<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, 1996
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
- --------------------------------------------------------------------------------
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,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $12,297,260 $12,176,738
Cash and cash equivalents 859,425 1,450,040
Other assets 9,931 9,160
----------- ------------
Total assets $13,166,616 $13,635,938
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 434,146 $ 113,462
Deposits due to tenants 99,936 97,196
Due to affiliates, net 114,544 107,175
Accrued real estate taxes 64,393 104,824
Unearned rental income 14,433 6,847
----------- ------------
Total liabilities 727,452 429,504
----------- ------------
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 12,245,056 13,002,889
General partners 194,108 203,545
----------- ------------
Total partners' capital 12,439,164 13,206,434
----------- ------------
Total liabilities and partners' capital $13,166,616 $13,635,938
----------- ------------
----------- ------------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
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<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,
------------------------- ---------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 938,242 $ 963,857 $474,631 $481,109
Interest 10,236 8,220 3,252 4,026
Other 11,865 34,572 6,190 12,814
---------- ---------- -------- --------
960,343 1,006,649 484,073 497,949
---------- ---------- -------- --------
EXPENSES
General and administrative 397,650 140,592 247,506 77,835
Property operating 338,399 323,871 156,024 152,094
Real estate taxes 93,605 96,372 45,338 48,473
Depreciation -- 293,833 -- 149,249
---------- ---------- -------- --------
829,654 854,668 448,868 427,651
---------- ---------- -------- --------
Net income $ 130,689 $ 151,981 $ 35,205 $ 70,298
---------- ---------- -------- --------
---------- ---------- -------- --------
ALLOCATION OF NET INCOME
Unitholders $ 120,234 $ 119,254 $ 32,389 $ 54,227
---------- ---------- -------- --------
---------- ---------- -------- --------
General partners $ 10,455 $ 32,727 $ 2,816 $ 16,071
---------- ---------- -------- --------
---------- ---------- -------- --------
Net income per depositary unit $ 1.81 $ 1.79 $ 0.49 $ .81
---------- ---------- -------- --------
---------- ---------- -------- --------
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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, 1995 $13,002,889 $203,545 $13,206,434
Net income 120,234 10,455 130,689
Distributions (878,067) (19,892) (897,959)
----------- -------- -----------
Partners' capital--June 30, 1996 $12,245,056 $194,108 $12,439,164
----------- -------- -----------
----------- -------- -----------
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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,
------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 947,797 $ 965,244
Interest received 10,236 8,220
Other income received 11,865 34,572
Property operating expenses paid (198,548) (330,331)
Real estate taxes paid (134,036) (151,472)
General and administrative expenses paid (209,448) (75,920)
---------- ---------
Net cash provided by operating activities 427,866 450,313
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (120,522) (108,156)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (897,959) (316,659)
---------- ---------
Net increase (decrease) in cash and cash equivalents (590,615) 25,498
Cash and cash equivalents at beginning of period 1,450,040 588,802
---------- ---------
Cash and cash equivalents at end of period $ 859,425 $ 614,300
---------- ---------
---------- ---------
- ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 130,689 $ 151,981
---------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation -- 293,833
Changes in:
Other assets (771) 5,899
Accounts payable and accrued expenses 320,684 36,612
Accrued real estate taxes (40,431) (55,100)
Due to affiliates, net 7,369 21,600
Unearned rental income 7,586 (6,417)
Deposits due to tenants 2,740 1,905
---------- ---------
Total adjustments 297,177 298,332
---------- ---------
Net cash provided by operating activities $ 427,866 $ 450,313
---------- ---------
---------- ---------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(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,
1996 and the results of its operations for the six and three months ended June
30, 1996 and 1995, and its cash flows for the six months ended June 30, 1996
and 1995. 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, 1995.
On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. On June 10, 1996,
the Partnership entered into a contract with Public Storage, Inc., the current
property manager of the Partnership's properties, for the sale of substantially
all the Partnership's properties for an aggregate sales price of $12,210,000.
This sale is subject to the approval by the Unitholders holding a majority of
the depository units and certain other conditions and potential price
adjustments, including the cost to remedy any potential environmental issues. In
preparing the properties for sale, the Partnership had an environmental site
assessment performed by a qualified engineering firm for each of the
Partnership's properties. One of the Partnership's properties evidenced certain
levels of hazardous materials. The Managing General Partner is working with the
engineering firm to determine the extent of the contamination. It is uncertain
at this time what the cost of remediation or the impact on the sale of the
affected property may be. The Partnership is exploring its alternatives in
addressing this issue.
The Partnership anticipates sending proxy statements in August 1996 or as
soon thereafter as practicable for the purpose of advising Unitholders of the
terms of the agreement and to solicit their consent of the proposed sale. It is
expected that, if approved, the sale will close before December 31, 1996.
Following the closing, the Partnership will make one or more cash distributions
to the Unitholders. The bulk of the distributions are expected to occur shortly
after the closing with the remainder expected to be distributed within twelve
months after the closing, at which time the Partnership would then by
liquidated.
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 months ended June 30, 1996 and 1995 were approximately $66,000 and
$49,000, respectively, and for the three months ended June 30, 1996 and 1995,
were approximately $32,000 and $25,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. Relating to the reimbursement of these services, the Partnership
recorded approximately $22,000 and $3,000 for the six months ended June 30, 1996
and 1995, respectively and for the three months ended June 30, 1996 and 1995
recorded approximately $21,000 and $1,000, respectively.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at June 30, 1996.
5
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<PAGE>
C. Subsequent Event
In August 1996, distributions of approximately $83,000 and $7,000 were paid
to the Unitholders and the General Partners, respectively, for the quarter
ended June 30, 1996.
6
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<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 six unimproved
properties. On December 15, 1995, the Management Committee of the Partnership
determined to seek bids for all of the properties held by the Partnership. On
June 10, 1996, the Partnership entered into a contract with Public Storage,
Inc., the current property manager of the Partnership's properties, for the sale
of substantially all the Partnership's properties for an aggregate sales price
of $12,210,000. This sale is subject to the approval by the Unitholders holding
a majority of the depository units and certain other conditions and potential
price adjustments, including the cost to remedy any potential environmental
issues. In preparing the properties for sale, the Partnership had an
environmental site assessment performed by a qualified engineering firm for each
of the Partnership's properties. One of the Partnership's properties evidenced
certain levels of hazardous materials. The Managing General Partner is working
with the engineering firm to determine the extent of the contamination. It is
uncertain at this time what the cost of remediation or the impact on the sale of
the affected property may be. The Partnership is exploring its alternatives in
addressing this issue.
The Partnership anticipates sending proxy statements in August 1996 or as
soon thereafter as practicable for the purpose of advising Unitholders of the
terms of the agreement and to solicit their consent of the proposed sale. It is
expected that, if approved, the sale will close before December 31, 1996.
Following the closing, the Partnership will make one or more cash distributions
to the Unitholders. The bulk of the distributions are expected to occur shortly
after the closing with the remainder expected to be distributed within twelve
months after the closing, at which time the Partnership would then be
liquidated.
During the six months ended June 30, 1996, the Partnership's cash and cash
equivalents decreased by approximately $590,000 due to capital expenditures and
distributions paid to partners in excess of cash flow from operations.
Distributions of approximately $83,000 and $7,000 were paid to the Unitholders
and General Partners, respectively, during the three months ended June 30, 1996.
These distributions were funded from the property's 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, including
the amount expended for property improvements, but also by the amount from and
the timing of any sale of the Partnership's properties.
Results of Operations
Average occupancy rates at the improved properties for the six months ended
June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
June 30,
-----------------
<S> <C> <C>
Property 1996 1995
---------------------------------------------------------------------------------
Airport South Business Center 97.0% 99.2%
Big A Mini-Warehouse 46.6 54.2
Downtown Business Center 98.5 99.7
Towneast Business Center 96.2 98.0
Dale City 93.2 97.5
---------------------------------------------------------------------------------
(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.)
</TABLE>
Net income decreased by approximately $21,000 and $35,000 for the six and
three months ended June 30, 1996 as compared to the corresponding period in the
prior year primarily for the reasons discussed below.
7
<PAGE>
<PAGE>
Rental income decreased by approximately $26,000 and $6,000 for the six and
three months ended June 30, 1996 as compared to the corresponding period in
1995. These decreases are primarily due to lower average occupancies at all five
properties but were partially offset by increased rental income at Downtown
Business Center and Towneast Business Center primarily due to higher commercial
space rental rates.
Other income decreased by approximately $23,000 and $7,000 for the six and
three months ended June 30, 1996 as compared to the corresponding period in 1995
as a result of the decreasing number of older leases that include charges to
recover operating expenses.
Property operating expenses increased by approximately $15,000 and $4,000 for
the six and three months ended June 30, 1996 as compared to the corresponding
period in 1995 primarily due to increases in payroll, utilities and repair and
maintenance expenses.
General and administrative expenses increased by approximately $257,000 and
$170,000 for the six and three months ended June 30, 1996 as compared to the
corresponding period in 1995. This variance was primarily due to the accrual of
professional fees and other costs relating to the anticipated solicitation of
the consent of the Unitholders for the sale of the properties.
Depreciation expense decreased by approximately $294,000 and $149,000 for the
six and three months ended June 30, 1996 as compared to the corresponding period
in 1995 due to the reclassification of the Partnership's properties from held
for use to held for sale as of December 31, 1995. Under generally accepted
accounting principles, such properties are no longer depreciated and therefore
no depreciation expense has been recorded for the six and three months ended
June 30, 1996.
8
<PAGE>
<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:
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)
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated June 14, 1996, as
filed with the Securities and Exchange Commission on June 20, 1996,
relating to Item 5 regarding the Registrant's entering into a contract
of sale for substantially all of the Registrant's properties.
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/ Eugene D. Burak Date: August 14, 1996
-----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd 4
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000780352
<NAME> P-B Watson & Taylor Ltd 4
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 859,425
<SECURITIES> 0
<RECEIVABLES> 9,931
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,297,260
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,166,616
<CURRENT-LIABILITIES> 727,452
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,439,164
<TOTAL-LIABILITY-AND-EQUITY> 13,166,616
<SALES> 0
<TOTAL-REVENUES> 960,343
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 829,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 130,689
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 0
</TABLE>
