
The MDE requested that a limited subsurface assessment be performed to evaluate
the potential impact to subsurface soil and ground water. Since this 1996
assessment there have been fourteen additional quarterly groundwater sampling
events performed through the first quarter of 2000. Based upon the results of
these tests, the Registrant has continued its quarterly monitoring of the
property and will continue to do so until further direction is provided by the
MDE.
The Registrant accrued a $500,000 liability which represents its best
estimate of the obligation as of December 31, 1999 in the Statement of Net
Assets regarding the environmental issues mentioned above. The amount includes
an active remediation program over a five-year period. It is reasonably possible
that the loss exposure will be in excess of the amount accrued and will be
material to the Registrant and may possibly change in the near future. However,
it is uncertain at this time what will ultimately be required to resolve the
environmental issue at the property. It is the Registrant's intention to sell
the property; however, because of the environmental problem it is uncertain when
any such sale could be consummated.
In accordance with EITF 90-8: Capitalization of Costs to Treat Environmental
Contamination, costs to remove, contain, neutralize, or prevent existing or
future environmental contamination may be capitalized if (i) those costs are
recoverable and (ii) those costs are incurred in preparing for sale of that
property currently held for sale. The Registrant has determined that the accrued
environmental liabilities of $500,000 are recoverable based upon an appraised
valuation of the property received in the first quarter of 2000 that is in
excess of the sum of the carrying value of the property and the environmental
liability accrual. The property is currently being held for sale as mentioned
above. Therefore, the Registrant increased the book value of the property on the
Statement of Net Assets to $2,018,521 as of December 31, 1999.
3
<PAGE>
A distribution of $300 per limited partnership unit was made on December 19,
1996 representing the net sales proceeds reduced by a contingency reserve and
funds required to meet the anticipated current and future operating costs until
the liquidation of the Registrant.
Effective February 28, 1998, American Office Park Properties, Inc., a
subsidiary of Public Storage, Inc., terminated its management of the Hampton
Park property. The Registrant has entered into a management agreement
('Management Agreement') with Watson & Taylor Management, Inc. ('WTMI'), an
affiliate of the individual General Partners, effective March 1, 1998. WTMI will
be responsible for the day-to-day operation of the property, including the
supervision of the on-site managers and the establishment of rental policies and
rates for new rentals and renewals and will direct the marketing activity for
the property.
General Partners
The general partners of the Registrant are Prudential-Bache Properties, Inc.
('PBP'), George S. Watson and A. Starke Taylor, III (collectively, the 'General
Partners'). PBP is the Managing General Partner and is responsible for the
day-to-day operations of the Registrant and its investments. See Notes A and E
of the financial statements in the Registrant's Annual Report which is filed as
an exhibit hereto.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement. See Note E of the financial statements in
the Registrant's Annual Report which is filed as an exhibit hereto.
Item 2. Properties
As of December 31, 1999, the Registrant owns the following property:
<TABLE>
<CAPTION>
Average Monthly
Occupancy Rates Rental Rates
for the year ended Per Unit
December 31, Land Rentable as of December 31,
Property Location 1999(1) (in acres) Units 1999
- -------------------------------------- ------------------- ---------- -------- --------------------
<S> <C> <C> <C> <C>
Hampton Park (Capitol Heights,
Maryland)
Mini-warehouse 96.59% 5.87 130 $ 42 - $280
Commercial 86.25% 54 $ 310 - $1,350
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184
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--------
</TABLE>
(1) Average occupancy rates are calculated by averaging the monthly occupancies
determined by dividing occupied square footage by available square footage
as of each month-end.
The Managing General Partner believes the Registrant's remaining property is
adequately insured.
For the years ended December 31, 1999, 1998 and 1997, respectively, the
following property rental revenues exceeded 15% of the Registrant's total
revenue:
1999 1998 1997
---- ---- ----
Hampton Park 96% 96% 95%
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Limited Partners
None
4
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PART II
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
As of March 21, 2000, there were 3,449 holders of record owning 51,818 Units,
inclusive of 258, 130 and 130 equivalent limited partnership units held by PBP
and Messrs. Watson and Taylor, respectively. A significant secondary market for
the Units has not developed, and it is not expected that one will develop in the
future. There are also certain restrictions set forth in Section 17.3 of the
Partnership Agreement limiting the ability of a limited partner to transfer
Units. Consequently, holders of Units may not be able to liquidate their
investments in the event of an emergency or for any other reason.
There were no cash distributions paid to limited partners during 1999, 1998
and 1997.
A distribution of $300 per limited partnership unit was made on December 19,
1996 representing the net proceeds from the sale of seven of the Registrant's
properties, reduced by a contingency reserve and funds required to meet the
anticipated current and future operating costs until the liquidation of the
Registrant. The Registrant intends to liquidate, subject to and assuming the
prior sale of the Hampton Park property, and will distribute any remaining funds
at such time.
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 7 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Nine Months*
Ended Year ended
September 30, December 31,
1996 1995
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<S> <C> <C>
Total revenues $ 2,209,270 $ 2,841,354
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Net income $ 619,119 $ 489,304
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Limited partner net income per Unit $ 11.89 $ 9.40
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Total assets $14,325,486 $14,086,449
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Total distributions $ 580,329 $ 773,886
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Limited partner distributions per Unit $ 11.13 $ 14.86
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* As of October 1, 1996, the Partnership adopted the liquidation basis of accounting in accordance
with generally accepted accounting principles and, therefore, there is no reporting of results of
operations for the three months ended December 31, 1996 and for the years ended December 31, 1997,
1998 and 1999. Total assets at December 31, 1996, 1997, 1998 and 1999 were $2,810,113, $2,468,042,
$2,594,664 and $3,332,496 respectively.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to page 8 of the Registrant's
Annual Report which is filed as an exhibit hereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The market risk disclosures are not being presented due to immateriality.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 7
of the Registrant's Annual Report which is filed as an exhibit hereto.
5
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing General Partner.
Section 16(a) Beneficial Ownership Reporting Compliance
The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and any persons holding more than 10% of the Registrant's
Units are required to report their initial ownership of such Units and any
subsequent changes in that ownership to the Securities and Exchange Commission
on Forms 3, 4 and 5. Such General Partners, executive officers, directors and
other persons who own greater than 10% of the Registrant's Units are required by
Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 or 5 they file. All of these filing requirements were
satisfied on a timely basis. In making these disclosures, the Registrant has
relied solely on written representations of the General Partners, PBP's
directors and executive officers and other persons who own greater than 10% of
the Registrant's Units or copies of the reports they have filed with the
Securities and Exchange Commission during and with respect to its most recent
fiscal year.
Prudential-Bache Properties, Inc., Managing General Partner
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
Name Position
Brian J. Martin Chairman of the Board of Directors
Chester A. Piskorowski President, Chief Executive Officer
and Director
Barbara J. Brooks Vice President--Finance and Chief
Financial Officer
Stephen A. Tolbert Vice President and Chief Accounting Officer
Nathalie P. Maio Director
BRIAN J. MARTIN, age 49, is the Chairman of the Board of Directors of PBP. He
is a Senior Vice President of Prudential Securities Incorporated ('PSI'), an
affiliate of PBP. Mr. Martin also serves in various capacities for certain other
affiliate companies. Mr. Martin joined PSI in 1980. Mr. Martin is a member of
the Pennsylvania Bar.
CHESTER A. PISKOROWSKI, age 56, is the President, Chief Executive Officer and
a Director of PBP. He is a Senior Vice President of PSI and is head of its
Specialty Finance Department. Mr. Piskorowski also serves in various capacities
for certain other affiliate companies. Mr. Piskorowski has held several
positions within PSI since April 1972. Mr. Piskorowski is a member of the New
York and Federal Bars.
BARBARA J. BROOKS, age 51, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
STEPHEN A. TOLBERT, age 37, is a Vice President of PBP. He is a First Vice
President of PSI. Mr. Tolbert also serves in various capacities for other
affiliated companies. He has held several positions within PSI since 1988.
NATHALIE P. MAIO, age 49, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.
Effective June 1, 1999, Frank W. Giordano resigned as a Director of PBP.
Effective June 21, 1999, Chester A. Piskorowski was elected as a Director of
PBP, Brian J. Martin ceased to serve as President and
6
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Chief Executive Officer of PBP effective March 1, 2000. Effective March 1, 2000,
Chester A. Piskorowski was elected President and Chief Executive Officer of PBP.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
Individual General Partners
GEORGE S. WATSON, age 59, is a financial specialist and a certified public
accountant. He has been instrumental in the success of The Community Minority
Business Advancement Program sponsored by the University of Texas at Austin
College and Graduate Schools of Business. Mr. Watson is a member of the Advisory
Council of the University of Texas at Austin Business School and a member of its
Chancellor's Council. Mr. Watson attended the University of Texas at Austin,
graduating summa cum laude in 1963 with a BBA in accounting and finance. He
received his MBA in accounting and finance from the University of Texas in 1965,
graduating first in his class and summa cum laude. He also has received various
awards and scholarships and is a member of many fraternal organizations
including Phi Kappa Phi, the honorary scholastic society. Mr. Watson has over 25
years of experience in real estate and financial investments.
A. STARKE TAYLOR, III, age 56, holds a bachelor of business administration
degree from Southern Methodist University which was awarded in 1966. He is past
president of the North Dallas Chamber of Commerce. Mr. Taylor is a member of the
boards of the Dallas Theological Seminary and the Northeast Texas Regional Board
of Young Life. He is president of Sovereign Corporation, a business investment
and finance organization. Mr. Taylor has over 25 years of experience in real
estate, insurance and financial investments.
The two individual General Partners are not related.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partner or to directors and officers
of the Managing General Partner for their services. Certain officers and
directors of the Managing General Partner receive compensation from affiliates
of the Managing General Partner, not from the Registrant, for services performed
for various affiliated entities, which may include services performed for the
Registrant; however, the Managing General Partner believes that any compensation
attributable to services performed for the Registrant is immaterial. See also
Item 13 Certain Relationships and Related Transactions for information regarding
reimbursement to the General Partners for services provided to the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 21, 2000, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any interest in the
voting securities of the Managing General Partner.
As of March 21, 2000, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any of the Units
issued by the Registrant. However, the General Partners have contributed to the
Registrant and, based on such contribution, they received 'equivalent units'
entitling them to participate in the distributions to the limited partners and
in the Registrant's profits and losses in the same proportion that the General
Partners' capital contribution bears to the total capital contributions of the
limited partners. The Managing General Partner has retained its right to receive
funds from the Registrant, such as General Partner distributions and
reimbursement of expenses, but has waived its right to share in any limited
partner cash distributions and allocations of Registrant's profits and losses
based upon such equivalent units.
As of March 21, 2000, no limited partner beneficially owns more than 5% of
the outstanding Units issued by the Registrant.
7
<PAGE>
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the individual General
Partners or the directors or officers of the Managing General Partner during
1999.
Reference is made to Notes A and E of the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
8
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page
Number in
Annual Report
<C> <S> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent
Auditors--incorporated by reference to the Registrant's Annual
Report which is filed as an exhibit hereto
Report of Independent Auditors 2
Financial Statements:
Statements of Net Assets--December 31, 1999 and 1998 3
Statements of Changes in Net Assets--Years ended December 31,
1999, 1998 and 1997 3
Notes to Financial Statements 4
2. Financial Statement Schedules and Consent of Independent Auditors
Consent of Independent Auditors
Schedules:
II-- Valuation and Qualifying Accounts and Reserves--Three years
ended December 31, 1999
III--Real Estate and Accumulated Depreciation at December 31,
1999
Notes to Schedule III--Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not
applicable or the required information is included in the
financial statements and the notes thereto.
3. Exhibits
Description:
2.01 Consent Statement dated September 17, 1996 (1)
3.01 Amended and Restated Certificate and Agreement of Limited
Partnership (2)
3.02 Amendment Number 8 to Amended and Restated Certificate and
Agreement of Limited Partnership (3)
4.01 Revised Form of Certificate of Limited Partnership Interest
(4)
10.01 Management Agreement (2)
10.02 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Commercial
Properties Group, Inc. (4)
10.03 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage
Management, Inc. (4)
10.04 Agreement Relating to General Partner Interests (2)
10.05 Management Agreement dated March 1, 1998 by and between the
Registrant and Watson & Taylor Management, Inc., a Texas
corporation (5)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
13.01 Registrant's Annual Report to Limited Partners for the year
ended December 31, 1999 (with the exception of the information
and data incorporated by reference in Items 7 and 8 of this
Annual Report on Form 10-K, no other information or data
appearing in the Registrant's Annual Report is to be deemed
filed as part of this report)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
</TABLE>
- ------------------
(1) Filed on the Registrant's Proxy Statement on Schedule 14A and incorporated
herein by reference.
(2) Filed as an exhibit to Registration Statement on Form S-11 (No. 2-88785)
and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Form 10-Q for the quarter ended March
31, 1990 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Form 10-K for the year ended December
31, 1988 and incorporated herein by reference.
(5) Filed as an exhibit to Registrant's Form 10-K for the year ended December
31, 1997 and incorporated herein by reference.
10
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-2
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Prudential-Bache/Watson & Taylor, Ltd.-2 of our report dated February 9,
2000, included in the 1999 Annual Report to Partners of Prudential-Bache/Watson
& Taylor, Ltd.-2.
Our audits also included the financial statement schedules of
Prudential-Bache/Watson & Taylor, Ltd.-2 listed in Item 14(a). These schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Ernst & Young LLP
New York, New York
February 9, 2000
11
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
December 31, 1999
<TABLE>
- -------------------------------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
<CAPTION>
Deductions - Amounts
Year Ended Balance at Additions - Amounts Written-off During Balance at
December 31, Beginning of Year Reserved During Year Year End of Year
- ------------ ----------------- -------------------- -------------------- -----------
<S> <C> <C> <C> <C>
1997 $ 1,418,000 -- -- $ 1,418,000(1)
1998 $ 1,418,000 -- -- $ 1,418,000(1)
1999 $ 1,418,000 -- -- $ 1,418,000(1)
- -------------------------------------------------------------------------------------------------------
(1) Shown as a direct deduction of carrying value of property held for sale.
</TABLE>
12
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Amount at which carried at
close of year
-----------------------------------------------
Initial cost to Valuation
Registrant Costs allowance on
(Note B) capitalized impaired assets
----------------------------- subsequent and accumulated
Description Buildings and to Buildings and depreciation
(Note A) Land Improvements acquisition Land Improvements (Notes C & D)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------- ---------- -------------- ------------ -------- -------------- ---------------
Hampton Park
(Capitol Heights, Maryland) $ 925,595 $ -- $ 3,774,366 $926,441 $3,773,520 $ 2,681,440
---------- -------------- ------------ -------- -------------- ---------------
---------- -------------- ------------ -------- -------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Description Total Dates of Date
(Note A) (Note C) construction acquired
<S> <C> <C> <C>
- ----------------------------- ---------- ------------- --------
Hampton Park
(Capitol Heights, Maryland) $2,018,521 1985/86 1984
----------
----------
- ---------------------------------------------------------------------------------
</TABLE>
See notes on the following page.
13
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1999
NOTE A--There are no mortgages, deeds of trust or similar
encumbrances against the remaining property.
NOTE B--Initial cost represents the initial purchase price of
the property including acquisition fees.
<TABLE>
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE
<CAPTION>
Year ended December 31,
----------------------------------------
1999 1998 1997
---------- ---------- ------------
<S> <C> <C> <C>
Balance at beginning of year.............................. $1,518,521 $1,518,521 $ 1,518,521
Additions during the year--capitalization of environmental
costs 500,000 -- --
---------- ---------- ------------
Balance at close of year.................................. $2,018,521 $1,518,521 $ 1,518,521
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
The aggregate cost of land, buildings and improvements, and furniture and
fixtures, net of depreciation, for Federal income tax purposes as of December
31, 1999 was $2,509,785.
<TABLE>
<CAPTION>
NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
<S> <C> <C> <C>
Year ended December 31,
----------------------------------------
1999 1998 1997
---------- ---------- ------------
Balance at beginning of year.............................. $ -- $ -- $ --
Depreciation during the year charged to expense(1)........ -- -- --
---------- ---------- ------------
Balance at close of year.................................. $ -- $ -- $ --
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
(1) The Partnership ceased depreciating the properties for financial
reporting purposes when the properties were reclassified as held for sale as of
December 31, 1995.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.-2
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Stephen A. Tolbert Date: March 30, 2000
----------------------------------------
Stephen A. Tolbert
Vice President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Brian J. Martin Date: March 30, 2000
-----------------------------------------
Brian J. Martin
Chairman of the Board of Directors and Director
By: /s/ Chester A. Piskorowski Date: March 30, 2000
-----------------------------------------
Chester A. Piskorowski
President, Chief Executive Officer
and Director
By: /s/ Barbara J. Brooks Date: March 30, 2000
-----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Stephen A. Tolbert Date: March 30, 2000
-----------------------------------------
Stephen A. Tolbert
Vice President
By: /s/ Nathalie P. Maio Date: March 30, 2000
-----------------------------------------
Nathalie P. Maio
Director
15
<PAGE>
1999
- ----------------------------------------------------------------------
Prudential-Bache/ Annual
Watson & Taylor, Ltd.-2 Report
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
1999 Annual Report
1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-2
We have audited the accompanying statements of net assets in process of
liquidation of Prudential-Bache/Watson & Taylor, Ltd.-2 as of December 31, 1999
and 1998, and the related statements of changes in net assets in process of
liquidation for each of the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in process of liquidation of
Prudential-Bache/Watson & Taylor, Ltd.-2 at December 31, 1999 and 1998, and the
changes in its net assets in process of liquidation for each of the three years
in the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note B to the financial statements, the Partnership adopted the
liquidation basis of accounting effective October 1, 1996.
/s/ Ernst & Young LLP
New York, New York
February 9, 2000
2
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(limited partnership)
STATEMENTS OF NET ASSETS
(in process of liquidation)
<TABLE>
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Property held for sale $2,018,521 $1,518,521
Cash and cash equivalents 1,036,053 1,019,613
Other assets 277,922 56,530
---------- ----------
Total assets 3,332,496 2,594,664
---------- ----------
LIABILITIES
Estimated liquidation costs 366,078 264,767
Estimated remediation costs 500,000 --
---------- ----------
Total liabilities 866,078 264,767
---------- ----------
Net assets available to limited and general partners $2,466,418 $2,329,897
---------- ----------
---------- ----------
Limited and equivalent partnership units issued and outstanding 51,818 51,818
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
(in process of liquidation)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net assets--December 31, 1996 $2,009,322 $ -- $2,009,322
Net income from liquidating activities 80,731 -- 80,731
---------- --------- ----------
Net assets--December 31, 1997 2,090,053 -- 2,090,053
Net income from liquidating activities 239,844 -- 239,844
---------- --------- ----------
Net assets--December 31, 1998 2,329,897 -- 2,329,897
Net income from liquidating activities 136,521 -- 136,521
---------- --------- ----------
Net assets--December 31, 1999 $2,466,418 $ -- $2,466,418
---------- --------- ----------
---------- --------- ----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
A. General
Prudential-Bache/Watson & Taylor, Ltd.-2 (the 'Partnership') is a Texas
limited partnership formed on November 14, 1983 which will terminate in
accordance with a vote of the limited partners as described below. The
Partnership was formed for the purpose of acquiring, developing, owning and
operating mini-storage and office/warehouse facilities. The general partners of
the Partnership are Prudential-Bache Properties, Inc. ('PBP'), a wholly owned
subsidiary of Prudential Securities Group Inc., George S. Watson, and A. Starke
Taylor, III (collectively, the 'General Partners'). PBP is the Managing General
Partner of the Partnership.
On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. On June 13, 1996,
the Partnership entered into a contract with Public Storage, Inc., the property
manager of the Partnership's properties, for the sale of all the Partnership's
properties. This sale was subject to the approval by the limited partners
holding a majority of the limited partnership units and certain other conditions
and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 (the 'Consent
Statement'), the limited partners approved, on October 18, 1996, the sale to
Public Storage, Inc. of all eight miniwarehouse facilities owned by the
Partnership and the liquidation and dissolution of the Partnership. Seven of the
eight properties which were under contract were sold to Public Storage, Inc. and
its affiliates on December 16, 1996. The Partnership received, in cash, gross
sales proceeds of $16,000,000 reduced by certain selling expenses and pro
rations of approximately $433,000. The gross sales price was in excess of the
appraised value of the properties and resulted in a gain on sale of
approximately $3,533,000 for financial reporting purposes.
The Partnership continues to own the Hampton Park property located in Capitol
Heights, Maryland. In conjunction with the contract of sale of the Partnership's
properties to Public Storage, Inc. ('Public'), as described above, a Phase I
Environmental Site Assessment was performed in the first quarter of 1996 by Law
Engineering and Environmental Services, Inc. ('LAW'), which identified one of
the tenants as a potential environmental concern. As a result, the property was
not sold to Public.
LAW, at the request of the Partnership, performed a Phase II Environmental
Site Assessment which was completed in June 1996. Analysis of soil and ground
water samples collected at the site in this assessment indicated detectable
levels of tetrachloroethene ('PCE'). LAW, at the request of the Partnership,
reported the PCE release to the Maryland Department of the Environment ('MDE').
The MDE requested that a limited subsurface assessment be performed to evaluate
the potential impact to subsurface soil and ground water. Since this 1996
assessment there have been fourteen additional quarterly groundwater sampling
events performed through the first quarter of 2000. Based upon the results of
these tests, the Partnership has continued its quarterly monitoring of the
property and will continue to do so until further direction is provided by the
MDE.
The Partnership accrued a $500,000 liability which represents its best
estimate of the obligation as of December 31, 1999 in the Statement of Net
Assets regarding the environmental issues mentioned above. The amount includes
an active remediation program over a five-year period. It is reasonably possible
that the loss exposure will be in excess of the amount accrued and will be
material to the Partnership and may possibly change in the near future. However,
it is uncertain at this time what will ultimately be required to resolve the
environmental issue at the property. It is the Partnership's intention to sell
the property; however, because of the environmental problem it is uncertain when
any such sale could be consummated.
In accordance with EITF 90-8: Capitalization of Costs to Treat Environmental
Contamination, costs to remove, contain, neutralize, or prevent existing or
future environmental contamination may be capitalized if (i) those costs are
recoverable and (ii) those costs are incurred in preparing for sale of that
property currently held for sale. The Partnership has determined that the
accrued environmental liabilities of $500,000 are recoverable based upon an
appraised valuation of the property received in the first quarter of 2000 that
is in excess of the sum of the carrying value of the property and the
environmental liability accrual. The property
4
<PAGE>
is currently being held for sale as mentioned above. Therefore, the Partnership
increased the book value of the property on the Statement of Net Assets to
$2,018,521 as of December 31, 1999.
A distribution of $300 per limited partnership unit was made on December 19,
1996 representing the net sales proceeds reduced by a contingency reserve and
funds required to meet the anticipated current and future operating costs until
the liquidation of the Partnership. Estimated costs expected to be incurred
through the date of liquidation of the Partnership have been accrued in the
accompanying financial statements.
Effective February 28, 1998, American Office Park Properties, Inc., a
subsidiary of Public Storage, Inc., terminated its management of the Hampton
Park property. The Partnership has entered into a management agreement
('Management Agreement') with Watson & Taylor Management, Inc. ('WTMI'), an
affiliate of the individual General Partners, effective March 1, 1998. WTMI will
be responsible for the day-to-day operation of the property, including the
supervision of the on-site managers and the establishment of rental policies and
rates for new rentals and renewals and will direct the marketing activity for
the property. The Management Agreement may be terminated by either party with 60
days' written notice, with or without cause, and can be terminated upon a sale
of the property. WTMI will receive 4.5% of the property's gross revenues (as
defined in the Management Agreement) as a management fee.
B. Summary of Significant Accounting Policies
Basis of accounting
The Partnership adopted the liquidation basis of accounting effective October
1, 1996. Accordingly, the net assets of the Partnership at December 31, 1997,
1998 and 1999 are stated at liquidation value, i.e., the assets have been valued
at their estimated fair values, net of selling expenses, and the liabilities
include estimated amounts to be incurred through the date of liquidation of the
Partnership, which is in conformity with generally accepted accounting
principles in the United States. The actual remaining net proceeds from
liquidation will depend upon a variety of factors and are likely to differ from
the estimated amounts reflected in the accompanying financial statements. Prior
to October 1, 1996, the books and records of the Partnership were maintained on
a going-concern accrual basis of accounting. The Partnership's fiscal year for
both book and tax purposes ends on December 31.
Property
Effective December 31, 1995, the Partnership reclassified its properties from
held for use to held for sale and ceased depreciating the properties for
financial reporting purposes only. Properties held for sale are recorded at the
lower of carrying amount or estimated fair value less costs to sell.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Profit and loss allocations and distributions
Net income from operations is allocated and cash from operations is
distributed 99% to the limited partners and 1% to the General Partners. Net loss
from operations is allocated 92% to the limited partners and 8% to the General
Partners.
Income from a Terminating Sale, as defined in the Partnership Agreement, is
allocated first to all partners having negative capital account balances, to the
extent of such balances, and then to the limited partners until their capital
accounts equal their Adjusted Capital Contribution plus a Cumulative Preference
as those terms are defined in the Partnership Agreement. However, the minimum
allocation to the General Partners of income from a Terminating Sale shall not
be less than 1%. Sales proceeds from a Terminating Sale are first used for the
payment of any debts or obligations of the Partnership, then any balance
remaining is distributed to the partners having positive capital account
balances.
Net income per limited partnership unit is based on 51,560 limited and
equivalent units outstanding, which excludes 258 equivalent units held by PBP
(see Note E) for which PBP has waived all of its rights therein.
5
<PAGE>
C. Property Held for Sale
The Partnership's property as of December 31, 1999, 1998 and 1997 consisted
solely of Hampton Park, a miniwarehouse facility located in Capitol Heights,
Maryland.
D. Net Income From Liquidating Activities
Net income from liquidating activities consisted of the following:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Rental and other income $542,053 $504,300 $483,910
------------ ------------ ------------
Property operating expenses 198,593 224,936 258,987
General and administrative expenses 4,467 6,493 53,840
Estimated liquidation expenses 202,472 33,027 90,352
------------ ------------ ------------
405,532 264,456 403,179
------------ ------------ ------------
Net income from liquidating activities $136,521 $239,844 $ 80,731
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
E. 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 years ended December 31, 1999, 1998 and 1997 were $92,000, $6,000 and
$57,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. Costs incurred in 1999 was $36,000. No additional costs were
incurred in 1997 or 1998.
In conjunction with the liquidation basis of accounting, the Partnership has
recorded an accrual as of December 31, 1999 and 1998 for the estimated costs
expected to be incurred to liquidate the Partnership. Included in these
estimated liquidation costs is $137,000 and $59,000 as of December 31, 1999 and
1998, respectively, expected to be payable to the General Partners and their
affiliates during the anticipated remaining liquidation period. The increase in
these estimated liquidation costs is a result of the lengthening of the
estimated holding period. The actual charges to be incurred by the Partnership
will depend primarily upon the length of time required to liquidate the
Partnership's remaining net assets, and may differ from the amounts accrued as
of December 31, 1999.
PBP and the individual General Partners of the Partnership, own 258, 130 and
130 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 258 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 180
limited partnership units at December 31, 1999.
6
<PAGE>
F. Income Taxes
The following is a reconciliation of net income for financial reporting
purposes to net income (loss) for tax reporting purposes:
<TABLE>
<CAPTION>
For the year ended December 31
-------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income per financial statements (a) $ 136,521 $ 239,844 $ 80,731
Estimated liquidation costs, deducted for books not tax 202,472 33,027 90,352
Liquidation costs incurred, deducted for tax not book (101,192) (146,248) (118,714)
Tax depreciation and amortization in excess of book amounts (138,418) (138,605) (138,810)
--------- --------- ---------
Tax basis net income (loss) $ 99,383 $ (11,982) $ (86,441)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(a) Represents net income from liquidating activities which is reflected in
the Statement of Changes in Net Assets.
The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments and the initial charge to partners' capital of syndication costs,
for book purposes, when the Partnership was formed.
7
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
In accordance with the Consent Statement dated September 17, 1996, the
limited partners approved, on October 18, 1996, the sale to Public Storage, Inc.
of all eight miniwarehouse facilities owned by the Partnership and the
liquidation and dissolution of the Partnership. Seven of the eight properties
which were under contract were sold to Public Storage, Inc. and its affiliates
on December 16, 1996. The Partnership received, in cash, gross sales proceeds of
$16,000,000 reduced by certain selling expenses and pro rations of approximately
$433,000. The gross sales price was in excess of the appraised value of the
properties and resulted in a gain on sale of approximately $3,533,000 for
financial reporting purposes.
The Partnership continues to own the Hampton Park property located in Capitol
Heights, Maryland. In conjunction with the contract of sale of the Partnership's
properties to Public Storage, Inc. ('Public'), as described above, a Phase I
Environmental Site Assessment was performed in the first quarter of 1996 by Law
Engineering and Environmental Services, Inc. ('LAW'), which identified one of
the tenants as a potential environmental concern. As a result, the property was
not sold to Public.
LAW, at the request of the Partnership, performed a Phase II Environmental
Site Assessment which was completed in June 1996. Analysis of soil and ground
water samples collected at the site in this assessment indicated detectable
levels of tetrachloroethene ('PCE'). LAW, at the request of the Partnership,
reported the PCE release to the Maryland Department of the Environment ('MDE').
The MDE requested that a limited subsurface assessment be performed to evaluate
the potential impact to subsurface soil and ground water. Since this 1996
assessment there have been fourteen additional quarterly groundwater sampling
events performed through the first quarter of 2000. Based upon the results of
these tests, the Partnership has continued its quarterly monitoring of the
property and will continue to do so until further direction is provided by the
MDE.
The Partnership accrued a $500,000 liability which represents its best
estimate of the obligation as of December 31, 1999 in the Statement of Net
Assets regarding the environmental issues mentioned above. The amount includes
an active remediation program over a five-year period. It is reasonably possible
that the loss exposure will be in excess of the amount accrued and will be
material to the Partnership and may possibly change in the near future. However,
it is uncertain at this time what will ultimately be required to resolve the
environmental issue at the property. It is the Partnership's intention to sell
the property; however, because of the environmental problem it is uncertain when
any such sale could be consummated.
In accordance with EITF 90-8: Capitalization of Costs to Treat Environmental
Contamination, costs to remove, contain, neutralize, or prevent existing or
future environmental contamination may be capitalized if (i) those costs are
recoverable and (ii) those costs are incurred in preparing for sale of that
property currently held for sale. The Partnership has determined that the
accrued environmental liabilities of $500,000 are recoverable based upon an
appraised valuation of the property received in the first quarter of 2000 that
is in excess of the sum of the carrying value of the property and the
environmental liability accrual. The property is currently being held for sale
as mentioned above. Therefore, the Partnership increased the book value of the
property on the Statement of Net Assets to $2,018,521 as of December 31, 1999.
A distribution of $300 per limited partnership unit was made on December 19,
1996, representing the net sales proceeds reduced by a contingency reserve and
funds required to meet the anticipated current and future operating costs until
the liquidation of the Partnership. The Partnership intends to liquidate after
the sale of the Hampton Park property, and will distribute any remaining funds
at such time. In accordance with the Partnership Agreement, such distributions
to partners will be made based upon each partners' capital account for Federal
income tax purposes. Estimated costs expected to be incurred through the date of
liquidation of the Partnership have been accrued in the accompanying financial
statements.
8
<PAGE>
Results of Operations
As a result of the Partnership adopting the liquidation basis of accounting
in accordance with generally accepted accounting principles as of October 1,
1996, and thus not reporting results of operations thereafter, and the sale of
substantially all of the properties in October 1996, there is no management
discussion comparing the corresponding 1999, 1998 and 1997 periods.
Impact of Year 2000
The Partnership has received no reports of incidents of systems or facilities
malfunctions related to the inability of computers and/or computer software to
process and calculate date-related information from and after January 1, 2000.
The Partnership did not incur any costs during 1999 in connection with
remediating its systems. The Partnership is not aware of any material problems
resulting from Year 2000 issues, either with its products, its internal systems,
or the products and services of third parties. The Partnership will continue to
monitor its mission critical computer applications and those of its suppliers
and vendors throughout 2000 to ensure that any latent Year 2000 matters that may
arise are addressed promptly.
9
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to limited partners without charge upon written
request to:
Prudential-Bache/Watson & Taylor, Ltd.-2
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016
10
<PAGE>
Peck Slip Station BULK RATE
P.O. Box 2016 U.S. POSTAGE
New York, NY 10272 PAID
Automatic Mail
PBW&T2/171650
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd 2
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000737296
<NAME> P-B Watson & Taylor Ltd 2
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Dec-31-1999
<PERIOD-TYPE> 12-Mos
<CASH> 1,036,053
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 277,922
<PP&E> 2,018,521
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,332,496
<CURRENT-LIABILITIES> 866,078
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,466,418
<TOTAL-LIABILITY-AND-EQUITY> 3,332,496
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>Registrant adopted the liquidation basis of accounting
on October 1, 1996, and, accordingly, does not reflect
operations subsequent to October 1, 1996. See Note A to the
financial statetments for further details.
</FN>
</TABLE>
