Item 1. Description of Business.
(a) General Development of Business.
(1) The Registrant, originally incorporated in 1919, is principally engaged in the manufacture and sale of various industrial component parts. During the fiscal year for which this Annual Report is being filed, there were no material developments with respect to the Registrant's business, except for those described in Registrant's 1995 Annual Report on pages 9-12, attached hereto as Exhibit 13. This information is incorporated herein by reference.
(2) Inapplicable.
(b) Financial Information About Industry Segments.
(1) (2) Industry segments.
The Registrant is engaged in a single business segment as described on pages 5-6 and 24 of the 1995 Annual Report of the Registrant, attached hereto as Exhibit 13. Amounts of revenue, operating profits and identifiable assets attributable to the single business segment are included on pages 13 and 14 of the 1995 Annual Report of the Registrant, attached hereto as Exhibit 13. This information is incorporated herein by reference.
(c) Narrative Description of Business.
The description of the business set forth on pages 5-6, 9-12, and 24 of the Registrant's 1995 Annual Report, attached hereto as Exhibit 13, is incorporated herein by reference. The following information supplements that description:
(1) (i) See Narrative Description cross-reference above.
(ii) See Narrative Description cross-reference above.
(iii) See Narrative Description cross-reference above.
(iv) While Registrant holds a number of patents, Registrant believes that the successful continuation of its business is not dependent on any single patent or group of patents, trademarks, or licenses. (Registrant retains the rights to certain royalties related to an exclusive license agreement with semiconductor manufacturer Silicon Systems incorporated (SSi), whereunder SSi will produce and market certain phonetic speech synthesizer chips under the SSi product name. Registrant does not consider the royalty agreement to be material to Registrant's business.)
(v) No material portion of the business of the Registrant is seasonal in nature.
(vi) There are no practices and conditions of the Registrant or known to the Registrant relating to working capital items which are material to an understanding of the Registrant's business in the industry in which it competes.
(vii) See Narrative Description cross-reference above.
(viii) As of August 31, 1995, the Registrant had an estimated backlog of firm orders amounting to approximately $15,000,000, all of which are expected to be filled within the 1996 fiscal year. The comparable backlog as of August 31, 1994 amounted to approximately $14,500,000.
(ix) No material portion of the business of Registrant is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Government.
(x) The manufacture and sale of Registrant's products is an extremely competitive business. Because industry statistics are not available, Registrant is unable to accurately determine the number of its competitors nor to state its competitive position in its principal market as a supplier of parts to automotive customers. However, Registrant believes that it is generally considered a leading producer of its principal type of product in an estimated $650 million annual market served by approximately thirty major domestic suppliers, no one of which, or no small number of which are dominant. Registrant is aware, however, that there are companies making similar products, with greater sales and resources than Registrant. Registrant is aware that in recent years the activity of foreign competitors manufacturing similar products has increased. The quality of the product, the product's price and service to customers are the principal methods of competition.
(xi) Research and development activity expenses during each of the last three fiscal years is not deemed material.
(xii) Registrant has experienced no material effects in complying with government environmental regulations.
(xiii) See Narrative Description cross-reference above.
(d) Financial Information About Foreign and Domestic Operations and Export Sales.
Financial information about foreign and domestic operations and export sales are set forth on pages 5, 6, 13, 14 and 24 of the Registrant's 1995 Annual Report, attached hereto as Exhibit 13. This information is incorporated herein by reference.
Item 2.

Item 2. Description of Property.
The description of property set forth on pages 5-6 of the Registrant's 1995 Annual Report, attached hereto as Exhibit 13, is incorporated herein by reference.
Item 3.

Item 3. Legal Proceedings.
Registrant is one of approximately twenty designated potentially responsible parties (PRPs) in a federal "Superfund" environmental clean-up proceeding involving a dump site in Rose Township, Oakland County, Michigan. Although Registrant denies responsibility for contamination of the site, it has nevertheless agreed to participate in funding clean-up of the site by paying a share of the clean-up costs which Registrant does not consider to be material. This share has been assumed primarily because of the large transactional costs expected to be incurred in defending the lawsuit against the PRPs which would have been filed by the Environmental Protection Agency if the matter had not been settled voluntarily.
Registrant and eleven other PRPs have signed a Consent Decree and adopted a Remedial Action Plan which has been filed in, and approved by, the U.S. District Court for the Eastern District of Michigan. The Complaint instituting the court proceeding was filed September 19, 1989. The principal parties are the United States of America, the State of Michigan, and the PRPs. On appeal, the Consent Decree has been affirmed by the United States Court of Appeals for the Sixth Circuit. The allocation of the responsibility to fund the Remedial Action Plan among the participating PRPs is set out in a written Agreement to which Registrant is a party. Settlements with two of the Registrant's insurers resulted in coverage for in excess of one half of the Registrant's share.
The settling defendants have submitted to the United States Environmental Protection Agency comments regarding a soil vapor extraction system report which the PRPs submitted after a pilot study at the Site. The EPA had previously concluded that neither soil flushing nor enhanced soil flushing would achieve target cleanup levels for certain materials within the time frames specified in the Remedial Action Plan attached to the Consent Decree. The Rose Township PRP Agreement provides, upon the occurrence of such an event, the participating PRPs shall meet to discuss the allocation of the costs of performing further work. No meetings have been held or scheduled to discuss any allocation of additional remediation costs. It is anticipated that even if a successful effort to reopen allocation costs is made that the Registrant's share would not be material. Selection of soil vapor extraction as an alternate remedy by the EPA may require an amendment to the Record of Decision.
The Registrant and other Rose Township PRPs have been notified by the EPA of potential liability at another site located in Springfield Township, Oakland County, Michigan. The PRPs have actively been engaged in negotiations with the EPA and the Michigan Department of Natural Resources in an effort to agree upon mutually acceptable remediation parameters. The PRPs have negotiated Administrative Orders on Consent Regarding Selected Response Activities and for Cost Recovery Settlement, the cost of which is not expected to have a material effect upon the Company's financial statements. The PRPs have not negotiated an overall remedy at the Site. But, interim remediation is
occurring as the Order Regarding Selected Response Activities covers the groundwater component of the remedy. The Registrant has settled with the Michigan Department of Natural Resources the Department's past cost claims at both the Rose and at the Springfield Township Sites. The Registrant's share of the settlements was an immaterial amount. It is anticipated that the Registrant's share of any future expense at the Site will be immaterial. The Registrant liquidated its coverage claims against its insurers.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
PART II
Item 5.

Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters.
(a) The information set forth under the caption "Stock Prices" on page 7 of Registrant's 1995 Annual Report, attached hereto as Exhibit 13, is incorporated herein by reference. On September 1, 1995, the market price for Registrant's common stock on the Nasdaq National Market was $26.25 asked, $26.25 bid.
(b) The approximate number of record holders of common stock securities is set forth on page 27 of Registrant's 1995 Annual Report, attached hereto as Exhibit 13. This information is incorporated herein by reference. Included are individual participants in security position listings.
(c) Cash dividends were declared in each of the four quarters during fiscal 1995 and fiscal 1994. Total cash dividends in fiscal 1995 were 80 cents per share and in fiscal 1994 were 60 cents per share. Additional information is set forth under the caption "Dividends" on page 10 and in "Note 2" to the financial statements on page 18 of the Registrant's 1995 Annual Report, attached hereto as Exhibit 13, and is incorporated herein by reference.
Item 6.

Item 6. Selected Financial Data.
The information set forth under the caption "Selected Financial Data" on page 8, supplemented by the discussion on pages 9-12 of Registrant's 1995 Annual Report, attached hereto as Exhibit 13, is incorporated herein by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 9-12 of Registrant's 1995 Annual Report, attached hereto as Exhibit 13, is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data.
The Financial Statements and Quarterly Data set forth on pages 7 and 13-26 of Registrant's 1995 Annual Report, attached hereto as Exhibit 13, are incorporated herein by reference.
Item 9.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
Inapplicable.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant.
(a) Identification of Directors.
The information set forth under the caption "Election of Directors and Security Ownership of Management" in Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
(b) Identification of Executive Officers.
The following information supplements the information provided under the caption "Election of Directors and Security Ownership of Management" in Registrant's Proxy Statement dated September 27, 1995 which is incorporated herein by reference.
(c) Identification of Certain Significant Employees.
Inapplicable.
(d) Family Relationships.
The information set forth in footnotes (b), (c), (d) and (e) under the caption "Election of Directors and Security Ownership of Management" in Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
(e) Business Experience.
(1) Included in response to paragraphs (a) and (b) of this Item 10.
(2) The information set forth under the caption "Election of Directors and Security Ownership of Management" in Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
(f) Involvement in Certain Legal Proceedings.
None.
(g) Promoters and Control Persons.
Inapplicable.
Item 11.

Item 11. Executive Compensation.
The information set forth under the captions "Executive Compensation," "Long-Term Incentive Plan," "Comparative Performance Graph," "Certain Relationships and Related Transactions," "Restricted Stock Bonus Plans," "Retirement Supplement," "Salaried Pension Plan" and "Board of Directors and Committees" in Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information set forth under the caption "Election of Directors and Security Ownership of Management" in the Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
Item 13.

Item 13. Certain Relationships and Related Transactions.
The information set forth under the captions "Certain Relationships and Related Transactions" in Registrant's Proxy Statement dated September 27, 1995 is incorporated herein by reference.
PART IV
Item 14.

Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.
(a) (1) and (2) - The response to this item is submitted as a separate section of this report beginning on page 12.
(3) Exhibits. The following exhibits designated with a "+" symbol represent the Company's management contracts or compensation plans or arrangements for directors and executive officers.
3.1 Registrant's Articles of Incorporation were filed as an exhibit to the Registrant's 1994 Form 10-K, and are incorporated herein by reference.
3.2 Registrant's By-Laws were filed as an exhibit to Registrant's 1989 Form 10-K and are incorporated herein by reference.
4.1 Lease-purchase contract dated as of November 1, 1979 between the City of Big Rapids, Michigan and Federal Screw Works was filed as an exhibit to Registrant's 1993 Form 10-K and is incorporated herein by reference.
4.2 Guarantee agreement (municipal industrial revenue bond) dated as of November 1, 1979, as previously filed, was filed as an exhibit to the Registrant's 1993 Form 10-K and is incorporated herein by reference. All waivers, amendments and modifications thereto, were filed as exhibits to the Registrant's 1989, 1993 and 1994 Forms 10-K and are incorporated herein by reference.
4.3 Revolving Credit and Term Loan Agreement by and between Registrant and Comerica Bank, as successor in interest by reason of merger to Manufacturers National Bank of Detroit dated September 21, 1989 (the "Comerica Loan Agreement") was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1989 and is incorporated herein by reference. Amendment No. 1 to the Comerica Loan Agreement dated January 24, 1990 was filed as an exhibit to the Registrant's 10-Q for the quarter ended December 31, 1989 and is incorporated herein by reference. Amendment No. 2 to the Comerica Loan Agreement dated September 15, 1990 was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1990 and is incorporated herein by reference. Amendment No. 3 to the Comerica Loan Agreement, dated August 12, 1991, was filed as an exhibit to the Registrant's 10-K for the year ended June 30, 1991 and is incorporated herein by reference. Amendment No. 4 for the Comerica Loan Agreement, dated October 30, 1992, was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1992 and is incorporated herein by reference. Amendments No. 5, 6, and 7 to the Comerica Loan Agreement, respectively dated November 15, 1992, December 15, 1992, and January 20, 1993 were filed as exhibits to the Registrant's 10-Q for the quarter ended December 31, 1992 and are incorporated herein by reference. Letter agreement, dated August 31, 1994, amending the Comerica Loan Agreement, was filed as an exhibit to the Registrant's 1994 Form 10-K, and is incorporated herein by reference.
10.1+ Supplemental retirement agreement between the Registrant and W. T. ZurSchmiede, Jr., current Chairman and CEO of the Company, dated April 1, 1986 was filed as an exhibit to Registrant's 1993 Form 10-K and is incorporated herein by reference.
10.2+ Supplemental retirement agreement between the Registrant and Hugh G. Harness, a director and past President of the Company, dated December 21, 1978 and amended pursuant to an Amendment to Agreement dated October 23, 1986, together with an Agreement providing for the retirement and consultation of and by Mr. Harness and the Registrant dated January 7, 1994, attached to which as Exhibits B and C were agreements further amending the supplemental retirement agreement, were filed as an exhibit to Registrant's 1994 Form 10-K, and are incorporated herein by reference.
10.3+ Indemnity agreement effective September 24, 1986, which exists between the Registrant and each director, was filed as an exhibit to Registrant's 1992 Form 10-K, and is incorporated herein by reference.
10.4 Lease agreement between the Registrant and Equitable Life Assurance Society of the United States for the lease of the 24th floor of the Buhl Building, Detroit, Michigan, effective January 1, 1995, was filed as an exhibit to the Registrant's Form 10-Q for the quarter ended March 31, 1995, and is incorporated herein by reference.
10.5+* Intermediate-Term Bonus Plan for the Company's Chief Executive Officer.
10.6+* Retirement Plan for Outside Directors as amended and restated.
13.* Registrant's Annual Report to security holders for the year ended June 30, 1995.
27.* Financial Data Schedule.
------------------------------------- * Filed with this report
(b) No reports on Form 8-K have been filed by Registrant during the last quarter of the period filed by this report.
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.
FEDERAL SCREW WORKS ---------------------------------- (Registrant)
By: /s/ W. T. ZurSchmiede, Jr. ------------------------------- (Signature)
W. T. ZurSchmiede, Jr. Chairman and Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Principal Accounting Officer
Date: September 25, 1995
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 and on the dates indicated.
Date ----
/s/ Thomas W. Butler, Jr. September 25, 1995 - ---------------------------------- Thomas W. Butler, Jr. Director
/s/ Hugh G. Harness September 25, 1995 - ---------------------------------- Hugh G. Harness Director
/s/ John J. Slavin September 25, 1995 - ---------------------------------- John J. Slavin Director
/s/ F. D. Tennent September 25, 1995 - ---------------------------------- F. D. Tennent Director
/s/ W. T. ZurSchmiede, Jr. September 25, 1995 - ---------------------------------- W. T. ZurSchmiede, Jr. Director
/s/ R. F. ZurSchmiede September 25, 1995 - ---------------------------------- R. F. ZurSchmiede Director
/s/ W. T. ZurSchmiede, III September 25, 1995 - ---------------------------------- W. T. ZurSchmiede, III Director
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2), (c) and (d)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED JUNE 30, 1995
FEDERAL SCREW WORKS
DETROIT, MICHIGAN
FORM 10-K - ITEM 14(a)(1) AND (2)
FEDERAL SCREW WORKS
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of Federal Screw Works, included in the annual report of the Registrant to its stockholders for the year ended June 30, 1995, attached hereto as Exhibit 13 are incorporated by reference in Item 8:
Balance sheets - June 30, 1995 and 1994
Statements of operations - Years ended June 30, 1995, 1994 and 1993
Statements of stockholders' equity - Years ended June 30, 1995, 1994 and 1993
Statements of cash flows - Years ended June 30, 1995, 1994 and 1993
Notes to financial statements - June 30, 1995
The following financial statement schedules of Federal Screw Works are included in Item 14(d);
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and, therefore, have been omitted.
[Letterhead of Ernst & Young LLP]
Ernst & Young LLP Suite 1700 Phone: 313 596 7100 500 Woodward Detroit, Michigan 48226-3426
Report of Independent Auditors
Board of Directors Federal Screw Works
We have audited the accompanying balance sheets of Federal Screw Works as of June 30, 1995 and 1994, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 1995. These financial statements are the responsibility of the Company'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 consolidated financial position of Federal Screw Works at June 30, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements, the Company changed its method of accounting for postretirement benefits other than pensions in the year ended June 30, 1994.
s/ Ernst & Young LLP
August 9, 1995
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
INDEX TO EXHIBITS
The following exhibits designated with a "+" symbol represent the Company's management contracts or compensation plans or arrangements for directors and executive officers.
3.1 Registrant's Articles of Incorporation were filed as an exhibit to the Registrant's 1994 Form 10-K, and are incorporated herein by reference.
3.2 Registrant's By-Laws were filed as an exhibit to Registrant's 1989 Form 10-K and are incorporated herein by reference.
4.1 Lease-purchase contract dated as of November 1, 1979 between the City of Big Rapids, Michigan and Federal Screw Works was filed as an exhibit to Registrant's 1993 Form 10-K and is incorporated herein by reference.
4.2 Guarantee agreement (municipal industrial revenue bond) dated as of November 1, 1979, as previously filed, was filed as an exhibit to the Registrant's 1993 Form 10-K and is incorporated herein by reference. All waivers, amendments and modifications thereto, were filed as exhibits to the Registrant's 1989, 1993 and 1994 Forms 10-K and are incorporated herein by reference.
4.3 Revolving Credit and Term Loan Agreement by and between Registrant and Comerica Bank, as successor in interest by reason of merger to Manufacturers National Bank of Detroit dated September 21, 1989 (the "Comerica Loan Agreement") was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1989 and is incorporated herein by reference. Amendment No. 1 to the Comerica Loan Agreement dated January 24, 1990 was filed as an exhibit to the Registrant's 10-Q for the quarter ended December 31, 1989 and is incorporated herein by reference. Amendment No. 2 to the Comerica Loan Agreement dated September 15, 1990 was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1990 and is incorporated herein by reference. Amendment No. 3 to the Comerica Loan Agreement, dated August 12, 1991, was filed as an exhibit to the Registrant's 10-K for the year ended June 30, 1991 and is incorporated herein by reference. Amendment No. 4 for the Comerica Loan Agreement, dated October 30, 1992, was filed as an exhibit to the Registrant's 10-Q for the quarter ended September 30, 1992 and is incorporated herein by reference. Amendments No. 5, 6, and 7 to the Comerica Loan Agreement, respectively dated November 15, 1992, December 15, 1992, and January 20, 1993 were filed as exhibits to the Registrant's 10-Q for the quarter ended December 31, 1992 and are incorporated herein by reference. Letter agreement, dated August 31, 1994, amending the Comerica Loan Agreement, was filed as an exhibit to the Registrant's 1994 Form 10-K, and is incorporated herein by reference.
10.1+ Supplemental retirement agreement between the Registrant and W. T. ZurSchmiede, Jr., current Chairman and CEO of the Company, dated April 1, 1986 was filed as an exhibit to Registrant's 1993 Form 10-K and is incorporated herein by reference.
10.2+ Supplemental retirement agreement between the Registrant and Hugh G. Harness, a director and past President of the Company, dated December 21, 1978 and amended pursuant to an Amendment to Agreement dated October 23, 1986, together with an Agreement providing for the retirement and consultation of and by Mr. Harness and the Registrant dated January 7, 1994, attached to which as Exhibits B and C were agreements further amending the supplemental retirement agreement, were filed as an exhibit to Registrant's 1994 Form 10-K, and are incorporated herein by reference.
10.3+ Indemnity agreement effective September 24, 1986, which exists between the Registrant and each director, was filed as an exhibit to Registrant's 1992 Form 10-K, and is incorporated herein by reference.
10.4 Lease agreement between the Registrant and Equitable Life Assurance Society of the United States for the lease of the 24th floor of the Buhl Building, Detroit, Michigan, effective January 1, 1995, was filed as an exhibit to the Registrant's Form 10-Q for the quarter ended March 31, 1995, and is incorporated herein by reference.
10.5+* Intermediate-Term Bonus Plan for the Company's Chief Executive Officer.
10.6+* Retirement Plan for Outside Directors as amended and restated.
13.* Registrant's Annual Report to security holders for the year ended June 30, 1995.
27.* Financial Data Schedule.
------------------------------------- * Filed with this report


Item 1. Business
General
Fogelman Mortgage L.P. I (the ``Registrant''), a Tennessee limited partnership, was formed on September 4, 1986 and will terminate on December 31, 2016 unless terminated sooner under the provisions of the Second Amendment to Amended and Restated Certificate and Agreement of Limited Partnership (the ``Partnership Agreement''). The Registrant was formed to invest in mortgage loans with the proceeds raised from the initial sale of 54,200 depositary units (``Units''). The Registrant invested in two mortgage loans (the ``Mortgage Loans'') which provided construction and permanent financing for the development of two multi-family residential apartment complexes. The Registrant's fiscal year for book and tax purposes ends on December 31.
The Registrant is engaged solely in the business of investing in mortgage loans; therefore, presentation of industry segment information is not applicable. For more information regarding the Registrant's operations, see Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations.
General Partner
The general partner of the Registrant is Prudential-Bache Properties, Inc. (``PBP'' or the ``General Partner'').
Mortgage Loans
The Registrant holds first mortgages on two properties, Pointe Royal apartments and Westmont apartments (individually, a ``Property'' and collectively, the ``Properties''). The Pointe Royal apartments were financed by the ``Royal View Loan'' and the Westmont apartments were financed by the ``Chesterfield Loan.''
The Pointe Royal project, which secures the Royal View Loan, is located in Overland Park, Kansas and is a townhouse apartment community consisting of 52 buildings on approximately 35 acres of land. As of December 31, 1995, the monthly rents at the Pointe Royal project range from $560 to $875.
The Westmont project, which secures the Chesterfield Loan, is located in Chesterfield, Missouri and is an apartment community consisting of 25 buildings on approximately 58 acres of land. As of December 31, 1995, the monthly rents at the Westmont project range from $560 to $790.
The interest pay rate has been modified and is equal to the net property cash flow generated by the respective Properties payable monthly (7.7% for 1995), with the difference between the amount actually paid and the original pay rate of 9.5% per annum being accounted for in a separate account for each Property, which itself bears interest at 9.5% per annum (``Unpaid Interest''). The Mortgage Loans require
current payments of interest only with balloon payments of the entire principal and Unpaid Interest amounts due from sale or refinancing proceeds or upon maturity. The ultimate collectibility of the Unpaid Interest as well as the full principal of the Mortgage Loans will depend upon the value of the underlying properties which are currently estimated, based on third party appraisals, to be less than the amounts due. However, the estimated property values exceed the Registrant's carrying amount of the Mortgage Loans. A full appraisal for both properties was obtained in 1990 which used the cost, sales comparison and income capitalization approaches to value. These reports were subsequently updated via limited appraisal reports in 1991, 1992 and 1993. Limited appraisal reports consist of an update of the income capitalization approach used to determine a property's market value. The values of Pointe Royal and Westmont estimated in the limited appraisal reports were $22,400,000 and $19,000,000, respectively, as of December 1, 1993.
Following is the interest received from each of the Registrant's Mortgage Loans as a percentage of total interest received and the equity income on the underlying properties as a percentage of total equity income:
For summary financial statements of the underlying properties, see Note G to the financial statements 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.
Competition
The General Partner has formed various entities to engage in businesses which may be competitive with the Registrant. Both of the Properties collateralizing the Mortgage Loans are located in markets where the property manager manages other apartment complexes.
The Registrant's business is affected by competition to the extent that the underlying properties from which it derives interest payments are subject to competition from neighboring properties. The Westmont apartments are located in the St. Louis metropolitan area and the Pointe Royal apartments are located in the Kansas City metropolitan area. The Properties' occupancy and rental rates are comparable to their competitors. There are new complexes under construction with expected completion dates during 1996 and 1997 that could become future competitors in Pointe Royal's market.
Employees
The Registrant has no employees. Management and administrative services for the Registrant are performed by the General Partner and its affiliates pursuant to the Partnership Agreement. The General Partner receives compensation and reimbursement of expenses in connection with such activities as described in Sections 9 and 10 of the Partnership Agreement. See Note E to the financial statements in the Registrant's Annual Report which is filed as an exhibit hereto.
Item 2.

Item 2. Properties
The Registrant does not own or lease any property.
Item 3.

Item 3. Legal Proceedings
This information is incorporated by reference to Note F to the financial statements in the Registrant's Annual Report which is filed as an exhibit hereto.
Item 4.

Item 4. Submission of Matters to a Vote of Unitholders
None
PART II
Item 5.

Item 5. Market for Registrant's Units and Related Unitholder Matters
As of March 1, 1996 there were 5,553 holders of record owning 54,200 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 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 during the following calendar quarters.
There are no material legal restrictions upon the Registrant's present or future ability to make distributions in accordance with the provisions of the Partnership Agreement. Cash distributions paid in 1995 were funded from current operations. Approximately $1,434,000 and $1,231,000 of the distributions paid to Unitholders during 1995 and 1994, respectively, represent a return of capital on a generally accepted accounting principles (GAAP) basis. The return of capital on a GAAP basis is calculated as Unitholder distributions less net income allocated to Unitholders. The Registrant currently expects that cash distributions will continue to be paid in the foreseeable future from cash generated by operations, which may be supplemented by previously undistributed cash from operations. For discussion of other factors that may affect 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.
Item 6.

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.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This information is incorporated by reference to pages 10 and 11 of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 8.

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.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.

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 General Partner.
The Registrant, the Registrant's General Partner and its 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 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' directors and executive officers and Unitholders 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.
The directors and executive officers of PBP and their positions with regard to managing the Registrant are as follows:
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 officers. All of the foregoing officers and/or directors have indefinite terms.
Item 11.

Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of compensation to directors and officers of the General Partner for their services. Certain officers and directors of the General Partner receive compensation from affiliates of the General Partner, not from the Registrant, for services performed for various affiliated entities, which may include services performed for the Registrant; however, the 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.

Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1996, no director or officer of the General Partner owns directly or beneficially any interest in the voting securities of the General Partner.
As of March 1, 1996, no director or officer of the General Partner owns directly or beneficially any of the Units issued by the Registrant.
As of March 1, 1996, no beneficial owners who are neither a director nor officer of the General Partner beneficially own more than five percent (5%) of the Units issued by the Registrant.
Item 13.

Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the General Partner and its affiliates. However, there have been no direct financial transactions between the Registrant and the directors or officers of the General Partner.
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.
PART IV
(LOGO) Two World Financial Center Telephone: (212) 436-2000 New York, New York 10281-1414 Facsimile: (212) 436-5000
INDEPENDENT AUDITORS' REPORT
To the Partners of Fogelman Mortgage L.P. I New York, New York
We have audited the financial statements of Fogelman Mortgage L.P. I (a Tennessee Limited Partnership) as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995, and have issued our report thereon dated February 12, 1996; such financial statements and report are included in your 1995 Annual Report to Limited Partners and are incorporated herein by reference. Our audits also included the financial statement schedule of Fogelman Mortgage L.P. I, listed in Item 14.