<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 June 30, 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
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __
<PAGE>
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 9,980,978 $ 9,980,978
Buildings and improvements 17,609,897 17,504,795
Furniture, fixtures and equipment 133,746 130,692
Less: Accumulated depreciation and amortization (5,526,973) (5,233,140 )
Allowance for loss on impairment of assets (8,142,000) (8,142,000 )
------------- ------------
Net investment in property 14,055,648 14,241,325
Cash and cash equivalents 614,300 588,802
Other assets 22,261 28,160
------------- ------------
Total assets $14,692,209 $14,858,287
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits due to tenants $ 100,892 $ 98,987
Accounts payable and accrued expenses 73,915 37,303
Accrued real estate taxes 62,019 117,119
Due to affiliates, net 51,785 30,185
Unearned rental income 11,358 17,775
------------- ------------
Total liabilities 299,969 301,369
------------- ------------
Contingencies
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 14,179,905 14,351,976
General partners 212,335 204,942
------------- ------------
Total partners' capital 14,392,240 14,556,918
------------- ------------
Total liabilities and partners' capital $14,692,209 $14,858,287
------------- ------------
------------- ------------
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------- -----------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 963,857 $890,548 $481,109 $437,462
Interest 8,220 8,640 4,026 4,241
Other 34,572 53,980 12,814 24,583
---------- -------- ---------- --------
1,006,649 953,168 497,949 466,286
---------- -------- ---------- --------
EXPENSES
Property operating 323,871 303,045 152,094 146,134
Depreciation and amortization 293,833 317,100 149,249 158,452
General and administrative 140,592 85,179 77,835 63,791
Real estate taxes 96,372 110,060 48,473 55,201
---------- -------- ---------- --------
854,668 815,384 427,651 423,578
---------- -------- ---------- --------
Net income $ 151,981 $137,784 $ 70,298 $ 42,708
---------- -------- ---------- --------
---------- -------- ---------- --------
ALLOCATION OF NET INCOME
Unitholders $ 119,254 $104,564 $ 54,227 $ 28,199
---------- -------- ---------- --------
---------- -------- ---------- --------
General partners $ 32,727 $ 33,220 $ 16,071 $ 14,509
---------- -------- ---------- --------
---------- -------- ---------- --------
Net income per depositary unit $ 1.79 $ 1.57 $ .81 $ .42
---------- -------- ---------- --------
---------- -------- ---------- --------
-----------------------------------------------------------------------------------------------------
</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 119,254 32,727 151,981
Distributions (291,325) (25,334 ) (316,659)
----------- -------- -----------
Partners' capital--June 30, 1995 $14,179,905 $212,335 $14,392,240
----------- -------- -----------
----------- -------- -----------
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1995 1994
<S> <C> <C>
---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 965,244 $ 883,804
Interest received 8,220 8,640
Other income received 34,572 53,980
Property operating expenses paid (330,331) (314,053)
Real estate taxes paid (151,472) (137,002)
General and administrative expenses paid (75,920) (128,929)
--------- ---------
Net cash provided by operating activities 450,313 366,440
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (108,156) (4,833)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (316,659) (500,145)
--------- ---------
Net increase (decrease) in cash and cash equivalents 25,498 (138,538)
Cash and cash equivalents at beginning of period 588,802 783,138
--------- ---------
Cash and cash equivalents at end of period $ 614,300 $ 644,600
--------- ---------
--------- ---------
---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 151,981 $ 137,784
--------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 293,833 317,100
Changes in:
Other assets 5,899 19,031
Accounts payable and accrued expenses 36,612 (27,655)
Accrued real estate taxes (55,100) (26,942)
Due to affiliates, net 21,600 (27,103)
Unearned rental income (6,417) (21,255)
Deposits due to tenants 1,905 (4,520)
--------- ---------
Total adjustments 298,332 228,656
--------- ---------
Net cash provided by operating activities $ 450,313 $ 366,440
--------- ---------
--------- ---------
---------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF FINANCING ACTIVITIES
Distributions to partners $(316,659) $(423,202)
Decrease in distribution payable -- (76,943)
--------- ---------
Distributions paid to partners $(316,659) $(500,145)
--------- ---------
--------- ---------
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 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 June 30,
1995, the results of its operations for the six and three months ended June 30,
1995 and 1994 and its cash flows for the six months ended June 30, 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 six and three months ended June 30, 1995 and 1994 were approximately
$49,200 and $41,700, respectively, and for the three months ended June 30, 1995
and 1994 were approximately $25,000 and $15,100, 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 $2,500 and $1,250 for the reimbursement of
these services for the six and three months ended June 30, 1995, respectively.
The Partnership recorded $27,250 relating to the reimbursement for these
services for the period from November 1988 through December 1994 during the
three months ended March 31, 1994. An additional $1,250 was recorded during the
three months ended June 30, 1994.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at June 30, 1995.
C. Contingencies
There are no material legal proceedings pending by or against the Partnership
or its properties.
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
5
<PAGE>
<PAGE>
contracts, and breach of implied covenants in connection with the marketing and
sales of limited partnership interests. Plaintiffs request relief in the nature
of rescission of the purchase of securities and recovery of all consideration
and expenses in connection therewith, as well as compensation for lost use of
money invested less cash distributions; compensatory damages; consequential
damages; treble damages for defendants' RICO violations (both federal and New
Jersey); general damages for all injuries resulting from negligence, fraud,
breaches of contract, and breaches of duty in an amount to be determined at
trial; disgorgement and restitution of all earnings, profits, benefits and
compensation received by defendants as a result of their unlawful acts; costs
and disbursements of the action; reasonable attorneys' fees; and such other and
further relief as the court deems just and proper.
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 August, distributions of approximately $146,000 and $13,000 were paid to
the Unitholders and the General Partners, respectively, for the quarter ended
June 30, 1995.
6
<PAGE>
<PAGE>
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 six months ended June 30, 1995, the
Partnership's cash and cash equivalents increased by approximately $25,000
primarily due to cash retained for anticipated property improvements.
Distributions of approximately $146,000 and $13,000 were paid to the
Unitholders and General Partners, respectively, during the quarter ended June
30, 1995. These distributions were funded from property operations.
The Partnership's ability to make future distributions 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 property improvements and the amount set aside for
anticipated property improvements. Property improvements (including tenant
improvements) are currently budgeted at approximately $102,000 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 as well as
one or more buildings. The Partnership is continuing to explore the options
available to mitigate the negative impact of these activities on rental revenue.
Results of Operations
Occupancies at the improved properties at June 30, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
Property 1995 1994
<S> <C> <C>
---------------------------------------------------------------------------------
Airport South Business Center 98.1% 92.3%
Big A Mini-Warehouse 35.9 32.4
Downtown Business Center 100.0 96.7
Towneast Business Center 98.9 91.6
Dale City 89.5 99.5
---------------------------------------------------------------------------------
(Occupancies are calculated by dividing occupied units by available units).
</TABLE>
Net income increased by approximately $14,000 and $28,000 for the six and
three months ended June 30, 1995 as compared to the same periods in the prior
year due to the reasons discussed below.
Rental income increased by approximately $73,000 and $44,000 for the six and
three months ended June 30, 1995 as compared to the same periods in 1994. Rental
income increased at all of the properties except Dale City primarily due to
higher average occupancies. Rental rates for the Towneast commercial space also
increased. Rental income at the Dale City property remained stable.
Other income decreased by approximately $19,000 and $12,000 for the six and
three months ended June 30, 1995 as compared to the same periods in 1994
primarily due to the decreasing number of older leases that include charges to
recover operating expenses.
Real estate taxes decreased by approximately $14,000 and $7,000 for the six
and three months ended June 30, 1995 as compared to the same periods in 1994 due
to lower reassessed property values.
General and administrative expenses increased by approximately $55,000 for
the six months ended June 30, 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. General and administrative expenses increased by approximately
$14,000 for the three months ended June 30, 1995 as compared to the same period
in 1994 primarily due to the timing of certain accruals from year to year and an
increase in professional fees.
7
<PAGE>
<PAGE>
Property operating expenses increased by approximately $21,000 and $6,000 for
the six and three months ended June 30, 1995 as compared to the same periods in
1994. The six month increase is due to increases in utilities at Airport South,
payroll at Dale City and leasing commissions at all of the properties offset by
a decrease in repairs and maintenance expenses. The three month increase is
primarily the result of the increased utilities expense. Management fees also
increased because they are based on rental income.
Depreciation and amortization decreased by approximately $23,000 and $9,000
for the six and three months ended June 30, 1995 as compared to the same periods
in 1994 due to a significant amount of older assets becoming fully depreciated.
8
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned 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: August 14, 1995
----------------------------------------
Robert J. Alexander
Vice President
Chief Accounting Officer for the
Registrant
10
<PAGE>
<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> Apr-1-1995
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> 6-Mos
<CASH> 614,300
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> (8,142,000)
<INVENTORY> 0
<CURRENT-ASSETS> 22,261
<PP&E> 27,724,621
<DEPRECIATION> (5,526,973)
<TOTAL-ASSETS> 14,692,209
<CURRENT-LIABILITIES> 299,969
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,392,240
<TOTAL-LIABILITY-AND-EQUITY> 14,692,209
<SALES> 0
<TOTAL-REVENUES> 1,006,649
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 854,668
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 151,981
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,981
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
