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, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number 0-8908
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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
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<PAGE>
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Condensed balance sheets at June 30, 1998
and December 31, 1997 2
Condensed statements of income for the three
and six months ended June 30, 1998 and 1997 3
Condensed statement of partners' deficit for the
six months ended June 30, 1998 4
Condensed statements of cash flows for the
six months ended June 30, 1998 and 1997 5
Notes to condensed financial statements 6
Management's discussion and analysis of
financial condition and results of operations 7-8
PART II. OTHER INFORMATION 9
<PAGE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------------------- ----------------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 3,663,000 $ 1,911,000
Marketable securities of affiliate (cost of $6,091,000) 10,743,000 11,220,000
Rent and other receivables 162,000 166,000
Real estate facilities, at cost:
Buildings and equipment 16,172,000 16,031,000
Land 5,244,000 5,244,000
---------------------- ----------------------
21,416,000 21,275,000
Less accumulated depreciation (11,358,000) (10,898,000)
---------------------- ----------------------
10,058,000 10,377,000
---------------------- ----------------------
Other assets 101,000 144,000
---------------------- ----------------------
Total assets $ 24,727,000 $ 23,818,000
====================== ========================
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 438,000 $ 65,000
Deferred revenue 286,000 230,000
Mortgage note payable 24,986,000 25,405,000
Partners' deficit:
Limited partners' deficit, $500 per unit, 40,000 units
authorized, issued and outstanding (4,180,000) (5,200,000)
General partners' deficit (1,455,000) (1,811,000)
Unrealized gain on marketable securities 4,652,000 5,129,000
---------------------- ----------------------
Total partners' deficit (983,000) (1,882,000)
---------------------- ----------------------
Total liabilities and partners' deficit $ 24,727,000 $ 23,818,000
====================== ========================
</TABLE>
See accompanying notes.
2
<PAGE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- ---------------- --------------- ----------------
REVENUES:
<S> <C> <C> <C> <C>
Rental income $ 2,194,000 $ 1,954,000 $ 4,304,000 $ 3,871,000
Dividends from marketable securities of
affiliate 84,000 76,000 168,000 141,000
Other income 41,000 33,000 71,000 68,000
--------------- ---------------- --------------- ----------------
2,319,000 2,063,000 4,543,000 4,080,000
--------------- ---------------- --------------- ----------------
COSTS AND EXPENSES:
Cost of operations 515,000 463,000 1,037,000 953,000
Management fees paid to affiliate 133,000 117,000 260,000 232,000
Depreciation 230,000 217,000 460,000 432,000
Administrative 26,000 20,000 41,000 31,000
Interest expense 683,000 705,000 1,369,000 1,415,000
--------------- ---------------- --------------- ----------------
1,587,000 1,522,000 3,167,000 3,063,000
--------------- ---------------- --------------- ----------------
NET INCOME $ 732,000 $ 541,000 $ 1,376,000 $ 1,017,000
=============== ================ =============== ================
Limited partners' share of net income ($34.03
per unit in 1998 and $25.13 per unit in $ 1,361,000 $ 1,005,000
1997)
General partners' share of net income 15,000 12,000
--------------- ----------------
$ 1,376,000 $ 1,017,000
=============== ================
</TABLE>
See accompanying notes.
3
<PAGE>
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, 1997 $ (5,200,000) $ (1,811,000) $ 5,129,000 $ (1,882,000)
Unrealized loss marketable securities - - (477,000) (477,000)
Net income 1,361,000 15,000 - 1,376,000
Equity transfer (341,000) 341,000 - -
----------------- ----------------- ----------------- -----------------
Balance at June 30, 1998 $ (4,180,000) $ (1,455,000) $ 4,652,000 $ (983,000)
================= ================= ================= =================
</TABLE>
See accompanying notes.
4
<PAGE>
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------------
1998 1997
-------------------- -------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,376,000 $ 1,017,000
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 460,000 432,000
Decrease (increase) in rent and other receivables 4,000 (22,000)
Amortization of prepaid loan fees 46,000 46,000
(Increase) decrease in other assets (3,000) 24,000
Increase in accounts payable 373,000 41,000
Increase in deferred revenue 56,000 20,000
-------------------- -------------------
Total adjustments 936,000 541,000
-------------------- -------------------
Net cash provided by operating activities 2,312,000 1,558,000
-------------------- -------------------
Cash flows from investing activities:
Purchase of marketable securities of affiliate - (1,289,000)
Additions to real estate facilities (141,000) (275,000)
-------------------- -------------------
Net cash used in investing activities (141,000) (1,564,000)
-------------------- -------------------
Cash flows from financing activities:
Principal payments on mortgage note payable (419,000) (454,000)
-------------------- -------------------
Net cash used in financing activities (419,000) (454,000)
-------------------- -------------------
Net increase (decrease) in cash and cash equivalents 1,752,000 (460,000)
Cash and cash equivalents at beginning of period 1,911,000 2,440,000
-------------------- -------------------
Cash and cash equivalents at end of period $ 3,663,000 $ 1,980,000
==================== ===================
Supplemental schedule of non-cash investing and financing activities:
Decrease in fair market value of marketable securities $ 477,000 $ 424,000
==================== ===================
Unrealized loss on marketable securities $ (477,000) $ (424,000)
==================== ===================
</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,
1997.
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, 1998, the results of its operations for the six months ended
June 30, 1998 and 1997 and its cash flows for the three months then ended.
3. The results of operations for the six months ended June 30, 1998 are not
necessarily indicative of the results expected for the full year.
4. Marketable securities at June 30, 1998 consist of 381,980 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, 1998, the Partnership has recorded the marketable
securities at fair value, based upon the closing quoted prices of the
securities at June 30, 1998. Changes in market value of marketable
securities are reflected as unrealized gains or losses directly in
Partners' Equity and accordingly have no effect on net income.
5. The Partnership's mortgage note payable matures on October 1, 1998. On July
1, 1998, the Partnership paid off the mortgage note payable with cash
reserves and with the proceeds of a $22,000,000 loan from Public Storage,
Inc. The loan from Public Storage, Inc. bears interest at the fixed rate of
7.2% and matures June 30, 1999. The loan calls for monthly payments of
interest only. Principal may be paid at any time without penalty. Public
Storage, Inc. has also provided the Partnership with options to extend the
loan term through June 2003.
6
<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, 1998 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1997:
The Partnership's net income for the six months ended June 30, 1998 was
$1,376,000 compared to $1,017,000 for the six months ended June 30, 1997,
representing an increase of $359,000 or 35%. The Partnership's net income for
the three months ended June 30, 1998 was $732,000 compared to $541,000 for the
three months ended June 30, 1997, representing an increase of $191,000 or 35%.
These increases are primarily a result of increased operating results at the
Partnership's real estate facilities combined with a decrease in interest
expense.
Rental income for the six months ended June 30, 1998 was $4,304,000
compared to $3,871,000 for the six months ended June 30, 1997 representing an
increase of $433,000 or 11%. Rental income for the three months ended June 30,
1998 was $2,194,000 compared to $1,954,000 for the three months ended June 30,
1997, representing an increase of $240,000 or 12%. These increases are primarily
attributable to higher rental rates and occupancy levels at the Partnership's
mini-warehouse facilities. The weighted average occupancy levels at the
mini-warehouse facilities were 94% and 91% for the six months ended June 30,
1998 and 1997, respectively. Realized rent for the six months ended June 30,
1998 increased to $.87 per occupied square foot from $.81 per occupied square
foot for the six months ended June 30, 1997.
Other income increased $3,000 for the six months ended June 30, 1998
compared to the same period in 1997. This increase is primarily due to an
increase in invested cash balances.
Dividend income from marketable securities of affiliate increased $27,000
for the six months ended June 30, 1998 compared to the same period in 1997 due
to an increase in the number of shares owned in 1998 compared to the same period
in 1997.
Cost of operations (including management fees paid to affiliate) for the
six months ended June 30, 1998 was $1,297,000 compared to $1,185,000 for the six
months ended June 30, 1997, representing an increase of $112,000 or 9%. Cost of
operations (including management fees paid to affiliate) for the three months
ended June 30, 1998 was $648,000 compared to $580,000 for the three months ended
June 30, 1997, representing an increase of $68,000 or 12%. This increase is
mainly attributable to increases in management fees, property taxes and payroll
expenses. Property taxes increased due to an increase in property tax rates at
some of the Partnership's mini-warehouse facilities.
7
<PAGE>
Interest expense decreased $46,000 to $1,369,000 in the six months ended
June 30, 1998 from $1,415,000 in the same period in 1997. This decrease is
mainly attributable to a lower outstanding principal balances on the
Partnership's notes payable.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from operating activities ($2,312,000 for the six months ended
June 30, 1998) have been sufficient to meet all current obligations of the
Partnership.
At June 30, 1998, the Partnership held 381,980 shares of common stock
(marketable securities) with a fair value totaling $10,743,000 (cost basis of
$6,091,000 at June 30, 1998) in Public Storage, Inc. The Partnership recognized
$168,000 in dividends for the six months ended June 30, 1998.
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.
On July 1, 1998, the Partnership paid off the mortgage note payable with
cash reserves and with the proceeds of a $22,000,000 loan from Public Storage,
Inc. The loan from Public Storage, Inc. bears interest at the fixed rate of 7.2%
and matures June 30, 1999. The loan calls for monthly payments of interest only.
Principal may be paid at any time without penalty. Public Storage, Inc. has also
provided the Partnership with options to extend the loan term through June 2003.
8
<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 12, 1998
PUBLIC STORAGE PROPERTIES IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
-------------------------
John Reyes
Senior Vice President and
Chief Financial Officer
9
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000022577
<NAME> Public Storage Properties IV, Ltd.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,663,000
<SECURITIES> 10,743,000
<RECEIVABLES> 162,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,669,000
<PP&E> 21,416,000
<DEPRECIATION> (11,358,000)
<TOTAL-ASSETS> 24,727,000
<CURRENT-LIABILITIES> 724,000
<BONDS> 24,986,000
0
0
<COMMON> 0
<OTHER-SE> (983,000)
<TOTAL-LIABILITY-AND-EQUITY> 24,727,000
<SALES> 0
<TOTAL-REVENUES> 4,543,000
<CGS> 0
<TOTAL-COSTS> 1,297,000
<OTHER-EXPENSES> 501,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,369,000
<INCOME-PRETAX> 1,376,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,376,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,376,000
<EPS-PRIMARY> 34.03
<EPS-DILUTED> 34.03
</TABLE>