<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended 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 0-15381
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
- - - - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-2083046
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
- - - - ----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 9,980,978 $ 9,980,978
Buildings and improvements 17,555,758 17,504,795
Furniture, fixtures and equipment 132,328 130,692
Less: Accumulated depreciation and amortization (5,377,724) (5,233,140 )
Allowance for loss on impairment of assets (8,142,000) (8,142,000 )
------------- ------------
Net investment in property 14,149,340 14,241,325
Cash and cash equivalents 613,057 588,802
Other assets 25,296 28,160
------------- ------------
Total assets $14,787,693 $14,858,287
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 98,194 $ 37,303
Deposits due to tenants 87,073 98,987
Accrued real estate taxes 61,417 117,119
Due to affiliates, net 48,934 30,185
Unearned rental income 11,703 17,775
------------- ------------
Total liabilities 307,321 301,369
------------- ------------
Contingencies
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 14,271,434 14,351,976
General partners 208,938 204,942
------------- ------------
Total partners' capital 14,480,372 14,556,918
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Total liabilities and partners' capital $14,787,693 $14,858,287
------------- ------------
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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.-4
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1995 1994
<S> <C> <C>
- - - - ---------------------------------------------------------------------------------------------------
REVENUES
Rental income $482,748 $453,086
Interest 4,194 4,399
Other 21,758 29,397
------------ --------
508,700 486,882
------------ --------
EXPENSES
Depreciation and amortization 144,584 158,648
Property operating 171,777 156,911
Real estate taxes 47,899 54,859
General and administrative 62,757 21,388
------------ --------
427,017 391,806
------------ --------
Net income $ 81,683 $ 95,076
------------ --------
------------ --------
ALLOCATION OF NET INCOME
Unitholders $ 65,027 $ 76,365
------------ --------
------------ --------
General partners $ 16,656 $ 18,711
------------ --------
------------ --------
Net income per depositary unit $ .98 $ 1.15
------------ --------
------------ --------
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</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- - - - ---------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1994 $14,351,976 $204,942 $14,556,918
Net income 65,027 16,656 81,683
Distributions (145,569) (12,660 ) (158,229)
----------- -------- -----------
Partners' capital--March 31, 1995 $14,271,434 $208,938 $14,480,372
----------- -------- -----------
----------- -------- -----------
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The accompanying notes are an integral part of these statements
</TABLE>
3
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1995 1994
<S> <C> <C>
- - - - ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 467,626 $ 448,263
Interest received 4,194 4,399
Other income received 21,758 29,397
Property operating expenses paid (129,806) (169,675)
Real estate taxes paid (103,601) (94,672)
General and administrative expenses paid (25,088) (65,693)
--------- ----------
Net cash provided by operating activities 235,083 152,019
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (52,599) --
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (158,229) (156,404)
--------- ----------
Net increase (decrease) in cash and cash equivalents 24,255 (4,385)
Cash and cash equivalents at beginning of period 588,802 783,138
--------- ----------
Cash and cash equivalents at end of period $ 613,057 $ 778,753
--------- ----------
--------- ----------
- - - - ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 81,683 $ 95,076
--------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 144,584 158,648
Changes in:
Other assets 2,864 6,018
Accounts payable and accrued expenses 60,891 (33,322)
Accrued real estate taxes (55,702) (39,813)
Due to affiliates, net 18,749 (23,747)
Unearned rental income (6,072) (12,629)
Deposits due to tenants (11,914) 1,788
--------- ----------
Total adjustments 153,400 56,943
--------- ----------
Net cash provided by operating activities $ 235,083 $ 152,019
--------- ----------
--------- ----------
- - - - ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF FINANCING ACTIVITIES
Distributions to partners $(158,229) $ (170,004)
Increase in distribution payable -- 13,600
--------- ----------
Distributions paid to partners $(158,229) $ (156,404)
--------- ----------
--------- ----------
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The accompanying notes are an integral part of these statements
</TABLE>
4
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of Prudential-Bache Properties, Inc. (``Managing General Partner'') (``PBP''),
the financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of
Prudential-Bache/Watson & Taylor, Ltd.-4 (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. However, the operating results for the interim
periods may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1994.
Certain balances for the prior period have been reclassified to conform with
the current financial statement presentation.
B. Related Parties
PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management; transfer and
assignment functions; asset management (including direct management of the
Partnership's unimproved properties); 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 three months ended March 31, 1995 and 1994 were approximately $25,000
and $23,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. The Partnership recorded $1,250 for the reimbursement of these
services for the three months ended March 31, 1995. The Partnership recorded
$27,250 relating to the reimbursement for these services for the period from
November 1988 through March 1994 during the three months ended March 31, 1994.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at March 31, 1995.
C. Contingencies
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, a number of purported class actions then pending in various federal
district courts were transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceedings 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 PBP. The Partnership is not named 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 Racketeer Influenced and
Corrupt Organizations Act (``RICO'') statutes, fraud, negligent
misrepresentation, breach of fiduciary duties, breach of third-party beneficiary
contracts, 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;
5
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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.
PSI and PBP, along with various other defendants, filed a motion to dismiss
the consolidated complaint on December 20, 1994. That motion is pending.
D. Subsequent Event
In May, distributions of approximately $146,000 and $13,000 were paid to the
unitholders and the General Partners, respectively, for the quarter ended March
31, 1995.
6
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership owns and operates five commercial properties consisting of
office warehouse/mini-warehouse and retail facilities as well as seven
unimproved properties. During the three months ended March 31, 1995, the
Partnership's cash and cash equivalents increased by approximately $24,000 due
to the timing of accrued expense payments.
Distributions of approximately $146,000 and $13,000 were paid to the
Unitholders and General Partners, respectively, during the quarter ended March
31, 1995. These distributions were funded from property operations. The
Partnership retained a portion of the cash from property operations in
anticipation of budgeted 1995 capital expenditures.
The Partnership's ability to make future distributions to the partners and
the amount of the distributions that may be made will be affected not only by
the amount of cash generated by the Partnership from the operations of its
properties, but also by the amount expended for capital improvements and the
amount set aside for anticipated capital improvements. Capital improvements are
currently budgeted at approximately $37,000 for the remainder of 1995.
The elimination of an exit ramp that provided access to the Big A property
has had a negative impact on operations. A second phase of this highway project
will have a further negative impact on the property. This phase will greatly
reduce access to the property and take a portion of the Big A site and one or
more buildings.
Results of Operations
Occupancies at the improved properties at March 31, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
Property 1995 1994
<S> <C> <C>
---------------------------------------------------------------------------------
Airport South Business Center 100.0% 100.0%
Big A Mini-Warehouse 35.9 29.9
Downtown Business Center 100.0 86.7
Towneast Business Center 93.7 89.5
Dale City 98.5 98.5
---------------------------------------------------------------------------------
(Occupancies are calculated by dividing occupied units by available units).
</TABLE>
Net income decreased by approximately $13,000 for the three months ended
March 31, 1995 as compared to the same period in the prior year due to the
reasons discussed below.
Rental income increased by approximately $30,000 for the three months ended
March 31, 1995 as compared to the same period in the prior year. Rental income
increased at the Downtown Business Center, Dale City and Big A Mini-Warehouse
properties primarily due to higher average occupancy rates. Rental income at the
Towneast Business Center and Airport South properties remained stable.
Other income decreased by approximately $8,000 for the three months ended
March 31, 1995 as compared to the same period in the prior year primarily due to
the decreasing number of older leases that include charges to recover operating
expenses.
Real estate taxes decreased by approximately $7,000 for the three months
ended March 31, 1995 as compared to the same period in the prior year due to
lower reassessed property values.
General and administrative expenses increased by approximately $41,000 for
the three months ended March 31, 1995 as compared to the same period in 1994
because, in March 1994, the Partnership was effectually reimbursed for
previously expensed general and administrative costs which decreased expenses
in that period. This increase was partially offset by a decrease in professional
fees in 1995 and the accrual of prior periods general, administrative and
monitoring expense reimbursements in 1994.
7
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<PAGE>
Property operating expenses increased by approximately $15,000 for the three
months ended March 31, 1995 as compared to the same period in 1994 due to
increases in payroll and leasing commissions offset by a decrease in repairs and
maintenance expenses.
Depreciation and amortization decreased by approximately $14,000 for the
three months ended March 31, 1995 as compared to the same period in the prior
year due to a significant amount of older assets becoming fully depreciated.
8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
C 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--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. (a) Exhibits
Description:
4.01 Certificate of Limited Partnership Interest (filed as an
exhibit to Registration Statement on Form S-11 (No. 33-1213)
and incorporated herein by reference)
4.02 Depositary Receipt (filed as an exhibit to Registration
Statement on Form S-11
(No. 33-1213) and incorporated herein by reference)
(b) Reports on Form 8-K--None
9
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<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 hereunto duly authorized.
Prudential-Bache/Watson & Taylor, Ltd.-4
By: Prudential-Bache Properties, Inc.
A Delaware corporation,
Managing General Partner
By: /s/ Robert J. Alexander Date: May 15, 1995
----------------------------------------
Robert J. Alexander
Vice President
Chief Accounting Officer for the
Registrant
10
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache Watson & Taylor Ltd 4
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000780352
<NAME> Prudential-Bache Watson & Taylor Ltd 4
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Mar-31-1995
<PERIOD-TYPE> 3-Mos
<CASH> 613,057
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,527,064
<DEPRECIATION> (5,377,724)
<TOTAL-ASSETS> 14,787,693
<CURRENT-LIABILITIES> 307,321
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,787,693
<SALES> 0
<TOTAL-REVENUES> 508,700
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 427,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,683
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
