<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __
<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>
March 31, December 31,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $12,294,393 $12,176,738
Cash and cash equivalents 580,044 1,450,040
Other assets 2,075 9,160
----------- ------------
Total assets $12,876,512 $13,635,938
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 145,754 $ 113,462
Deposits due to tenants 92,152 97,196
Due to affiliates, net 71,505 107,175
Accrued real estate taxes 52,803 104,824
Unearned rental income 19,708 6,847
----------- ------------
Total liabilities 381,922 429,504
----------- ------------
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 12,296,080 13,002,889
General partners 198,510 203,545
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Total partners' capital 12,494,590 13,206,434
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Total liabilities and partners' capital $12,876,512 $13,635,938
----------- ------------
----------- ------------
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The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
REVENUES
Rental income $463,611 $482,748
Interest 6,984 4,194
Other 5,675 21,758
------------ --------
476,270 508,700
------------ --------
EXPENSES
Property operating 182,375 171,777
General and administrative 150,144 62,757
Real estate taxes 48,267 47,899
Depreciation -- 144,584
------------ --------
380,786 427,017
------------ --------
Net income $ 95,484 $ 81,683
------------ --------
------------ --------
ALLOCATION OF NET INCOME
Unitholders $ 87,845 $ 65,027
------------ --------
------------ --------
General partners $ 7,639 $ 16,656
------------ --------
------------ --------
Net income per depositary unit $ 1.32 $ .98
------------ --------
------------ --------
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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 87,845 7,639 95,484
Distributions (794,654) (12,674 ) (807,328)
----------- -------- -----------
Partners' capital--March 31, 1996 $12,296,080 $198,510 $12,494,590
----------- -------- -----------
----------- -------- -----------
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The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 478,513 $ 467,626
Interest received 6,984 4,194
Other income received 5,675 21,758
Property operating expenses paid (203,101) (129,806)
Real estate taxes paid (100,288) (103,601)
General and administrative expenses paid (132,796) (25,088)
---------- ---------
Net cash provided by operating activities 54,987 235,083
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (117,655) (52,599)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (807,328) (158,229)
---------- ---------
Net increase (decrease) in cash and cash equivalents (869,996) 24,255
Cash and cash equivalents at beginning of period 1,450,040 588,802
---------- ---------
Cash and cash equivalents at end of period $ 580,044 $ 613,057
---------- ---------
---------- ---------
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RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 95,484 $ 81,683
---------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation -- 144,584
Changes in:
Other assets 7,085 2,864
Accounts payable and accrued expenses 32,292 60,891
Accrued real estate taxes (52,021) (55,702)
Due to affiliates, net (35,670) 18,749
Unearned rental income 12,861 (6,072)
Deposits due to tenants (5,044) (11,914)
---------- ---------
Total adjustments (40,497) 153,400
---------- ---------
Net cash provided by operating activities $ 54,987 $ 235,083
---------- ---------
---------- ---------
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The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 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 March 31,
1996 and the results of its operations and its cash flows for the three months
ended March 31, 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. The Partnership is
continuing the process of attempting to sell the properties held by the
Partnership. However, there can be no assurances that any transactions will be
consummated. The Unitholders will be advised if the Partnership enters into a
definitive agreement to sell the properties. Accordingly, effective December 31,
1995, the Partnership has reclassified its properties to held for sale and has
ceased depreciating the properties for financial statement purposes only.
Properties held for sale are recorded at the lower of the carrying amount or the
estimated fair value less costs to sell.
B. Related Parties
PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management, transfer and
assignment functions, asset management (including direct management of the
Partnership's unimproved properties), investor communications, printing and
other administrative services. PBP and its affiliates receive reimbursements for
costs incurred in connection with these services, the amount of which is limited
by the provisions of the Partnership Agreement. The costs and expenses incurred
on behalf of the Partnership which are reimbursable to PBP and its affiliates
for the three months ended March 31, 1996 and 1995 were approximately $34,000
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 $1,200 and $1,250 for the three months ended March 31, 1996 and 1995,
respectively. The amount for the three months ended March 31, 1996 has been
reduced by a $5,000 overaccrual from 1995.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at March 31, 1996.
C. Subsequent Event
In May 1996, distributions of approximately $83,000 and $7,000 were paid to
the Unitholders and the General Partners, respectively, for the quarter ended
March 31, 1996. This represents a distribution of $1.25 per Unit as compared to
the previous quarter's distribution of $2.19 per Unit.
5
<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. The
Partnership is continuing the process of attempting to sell the properties held
by the Partnership. However, there can be no assurances that any transactions
will be consummated. The Unitholders will be advised if the Partnership enters
into a definitive agreement to sell the properties.
During the three months ended March 31, 1996, the Partnership's cash and cash
equivalents decreased by approximately $870,000 due to capital expenditures and
distributions paid to the partners in excess of cash flow from property
operations. Distributions made during the three months ended March 31, 1996
totaled approximately $159,000 of which $146,000 and $13,000 were paid to the
Unitholders and General Partners, respectively. These distributions were funded
from current and prior periods' property operations. Additionally, a special
distribution of approximately $649,000 was paid to Unitholders representing the
net proceeds from the sale of the 150th and Black Bob property. At the end of
1995, a major tenant moved out of Dale City. In order to reconfigure the
property for rental, the Partnership incurred construction costs of
approximately $100,000 in the first quarter of 1996. This, coupled with the loss
of rental income at the property for the quarter, had a negative impact on the
cash flow of the Partnership.
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 three months ended
March 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
March 31,
-----------------
<S> <C> <C>
Property 1996 1995
---------------------------------------------------------------------------------
Airport South Business Center 96.4% 99.1%
Big A Mini-Warehouse 46.2 54.1
Downtown Business Center 100.0 99.4
Towneast Business Center 95.1 96.5
Dale City 90.1 98.9
---------------------------------------------------------------------------------
(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 increased by approximately $14,000 for the three months ended
March 31, 1996 as compared to the corresponding period in the prior year
primarily for the reasons discussed below.
Rental income decreased by approximately $19,000 for the three months ended
March 31, 1996 as compared to the corresponding period in 1995. The three month
decrease is primarily due to decreased rental income at Big A Mini-Warehouse and
Dale City (as discussed above) because of the lower average occupancies at these
properties. These decreases were partially offset by increased rental income at
Downtown Business Center primarily due to higher commercial space rental rates.
Other income decreased by approximately $16,000 for the three months ended
March 31, 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.
6
<PAGE>
Property operating expenses increased by approximately $11,000 for the three
months ended March 31, 1996 as compared to the corresponding period in 1995
primarily due to increases in utilities and repairs and maintenance.
General and administrative expenses increased by approximately $87,000 for
the three months ended March 31, 1996 as compared to the corresponding period in
1995. This variance was primarily due to increased professional fees and other
costs relating to the anticipated solicitation of the consent of the limited
partners for the potential sale of the properties.
Depreciation expense decreased by approximately $145,000 for the three months
ended March 31, 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 three months ended March 31, 1996.
7
<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--None
8
<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: May 15, 1996
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
9
<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 4
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Mar-31-1996
<PERIOD-TYPE> 3-Mos
<CASH> 580,044
<SECURITIES> 0
<RECEIVABLES> 2,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 582,119
<PP&E> 12,294,393
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,876,512
<CURRENT-LIABILITIES> 381,922
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,494,590
<TOTAL-LIABILITY-AND-EQUITY> 12,876,512
<SALES> 0
<TOTAL-REVENUES> 476,270
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 380,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 95,484
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 95,484
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 0
</TABLE>
