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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 March 31, 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.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3146963
- - ------------------------------------------ -----------------------
(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
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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 March 31, 1995
and December 31, 1994 2
Condensed statements of operations for the three
months ended March 31, 1995 and 1994 3
Condensed statement of partners' deficit for the
three months ended March 31, 1995 4
Condensed statements of cash flows for the
three months ended March 31, 1995 and 1994 5
Notes to condensed financial statements 6-7
Management's discussion and analysis of
financial condition and results of operations 8-9
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PART II. OTHER INFORMATION 10
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PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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<S> <C> <C>
ASSETS
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Cash and cash equivalents $ 158,000 $ 159,000
Marketable securities of affiliate
at market value (cost of $68,000) 85,000 72,000
Rent and other receivables 42,000 32,000
Real estate facilities at cost:
Building, land improvements and equipment 3,196,000 3,194,000
Land 1,268,000 1,267,000
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4,464,000 4,461,000
Less accumulated depreciation (2,153,000) (2,117,000)
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2,311,000 2,344,000
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Other assets 204,000 206,000
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Total assets $ 2,800,000 $ 2,813,000
============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 9,000 $ 10,000
Deferred revenue 87,000 74,000
Notes payable 9,254,000 9,384,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 10,000 units authorized, 9,890
issued and outstanding (4,871,000) (4,939,000)
General partners' deficit (1,696,000) (1,720,000)
Unrealized gain on marketable
securities 17,000 4,000
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Total partners' deficit (6,550,000) (6,655,000)
=========== ===========
Total liabilities and partners' deficit $ 2,800,000 $ 2,813,000
=========== ===========
</TABLE>
see accompanying notes.
2
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PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1995 1994
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<S> <C> <C>
REVENUES:
Rental income $530,000 $550,000
Dividends and other income
(including dividends from marketable
securities of affiliate) 3,000 -
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533,000 550,000
-------- --------
COSTS AND EXPENSES:
Cost of operations 111,000 97,000
Management fees paid to affiliate 32,000 33,000
Depreciation and amortization 36,000 34,000
Administrative 19,000 12,000
Interest expense 243,000 269,000
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441,000 445,000
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NET INCOME $ 92,000 $105,000
======== ========
Limited partners'
share of net income
($9.20 per unit in 1995
and $10.52 per unit in 1994) $ 91,000 $104,000
General partners' share
of net income 1,000 1,000
-------- --------
$ 92,000 $105,000
======== ========
</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 - - 13,000 13,000
Net Income 91,000 1,000 - 92,000
Equity transfer (23,000) 23,000 - -
----------- ----------- ------- -----------
Balance at March 31, 1995 $(4,871,000) $(1,712,000) $17,000 $(6,550,000)
=========== =========== ======= ===========
</TABLE>
see accompanying notes.
4
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PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31,
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1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 92,000 $ 105,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 36,000 34,000
Increase in rent and other receivables (10,000) (16,000)
Decrease in prepaid loan fees 3,000 -
(Increase) decrease in other assets (1,000) 15,000
Decrease in accounts payable (1,000) (2,000)
Increase (decrease) in deferred revenue 13,000 (1,000)
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Total adjustments 40,000 30,000
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Net cash provided
by operating activities 132,000 135,000
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Cash flows from investing activities:
Additions to real estate facilities (3,000) -
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Net cash used in
investing activities (3,000) -
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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 (130,000) (70,000)
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Net cash used in
financing activities (130,000) (70,000)
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Net (decrease) increase in
cash and cash equivalents (1,000) 65,000
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 $ 158,000 $ 155,000
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SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Increase in fair value of marketable securities $ (4,000) $ -
========= =========
Unrealized gain on marketable securities 4,000 -
========= =========
</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 March 31, 1995, the results of its operations for the three
months ended March 31, 1995 and its cash flows for the three months then
ended.
3. The results of operations for the three months ended March 31, 1995 are
not necessarily indicative of the results expected for the full year.
4. Marketable securities at March 31, 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 March 31, 1995, the
Partnership has recorded the marketable securities at fair value and,
based upon the closing quoted price of the securities at March 31, 1995,
recorded a corresponding unrealized gain totaling $17,000 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 not been completed. The Partnership
is not presently aware of any 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 three months ended March 31, 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
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THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1994:
The Partnership's net income for the three months ended March 31, 1995
was $92,000 compared to $105,000 for the three months ended March 31, 1994,
representing a decrease of $13,000. This decrease is primarily a result of
decreased operating results at the Partnership's real estate facilities.
Rental income was $530,000 compared to $550,000 for the three months
ended March 31, 1995 and 1994, respectively, representing a decrease of
$20,000. This decrease 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 81% and 78% for the three months ended March 31, 1995 and
1994, respectively.
Cost of operations (including management fees paid to affiliate)
increased $14,000 to $143,000 from $130,000 for the three months ended March
31, 1995 and 1994 respectively. This increase is mainly attributable to
increases in payroll and repairs and maintenance costs.
Administrative expenses increased $7,000 for the three months ended
March 31, 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 acquisitions. During the first quarter of
1995, the Partnership commenced environmental assessments on its properties.
The result of those assessments have not been completed. However, the
Partnership is not presently aware of any 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 ($132,000 for the three months ended
March 31, 1995) has been sufficient to meet all current obligations of the
Partnership.
8
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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 6 are inapplicable.
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: May 1, 1995
PUBLIC STORAGE PARTNERS II, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
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Ronald L. Havner, Jr.
Vice President and Chief
Financial Officer
(principal accounting and
financial officer)
10
