<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, 1998
/ / 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
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(Exact name of registrant as specified in its charter)
Texas 75-1991528
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Seaport Plaza, New York, NY 10292-0128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
N/A
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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 __
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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,
1998 1998
<S> <C> <C>
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ASSETS
Cash and cash equivalents $ 933,408 $ 955,464
Property held for sale 275,000 275,000
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Total assets 1,208,408 1,230,464
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LIABILITIES
Estimated liquidation costs 135,152 162,712
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Net assets available to limited and general partners $1,073,256 $ 1,067,752
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------------ -------------
Limited and equivalent partnership units issued
and outstanding 53,855 53,855
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------------ -------------
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</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in process of liquidation)
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
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Net assets in liquidation, September 30, 1998 $1,067,752 $ -- $1,067,752
Changes in estimated liquidation values of assets and
liabilities 5,504 -- 5,504
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Net assets in liquidation, December 31, 1998 $1,073,256 $ -- $1,073,256
---------- -------- ----------
---------- -------- ----------
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The accompanying notes are an integral part of these statements.
</TABLE>
2
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-3
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(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, 1998 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. Prior to
October 1, 1996, the books and records of the Partnership were maintained on a
going concern accrual basis of accounting.
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
should 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, 1998.
The Partnership continues to own an undeveloped land parcel (I35/I20) located
in Dallas, Texas. The Partnership intends to sell the property as soon as
possible; however, no buyer for the property has been identified and it is
uncertain when any such sale will be consummated.
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.
In conjunction with the liquidation basis of accounting, the Partnership has
recorded an accrual as of December 31, 1998 for the estimated costs expected to
be incurred to liquidate the Partnership. Included in these estimated
liquidation costs is $71,000 expected for reimbursement to the General Partners
and their affiliates during the anticipated remaining liquidation 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, 1998.
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 distributions per limited partnership
unit.
Prudential Securities Incorporated, an affiliate of PBP, owns 253 limited
partnership units at December 31, 1998.
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 located in Dallas, Texas. The
Partnership intends to liquidate as soon as possible, subject to the sale of the
remaining undeveloped land parcel, and will distribute any remaining funds at
such time. In accordance with the Partnership Agreement, such distributions to
partners will be 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.
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, coupled with the
sale of substantially all of the properties in October 1996, there is no
management discussion comparing the corresponding 1998 and 1997 periods.
Year 2000
The Partnership has considered, and is taking appropriate actions to address,
the possible adverse effects of the Year 2000 on its systems and operations.
Accordingly, the Partnership believes the Year 2000 will not have significant
adverse effects on its systems and operations.
4
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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
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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/ Stephen A. Tolbert Date: February 12, 1999
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Stephen A. Tolbert
Vice President
Chief Accounting Officer for the Registrant
6
<TABLE> <S> <C>
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<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-30-1999
<PERIOD-START> Oct-01-1998
<PERIOD-END> Dec-31-1998
<PERIOD-TYPE> 3-Mos
<CASH> 933,408
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 933,408
<PP&E> 275,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,208,408
<CURRENT-LIABILITIES> 135,152
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,073,256
<TOTAL-LIABILITY-AND-EQUITY> 1,208,408
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0<F1>
<OTHER-EXPENSES> 0
<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-PRIMARY> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>
Registrant adopted the liquidation basis of accounting
on October 1, 1996, and, accordingly, does not reflect
Statement of Operations subsequent to 1996. See Note A
to the financial statements for further details.
</FN>
</TABLE>
