<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, 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
- --------------------------------------------------------------------------------
(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(b) of the Act:
None
- ------------------------------------------------------------------------------
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 Limited Partners for the year ended December
31, 1996 is incorporated by reference into Parts 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 and 10.
<PAGE>
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CAUTIONARY STATEMENT FOR PURPOSES OF
THE ``SAFE HARBOR'' PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
When used in this Annual Report on Form 10-K, the words ``Believe''
``Anticipates,'' ``Expects'' and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this Annual Report on Form 10-K pursuant to the ``Safe Harbor'' provision of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth in ``Management's
Discussion and Analysis of Financial Condition and Results of Operations.''
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Registrant undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
2
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business.......................................................................... 4
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................................................................................... 15
</TABLE>
3
<PAGE>
<PAGE>
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 in
accordance with a vote of the Unitholders as described below. 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
proceeds raised from the initial sale of units of depositary units (``Units'').
The Registrant's fiscal year for book and tax purposes ends on December 31.
On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all of the properties held by the Registrant. On June 13, 1996,
the Registrant entered into a contract with Public Storage, Inc., the property
manager of the Registrant's properties, for the sale of substantially all the
Registrant's properties. This sale was subject to the approval by the
Unitholders holding a majority of the depositary units and certain other
conditions and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 (the
``Consent Statement''), the Unitholders approved, on October 18, 1996, the sale
to Public Storage, Inc. of all five miniwarehouse facilities and four of the six
undeveloped land parcels owned by the Registrant and the liquidation and
dissolution of the Registrant. The five miniwarehouse facilities and three of
the four undeveloped land parcels which were under contract were sold to Public
Storage, Inc. and its affiliates on November 13, 1996. The Registrant received,
in cash, gross sales proceeds of $12,030,000 reduced by certain selling expenses
and pro-rations of approximately $440,000. The gross sales price was in excess
of the appraised value of the properties. The fourth land parcel, Yancy Camp was
sold to Public Storage, Inc. on December 19, 1996. The Registrant received in
cash, gross sales proceeds of $175,000 reduced by certain selling expenses and
pro-rations of approximately $7,000. The fifth land parcel, Dimension, a
one-half acre of land, was sold for $5,000 to a third party on November 22,
1996. The Registrant continues to own the remaining undeveloped land parcel,
Beltline Central, located in Addison, Texas. It is uncertain at this time as to
when the sale of this property will occur.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet current and future operating
costs until the liquidation of the Registrant. The Registrant intends to sell
its remaining land parcel and liquidate in 1997 and will distribute any
remaining funds at such time.
For more information regarding the Consent Statement, see Item 4 Submission
of Matters to a Vote of Limited Partners.
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
of the financial statements in the Registrant's Annual Report which is filed as
an exhibit hereto.
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. See Note E of the financial statements in
the Registrant's Annual Report which is filed as an exhibit hereto.
Item 2. Properties
As of December 31, 1996, the Registrant has sold all of its properties except
for one undeveloped land parcel, Beltline Central, consisting of 0.77 acres
located in Addison, Texas.
4
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<PAGE>
For the years ended December 31, 1996, 1995 and 1994, respectively, the
following properties' rental revenues exceeded 15% of the Registrant's total
revenue:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Dale City 40 % 39% 40%
Downtown Business Center 17 17 16
Airport South Business Center 18 17 16
</TABLE>
No single tenant accounted for 10% or more of the total revenue for any of
the three years in the period ended December 31, 1996.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Unitholders
Pursuant to the Consent Statement dated September 17, 1996, the Unitholders
of the Registrant approved, on October 18, 1996, the sale to Public Storage,
Inc. of substantially all the Registrant's properties and the liquidation and
dissolution of the Registrant. The vote was 41,032 Units or 61.7% in favor,
1,950 Units or 2.9% against and 987 Units or 1.5% abstaining. Reference is made
to the Consent Statement dated September 17, 1996 which is incorporated by
reference in Item 14.
PART II
Item 5. Market for the Registrant's Units and Related Unitholder Matters
As of March 3, 1997, there were 4,264 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 and were made from current
and previously undistributed cash generated by the operations of the
Registrant's properties:
<TABLE>
<CAPTION>
Quarter Ended 1996 1995
------------------------------------ ----- -----
<S> <C> <C>
March 31 $1.25 $2.19
June 30 1.25 2.19
September 30 -- 2.19
December 31 -- 2.19
</TABLE>
A distribution of $9.75 per limited partnership unit was made in February
1996 representing all the net proceeds from the sale of the 150th and Black Bob
property, an undeveloped land parcel.
In addition, a distribution of $165 per limited partnership unit was made on
November 26, 1996 representing substantially all of the net proceeds from the
sale of substantially all the Registrant's properties, reduced by a contingency
reserve and funds required to meet current and future operating costs until the
liquidation of the Registrant. The Registrant intends to sell its remaining land
parcel and liquidate in 1997 and will distribute any remaining funds at such
time.
All of the distributions paid to Unitholders during 1995 and primarily all of
the distributions paid to Unitholders during 1996 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.
5
<PAGE>
<PAGE>
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 10 of the Registrant's
Annual Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Nine Months
Ended Year ended December 31,
September 30, -----------------------------------------------------
1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 1,458,001 $ 2,027,520 $ 1,938,381 $ 1,787,959 $ 1,641,776
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Provisions for loss on
impairment of assets $ 300,000 $ 900,000 $ -- $ 800,000 $ 484,000
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Net income (loss) $ (121,250) $ (717,009) $ 276,355 $ (667,213) $ (688,472)
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Unitholder income (loss) per
Unit $ (1.99) $ (11.51) $ 3.17 $ (10.75) $ (10.76)
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Total assets $12,760,473 $13,635,938 $14,858,287 $15,616,124 $16,885,088
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Total distributions $ 988,370 $ 633,475 $ 805,171 $ 669,167 $ 464,438
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Unitholder distributions per
Unit $ 14.44 $ 8.76 $ 11.13 $ 9.25 $ 6.42
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to page 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 10
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.
Section 16(a) Beneficial Ownership Reporting Compliance
The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and any 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, executive officers,
directors and other persons 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
<PAGE>
<PAGE>
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>
<CAPTION>
Name Position
<S> <C>
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
Brian J. Martin Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>
THOMAS F. LYNCH, III, age 38, 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 48, 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 51, 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.
BRIAN J. MARTIN, age 46, is a Vice President of PBP. He is a Senior Vice
President of PSI, which he joined in 1980. Mr. Martin is a Manager in the
Specialty Finance Asset Management Group and also serves in various capacities
for certain other affiliated companies. Mr. Martin is a member of the
Pennsylvania Bar.
FRANK W. GIORDANO, age 54, 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 LLC, 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 46, 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.
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 56, 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 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 53, 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
7
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<PAGE>
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.
The two individual General Partners are not related.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partner 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 affiliates
of the Managing General Partner, 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 also
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 3, 1997, 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 3, 1997, 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. However, the General Partners have contributed to the
Registrant and, based on such contribution, they received ``equivalent units''
entitling them to participate in the distributions to the limited partners and
in the Registrant's profits and losses in the same proportion that the General
Partners' capital contribution bears to the total capital contributions of the
limited partners. The Managing General Partner has retained its right to receive
funds from the Registrant, such as General Partner distributions and
reimbursement of expenses, but has waived its right to share in any limited
partner cash distributions and allocations of Registrant's profits and losses
based upon such equivalent units.
As of March 3, 1997, no limited partner 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
1996.
Reference is made to Notes A and E of 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
<PAGE>
<PAGE>
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:
Statement of Net Assets--December 31, 1996 3
Statement of Financial Condition--December 31, 1995 3
Statement of Changes in Net Assets--Three months ended December 31,
1996 4
Statements of Operations--Nine months ended September 30, 1996 and
two years ended December 31, 1995 4
Statements of Changes in Partners' Capital--Nine months ended
September 30, 1996 and two years ended December 31, 1995 5
Statements of Cash Flows--Nine months ended September 30, 1996 and
two years ended December 31, 1995 6
Notes to Financial Statements 7
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, 1996
III--Real Estate and Accumulated Depreciation at December 31, 1996
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:
2.01 Consent Statement dated September 17, 1996 (1)
3.01 Amended and Restated Certificate and Agreement of Limited Partnership
(2)
3.02 Amendment Number 10 to the Amended and Restated Certificate and
Agreement of Limited Partnership (3)
4.01 Certificate of Limited Partnership Interest (2)
4.02 Depositary Receipt (2)
10.01 Management Agreement (2)
10.02 Depositary Agreement (2)
10.03 Agreement Relating to General Partner Interests (2)
13 Registrant's Annual Report to Unitholders for the year ended December
31, 1996 (with the exception of the information and data incorporated
by reference in Items 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)
</TABLE>
9
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the last
quarter of the year covered by this report.
</TABLE>
- ------------------
(1) Filed on the Registrant's Proxy Statement on Schedule 14A and incorporated
herein by reference.
(2) Filed as an exhibit to Registration Statement on Form S-11 (No. 33-1213) 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, 1991 and incorporated herein by reference.
10
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<PAGE>
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 7,
1997, included in the 1996 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.
/s/ Ernst & Young LLP
New York, New York
February 7, 1997
11
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PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- ----------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
<TABLE>
<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
- ------------- ----------------- -------------------- ---------------------- -------------
<C> <C> <C> <C> <C> <S>
1994 $ 8,142,000 -- -- $ 8,142,000
1995(1) $ 8,142,000 900,000 -- $ 9,042,000
1996(1) $ 9,042,000 300,000 (9,261,210)(2) $ 80,790 (3)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Registrant's properties were 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 and $300,000 was recorded for the
years ended December 31, 1995 and 1996, respectively.
(2) Applicable to property which was sold during the year.
(3) Shown as a direct deduction of carrying value of property.
12
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Initial cost to Amount at which carried at
Registrant close of year
(Note B) Costs -----------------------------------------------
---------------------------- capitalized Permanent
Buildings subsequent Buildings writedown of
and to and impaired assets
Description (Note A) Land improvements acquisition Land improvements (Notes C & D)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------- ----------- ------------ ------------ ---------- ------------ ---------------
UNIMPROVED PROPERTY
Beltline Central $ 505,790 $ -- -- $ 505,790 $ -- $ 80,790
(Addison, TX)
----------- ------------ ------------ ---------- ------------ ---------------
$ 505,790 $ -- $ -- $ 505,790 $ -- $ 80,790
----------- ------------ ------------ ---------- ------------ ---------------
----------- ------------ ------------ ---------- ------------ ---------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on the following page
<TABLE>
<CAPTION>
Total Date
Description (Note A) (Note C) acquired
<S> <C> <C>
- --------------------------- ---------- --------
UNIMPROVED PROPERTY
Beltline Central $ 425,000 1986
(Addison, TX)
----------
$ 425,000
----------
----------
- -------------------------------------------------------------
</TABLE>
13
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1996
NOTE A--There are no mortgages, deeds of trust or similar encumbrances against
the remaining property.
NOTE B--Initial cost represents the initial purchase price of the property
including acquisition fees.
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE OWNED
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year................... $27,042,522 $27,616,465 $27,558,067
Allocation of accumulated depreciation
against the carrying amount of the
properties based upon the reclassification
of the properties as held for sale........... (5,823,784) -- --
Allocation of allowance for loss on impairment
of assets against the carrying amount of the
properties based upon the reclassification of
the properties as held for sale (2).......... (9,342,000) -- --
Additions during year-property improvements.... 160,214 136,241 58,398
Deductions during year-costs of properties sold
(1).......................................... (11,611,952) (710,184) --
----------- ----------- -----------
Balance at close of year....................... $ 425,000 $27,042,522 $27,616,465
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(1) In December 1995, the Registrant sold the 150th & Black Bob property,
an undeveloped land parcel. In November and December 1996, the Registrant sold
all of its remaining properties except for Beltline Central, an undeveloped
land parcel.
(2) During 1996, an allowance for loss on impairment of assets of $300,000
was provided for, bringing the total allowance on the above assets to
$9,342,000. See Note C to the financial statements of the Registrant's Annual
Report filed as an exhibit hereto.
The aggregate cost of land for Federal income tax purposes as of December
31, 1996 was $596,000.
NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year................... $ 5,823,784 $ 5,233,140 $ 4,616,561
Depreciation during the year charged to
expense...................................... -- 590,644 616,579
Allocation of accumulated depreciation against
the carrying amount of the properties based
upon the reclassification of the properties
as held for sale............................. (5,823,784) -- --
----------- ----------- -----------
Balance at close of year....................... $ -- $ 5,823,784 $ 5,233,140
----------- ----------- -----------
----------- ----------- -----------
The Partnership ceased depreciating the properties for financial reporting purposes when
the properties were reclassified as held for sale as of December 31, 1995.
</TABLE>
14
<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 27, 1997
----------------------------------------
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 Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Thomas F. Lynch, III Date: March 27, 1997
-----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: March 27, 1997
-----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Eugene D. Burak Date: March 27, 1997
-----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 27, 1997
-----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 27, 1997
-----------------------------------------
Nathalie P. Maio
Director
15
<PAGE>
1996 ANNUAL REPORT
1996
- ------------------------------------------------
Prudential-Bache/ Annual
Watson & Taylor, Ltd.-4 Report
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
1996 Annual Report
1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-4
We have audited the accompanying statement of net assets in process of
liquidation of
Prudential-Bache/Watson & Taylor, Ltd.-4 as of December 31, 1996, and the
related statement of changes in net assets in process of liquidation for the
three months then ended. In addition, we have audited the accompanying statement
of financial condition, as of December 31, 1995, and the related statements of
operations, changes in partners' capital, and cash flows for each of the two
years in the period ended December 31, 1995 and for the nine months ended
September 30, 1996. 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 net assets in liquidation of Prudential-Bache/Watson
& Taylor, Ltd.-4 as of December 31, 1996, the changes in its net assets in
liquidation for the three months then ended, its financial condition as of
December 31, 1995, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1995, and for the nine months
ended September 30, 1996, 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.
/s/ Ernst & Young LLP
New York, New York
February 7, 1997
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(limited partnership)
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
(in process of liquidation)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 1,409,327
Property held for sale 425,000
-----------
Total assets 1,834,327
-----------
LIABILITIES
Estimated liquidation costs 226,000
Other liabilities 130,796
Due to affiliates, net 44,287
-----------
Total liabilities 401,083
-----------
Net assets available to limited and general partners $ 1,433,244
-----------
-----------
Depositary units issued and outstanding 66,555
-----------
-----------
- -------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1995
(going concern basis)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $12,176,738
Cash and cash equivalents 1,450,040
Other assets 9,160
-----------
Total assets $13,635,938
-----------
-----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued real estate taxes $ 104,824
Accounts payable and accrued expenses 113,462
Unearned rental income 6,847
Due to affiliates, net 107,175
Deposits due to tenants 97,196
-----------
Total liabilities 429,504
-----------
Partners' capital
Unitholders (66,555 depositary units issued and outstanding) 13,002,889
General partners 203,545
-----------
Total partners' capital 13,206,434
-----------
Total liabilities and partners' capital $13,635,938
-----------
-----------
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENT OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996
(in process of liquidation)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net assets--October 1, 1996 $ 11,909,078 $187,736 $ 12,096,814
Loss on sale of properties -- (5,755 ) (5,755)
Net income from liquidating activities 297,859 25,901 323,760
Distributions (10,981,575) -- (10,981,575)
------------ --------- ------------
Net assets--December 31, 1996 $ 1,225,362 $207,882 $ 1,433,244
------------ --------- ------------
------------ --------- ------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE TWO YEARS ENDED DECEMBER 31, 1995 AND 1994
(going concern basis)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,425,875 $1,945,915 $1,837,381
Interest 14,596 18,210 16,949
Other 17,530 63,395 84,051
---------- ---------- ----------
1,458,001 2,027,520 1,938,381
---------- ---------- ----------
EXPENSES
Property operating 511,059 643,826 635,806
General and administrative 623,949 361,121 192,985
Real estate taxes 144,243 216,826 216,656
Loss on sale of land -- 32,112 --
Provision for loss on impairment of assets 300,000 900,000 --
Depreciation and amortization -- 590,644 616,579
---------- ---------- ----------
1,579,251 2,744,529 1,662,026
---------- ---------- ----------
Net income (loss) $ (121,250) $ (717,009) $ 276,355
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME (LOSS)
Unitholders $ (132,550) $ (766,241) $ 211,086
---------- ---------- ----------
---------- ---------- ----------
General partners $ 11,300 $ 49,232 $ 65,269
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per depositary unit $ (1.99) $ (11.51) $ 3.17
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(going concern basis)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
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
Net income (loss) (132,550 ) 11,300 (121,250)
Distributions (961,261 ) (27,109 ) (988,370)
------------ --------- ------------
Partners' capital--September 30, 1996 $11,909,078 $187,736 $ 12,096,814
------------ --------- ------------
------------ --------- ------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of this statement
5
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-4
(a limited partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE TWO YEARS ENDED DECEMBER 31, 1995 AND 1994
(going concern basis)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $1,429,223 $1,952,196 $1,822,992
Interest received 14,596 18,210 16,949
Other income received 17,530 63,395 84,051
Property operating expenses paid (499,540) (596,941) (668,042)
Real estate taxes paid (138,605) (229,121) (196,709)
General and administrative expenses paid (425,061) (254,857) (313,065)
---------- ---------- ----------
Net cash provided by operating activities 398,143 952,882 746,176
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of land -- 678,072 --
Property improvements (146,597) (136,241) (58,398)
---------- ---------- ----------
Net cash provided by investing activities (146,597) 541,831 (58,398)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (988,370) (633,475) (882,114)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (736,824) 861,238 (194,336)
Cash and cash equivalents at beginning of period 1,450,040 588,802 783,138
---------- ---------- ----------
Cash and cash equivalents at end of period $ 713,216 $1,450,040 $ 588,802
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income (loss) $ (121,250) $ (717,009) $ 276,355
---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for loss on impairment of assets 300,000 900,000 --
Loss on sale of land -- 32,112 --
Depreciation and amortization -- 590,644 616,579
Changes in:
Other assets (14,762) 19,000 5,320
Accounts payable and accrued expenses 245,982 76,159 (65,304)
Due to affiliates, net (35,575) 76,990 (87,012)
Accrued real estate taxes 5,638 (12,295) 19,947
Unearned rental income 5,897 (10,928) (13,396)
Deposits due to tenants 12,213 (1,791) (6,313)
---------- ---------- ----------
Total adjustments 519,393 1,669,891 469,821
---------- ---------- ----------
Net cash provided by operating activities $ 398,143 $ 952,882 $ 746,176
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Distributions to partners $ (988,370) $ (633,475) $ (805,171)
Increase (decrease) in distributions payable -- -- (76,943)
---------- ---------- ----------
Distributions paid to partners $ (988,370) $ (633,475) $ (882,114)
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
6
<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 in
accordance with a vote of the Unitholders as described below. The Partnership
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. 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.
On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. On June 13, 1996,
the Partnership entered into a contract with Public Storage, Inc., the property
manager of the Partnership's properties, for the sale of substantially all the
Partnership's properties. This sale was subject to the approval by the
Unitholders holding a majority of the depositary units and certain other
conditions and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 (the
``Consent Statement''), the Unitholders approved, on October 18, 1996, the sale
to Public Storage, Inc. of all five miniwarehouse facilities and four of the six
undeveloped land parcels owned by the Partnership and the liquidation and
dissolution of the Partnership. The five miniwarehouse facilities and three of
the four undeveloped land parcels which were under contract were sold to Public
Storage, Inc. and its affiliates on November 13, 1996. The Partnership received,
in cash, gross sales proceeds of $12,030,000 reduced by certain selling expenses
and pro-rations of approximately $440,000. The gross sales price was in excess
of the appraised value of the properties. The fourth land parcel, Yancy Camp was
sold to Public Storage, Inc. on December 19, 1996. The Partnership received in
cash, gross sales proceeds of $175,000 reduced by certain selling expenses and
pro-rations of approximately $7,000. The fifth land parcel, Dimension, a
one-half acre of land, was sold for $5,000 to a third party on November 22,
1996. The Partnership continues to own the remaining undeveloped land parcel,
Beltline Central, located in Addison, Texas. It is uncertain at this time as to
when the sale of this property will occur.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet current and future operating
costs until the liquidation of the Partnership. The Partnership intends to sell
its remaining land parcel and liquidate in 1997 and will distribute any
remaining funds at such time. Estimated costs expected to be incurred through
the date of liquidation of the Registrant have been accrued in the accompanying
financial statements.
B. Summary of Significant Accounting Policies
Basis of accounting
As a result of the pending liquidation of the Partnership, the Partnership
changed from the going concern basis and adopted the liquidation basis of
accounting effective October 1, 1996. Accordingly, the net assets of the
Partnership at December 31, 1996 are stated at liquidation value, i.e., the
assets have been valued at their estimated net realizable values and the
liabilities include estimated amounts to be incurred through the date of
liquidation of the Partnership. The actual remaining net proceeds from
liquidation will depend upon a variety of factors and are likely to differ from
the estimated amounts reflected in the accompanying financial statements.
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.'' 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 had reclassified its properties from held for
use to held for sale and had ceased depreciating the properties for financial
reporting purposes only. In
7
<PAGE>
<PAGE>
connection therewith, the Partnership recorded a provision for loss in
impairment of assets of $900,000 in 1995 and $300,000 in 1996.
Prior to December 31, 1995, property investments were carried at the lower
of the carrying amount or estimated amounts recoverable through future
operations and sale of the property. Property investments were depreciated 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 though future operations
and ultimate disposition of the property, on an undiscounted basis, were below
the carrying amount of the property.
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 and cash from
operations is distributed 92% to the Unitholders and 8% to the General Partners.
Net operating loss, provisions for loss on impairment of assets, and
depreciation are allocated 99% to the Unitholders and 1% to the General
Partners.
Loss from a Terminating Sale, as defined in the Partnership Agreement, is
allocated generally first to the General Partners to the extent of their
positive capital account balances, and then to the Unitholders until their
capital accounts are reduced to zero. However, the minimum allocation to the
General Partners of loss from a Terminating Sale shall not be less than 1%.
Sales proceeds from a Terminating Sale are first used for the payment of any
debts or obligations of the Partnership, then any balance remaining is
distributed to the partners having positive capital account balances.
C. Property
The Partnership's property consisted of:
<TABLE>
<CAPTION>
December 31,
-------------------------
<S> <C> <C>
1996 1995
-------- -----------
Improved properties:
Downtown Business Center - Nashville, TN $ -- $ 2,678,835
Airport South - Nashville, TN -- 3,198,998
Big A Mini Warehouse - Forest Park, GA -- 2,547,484
Towneast Business Center - Mesquite, TX -- 1,632,495
Dale City - Dale City, VA -- 5,532,202
-------- -----------
-- 15,590,014
-------- -----------
Unimproved properties:
Dimension - Fort Worth, TX -- 76,326
Airport South - Nashville, TN -- 547,432
Highway 360 - Arlington, VA -- 440,644
Mansfield - Mansfield, TX -- 3,229,084
Yancy Camp - Dallas, TX -- 829,448
150th & Black Bob - Olathe, KS (A) -- --
Beltline Central - Addison, TX 425,000 505,790
-------- -----------
425,000 5,628,724
-------- -----------
Less: allowance for loss on impairment of assets
(B) -- (9,042,000)
-------- -----------
$425,000 $12,176,738
-------- -----------
-------- -----------
</TABLE>
In November and December 1996, the Partnership sold all of its remaining
properties except for Beltline Central, an undeveloped land parcel.
(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.
8
<PAGE>
<PAGE>
D. Net Income From Liquidating Activities
Net income from liquidating activities for the three months ended December
31, 1996 consisted of:
<TABLE>
<S> <C>
Rental and other income $ 352,448
---------
Property operating expenses 128,867
General and administrative expenses (326,179)
Estimated liquidation expenses 226,000
---------
28,688
---------
Net income from liquidating activities $ 323,760
---------
---------
</TABLE>
The credit balance for general and administrative expenses resulted from the
reclassification in the three months ended December 31, 1996 of certain Consent
Statement costs which arose in the nine months ended September 30, 1996. These
consent costs were reclassified as an increase to the loss on sale of the
property during the three months ended December 31, 1996.
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, 1996, 1995 and 1994 were approximately
$129,000, $131,000 and $85,000, 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 certain prior periods' general, administrative and monitoring
expenses incurred by affiliates of the individual General Partners.
Approximately $41,000 and $29,000 were incurred in 1996 and 1995, respectively.
In conjunction with the adoption of the liquidation basis of accounting, the
Partnership has recorded an accrual as of December 31, 1996 for the estimated
costs expected to be incurred to liquidate the Partnership. Included in these
estimated liquidation costs is $138,000 expected to be payable to the General
Partners and their affiliates during the anticipated remaining liquidation
period. The actual charges to be incurred by the Partnership will depend
primarily upon the length of time required to liquidate the Partnership's
remaining net assets, and may differ from the amounts accrued as of December
31, 1996.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 391
depositary units at December 31, 1996.
9
<PAGE>
<PAGE>
F. Income Taxes
The following is a reconciliation of net income (loss) for financial
reporting purposes to net income (loss) for tax reporting purposes:
<TABLE>
<CAPTION>
For the year ended December 31
----------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------ --------- ---------
Net income (loss) per financial statements $ 196,755(a) $(717,009) $ 276,355
Tax loss on sale of property in excess of book amount (11,212,578) (205,854) --
Estimated liquidation costs, deducted for books not tax 226,000 -- --
Provision for loss on impairment of assets 300,000 900,000 --
Rent received in advance, net of reversal of prior year
amount (6,847) (10,928) (13,396)
Carrying costs on land held for investment, capitalized
for tax -- 110,803 79,714
Other amounts deductible for tax -- (15,047) --
Tax depreciation and amortization (in excess of) less than
book amounts (537,814) 7,037 34,480
------------ --------- ---------
Tax basis net income (loss) $(11,034,484) $ 69,002 $ 377,153
------------ --------- ---------
------------ --------- ---------
</TABLE>
(a) Includes loss on sale of properties ($5,755) and net income from
liquidating activities ($323,760) included in the Statement of Changes in
Net Assets.
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 and the initial charge to partner's capital of syndication costs,
for book purposes, when the Partnership was formed.
10
<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
In accordance with the Consent Statement dated September 17, 1996, the
Unitholders approved, on October 18, 1996, the sale to Public Storage, Inc. of
all five miniwarehouse facilities and four of the six undeveloped land parcels
owned by the Partnership and the liquidation and dissolution of the Partnership.
The five miniwarehouse facilities and three of the four undeveloped land parcels
which were under contract were sold to Public Storage, Inc. and its affiliates
on November 13, 1996. The Partnership received, in cash, gross sales proceeds of
$12,030,000 reduced by certain selling expenses and pro-rations of approximately
$440,000. The gross sales price was in excess of the appraised value of the
properties. The fourth land parcel, Yancy Camp was sold to Public Storage, Inc.
on December 19, 1996. The Partnership received in cash, gross sales proceeds of
$175,000 reduced by certain selling expenses and pro-rations of approximately
$7,000. The fifth land parcel, Dimension, was sold for $5,000 to a third party
on November 22, 1996. The Partnership continues to own the remaining undeveloped
land parcel, Beltline Central, located in Addison, Texas. It is uncertain at
this time as to when the sale of this property will occur.
A distribution of $165 per depositary unit was made on November 26, 1996
representing substantially all of the net sales proceeds reduced by a
contingency reserve and funds required to meet current and future operating
costs until the liquidation of the Partnership. The Partnership intends to sell
its remaining land parcel and liquidate in 1997 and will distribute any
remaining funds at such time. Estimated costs expected to be incurred through
the date of liquidation of the Registrant have been accrued in the accompanying
financial statements.
Results of Operations
All significant fluctuations between 1995 and 1996 were due to comparing nine
months in 1996 on a going-concern basis to twelve months in 1995, the sale of
substantially all the Partnership's properties during 1996 and the accrual of
estimated costs relating to the liquidation of the Partnership.
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 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.
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 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.
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 limited partners 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>
<PAGE>
Peck Slip Station
BULK RATE
P.O. Box 2016
U.S. POSTAGE
New York, NY 10272
PAID
Automatic Mail
PBW&T486/171674
<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> Dec-31-1996
<PERIOD-TYPE> 12-Mos
<CASH> 1,409,327
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,409,327
<PP&E> 425,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,834,327
<CURRENT-LIABILITIES> 401,083
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,433,244
<TOTAL-LIABILITY-AND-EQUITY> 1,834,327
<SALES> 0
<TOTAL-REVENUES> 1,458,001<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,279,251<F1>
<LOSS-PROVISION> 300,000<F1>
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,250)<F1>
<EPS-PRIMARY> (1.99)<F1>
<EPS-DILUTED> 0
<FN>
<F1> Reflects operations for the nine months ended September 30, 1996
when the Liquidation basis of accounting was adopted. See Note B to the
financial statements for further details
</TABLE>
