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, 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 0-8908
------
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)
701 Western Avenue
Glendale, California 91201
- ------------------------------- ---------------------
(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, 1996
and December 31, 1995 2
Condensed statements of income for the three and six
months ended June 30, 1996 and 1995 3
Condensed statement of partners' deficit for the
six months ended June 30, 1996 4
Condensed statements of cash flows for the
six months ended June 30, 1996 and 1995 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
<PAGE>
<TABLE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
-------------------- ------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,860,000 $ 967,000
Marketable securities of affiliate
(cost of $3,791,000 in 1996 and 1995) 6,128,000 5,645,000
Rent and other receivables 110,000 100,000
Real estate facilities, at cost:
Buildings and equipment 15,192,000 15,015,000
Land 5,244,000 5,244,000
-------------------- ------------------
20,436,000 20,259,000
Less accumulated depreciation (9,598,000) (9,203,000)
-------------------- ------------------
10,838,000 11,056,000
-------------------- ------------------
Other assets 366,000 599,000
-------------------- ------------------
Total assets $ 19,302,000 $ 18,367,000
==================== ==================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 103,000 $ 81,000
Deferred revenue 274,000 244,000
Mortgage note payable 26,769,000 27,178,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 40,000 units authorized,
issued and outstanding (7,552,000) (8,152,000)
General partners' deficit (2,629,000) (2,838,000)
Unrealized gain on marketable securities 2,337,000 1,854,000
-------------------- ------------------
Total partners' deficit (7,844,000) (9,136,000)
-------------------- ------------------
Total liabilities and partners' deficit $ 19,302,000 $ 18,367,000
==================== ==================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------- --------------------------------------
1996 1995 1996 1995
----------------- ----------------- ------------------ ------------------
(Restated)
REVENUE:
<S> <C> <C> <C> <C>
Rental income $1,839,000 $1,759,000 $ 3,622,000 $ 3,459,000
Dividends from marketable
securities of affiliate 66,000 60,000 131,000 121,000
Other income 18,000 247,000 32,000 304,000
----------------- ----------------- ------------------ ------------------
1,923,000 2,066,000 3,785,000 3,884,000
----------------- ----------------- ------------------ ------------------
COSTS AND EXPENSES:
Cost of operations 448,000 438,000 896,000 886,000
Management fees paid to affiliate 99,000 106,000 198,000 208,000
Depreciation 198,000 181,000 395,000 361,000
Administrative 17,000 19,000 27,000 35,000
Environmental cost - - - 25,000
Interest expense 727,000 751,000 1,460,000 1,508,000
----------------- ----------------- ------------------ ------------------
1,489,000 1,495,000 2,976,000 3,023,000
----------------- ----------------- ------------------ ------------------
$ 434,000 $ 571,000 $ 809,000 $ 861,000
NET INCOME ================= ================= ================== ==================
Limited partners' share of net income
($20.00 per unit in 1996 and $21.28
per unit in 1995) $ 800,000 $ 851,000
General partners' share of net income 9,000 10,000
------------------ ------------------
$ 809,000 $ 861,000
================== ==================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
<CAPTION>
Gain on Total
Limited General Marketable Partners'
Partners Partners Securities Deficit
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 ($8,152,000) ($2,838,000) $1,854,000 ($9,136,000)
Unrealized gain on marketable
securities - - 483,000 483,000
Net income 800,000 9,000 - 809,000
Equity transfer (200,000) 200,000 - -
----------------- ------------------ ----------------- -----------------
Balance at June 30, 1996 ($7,552,000) ($2,629,000) $2,337,000 ($7,844,000)
================= ================== ================= =================
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
----------------------------------------------
1996 1995
-------------------- ------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 809,000 $ 861,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 395,000 361,000
Decrease in advances to reconstruct real estate facility - (236,000)
Increase in rent and other receivables (10,000) (20,000)
Decrease in other assets 35,000 44,000
Amortization of prepaid management fees 198,000 -
Increase in accounts payable 22,000 40,000
Increase (decrease) in deferred revenue 30,000 (52,000)
-------------------- ------------------
Total adjustments 670,000 137,000
-------------------- ------------------
Net cash provided by operating activities 1,479,000 998,000
-------------------- ------------------
Cash flows from investing activities:
Expenditures to reconstruct damaged real estate facility - (1,000)
Additions to real estate facilities (177,000) (77,000)
-------------------- ------------------
Net cash used in investing activities (177,000) (78,000)
-------------------- ------------------
Cash flows from financing activities:
Principal payments on mortgage notes payable (409,000) (361,000)
-------------------- ------------------
Net cash used in financing activities (409,000) (361,000)
-------------------- ------------------
Net increase in cash and cash equivalents 893,000 559,000
Cash and cash equivalents at the beginning of the period 967,000 551,000
-------------------- ------------------
Cash and cash equivalents at the end of the period $ 1,860,000 $ 1,110,000
==================== ==================
Supplemental schedule of noncash investing and financing activities:
Increase in fair value of marketable securities $ (483,000) $ (550,000)
==================== ==================
Unrealized gain on marketable securities 483,000 550,000
==================== ==================
</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,
1995.
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, 1996, the results of its operations for the three and six
months ended June 30, 1996 and 1995 and its cash flows for the six months
then ended.
3. The results of operations for the three and six months ended June 30, 1996
are not necessarily indicative of the results expected for the full year.
4. Certain prior year amounts have been reclassified to conform with the 1996
presentation.
5. Marketable securities at June 30, 1996 consist of 297,130 shares of common
stock of Public Storage, Inc., a publicly traded real estate investment
trust and a general partner of the Partnership. The Partnership has
designated its portfolio of marketable securities as available for sale.
Accordingly, at June 30, 1996, the Partnership has recorded the marketable
securities at fair value, based upon the closing quoted prices of the
securities at June 30, 1996, and a corresponding unrealized gain totaling
$483,000 as a credit to Partnership equity.
6
<PAGE>
6. In 1995, the Partnership prepaid eight months of 1996 management fees at a
total cost of $265,000. The Partnership expensed $198,000 of the 1996
prepaid management fees for the six months ended June 30, 1996. The balance
of prepaid management fees, $67,000, is included in other assets in the
Balance Sheet at June 30, 1996.
7. 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 Income.
7
<PAGE>
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, 1996 compared to three and six months
ended June 30, 1995:
The Partnership's net income for the six months ended June 30, 1996 and
1995 was $809,000 and $861,000, respectively, representing a decrease of $52,000
or 6%. Net income for the three months ended June 30, 1996 and 1995 was $434,000
and $571,000, respectively, representing a decrease of $137,000 or 24%. The
decrease for the three months ended June 30, 1996 is primarily attributed to
$236,000 of income recognized in the second quarter of 1995 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 7 in the Notes to Condensed
Financial Statements). Partially offsetting the decrease in net income for both
the three and six months ended June 30, 1996 is an increase in operating results
at the Partnership's mini-warehouse facilities combined with decreased interest
expense.
Rental income was $3,622,000 compared to $3,459,000 for the six months
ended June 30, 1996 and 1995, respectively, representing an increase of $163,000
or 5%. Rental income was $1,839,000 compared to $1,759,000 for the three months
ended June 30, 1996 and 1995, respectively, representing an increase of $80,000
or 11%. These increases are primarily attributable to increases in rental rates
and occupancy levels at the Partnership's mini-warehouse facilities. The
weighted average occupancy levels at the mini-warehouse facilities were 87% and
84% for the six months ended June 30, 1996 and 1995, respectively. Realized rent
for the six months ended June 30, 1996 increased to $.79 per occupied square
foot from $.78 per occupied square foot for the six months ended June 30, 1995.
Other income decreased $229,000 and $272,000 for the three and six months
ended June 30, 1996, respectively, compared to the same periods in 1995. These
decreases are primarily due to the recognition of $236,000 in income from unused
insurance proceeds, as discussed above, combined with the recognition of $49,000
of business interruption income in the first quarter of 1995.
Dividend income from marketable securities of affiliate increased $10,000
and $6,000 for the six and three month periods ended June 30, 1996,
respectively, compared to the same periods in 1995. These increases are
attributable to an increase in the number of shares owned in 1996 compared to
the same periods in 1995.
8
<PAGE>
Cost of operations (including management fees paid to affiliate) remained
stable for the six months ended June 30, 1996 compared to the same period in
1995. Cost of operations increased $3,000 to $547,000 from $544,000 for the
three months ended June 30, 1996 and 1995, respectively. These increases are
mainly attributable to increases in utilities and repairs and maintenance costs,
partially offset by decreases in management fees paid to an affiliate and
security expenses.
In 1995, the Partnership prepaid eight months of 1996 management fees on
its mini-warehouse operations (based on the management fees for the comparable
period during the calendar year immediately preceding the prepayment) discounted
at the rate of 14% per year to compensate for early payment. During the six
month period ended June 30, 1996, the Partnership expensed $198,000 of prepaid
management fees. The amount is shown as management fees paid to affiliate in the
condensed statements of income. As a result of the prepayment, the Partnership
saved approximately $19,000 in management fees, based on the management fees
that would have been payable on rental income generated in the six months ended
June 30, 1996 compared to the amount prepaid.
Interest expense decreased $48,000 for the six months ended June 30, 1996
compared to the same period in 1995 due primarily to a lower outstanding loan
balance in 1996 over 1995.
In 1995, the Partnership incurred cost of $25,000 to conduct environmental
assessments of its properties to evaluate the environmental condition of and
potential environmental liabilities of such properties. Those assessments did
not indicate any environmental contamination of any of its property sites which
individually or in the aggregate would be material to the Partnership's overall
business, financial condition, or results of operations. No such cost was
incurred in 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from operating activities ($1,479,000 for the six months ended
June 30, 1996) have been sufficient to meet all current obligations of the
Partnership, including principal repayments of the Partnership's note payable.
At June 30, 1996, the Partnership held 297,130 shares of common stock
(marketable securities) with a fair value totaling $6,128,000 (cost basis of
$3,791,000 at June 30, 1996) in Public Storage, Inc. The Partnership recognized
$131,000 in dividends for the six months ended June 30, 1996.
9
<PAGE>
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 5 are inapplicable.
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
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 13, 1996
PUBLIC STORAGE PROPERTIES IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
-----------------------------
Ronald L. Havner, Jr.
Senior Vice President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000225775
<NAME> PUBLIC STORAGE PROPERTIES IV, LTD.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,860,000
<SECURITIES> 6,128,000
<RECEIVABLES> 110,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,098,000
<PP&E> 20,436,000
<DEPRECIATION> (9,598,000)
<TOTAL-ASSETS> 19,302,000
<CURRENT-LIABILITIES> 377,000
<BONDS> 26,769,000
0
0
<COMMON> 0
<OTHER-SE> (7,844,000)
<TOTAL-LIABILITY-AND-EQUITY> 19,302,000
<SALES> 0
<TOTAL-REVENUES> 3,785,000
<CGS> 0
<TOTAL-COSTS> 1,094,000
<OTHER-EXPENSES> 422,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,460,000
<INCOME-PRETAX> 809,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 809,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 809,000
<EPS-PRIMARY> 20.00
<EPS-DILUTED> 20.00
</TABLE>
