PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED BALANCE SHEETS
September 30, December 31,
2000 1999
---------------- -----------------
(Unaudited)
ASSETS
------
Cash and cash equivalents $ 907,000 $ 249,000
Marketable securities of affiliate (cost of $6,340,000 at
September 30, 2000 and $6,091,000 at December 31, 1999) 9,431,000 8,666,000
Rent and other receivables 324,000 389,000
Real estate facilities, at cost:
Buildings and equipment 17,020,000 16,797,000
Land 5,021,000 5,244,000
---------------- -----------------
22,041,000 22,041,000
Less accumulated depreciation (13,539,000) (12,815,000)
---------------- -----------------
8,502,000 9,226,000
Other assets 106,000 113,000
---------------- -----------------
Total assets $ 19,270,000 $ 18,643,000
================ =================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $ 364,000 $ 177,000
Deferred revenue 279,000 240,000
Note payable to commercial bank 9,675,000 14,050,000
Partners' equity:
Limited partners' equity, $500 per unit, 40,000 units
authorized, issued and outstanding 4,348,000 1,188,000
General partners' equity 1,513,000 413,000
Other comprehensive income 3,091,000 2,575,000
---------------- -----------------
Total partners' equity 8,952,000 4,176,000
---------------- -----------------
Total liabilities and partners' equity $ 19,270,000 $ 18,643,000
================ =================
See accompanying notes.
2
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
REVENUES:
Rental income $ 2,422,000 $ 2,403,000 $ 7,114,000 $ 6,937,000
Dividends from marketable securities of affiliate 321,000 84,000 503,000 252,000
Gain on sale of land - - 61,000 -
Other income 4,000 1,000 6,000 5,000
------------- ------------- ------------- -------------
2,747,000 2,488,000 7,684,000 7,194,000
------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Cost of operations 539,000 525,000 1,641,000 1,579,000
Management fees paid to affiliate 146,000 144,000 427,000 416,000
Depreciation 241,000 248,000 724,000 741,000
Administrative 17,000 15,000 80,000 61,000
Interest expense 164,000 243,000 552,000 797,000
------------- ------------- ------------- -------------
1,107,000 1,175,000 3,424,000 3,594,000
------------- ------------- ------------- -------------
NET INCOME $ 1,640,000 $ 1,313,000 $ 4,260,000 $ 3,600,000
============= ============= ============= =============
Limited partners' share of net income ($105.33
per unit in 2000 and $89.00 per unit in 1999) $ 4,213,000 $ 3,560,000
General partners' share of net income 47,000 40,000
------------- -------------
$ 4,260,000 $ 3,600,000
============= =============
See accompanying notes.
3
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENT OF PARTNERS' EQUITY
(UNAUDITED)
Other
Limited General Comprehensive Total Partners'
Partners Partners Income Equity
----------------- ----------------- ----------------- -----------------
Balance at December 31, 1999 $ 1,188,000 $ 413,000 $ 2,575,000 $ 4,176,000
Change in unrealized gain of marketable
equity securities - - 516,000 516,000
Net income 4,213,000 47,000 - 4,260,000
Equity transfer (1,053,000) 1,053,000 - -
----------------- ----------------- ----------------- -----------------
Balance at September 30, 2000 $ 4,348,000 $ 1,513,000 $ 3,091,000 $ 8,952,000
================= ================= ================= =================
See accompanying notes.
4
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
--------------------------------
2000 1999
------------- -------------
Cash flows from operating activities:
Net income $ 4,260,000 $ 3,600,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 721,000 741,000
Gain on sale of land (61,000) -
(Increase) decrease in rent and other receivables (184,000) 2,000
Amortization of prepaid loan fees 3,000 -
Decrease in other assets 7,000 10,000
Increase in accounts payable 187,000 92,000
Increase in deferred revenue 39,000 (1,000)
------------- -------------
Total adjustments 712,000 844,000
------------- -------------
Net cash provided by operating activities 4,972,000 4,444,000
------------- -------------
Cash flows from investing activities:
Proceeds from sale of land 305,000 -
Additions to real estate facilities (244,000) (329,000)
------------- -------------
Net cash provided by (used in) investing activities 61,000 (329,000)
------------- -------------
Cash flows from financing activities:
Principal payments on note payable to commercial bank (4,375,000) (4,440,000)
------------- -------------
Net cash used in financing activities (4,375,000) (4,440,000)
------------- -------------
Net increase (decrease) in cash and cash equivalents 658,000 (325,000)
Cash and cash equivalents at beginning of period 249,000 433,000
------------- -------------
Cash and cash equivalents at end of period $ 907,000 $ 108,000
============= =============
Supplemental schedule of non-cash activities:
Receipt of stock dividend:
Marketable securities $ 249,000 $ -
============= =============
Rent and other receivables $ (249,000) $ -
============= =============
Increase (decrease) in fair market value of marketable securities:
Marketable securities $ 516,000 $ 716,000
============= =============
Other comprehensive income $ 516,000 $ (716,000)
============= =============
See accompanying notes.
5
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, 1999.
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 September 30, 2000, the results of its operations for the nine months ended September 30,
2000 and 1999 and its cash flows for the nine months then ended.
3. The results of operations for the nine months ended September 30, 2000 are not necessarily indicative of
the results expected for the full year.
4. Marketable securities at September 30, 2000 consist of 381,980 shares of common stock and 12,412 shares
of Equity Stock, Series A of Public Storage, Inc., a publicly traded real estate investment trust and a
general partner of the Partnership. We have designated our portfolio of marketable securities as
available for sale. Accordingly, at September 30, 2000, we have recorded the marketable securities at
fair value, based upon the closing quoted prices of the securities at September 30, 2000. 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. During September 1998, we borrowed $21,000,000 from a commercial bank. The loan is unsecured and bears
interest at the London Interbank Offering Rate, ("LIBOR") rounded up to the nearest .125% plus 0.60% to
1.20% depending on our interest coverage ratio (7.23% at September 30, 2000). The loan requires monthly
payments of interest and mature September 2002. Principal may be paid, in whole or in part, at any time
without penalty or premium.
6
5. (continued)
We entered into an interest rate swap agreement to reduce the impact of changes in interest rates on a
portion of its floating rate debt. The agreement, which covered $11,500,000 of debt through March 2000
and $7,500,000 from March 2000 through September 2000, effectively changes the interest rate exposure
from floating rate to a fixed rate of 5.22% plus 0.60% to 1.20% based on our interest coverage ratio
(5.82% as of September 30, 2000). Market gains and losses on the value of the swap were deferred and
included in income over the life of the contract. We recorded the differences paid or received on the
interest rate swap in interest expense as payments were made or received.
6. We sold during May 2000 excess land adjacent to one of our operating properties for $305,000. This
resulted in a gain of $61,000 being realized in the second quarter of 2000.
7
PUBLIC STORAGE PROPERTIES IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
When used within this document, the words "expects," "believes," "anticipates," "should," "estimates,"
and similar expressions are intended to identify "forward-looking statements" within the meaning of that term in
Section 27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of the Securities Exchange Act
of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties, and other
factors, which may cause the actual results and performance of the Partnership to be materially different from
those expressed or implied in the forward looking statements. Such factors include the impact of competition
from new and existing real estate facilities which could impact rents and occupancy levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to effectively compete in the
markets that it does business in; the impact of the regulatory environment as well as national, state, and local
laws and regulations including, without limitation, those governing Partnerships; and the impact of general
economic conditions upon rental rates and occupancy levels at the real estate facilities that the Partnership has
an interest in.
RESULTS OF OPERATIONS
Three and nine months ended September 30, 2000 compared to three and nine months ended September 30,
1999:
Our net income for the nine months ended September 30, 2000 was $4,260,000 compared to $3,600,000 for
the nine months ended September 30, 1999, representing an increase of $660,000 or 18%. Our net income for the
three months ended September 30, 2000 was $1,640,000 compared to $1,313,000 for the three months ended September
30, 1999, representing an increase of $327,000 or 25%. These increases are primarily a result of increased
operating results at our real estate facilities (for the nine month period), increase in dividend income on
marketable securities of an affiliate, and a decrease in interest expense resulting from our lower outstanding
debt.
Rental income for the nine months ended September 30, 2000 was $7,114,000 compared to $6,937,000 for the
nine months ended September 30, 1999, representing an increase of $177,000 or 3%. Rental income for the three
months ended September 30, 2000 was $2,422,000 compared to $2,403,000 for the three months ended September 30,
1999, representing an increase of $19,000 or 1%. These increases are primarily attributable to higher rental
rates at our mini-warehouse facilities. The weighted average occupancy levels at the mini-warehouse facilities
were 94% for each of the nine months ended September 30, 2000 and 1999 respectively. Annual realized rent for
the nine months ended September 30, 2000 increased to $11.69 per occupied square foot from $11.23 per occupied
square foot for the nine months ended September 30, 1999.
8
Interest and other income increased $1,000 for the nine months ended September 30, 2000 compared to the
same period in 1999. The increase is primarily a result of higher invested cash balances and consequently more
interest earned.
Dividend income from marketable securities of affiliate increased $251,000 for the nine months ended
September 30, 2000 compared to the same period in 1999. The increase is the result of a special dividend of
$229,000 we received on the Public Storage common stock in the third quarter of year 2000 and from dividends we
received on the Public Storage Equity Stock, Series A which we received as a stock dividend in January 2000.
Cost of operations (including management fees paid to affiliate) for the nine months ended September 30,
2000 was $2,068,000 compared to $1,995,000 for the nine months ended September 30, 1999, representing an increase
of $73,000 or 4%. Cost of operations (including management fees paid to affiliate) for the three months ended
September 30, 2000 was $685,000 compared to $669,000 for the three months ended September 30, 1999, representing
an increase of $16,000 or 2%. This increase is mainly attributable to increases in advertising and promotion
expenses, tenant and legal settlements, and repairs and maintenance expense.
Interest expense was $552,000 in the nine months ended September 30, 2000 compared to $797,000 in the
same period in 1999, a $245,000 or 31% decrease. This decrease is mainly attributable to a lower outstanding
principal balance.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities ($4,972,000 for the nine months ended September 30, 2000) have been
sufficient to meet all current obligations of the Partnership.
During September 1998, we borrowed $21,000,000 from a commercial bank. The loan is unsecured and bears
interest at the London Interbank Offering Rate ("LIBOR") rounded up to the nearest .125% plus 0.60% to 1.20%
depending on our interest coverage ratio (7.23% at September 30, 2000). The loan requires monthly payments of
interest and matures September 2002. Principal may be paid, in whole or in part, at any time without penalty or
premium.
We entered into an interest rate swap agreement to reduce the impact of changes in interest rates on a
portion of its floating rate debt. The agreement, which covered $11,500,000 of debt through March 2000 and
$7,500,000 from March 2000 through September 2000, effectively changes the interest rate exposure from floating
rate to a fixed rate of 5.22% plus 0.60% to 1.20% based on our interest coverage ratio (5.82% as of September 30,
2000). Market gains and losses on the value of the swap were deferred and included in income over the life of
the contract. We recorded the differences paid or received on the interest rate swap in interest expense as
payments were made or received.
9
PART II. OTHER INFORMATION
Items 1 through 5 are inapplicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) The following exhibits are 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: November 13, 2000
PUBLIC STORAGE PROPERTIES IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
John Reyes
Senior Vice President and
Chief Financial Officer
10
