<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 30, 1995
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
Commission File Number 0-8908
------
PUBLIC STORAGE PROPERTIES IV, LTD.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3192402
----------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 N. Brand Boulevard
Glendale, California 91203
----------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
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 X No
----- -----
<PAGE>
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Condensed balance sheets at June 30, 1995
and December 31, 1994 2
Condensed statements of operations for the three and six
months ended June 30, 1995 and 1994 3
Condensed statement of partners' deficit for the
six months ended June 30, 1995 4
Condensed statements of cash flows for the
six months ended June 30, 1995 and 1994 5
Notes to condensed financial statements 6-7
Management's discussion and analysis of
financial condition and results of operations 8-10
PART II. OTHER INFORMATION 11-12
<PAGE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 1,110,000 $ 551,000
Marketable securities of affiliate
(cost of $3,392,000) 4,498,000 3,948,000
Rent and other receivables 108,000 88,000
Real estate facilities at cost:
Buildings and equipment 14,780,000 14,703,000
Land 5,256,000 5,256,000
----------- -----------
20,036,000 19,959,000
Less accumulated depreciation (8,822,000) (8,461,000)
----------- -----------
11,214,000 11,498,000
----------- -----------
Other assets 376,000 420,000
----------- -----------
Total assets $17,306,000 $16,505,000
=========== ===========
</TABLE>
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
<TABLE>
<S> <C> <C>
Accounts payable $ 88,000 $ 48,000
Advances to reconstruct real estate facility - 237,000
Deferred revenue 240,000 292,000
Mortgage note payable 27,725,000 28,086,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 40,000 units authorized,
issued and outstanding (8,792,000) (9,430,000)
General partners' deficit (3,061,000) (3,284,000)
Unrealized gain on marketable
securities 1,106,000 556,000
------------ ------------
Total partners' deficit (10,747,000) (12,158,000)
------------ ------------
Total liabilities and partners' deficit $ 17,306,000 $ 16,505,000
============ ============
</TABLE>
See accompanying notes.
2
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PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $1,759,000 $1,620,000 $3,459,000 $3,238,000
Dividends from marketable
securities of affiliate 60,000 39,000 121,000 78,000
Other income 247,000 101,000 304,000 146,000
---------- ---------- ---------- ----------
2,066,000 1,760,000 3,884,000 3,462,000
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of operations 438,000 412,000 886,000 802,000
Management fees paid to affiliate 106,000 97,000 208,000 195,000
Depreciation and amortization 181,000 170,000 361,000 338,000
Administrative 19,000 14,000 60,000 30,000
Interest expense 751,000 770,000 1,508,000 1,544,000
---------- ---------- ---------- ----------
1,495,000 1,463,000 3,023,000 2,909,000
---------- ---------- ---------- ----------
NET INCOME $ 571,000 $ 297,000 $ 861,000 $ 553,000
========== ========== ========== ==========
Limited partners' share of net income
($21.28 per unit in 1995 and
$13.68 per unit in 1994) $ 851,000 $ 547,000
General partners' share of net income 10,000 6,000
---------- ----------
$ 861,000 $ 553,000
========== ==========
</TABLE>
See accompanying notes.
3
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PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Gain on Total
Limited General Marketable Partners'
Partners Partners Securities Deficit
------------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $(9,430,000) $(3,284,000) $ 556,000 $(12,158,000)
Unrealized gain on marketable
securities - - 550,000 550,000
Net income 851,000 10,000 - 861,000
Equity transfer (213,000) 213,000 - -
----------- ----------- ---------- ------------
Balance at June 30, 1995 $(8,792,000) $(3,061,000) $1,106,000 $(10,747,000)
=========== =========== ========== ============
</TABLE>
See accompanying notes.
4
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PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 861,000 $ 553,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 361,000 338,000
Decrease in advances to reconstruct real estate facility (236,000) -
(Increase) decrease in rent and other receivables (20,000) 80,000
Decrease in other assets 44,000 41,000
Increase (decrease) in accounts payable 40,000 (415,000)
Decrease in deferred revenue (52,000) (202,000)
---------- ----------
Total adjustments 137,000 (158,000)
---------- ----------
Net cash provided by operating activities 998,000 395,000
---------- ----------
Cash flows from investing activities:
Insurance proceeds relating to damaged
real estate facility - 837,000
Purchase of marketable securities - (693,000)
Expenditures to reconstruct damaged
real estate facility (1,000) (968,000)
Additions to real estate facilities (77,000) (99,000)
---------- ----------
Net cash used in investing activities (78,000) (923,000)
---------- ----------
Cash flows from financing activities:
Principal payments on mortgage note payable (361,000) (325,000)
---------- ----------
Net cash used in financing activities (361,000) (325,000)
---------- ----------
Net increase (decrease) in
cash and cash equivalents 559,000 (853,000)
Cash and cash equivalents at
the beginning of the period 551,000 2,807,000
---------- ----------
Cash and cash equivalents at
the end of the period $1,110,000 $1,954,000
========== ==========
Supplemental schedule of non-cash
investing and financing activities:
Increase in fair value of marketable securities $(550,000) $ (684,000)
========= ===========
Unrealized gain on marketable securities $ 550,000 $ 684,000
========= ===========
</TABLE>
See accompanying notes.
5
<PAGE>
PUBLIC STORAGE PROPERTIES IV, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that
the disclosures contained herein are adequate to make the information
presented not misleading. These unaudited condensed financial statements
should be read in conjunction with the financial statements and related
notes appearing in the Partnership's Form 10-K for the year ended
December 31, 1994.
2. In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
accruals, necessary to present fairly the Partnership's financial
position at June 30, 1995, the results of its operations for the three
and six months ended June 30, 1995 and 1994 and its cash flows for the
six months then ended.
3. The results of operations for the three and six months ended June 30,
1995 are not necessarily indicative of the results expected for the full
year.
4. Marketable securities at June 30, 1995 consist of 274,675 common shares
of Storage Equities, Inc. ("SEI"), a publicly traded real estate
investment trust whose investment advisor is an affiliate of Public
Storage, Inc. (a general partner of the Partnership). SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities"
requires marketable securities to be classified as trading or available
for sale. The Partnership has designated its portfolio of marketable
securities as available for sale. Accordingly, at June 30, 1995, the
Partnership has recorded the marketable securities at fair value, based
upon the closing quoted prices of the securities at June 30, 1995, and a
corresponding unrealized gain totaling $1,106,000 as a credit to
Partnership equity.
6
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5. Substantially all of the Partnership's facilities were acquired prior to
the time that it was customary to conduct environmental investigations in
connection with property acquisitions. During the six month period ended
June 30, 1995, the Partnership completed environmental assessments on its
properties. Those assessments indicate that the Partnership's property
sites do not have any significant environmental issues which would have a
materially adverse effect on the Partnership's financial position.
Included in administrative expenses on the statement of operations for the
six months ended June 30, 1995 is approximately $25,000 incurred in
connection with the environmental assessments.
6. In 1993, the Partnership reached a settlement with its insurance carrier
for damage sustained to the property located in Miami, Florida from
Hurricane Andrew in August 1992 and for business interruption while the
facility was being reconstructed. The settlement provided for the payment
of $2,987,000 consisting of (i) reconstruction and related costs of the
facility and (ii) business interruption. The insurance proceeds received
with respect to reconstruction were recorded on the balance sheet as
"Advances to reconstruct real estate facility" and has been reduced by the
amount of actual costs paid with respect to the reconstruction of the
facility. The facility recommenced operations in October 1994 and the
reconstruction of the facility was completed in the second quarter of
1995. The balance of $236,000 in Advances to Reconstruct Real Estate
Facility was recognized as income during the second quarter of 1995 and
is included in Other income on the Condensed Statements of Operations.
7
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PUBLIC STORAGE PROPERTIES IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
THREE AND SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE AND SIX
MONTHS ENDED JUNE 30, 1994:
The Partnership's net income for the six months ended June 30, 1995 and
1994 was $861,000 and $553,000, respectively, representing an increase of
$308,000 or 56%. Net income for the three months ended June 30, 1995 and
1994 was $571,000 and $297,000, respectively, representing an increase of
$274,000 or 92%. The increase for the three months ended June 30, 1995 is
primarily attributed to $236,000 of income recognized as a result of actual
cost being lower than amounts received from insurance proceeds to reconstruct
a real estate facility located in Miami, Florida which was damaged by
Hurricane Andrew in August 1992 (see Note 6 in the Notes to Condensed
Financial Statements). Also contributing to the increase in net income for
both the three and six months ended June 30, 1995 is an increase in operating
results at the Partnership's mini-warehouse facilities combined with
decreased interest expense.
Rental income was $3,459,000 compared to $3,238,000 for the six months
ended June 30, 1995 and 1994, respectively, representing an increase of
$221,000 or 7%. Rental income was $1,759,000 compared to $1,620,000 for the
three months ended June 30, 1995 and 1994, respectively, representing an
increase of $139,000 or 9%. These increases are primarily attributable to an
increase in rental rates at the Partnership's mini-warehouse facilities
offset by a slight decrease in occupancy levels. The weighted average
occupancy levels at the mini-warehouse facilities were 84% and 86% for the
six months ended June 30, 1995 and 1994, respectively. Realized rent for the
six months ended June 30, 1995 increased to $.78 per occupied square foot
from $.75 per occupied square foot for the six months ended June 30, 1994.
Other income increased $158,000 for the six months ended June 30, 1995
compared to the same period in 1994. Other income increased $146,000 for the
three months ended June 30, 1995 compared to the same period in 1994. The
increase for the six months ended June 30, 1995 is attributable to the
recognition of $236,000 in income from unused insurance proceeds, as
discussed above, offset by a lower amount of business interruption income
recognized in 1995 over 1994. Included in Other income for the six months
ended June 30, 1995 and 1994 are $49,000 and $131,000, respectively, of
business interruption income. The increase for the three months ended June
30, 1995 over 1994 is primarily due to the
8
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recognition of the $236,000 in unused insurance proceeds in 1995 and business
interruption income of $88,000 in 1994. No business interruption income was
recognized in the second quarter of 1995.
Dividend income from marketable securities of affiliate increased $43,000
and $21,000 for the six and three month periods ended June 30, 1995,
respectively, compared to the same periods in 1994. These increases are
attributable to an increase in the number of shares owned in 1995 compared to
the same periods in 1994 and an increase in the dividend rate from $.21 to
$.22 per quarter per share.
Cost of operations (including management fees paid to affiliate)
increased $97,000 to $1,094,000 from $997,000 for the six months ended June
30, 1995 and 1994, respectively. Cost of operations increased $35,000 to
$544,000 from $509,000 for the three months ended June 30, 1995 and 1994,
respectively. These increases are mainly attributable to increases in
payroll, utilities and repairs and maintenance costs.
Administrative expenses increased $30,000 for the six months ended June
30, 1995 compared to the same period in 1994 primarily as a result of cost
incurred on environmental assessments on the Partnership's properties.
Substantially all of the Partnership's facilities were acquired prior to the
time that it was customary to conduct environmental investigations in
connection with property acquisitions. During the first quarter of 1995, the
Partnership commenced environmental assessments on its properties and
incurred $25,000 in connection with those assessments. Those assessments
indicate that the Partnership's property sites do not have any significant
environmental issues which would have a materially adverse effect on the
Partnership's financial position.
Interest expense decreased $36,000 for the six months ended June 30, 1995
compared to the same period in 1994 due primarily to a lower outstanding loan
balance in 1995 over 1994.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flows from operating activities ($998,000 for the six months ended
June 30, 1995) have been sufficient to meet all current obligations of the
Partnership. During 1995, the Partnership anticipates approximately $348,000
of capital improvements, of which $78,000 has been incurred through June 30,
1995.
At June 30, 1995, the Partnership held 274,675 shares of common stock
(marketable securities) with a fair value totaling $4,498,000 (cost basis of
$3,392,000 at June 30, 1995) in Storage Equities, Inc. ("SEI"), a real estate
investment trust whose investment advisor is an affiliate of Public Storage,
Inc. (a general partner
9
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of the Partnership). The Partnership recognized $121,000 in dividends for the
six months ended June 30, 1995 and included this in Other income on the
Condensed Statements of Operations.
In the third quarter of 1991, quarterly distributions were discontinued
to enable the Partnership to make principal payments that commenced in 1990
and to increase cash reserves in subsequent years through 1998, at which time
the remaining principal balance is due.
10
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 4 are inapplicable.
Item 5 Other Information
-----------------
In April 1995, Public Storage, Inc. completed a cash tender offer for
16,302 of the 40,000 outstanding limited partnership units in the Partnership
at $250 per unit.
Item 6 Exhibits and Reports on Form 8-K.
---------------------------------
(a) The following exhibit is included herein:
(27) Financial Data Schedule
(b) Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: August 4, 1995
PUBLIC STORAGE PROPERTIES IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
----------------------------
Ronald L. Havner, Jr.
Vice President and Chief
Financial Officer
(principal accounting and
financial officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 1,110,000
<SECURITIES> 4,498,000
<RECEIVABLES> 108,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,716,000
<PP&E> 20,412,000
<DEPRECIATION> (8,822,000)
<TOTAL-ASSETS> 17,306,000
<CURRENT-LIABILITIES> 328,000
<BONDS> 27,725,000
<COMMON> 0
0
0
<OTHER-SE> (10,747,000)
<TOTAL-LIABILITY-AND-EQUITY> 17,306,000
<SALES> 0
<TOTAL-REVENUES> 3,884,000
<CGS> 0
<TOTAL-COSTS> 1,455,000
<OTHER-EXPENSES> 60,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,508,000
<INCOME-PRETAX> 861,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 861,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 861,000
<EPS-PRIMARY> 21.28
<EPS-DILUTED> 0.000
</TABLE>
