<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 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
- - --------------------------------------------------------------------------------
(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
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership Interest
- - --------------------------------------------------------------------------------
(Title of class)
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 _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Unitholders for the year ended December 31,
1995 is incorporated by reference into Parts I, II and IV of this Annual Report
on Form 10-K
Amended and Restated Certificate and Agreement of Limited Partnership,
included as part of the Registration Statement on Form S-11 (File No. 33-1213)
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, is incorporated by reference into Part IV of
this Annual Report on Form 10-K
Index to exhibits can be found on pages 9 through 11.
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
----
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 5
Item 4 Submission of Matters to a Vote of Unitholders................................... 5
PART II
Item 5 Market for the Registrant's Units and Related Unitholder Matters................. 5
Item 6 Selected Financial Data.......................................................... 6
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 8
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 8
Item 13 Certain Relationships and Related Transactions................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules........................... 9
Exhibits......................................................................... 9
Reports on Form 8-K.............................................................. 10
SIGNATURES.................................................................................... 16
</TABLE>
2
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PART I
Item 1. Business
General
Prudential-Bache/Watson & Taylor, Ltd.-4 (the ``Registrant''), a Texas
limited partnership, was formed on October 11, 1985 and will terminate on
December 31, 2010 unless terminated sooner under the provisions of the Amended
and Restated Certificate and Agreement of Limited Partnership (the ``Partnership
Agreement''). The Registrant was formed for the purpose of acquiring,
developing, owning and operating business centers, retail shopping centers,
mini-storage facilities and other similar commercial real estate and investing
in unimproved commercial properties with the proceeds raised from the initial
sale of depositary units (``Units''). The Registrant's fiscal year for book and
tax purposes ends on December 31.
The Registrant operates eleven properties, five of which are commercial real
estate properties and six of which are unimproved properties. The commercial
real estate properties consist of office/warehouse, mini-warehouse and retail
facilities. For more information regarding the Registrant's properties
(collectively, the ``Properties'' or individually, a ``Property''), see Item 2
Properties. For more information regarding the Registrant's operations, see Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report to Unitholders for the year ended
December 31, 1995 (``Registrant's Annual Report'') which is filed as an exhibit
hereto. The Registrant is engaged solely in the business of real estate
investment; therefore, presentation of industry segment information is not
applicable.
On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all of the properties held by the Registrant. As of March 22,
1996, preliminary bids have been received for all properties. If bids for the
properties are deemed acceptable by the Registrant, the Registrant intends to
enter into agreements to sell the properties, subject to the approval of the
Unitholders owning a majority of the Units as required by the Partnership
Agreement. If such sales are approved and consummated, the Registrant will
liquidate and distribute its net assets to its partners. There can, of course,
be no assurance that acceptable bids will be received or that any transactions
will be consummated.
General Partners
The general partners of the Registrant are Prudential-Bache Properties, Inc.
(``PBP''), George S. Watson and A. Starke Taylor, III (collectively, the
``General Partners''). PBP is the Managing General Partner and is responsible
for the day-to-day operations of the Registrant and its investments. See Note E
to the financial statements in the Registrant's Annual Report which is filed as
an exhibit hereto.
Competition
The General Partners and/or their affiliates have formed, and may continue to
form, various entities to engage in businesses which may be competitive with the
Registrant.
The Registrant competes with national and regional real estate owners and
operators, some of whom have more experience and resources than the Registrant.
Such owners and operators may include insurance companies, mortgage banks,
pension funds, and other real estate investors, including foreign investors,
syndicated partnerships, and real estate investment trusts. The primary factors
affecting a particular property's ability to successfully compete against other
properties include the location of such property, the suitability of its design
to a prospective tenant's needs, the manner in which it is managed and marketed,
and rental rates. The extent to which the Registrant is affected by competition
will depend, in part, on existing market conditions. The property managers,
Public Storage Management, Inc. and Public Storage Commercial Properties Group,
Inc., manage other properties which compete with the Registrant's properties
within the same geographical area.
3
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Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement as amended. See Note E to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 2. Properties
As of December 31, 1995, the Registrant owns the following properties:
<TABLE>
<CAPTION>
Average
Occupancy Rates Monthly Rental
for the year ended Rates Per
December 31, Land Rentable Unit as of
Property Location 1995(1) (in acres) Units December 31, 1995
- - ------------------------------------------- ------------------- ---------- -------- -----------------
<S> <C> <C> <C> <C>
Improved Properties
Downtown Business Center (Nashville, TN) 99.7% 3.50
Office/warehouse 30 $ 620 - $3,150
--------
Airport South Business Center (Nashville,
TN) 99.4 4.25
Office/warehouse 52 $ 395 - $2,800
--------
Big A Mini-Warehouse (Forest Park, GA) 53.7 7.00
Mini-warehouse 996 $ 19 - $ 795
--------
Towneast Business Center (Mesquite, TX) 96.3 3.38
Office/warehouse 35 $ 350 - $ 826
Mini-warehouse 60 $ 45 - $ 73
--------
95
--------
Dale City (Dale City, VA) 98.1 8.00
Office/warehouse 70 $250 - $1,800
Retail 8 $1,000 - $1,985
Mini-warehouse 122 $ 89 - $ 200
--------
200
--------
Unimproved Properties
Airport South (Nashville, TN) N/A 3.06 None N/A
Mansfield (Mansfield, TX) N/A 36.34 None N/A
Yancy Camp (Dallas, TX) N/A 2.08 None N/A
Highway 360 (Arlington, TX) N/A 1.94 None N/A
Dimension (Fort Worth, TX) N/A 0.52 None N/A
Beltline Central (Addison, TX) N/A 0.77 None N/A
--------
1,373
--------
--------
(1) 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>
The Managing General Partner believes the Registrant's properties are
adequately insured.
For the years ended December 31, 1995, 1994 and 1993 the following improved
properties' rental revenue exceeded 15% of the Registrant's total revenue:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Dale City 39% 40% 36%
Downtown Business Center 17 16 *
Airport South Business Center 17 16 16
</TABLE>
* Property's rental revenue was 15% or less of the Registrant's total revenue
for the year.
4
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No single tenant accounted for 10% or more of the Registrant's total revenue
for any of the three years in the period ended December 31, 1995.
For additional information describing the Registrant's properties, see
Supplementary Schedule III-Real Estate and Accumulated Depreciation on page 14
in Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.
Item 3. Legal Proceedings
This information is incorporated by reference to Note G to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 4. Submission of Matters to a Vote of Unitholders
None
PART II
Item 5. Market for the Registrant's Units and Related Unitholder Matters
As of March 1, 1996, there were 4,293 holders of record owning 66,555 Units.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in Section 18.2 of the Partnership Agreement limiting the
ability of a Unitholder to transfer Units. Consequently, holders of Units may
not be able to liquidate their investments in the event of an emergency or for
any other reason.
The following per Unit cash distributions were paid to Unitholders on or
about 45 days after the end of the specified quarter.
<TABLE>
<CAPTION>
Quarter Ended 1995 1994
- - ---------------------- ----- -----
<S> <C> <C>
March 31 $2.19 $3.50
June 30 2.19 2.88
September 30 2.19 2.40
December 31 2.19 2.19
</TABLE>
There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement. Distributions for 1995 and 1994 were made from current
and previously undistributed cash generated by operations. Unitholder
distributions were approximately $583,000 and $741,000 for the years ended
December 31, 1995 and 1994, respectively. All of the distributions paid to
Unitholders during 1995 and approximately $530,000 of the distributions paid to
Unitholders during 1994 represent a return of capital on a generally accepted
accounting principles (GAAP) basis (return of capital on a GAAP basis is
calculated as Unitholder distributions less net income allocated to
Unitholders). The Registrant currently expects that recurring quarterly cash
distributions will continue to be paid in the foreseeable future from cash
generated by operations. For discussion of other factors that may affect the
amounts of future distributions, see Management's Discussion and Analysis of
Financial Condition and Results of Operations on pages 10 through 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.
5
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Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant.
This data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 9 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
----------- ----------- ----------- ----------- -----------
Total revenues $ 2,027,520 $ 1,938,381 $ 1,787,959 $ 1,641,776 $ 1,687,392
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Provision for loss on impairment
of assets $ 900,000 $ -- $ 800,000 $ 484,000 $ 6,858,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (717,009) $ 276,355 $ (667,213) $ (688,472) $(7,219,794)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per Unit $ (11.51) $ 3.17 $ (10.75) $ (10.76) $ (107.94)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets $13,635,938 $14,858,287 $15,616,124 $16,885,088 $18,158,889
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total distributions $ 633,475 $ 805,171 $ 669,167 $ 464,438 $ 719,986
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Unitholder Distributions per
Unit $ 8.76 $ 11.13 $ 9.25 $ 6.42 $ 9.94
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 10 through 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 9
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing General Partner.
The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and other persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such General Partners, PBP's executive officers,
directors and Unitholders who own greater than ten percent of the Registrant's
Units are required by Securities and Exchange Commission regulations to furnish
the Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partners,
PBP's directors and executive officers and other persons who own greater than
ten percent of the Registrant's Units or copies of the reports they have filed
with the Securities and Exchange Commission during and with respect to its most
recent fiscal year.
6
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Prudential-Bache Properties, Inc., Managing General Partner
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
<TABLE>
<S> <C>
Name Position
Thomas F. Lynch, III President, Chief Executive Officer, Chairman of the
Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Piskorowski Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>
THOMAS F. LYNCH, III, age 37, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 47, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 50, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 52, is a Vice President of PBP. He is a Senior
Vice President of PSI and is the Senior Manager of the Specialty Finance Asset
Management area. Mr. Piskorowski has held several positions within PSI since
April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 53, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
NATHALIE P. MAIO, age 45, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently she also serves
in various capacities for other affiliated companies.
James M. Kelso ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director effective June 30, 1995.
Effective June 30, 1995, Thomas F. Lynch, III was elected President, Chief
Executive Officer, Chairman of the Board of Directors and Director. Robert J.
Alexander ceased to serve as Vice President effective August 25, 1995. Eugene D.
Burak was elected Vice President effective October 9, 1995.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
Individual General Partners
George S. Watson, age 55, is a financial specialist and a certified public
accountant. He is also a member of the board of directors of Lyco Energy
Corporation as well as the Advisory Council of the University of Texas Business
School and a member of its Chancellor's Council. Mr. Watson attended the
University of Texas in Austin, graduating summa cum laude in 1963 with a B.B.A.
in accounting and finance. He received his M.B.A. in accounting and finance from
the University of Texas in 1965, graduating first in his class and
7
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summa cum laude. He has received various awards and scholarships and is a member
of many fraternal organizations including Phi Kappa Phi, the honorary scholastic
fraternity.
A. Starke Taylor, III, age 52, holds a bachelor of business administration
degree from Southern Methodist University which was awarded in 1966. He is past
president of the North Dallas Chamber of Commerce. Active in the community, Mr.
Taylor is the chairman of the board of Priority One, an international missionary
organization, the founding chairman of the board of the Park Central Athletic
Association, a member of the Dallas regional board of the Salvation Army, and a
board member of the Dallas Theological Seminary. Mr. Taylor was recognized in
1983 by D Magazine as one of Dallas's 10 most outstanding young business
leaders.
There are no family relationships among any of the foregoing individual
General Partners.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partners or to directors and officers
of the Managing General Partner for their services. Certain officers and
directors of the Managing General Partner receive compensation from the Managing
General Partner and its affiliates, not from the Registrant, for services
performed for various affiliated entities, which may include services performed
for the Registrant; however, the Managing General Partner believes that any
compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding reimbursement to the General Partners for services
provided to the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1996, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any interest in the
voting securities of the Managing General Partner.
As of March 1, 1996, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any of the Units
issued by the Registrant.
As of March 1, 1996, no Unitholder beneficially owns more than five percent
(5%) of the outstanding Units issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the individual General
Partners or the directors or officers of the Managing General Partner during
1995.
Reference is made to Notes A and E to the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
8
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PART IV
<TABLE>
<CAPTION>
Page Number
In Annual
Report
-----------
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent
Auditors--Incorporated by reference to the Registrant's Annual
Report which is filed as an
exhibit hereto
Report of Independent Auditors 2
Financial Statements:
Statements of Financial Condition--December 31, 1995 and 1994 3
Statements of Operations--Three years ended December 31, 1995 4
Statements of Changes in Partners' Capital--Three years ended
December 31, 1995 4
Statements of Cash Flows--Three years ended December 31, 1995 5
Notes to Financial Statements 6
2. Financial Statement Schedules and Consent of Independent Auditors
Consent of Independent Auditors
Schedules:
II--Valuation and Qualifying Accounts and Reserves--Three years
ended December 31, 1995
III--Real Estate and Accumulated Depreciation at December 31, 1995
Notes to Schedule III--Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not
applicable or the required information is included in the financial
statements and the notes thereto.
3. Exhibits
Description:
3.01 Amended and Restated Certificate and Agreement of Limited
Partnership (1)
3.02 Amendment Number 10 to the Amended and Restated Certificate
and Agreement of Limited Partnership (5)
4.01 Certificate of Limited Partnership Interest (1)
4.02 Depositary Receipt (1)
10.01 Management Agreement (1)
10.02 Depositary Agreement (1)
10.03 Agreement Relating to General Partner Interests (1)
10.04 Construction Contract by and between the Watson & Taylor
Holding Joint Venture and Watson & Taylor Construction,
Inc., dated August 21, 1986 (1)
10.05 Special Warranty Deed by and between Prince William
Partners, Ltd. and the Registrant transferring title to the Dale
City Property to the Registrant (2)
</TABLE>
9
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<TABLE>
<S> <C> <C> <C>
10.06 Special Warranty Deed by and between 287-Mansfield Joint
Venture and the Registrant conveying title to the Mansfield
Property to the Registrant (2)
10.07 Warranty Deed by and between Messrs. Watson and Taylor and
the Registrant conveying title to the Highway 360 Strip (2)
10.08 Special Warranty Deed by and between Watson & Taylor Realty
Company, Trustee, and the Registrant conveying title to the
Dimension Tract (3)
10.09 Special Warranty Deed by and between Watson & Taylor Realty
Company, Trustee, and the Registrant conveying title to the
Yancy Camp Tract (3)
10.10 Special Warranty Deed by and between George S. Watson and A.
Starke Taylor, III and the Registrant conveying title to the
Belt Line Tract (4)
10.11 Construction Contract by and between Watson & Taylor Con-
struction, Inc. and the Registrant for construction of the
Dale City Business Center (2)
10.12 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Man-
agement, Inc. (4)
10.13 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Commercial
Properties Group, Inc. (4)
10.14 Agreement in connection with Closing of Purchase and Sale of
Real Estate between the Registrant and Paul Darby or
assigns, as Purchaser conveying title of the Black Bob and
119th Property, located in Olathe, Kansas (4)
10.15 General Warranty Deed by and between the Registrant and the
Purchaser of the Black Bob and 119th Property, located in
Olathe, Kansas, effective as of the 26th day of June 1989
(4)
13 Registrant's Annual Report to Unitholders for the year ended
December 31, 1995 (6) (with the exception of the information
and data incorporated by reference in Items 3, 7 and 8 of
this Annual Report on Form 10-K, no other information or
data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
27 Financial Data Schedule (6)
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated December 6, 1995, as
filed with the Securities and Exchange Commission on December 6,
1995, relating to Item 5 regarding the communication of certain
information to the limited partners.
Registrant's Current Report on Form 8-K dated December 15, 1995, as
filed with the Securities and Exchange Commission on December 26,
1995, relating to Item 5 regarding the intention of the Partnership
to solicit bids for the partnership's properties.
------------------------------------
(1) Filed as an exhibit to Registration Statement on Form S-11 (No.
33-1213) and incorporated herein by reference.
</TABLE>
10
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<TABLE>
<S> <C> <C> <C>
(2) Filed as an exhibit to Registrant's Form 8-K filed with the
Securities and Exchange Commission on November 25, 1987 and incorporated
herein by reference.
(3) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1987 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1988 and incorporated herein by reference.
(5) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991 and incorporated herein by reference.
(6) Filed herewith.
</TABLE>
11
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CONSENT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Prudential-Bache/Watson & Taylor, Ltd.-4 of our report dated February 16,
1996, included in the 1995 Annual Report to Limited Partners of
Prudential-Bache/Watson & Taylor, Ltd.-4.
Our audits also included the financial statement schedules of
Prudential-Bache/Watson & Taylor, Ltd.-4 listed in Item 14(a). These schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
Ernst & Young LLP
New York, New York
March 29, 1996
12
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
- - -------------------------------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
<CAPTION>
Deductions - Amounts
Year Ended Balance at Additions - Amounts Written-off During Balance at
December 31, Beginning of Year Reserved During Year Year End of Year
- - ------------ ----------------- -------------------- -------------------- -----------
<S> <C> <C> <C> <C>
1993 $ 7,342,000 $800,000 -- $ 8,142,000
1994 $ 8,142,000 -- -- $ 8,142,000
1995 $ 8,142,000 $900,000 -- $ 9,042,000
- - -------------------------------------------------------------------------------------------------------
</TABLE>
Note: The Registrant's properties are valued at the lower of the carrying amount
or estimated fair value less costs to sell. As a result, a provision for loss on
impairment of assets of $900,000 was recorded for the year ended December 31,
1995.
13
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
<TABLE>
<CAPTION>
Initial cost to Gross amount at which
Registrant carried at
(Note B) Costs Permanent close of period
---------------------------- capitalized write-down ---------------------------
Buildings (sold) of im- Buildings
and subsequent to paired and
Description (Note A) Land improvements acquisition assets Land improvements
<S> <C> <C> <C> <C> <C> <C>
- - --------------------------- ----------- ------------ ------------- --------- ---------- ------------
IMPROVED PROPERTIES:
Downtown Business
Centers I & II $ 709,956 $ 3,076,475 $ 232,692 $ -- $ 709,956 $ 3,309,167
(Nashville, TN)
Airport South
Business Center 764,820 3,431,125 100,938 -- 764,820 3,532,063
(Nashville, TN)
Big A Mini-Warehouse 341,117 3,032,936 67,447 -- 341,117 3,100,383
(Forest Park, GA)
Towneast Business Center 439,121 1,756,485 29,776 -- 438,771 1,786,611
(Mesquite, TX)
Dale City (Dale City, VA) 1,387,406 4,954,792 1,088,712 -- 1,387,406 6,043,504
UNIMPROVED PROPERTIES:
Dimension 76,326 -- -- -- 76,326 --
(Fort Worth, TX)
Airport South 547,432 -- -- -- 547,432 --
(Nashville, TN)
Highway 360 (Arlington, TX) 440,644 -- -- -- 440,644 --
Mansfield (Mansfield, TX) 3,929,084 -- -- (700,000) 3,229,084 --
Yancy Camp 829,448 -- -- -- 829,448 --
(Dallas, TX)
119th & Black Bob 587,871 -- (587,871) -- -- --
(Olathe, KS)
150th & Black Bob 815,396 -- (815,396) -- -- --
(Olathe, KS)
Beltline Central 505,790 -- -- -- 505,790 --
(Addison, TX)
----------- ------------ ------------- --------- ---------- ------------
$11,374,411 $ 16,251,813 $ 116,298 $(700,000) $9,270,794 $ 17,771,728
----------- ------------ ------------- --------- ---------- ------------
----------- ------------ ------------- --------- ---------- ------------
- - ---------------------------------------------------------------------------------------------------------------------------
See notes on the following page
<CAPTION>
Life on which
depreciation
in latest
Accumulated Statement of
Total depreciation Date(s) of Date Operations
Description (Note A) (Note C) (Note D) construction acquired is computed
<S> <C> <C> <C> <C> <C>
- - --------------------------- ----------- ------------- ------------ -------- -------------
IMPROVED PROPERTIES:
Downtown Business 5 to
Centers I & II $ 4,019,123 $ 1,340,288 1983, 1985 1986 25 years
(Nashville, TN)
Airport South 5 to
Business Center 4,296,883 1,097,885 1987 1987 25 years
(Nashville, TN)
5 to
Big A Mini-Warehouse 3,441,500 894,016 1986 1986 25 years
(Forest Park, GA)
5 to
Towneast Business Center 2,225,382 592,887 1987 1987 25 years
(Mesquite, TX)
5 to
Dale City (Dale City, VA) 7,430,910 1,898,708 1987 1987 25 years
UNIMPROVED PROPERTIES:
Dimension 76,326 -- -- 1987 N/A
(Fort Worth, TX)
Airport South 547,432 -- -- 1986 N/A
(Nashville, TN)
Highway 360 (Arlington, TX) 440,644 -- -- 1987 N/A
Mansfield (Mansfield, TX) 3,229,084 -- -- 1987 N/A
Yancy Camp 829,448 -- -- 1987 N/A
(Dallas, TX)
119th & Black Bob -- -- -- 1986 N/A
(Olathe, KS)
150th & Black Bob -- -- -- 1986 N/A
(Olathe, KS)
Beltline Central 505,790 -- -- 1986 N/A
(Addison, TX)
----------- -------------
$27,042,522 $ 5,823,784
----------- -------------
----------- -------------
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1995
NOTE A--There are no mortgages, deeds of trust or similar encumbrances against
any of the properties.
NOTE B--Initial cost represents the initial purchase price of the properties
including acquisition fees.
<TABLE>
<CAPTION>
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE OWNED
<S> <C> <C> <C> <C>
Year ended December 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
Balance at beginning of year.............. $27,616,465 $27,558,067 $27,462,329
Net additions during year................. 136,241 58,398 95,738
Net deletions during year (1)............. (710,184) -- --
----------- ----------- -----------
Balance at close of year.................. $27,042,522 $27,616,465 $27,558,067
----------- ----------- -----------
----------- ----------- -----------
(1) The 150th & Black Bob property was sold in December 1995 for $678,072 net of
selling expenses.
During 1995, an allowance for loss on impairment of assets of $900,000 was provided
for, bringing the total allowance on the above assets to $9,042,000 as of December 31,
1995. See Note C to the financial statements of the Registrant's Annual Report filed
as an exhibit hereto.
The aggregate cost of land, buildings and improvements for Federal income tax
purposes for the tax year ended December 31, 1995 was $28,595,297.
NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at beginning of year.............. $ 5,233,140 $ 4,616,561 $ 3,965,034
Depreciation during the year charged to
expense................................. 590,644 616,579 651,527
----------- ----------- -----------
Balance at close of year.................. $ 5,823,784 $ 5,233,140 $ 4,616,561
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
15
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.-4
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partners) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Thomas F. Lynch, III Date: March 29, 1996
----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: March 29, 1996
----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 29, 1996
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 29, 1996
----------------------------------------
Nathalie P. Maio
Director
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.-4
By: Date: March 29, 1996
----------------------------------------
George S. Watson
General Partner
By: Date: March 29, 1996
----------------------------------------
A. Starke Taylor
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partners) and on
the dates indicated.
By: Date: March 29, 1996
----------------------------------------
George S. Watson
General Partner
By: Date: March 29, 1996
----------------------------------------
A. Starke Taylor
General Partner
17
<PAGE>
<PAGE>
1995 ANNUAL REPORT
<PAGE>
<PAGE>
1995
- - --------------------------------------------------------------------------------
Prudential-Bache/ Annual
Watson & Taylor, Ltd.-4 Report
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
1995 Annual Report
1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4
We have audited the accompanying statements of financial condition of
Prudential-Bache/Watson & Taylor, Ltd.-4 as of December 31, 1995 and 1994, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of Prudential-Bache/Watson &
Taylor, Ltd.-4 as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note B to the financial statements, in 1995, the Partnership
changed its method of accounting for the carrying value of real estate by
adopting Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
Ernst & Young LLP
New York, New York
February 16, 1996
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
-----------------------------
<S> <C> <C>
1995 1994
- - ----------------------------------------------------------------------------------------------------
ASSETS
Land $ 9,270,794 $ 9,980,978
Buildings and improvements 17,630,626 17,504,795
Furniture, fixtures and equipment 141,102 130,692
Less: Accumulated depreciation and amortization (5,823,784 ) (5,233,140 )
Allowance for loss on impairment of assets (9,042,000 ) (8,142,000 )
------------ ------------
Property 12,176,738 14,241,325
Cash and cash equivalents 1,450,040 588,802
Other assets 9,160 28,160
------------ ------------
Total assets $13,635,938 $14,858,287
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 113,462 $ 37,303
Due to affiliates, net 107,175 30,185
Accrued real estate taxes 104,824 117,119
Deposits due to tenants 97,196 98,987
Unearned rental income 6,847 17,775
------------ ------------
Total liabilities 429,504 301,369
------------ ------------
Contingencies
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 13,002,889 14,351,976
General partners 203,545 204,942
------------ ------------
Total partners' capital 13,206,434 14,556,918
------------ ------------
Total liabilities and partners' capital $13,635,938 $14,858,287
------------ ------------
------------ ------------
- - ----------------------------------------------------------------------------------------------------
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 OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1995 1994 1993
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,945,915 $1,837,381 $1,584,984
Interest 18,210 16,949 14,655
Other 63,395 84,051 188,320
---------- ---------- ----------
2,027,520 1,938,381 1,787,959
---------- ---------- ----------
EXPENSES
Property operating 643,826 635,806 569,513
Depreciation and amortization 590,644 616,579 651,527
Real estate taxes 216,826 216,656 175,265
General and administrative 361,121 192,985 258,867
Provision for loss on impairment of assets 900,000 -- 800,000
Loss on sale of land 32,112 -- --
---------- ---------- ----------
2,744,529 1,662,026 2,455,172
---------- ---------- ----------
Net income (loss) $ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME (LOSS)
Unitholders $ (766,241) $ 211,086 $ (715,443)
General partners 49,232 65,269 48,230
---------- ---------- ----------
$ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per depositary unit $ (11.51) $ 3.17 $ (10.75)
---------- ---------- ----------
---------- ---------- ----------
- - ----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1992 $16,212,724 $209,390 $16,422,114
Net income (loss) (715,443) 48,230 (667,213)
Distributions (615,634) (53,533 ) (669,167)
----------- -------- -----------
Partners' capital--December 31, 1993 14,881,647 204,087 15,085,734
Net income 211,086 65,269 276,355
Distributions (740,757) (64,414 ) (805,171)
----------- -------- -----------
Partners' capital--December 31, 1994 14,351,976 204,942 14,556,918
Net income (loss) (766,241) 49,232 (717,009)
Distributions (582,846) (50,629 ) (633,475)
----------- -------- -----------
Partners' capital--December 31, 1995 $13,002,889 $203,545 $13,206,434
----------- -------- -----------
----------- -------- -----------
- - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
<S> <C> <C> <C>
1995 1994 1993
- - ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $1,952,196 $1,822,992 $1,633,929
Interest received 18,210 16,949 14,655
Other income received 63,395 84,051 188,320
Property operating expenses paid (596,941) (668,042) (577,304)
Real estate taxes paid (229,121) (196,709) (216,894)
General and administrative expenses paid (254,857) (313,065) (235,397)
---------- ---------- ----------
Net cash provided by operating activities 952,882 746,176 807,309
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of land 678,072 -- --
Property improvements (136,241) (58,398) (95,738)
---------- ---------- ----------
Net cash provided by investing activities 541,831 (58,398) (95,738)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (633,475) (882,114) (615,634)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 861,238 (194,336) 95,937
Cash and cash equivalents at beginning of year 588,802 783,138 687,201
---------- ---------- ----------
Cash and cash equivalents at end of year $1,450,040 $ 588,802 $ 783,138
---------- ---------- ----------
---------- ---------- ----------
- - ----------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net income (loss) $ (717,009) $ 276,355 $ (667,213)
---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for loss on impairment of assets 900,000 -- 800,000
Loss on sale of land 32,112 -- --
Depreciation and amortization 590,644 616,579 651,527
Changes in:
Other assets 19,000 5,320 9,112
Accounts payable and accrued expenses 76,159 (65,304) 11,636
Due to affiliates, net 76,990 (87,012) 4,043
Accrued real estate taxes (12,295) 19,947 (41,629)
Unearned rental income (10,928) (13,396) 13,036
Deposits due to tenants (1,791) (6,313) 26,797
---------- ---------- ----------
Total adjustments 1,669,891 469,821 1,474,522
---------- ---------- ----------
Net cash provided by operating activities $ 952,882 $ 746,176 $ 807,309
---------- ---------- ----------
---------- ---------- ----------
- - ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Distributions to partners $ (633,475) $ (805,171) $ (669,167)
Increase (decrease) in distributions payable -- (76,943) 53,533
---------- ---------- ----------
Distributions paid to partners $ (633,475) $ (882,114) $ (615,634)
---------- ---------- ----------
---------- ---------- ----------
- - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
5
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Prudential-Bache/ Watson & Taylor, Ltd.-4 (the ``Partnership) is a Texas
limited partnership formed on October 11, 1985 which will terminate on December
31, 2010 unless terminated sooner under the provisions of the Amended and
Restated Certificate and Agreement of Limited Partnership (the ``Partnership
Agreement''). The Partnership was formed for the purpose of acquiring,
developing, owning and operating business centers, retail shopping centers and
mini-warehouse facilities, and investing in unimproved commercial properties.
The general partners of the Partnership are Prudential-Bache Properties, Inc.
(``PBP''), a wholly-owned subsidiary of Prudential Securities Group Inc., George
S. Watson, and A. Starke Taylor, III (collectively, the ``General Partners'').
PBP is the Managing General Partner and is responsible for the day-to-day
operations of the Partnership and its investments. At December 31, 1995, the
Partnership owned eleven properties.
B. Summary of Significant Accounting Policies
Basis of accounting
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partners to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property
Effective December 31, 1995, the Partnership adopted Statement of Financial
Accounting Standards (``SFAS'') No. 121, ``Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of.'' Under SFAS No.
121, impairment of properties to be held and used is determined to exist when
estimated amounts recoverable through future operations on an undiscounted basis
are below the properties' carrying value. If a property is determined to be
impaired, it should be recorded at the lower of its carrying value or its
estimated fair value. For properties that are held for sale, SFAS No. 121 states
that they should be recorded at the lower of carrying amount or estimated fair
value less costs to sell. On December 15, 1995, the Management Committee of the
Partnership determined to seek bids for all of the properties held by the
Partnership. Accordingly, effective December 31, 1995, the Partnership has
reclassified its properties from held for use to held for sale and has ceased
depreciating the properties for financial reporting purposes only. In connection
therewith, the Partnership recorded a provision for loss on impairment of assets
of $900,000.
The determination of estimated fair value is based, not only upon future cash
flows, which rely upon estimates and assumptions including expense growth,
occupancy and rental rates, but also upon market capitalization and discount
rates as well as other market indicators. The General Partners believe that the
estimates and assumptions used are appropriate in evaluating the carrying amount
of the Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years.
Prior to December 31, 1995, the Partnership carried its property investments
at the lower of depreciated cost or estimated amounts recoverable through future
operations and ultimate disposition of the property. Property investments were
depreciated or amortized using the straight-line method over their estimated
economic lives which range from 5 to 25 years depending on property type. A
provision for loss on impairment of assets was recorded when estimated amounts
recoverable through future operations and ultimate disposition of the property,
on an undiscounted basis, were below the depreciated cost.
6
<PAGE>
<PAGE>
Cash and cash equivalents
Cash and cash equivalents include money market funds whose cost approximates
market value.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Profit and loss allocations and distributions
Net operating income before depreciation is allocated 92% to the Unitholders
and 8% to the General Partners. Net operating loss, provisions for loss on
impairment, and depreciation are allocated 99% to the Unitholders and 1% to the
General Partners.
Distributions of cash are made in accordance with the Partnership Agreement
and are allocated 92% to the Unitholders and 8% to the General Partners.
Proceeds upon the sale of the properties and liquidation of the Partnership
will be distributed in accordance with the Partnership Agreement.
C. Property
The Partnership's property is comprised of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1994
<S> <C> <C>
----------- -----------
Improved properties:
Downtown Business Center - Nashville, TN $ 2,678,835 $ 2,796,137
Airport South - Nashville, TN 3,198,998 3,302,123
Big A Mini Warehouse - Forest Park, GA 2,547,484 2,593,580
Towneast Business Center - Mesquite, TX 1,632,495 1,668,061
Dale City - Dale City, VA 5,532,202 5,684,516
----------- -----------
15,590,014 16,044,417
----------- -----------
Unimproved properties:
Dimension - Fort Worth, TX 76,326 76,326
Airport South - Nashville, TN 547,432 547,432
Highway 360 - Arlington, VA 440,644 440,644
Mansfield - Mansfield, TX 3,229,084 3,229,084
Yancy Camp - Dallas, TX 829,448 829,448
150th & Black Bob - Olathe, KS (A) -- 710,184
Beltline Central - Addison, TX 505,790 505,790
----------- -----------
5,628,724 6,338,908
----------- -----------
Less: allowance for loss on impairment of assets
(B) (9,042,000) (8,142,000)
----------- -----------
$12,176,738 $14,241,325
----------- -----------
----------- -----------
(A) The 150th & Black Bob property was sold in December 1995 for $678,072 net
of selling expenses which resulted in a loss of $32,112 for financial
reporting purposes.
(B) In 1995, the Partnership's properties are valued at the lower of the
carrying amount or estimated fair value less costs to sell. Accordingly, an
additional allowance for loss on impairment of assets of $900,000 was
recorded as of December 31, 1995.
</TABLE>
7
<PAGE>
<PAGE>
For the years ended December 31, 1995, 1994 and 1993 the following improved
properties' rental revenue exceeded 15% of the Registrant's total revenue:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Dale City 39% 40% 36%
Downtown Business Center 17 16 *
Airport South Business Center 17 16 16
</TABLE>
* Property's rental revenue was 15% or less of the Registrant's total revenue
for the year.
No single tenant accounted for 10% or more of the Registrant's total revenue
for any of the three years in the period ended December 31, 1995.
D. Minimum Future Lease Revenues
The Partnership earns a majority of its rental income from month-to-month and
other short-term leasing arrangements. The Partnership also has certain
noncancellable operating leases on the Partnership's properties. The minimum
future rental revenues receivable under these noncancellable operating leases at
the Partnership's improved properties are approximately $901,000 and $196,000
for the years ending December 31, 1996 and 1997, respectively.
E. 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 years ended December 31, 1995, 1994 and 1993, were approximately
$131,000, $85,000 and $104,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. In 1994, the Partnership recorded approximately $31,000 for the
reimbursement of prior periods' general, administrative and monitoring expenses
incurred by affiliates of the individual General Partners. Approximately $29,000
was incurred in 1995.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at December 31, 1995.
F. Income Taxes
The following is a reconciliation of net income (loss) for financial
reporting purposes to net income for tax reporting purposes for the years ended
December 31, 1995, 1994 and 1993, respectively:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net income (loss) per financial statements $(717,009) $ 276,355 $(667,213)
Book depreciation and amortization in excess of tax amounts 7,037 34,480 71,046
Rent received in advance, net of reversal of prior year
amount (10,928) (13,396) 13,036
Carrying costs on land held for investment, capitalized for
tax
purposes 110,803 79,714 78,854
Tax loss in excess of book loss on sale of land (205,854) -- --
Book gain in excess of tax gain on sale -- -- (30,620)
Other amounts deductible for tax purposes (15,047) -- --
Provision for loss on impairment of assets 900,000 -- 800,000
--------- --------- ---------
Tax basis net income $ 69,002 $ 377,153 $ 265,103
--------- --------- ---------
--------- --------- ---------
</TABLE>
The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments.
8
<PAGE>
<PAGE>
G. 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 was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.
On August 9, 1995, PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from instituting, commencing or
prosecuting any settled claim against the released parties. The full amount due
under the settlement agreement has been paid by PSI.
H. Subsequent Event
In February 1996, distributions of approximately $146,000 and $13,000 were
paid to the Unitholders and the General Partners, respectively, for the quarter
ended December 31, 1995.
Also in February 1996, a special distribution of approximately $649,000 was
paid to Unitholders representing the net proceeds from the sale of the 150th &
Black Bob property.
9
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
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. As of
March 22, 1996, preliminary bids have been received for all properties. If bids
for the properties are deemed acceptable by the Partnership, the Partnership
intends to enter into agreements to sell the properties, subject to the approval
of the unitholders owning a majority of the Units, as required by the
Partnership Agreement. If such sales are approved and consummated, the
Partnership will liquidate and distribute its net assets to its partners. There
can, of course, be no assurance that acceptable bids will be received or that
any transactions will be consummated.
During the year ended December 31, 1995, the Partnership's cash and cash
equivalents increased by approximately $861,000 due primarily to the cash
proceeds from selling the 150th & Black Bob unimproved property located in
Olathe, Kansas. Distributions during the year ended December 31, 1995 of
approximately $583,000 and $51,000 were paid to the unitholders and General
Partners, respectively. These distributions were funded from property
operations.
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. A portion of the cash
generated by operations for the fourth quarter of 1995 was retained in
anticipation of capital expenditures in 1996. Capital improvements are currently
budgeted at approximately $242,000 for 1996.
Results of Operations
Average occupancy rates at the improved properties for the years ended
December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
<S> <C> <C> <C>
1995 1994 1993
-------------------------------------------------------------------------------------
Airport South Business Center 99.4% 96.2% 97.7%
Big A Mini-Warehouse 53.7 48.2 45.2
Downtown Business Center 99.7 96.5 88.6
Towneast Business Center 96.3 94.8 85.6
Dale City 98.1 99.1 94.4
-------------------------------------------------------------------------------------
(Average occupancy rates are calculated by averaging the monthly occupancies deter-
mined by dividing occupied square footage by available square footage as of each
month-end.)
</TABLE>
1995 vs. 1994
Net operating income, which excludes provision for loss on impairment of
assets, decreased by approximately $93,000 in the year ended December 31, 1995
as compared to the year ended December 31, 1994 for the reasons discussed below.
Rental income increased by approximately $109,000 or 6% in 1995 as compared
to 1994. The most significant increases occurred at the Downtown Business
Center, Airport South Business Center properties and Big A Mini-Warehouse;
however, there were also increases at the Towneast Business Center and Dale City
properties. All properties experienced improvements in average rental rates and
average occupancies, with the exception of Dale City where only rental rates
improved.
10
<PAGE>
<PAGE>
Other income decreased by approximately $21,000 in 1995 as compared to 1994
as a result of the decreasing number of older leases that include charges to
recover operating expenses.
Property operating expenses increased by approximately $8,000 for the year
ended December 31, 1995 as compared to December 31, 1994 due to increases in
payroll, management fees and utilities expenses, slightly offset by a decrease
in repairs and maintenance expense.
General and administrative expenses increased by approximately $168,000 for
the year ended December 31, 1995, as compared to 1994 due to the effectual
reimbursement of previously expensed general and administrative and monitoring
expenses owed to affiliates of the individual General Partners in 1994 which
reduced expenses in 1994, increases in costs associated with administering the
Partnership in 1995, and increases in professional fees including legal, audit
and tax, and appraisal fees.
A provision for loss on impairment of assets of $900,000 was recorded for the
year ended December 31, 1995 to reflect the Partnership's property held for sale
at the lower of the carrying amount or estimated fair value less costs to sell.
1994 vs. 1993
Net operating income, which excludes provisions for loss on impairment of
assets, increased by approximately $144,000 in the year ended December 31, 1994
as compared to the year ended December 31, 1993 for the reasons discussed below.
Rental income increased by approximately $252,000 or 16% in 1994 as compared
to 1993. The most significant increases occurred at the Downtown Business Center
and Dale City properties; however, there were also increases at the Towneast
Business Center and Airport South Business Center properties due to higher
average occupancies in 1994 as compared to 1993. Rental income at the Big A
Mini-Warehouse remained stable despite higher average occupancy rates as the
elimination of an exit ramp that provided access to the Big A property continued
to have a negative impact on rental rates.
Other income decreased by approximately $104,000 in 1994 as compared to 1993
as a result of the decreasing number of older leases that include charges to
recover operating expenses.
Property operating expenses increased by approximately $66,000 for the year
ended December 31, 1994 as compared to December 31, 1993 due to increases for
insurance and utilities (particularly trash removal and water) expenses and
leasing commissions, payroll and repairs and maintenance expenses. The increased
trash removal costs reflect the pass-through of landfill usage taxes and
increased municipal surcharges. Water rates have increased in Nashville where
two of the Partnership's five improved properties are located.
The increase in real estate taxes of approximately $41,000 for the year ended
December 31, 1994 as compared to the year ended December 31, 1993 was primarily
the result of the receipt of tax refunds in the first quarter of 1993.
General and administrative expenses decreased by approximately $66,000 for
the year ended December 31, 1994, as compared to 1993. The Partnership was, in
effect, reimbursed for previously expensed general and administrative and
monitoring expenses owed to affiliates of the individual General Partners for
prior years. The decrease was also due to lower legal costs at the property
level and lower overall costs of administering the Partnership.
11
<PAGE>
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to Unitholders without charge upon written
request to:
Prudential-Bache/Watson & Taylor, Ltd.-4
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016
12
<PAGE>
Peck Slip Station
BULK RATE
P.O. Box 2016
U.S. POSTAGE
New York, NY 10272
PAID
Automatic Mail
PBWT486/171674
<PAGE>
<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-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> 12-Mos
<CASH> 1,450,040
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> (9,042,000)
<INVENTORY> 0
<CURRENT-ASSETS> 9,160
<PP&E> 27,042,522
<DEPRECIATION> (5,823,784)
<TOTAL-ASSETS> 13,635,938
<CURRENT-LIABILITIES> 429,504
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,206,434
<TOTAL-LIABILITY-AND-EQUITY> 13,635,938
<SALES> 0
<TOTAL-REVENUES> 2,027,520
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,844,529
<LOSS-PROVISION> 900,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (717,009)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (717,009)
<EPS-PRIMARY> (11.51)
<EPS-DILUTED> 0
</TABLE>
