<PAGE>
UNITED STATES
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 December 31, 1997
/ / 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: 0-14397
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-3
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1991528
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, NY 10292-0128
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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 __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-3
(a limited partnership)
STATEMENTS OF NET ASSETS
(in process of liquidation)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $1,069,486 $ 1,089,835
Property held for sale 275,000 275,000
------------ -------------
Total assets 1,344,486 1,364,835
------------ -------------
LIABILITIES
Estimated liquidation costs 189,206 220,331
------------ -------------
Net assets available to limited and general partners $1,155,280 $ 1,144,504
------------ -------------
------------ -------------
Limited and equivalent partnership units issued
and outstanding 53,855 53,855
------------ -------------
------------ -------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in process of liquidation)
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net assets in liquidation, September 30, 1997 $1,144,504 $ -- $1,144,504
Changes in estimated liquidation values of assets and
liabilities 10,776 -- 10,776
---------- ---------- ----------
Net assets in liquidation, December 31, 1997 $1,155,280 $ -- $1,155,280
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-3
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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 for the period ended December 31, 1997 contain all
adjustments necessary to present fairly such information subject to the effects
of any further liquidation accounting adjustments that would have been required
had the current realizable values of assets and the amounts of liabilities been
known when Prudential-Bache/Watson & Taylor, Ltd.-3 (the 'Partnership') first
adopted the liquidation basis of accounting as of October 1, 1996.
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 September 30, 1997.
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, management of the Partnership's unimproved property,
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. Affiliates of Messrs. Watson and Taylor, the individual General
Partners, also perform certain administrative and monitoring functions on behalf
of the Partnership.
Estimated liquidation costs payable to the General Partners and their
affiliates were approximately $71,000 and $101,000 as of December 31, 1997 and
September 30, 1997, respectively.
PBP and the two individual General Partners of the Partnership own 270, 135
and 135 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 270 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, an affiliate of PBP, owns 253 limited
partnership units at December 31, 1997.
3
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-3
(a limited partnership)
ITEM 2. 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
Partnership sold substantially all of its properties on October 31, 1996. The
Partnership has retained funds for a contingency reserve and to meet current and
future operating costs until the liquidation of the Partnership. The Partnership
continues to own an undeveloped land parcel (I35/I20) located in Dallas, Texas.
The Partnership intends to liquidate in 1998, subject to the sale of the
remaining undeveloped land parcel, and will distribute any remaining funds at
such time. Estimated costs expected to be incurred through the date of
liquidation of the Partnership have been accrued in the accompanying financial
statements.
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 the sale of substantially all of the Partnership properties in October
1996, there is no management discussion comparing the corresponding 1997 and
1996 periods.
4
<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:
3.01 Amended and Restated Certificate and Agreement of Limited
Partnership (filed as an exhibit to Registration Statement on Form
S-11 (No. 2-94976) and incorporated herein by reference)
3.02 Amendment to the Amended and Restated Certificate and
Agreement of Limited Partnership (filed as an exhibit to
Registrant's Form 10-K for the year ended September 30, 1989
and incorporated herein by reference)
4.01 Certificate of Limited Partnership Interest (filed as an
exhibit to Registration Statement on Form S-11 (No.
2-94976) and incorporated herein by reference)
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
5
<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.-3
By: Prudential-Bache Properties, Inc.
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: February 13, 1998
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor, Ltd. 3
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000759726
<NAME> P-B Watson & Taylor, Ltd. 3
<MULTIPLIER> 1
<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-START> Oct-01-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> 3-Mos
<CASH> 1,069,486
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 275,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,344,486
<CURRENT-LIABILITIES> 189,206
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,155,280
<TOTAL-LIABILITY-AND-EQUITY> 1,344,486
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0<F1>
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-PRIMARY> 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 statements for further details.
</FN>
</TABLE>
