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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 0-8676
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PUBLIC STORAGE PARTNERS II, LTD.
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(Exact name of registrant as specified in its charter)
California 95-3146963
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 N. Brand Boulevard
Glendale, California 91203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
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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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INDEX
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Page
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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
three and 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
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PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
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<S> <C> <C>
ASSETS
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Cash and cash equivalents $ 195,000 $ 159,000
Marketable securities of affiliate
at market value (cost of $68,000) 82,000 72,000
Rent and other receivables 38,000 32,000
Real estate facilities at cost:
Building, land improvements and equipment 3,197,000 3,194,000
Land 1,267,000 1,267,000
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4,464,000 4,461,000
Less accumulated depreciation (2,189,000) (2,117,000)
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2,275,000 2,344,000
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Other assets 202,000 206,000
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Total assets $ 2,792,000 $ 2,813,000
=========== ===========
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LIABILITIES AND PARTNERS' DEFICIT
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<S> <C> <C>
Accounts payable $ 1,000 $ 10,000
Deferred revenue 77,000 74,000
Notes payable 9,122,000 9,384,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 10,000 units authorized, 9,890
issued and outstanding (4,753,000) (4,939,000)
General partners' deficit (1,669,000) (1,720,000)
Unrealized gain on marketable
securities 14,000 4,000
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Total partners' deficit (6,408,000) (6,655,000)
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Total liabilities and partners' deficit $ 2,792,000 $ 2,813,000
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</TABLE>
See accompanying notes.
2
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PUBLIC STORAGE PARTNERS II, 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>
REVENUE:
Rental income $558,000 $541,000 $1,088,000 $1,091,000
Dividends and other income
(including dividends from marketable
securities of affiliate) 2,000 - 5,000 -
-------- -------- ---------- ----------
560,000 541,000 1,093,000 1,091,000
-------- -------- ---------- ----------
COSTS AND EXPENSES:
Costs of operations 97,000 108,000 208,000 205,000
Management fees paid to affiliate 34,000 32,000 66,000 65,000
Depreciation and amortization 36,000 33,000 72,000 67,000
Administrative 9,000 7,000 28,000 19,000
Interest expense 239,000 257,000 482,000 526,000
-------- -------- ---------- ----------
415,000 437,000 856,000 882,000
-------- -------- ---------- ----------
NET INCOME $145,000 $104,000 $ 237,000 $ 209,000
======== ======== ========== ==========
Limited partners' share of net income
($23.76 per unit in 1995 and
$20.93 per unit in 1994) $ 235,000 $ 207,000
General partner's share of net income 2,000 2,000
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$ 237,000 $ 209,000
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</TABLE>
See accompanying notes.
3
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PUBLIC STORAGE PARTNERS II, 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 $(4,939,000) $(1,720,000) $ 4,000 $(6,655,000)
Unrealized gain on marketable
Securities - - 10,000 10,000
Net income 235,000 2,000 - 237,000
Equity transfer (49,000) 49,000 - -
----------- ----------- ------- -----------
Balance at June 30, 1995 $(4,753,000) $(1,669,000) $14,000 $(6,408,000)
=========== =========== ======= ===========
</TABLE>
See accompanying notes.
4
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PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
June 30,
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1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 237,000 $ 209,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 72,000 67,000
Increase in rent and other receivables (6,000) (4,000)
Decrease in prepaid loan fees 5,000 5,000
(Increase) decrease in other assets (1,000) 27,000
Decrease in accounts payable (9,000) (7,000)
Increase (decrease) in deferred revenue 3,000 (11,000)
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Total adjustments 64,000 77,000
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Net cash provided
by operating activities 301,000 286,000
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Cash flows from investing activities:
Additions to real estate facilities (3,000) (20,000)
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Net cash used in
investing activities (3,000) (20,000)
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Cash flows from financing activities:
Proceeds from note payable - 850,000
Principal payment on note payable
to affiliate - (850,000)
Principal payments on note payable (262,000) (177,000)
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Net cash used in
financing activities (262,000) (177,000)
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Net increase in cash
and cash equivalents 36,000 89,000
Cash and cash equivalents at
the beginning of the period 159,000 90,000
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Cash and cash equivalents at
the end of the period $ 195,000 $ 179,000
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SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Increase in fair value of marketable securities $ (10,000) $ -
========= =========
Unrealized gain on marketable securities 10,000 -
========= =========
</TABLE>
See accompanying notes.
5
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PUBLIC STORAGE PARTNERS II, 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 5,000 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). FASB Statement 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 and,
based upon the closing quoted price of the securities at June 30, 1995,
recorded a corresponding unrealized gain totaling $14,000 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 first quarter of 1995,
the Partnership commenced environmental assessments on its properties.
The results of those assessments have been completed. The Partnership is
not presently aware of any significant environmental matters with respect
to any of its properties which would have a materially adverse effect on
the Company's financial position. Included in administrative expenses on
the statements of operations for six months ended June 30, 1995 is
approximately $9,000 incurred in connection with the environmental
assessments.
7
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PUBLIC STORAGE PARTNERS II, 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 was
$237,000 compared to $209,000 for the six months ended June 30, 1994,
representing an increase of $28,000, or 13%. The Partnership's net income for
the three months ended June 30, 1995 was $145,000 compared to $104,000 for
the three months ended June 30, 1994, representing an increase of $41,000, or
39%. These increases are primarily a result of decreased interest expense
due to lower outstanding loan balances in 1995 compared to 1994.
Rental income was $1,088,000 compared to $1,091,000 for the six months
ended June 30, 1995 and 1994, respectively, representing a decrease of
$3,000. Rental income was $558,000 compared to $541,000 for the three months
ended June 30, 1995 and 1994, respectively, representing an increase of
$17,000. The slight decrease for the six months ended is primarily
attributable to lower rental rates which effected an increase in occupancy
levels at the Partnership's mini-warehouse facilities. The weighted average
occupancy levels at the mini-warehouse facilities were 82% and 80% for the
six months ended June 30, 1995 and 1994, respectively. Realized rent for the
six months ended June 30, 1995 decreased to $.87 per occupied square foot
from $.90 per occupied square foot for the six months ended June 30, 1994.
Cost of operations (including management fees paid to an affiliate)
increased $4,000 to $274,000 from $270,000 for the six months ended June 30,
1995 and 1994, respectively. This increase is mainly attributable to
increases in payroll offset by a decrease in advertising cost. Cost of
operations (including management fees paid to an affiliate) decreased $9,000
to $131,000 from $140,000 for the three months ended June 30, 1995 and 1994
respectively. This decrease is mainly attributable to a decrease in repairs
and maintenance.
Administrative expenses increased $9,000 for the six months ended June
30, 1995 compared to the same period in 1994 primarily as the 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 extensive environmental investigations
in connection with the property
8
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acquisitions. During the first quarter of 1995, the Partnership commenced
environmental assessments on its properties. The result of those assessments
have been completed. However, the Partnership is not presently aware of any
significant environmental matters with respect to any of its properties which
would have a materially adverse effect on the Company's financial position.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash generated from operations ($301,000 for the six months ended June
30, 1995) has been sufficient to meet all current obligations of the
Partnership.
In the fourth quarter of 1990, quarterly distributions were discontinued
to enable the Partnership to make principal repayments that commenced in 1990
and will continue through 1996, at which time the remaining principal balance
is due.
9
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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.
10
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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 PARTNERS II, 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)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 195,000
<SECURITIES> 82,000
<RECEIVABLES> 38,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 315,000
<PP&E> 4,464,000
<DEPRECIATION> (2,189,000)
<TOTAL-ASSETS> 2,792,000
<CURRENT-LIABILITIES> 78,000
<BONDS> 9,122,000
<COMMON> 0
0
0
<OTHER-SE> (6,422,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,792,000
<SALES> 0
<TOTAL-REVENUES> 1,093,000
<CGS> 0
<TOTAL-COSTS> 346,000
<OTHER-EXPENSES> 28,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 482,000
<INCOME-PRETAX> 237,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 237,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 237,000
<EPS-PRIMARY> 23.76
<EPS-DILUTED> 0.000
</TABLE>
