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, 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 0-8676
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)
701 Western Ave.
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 March 31, 1996
and December 31, 1995 2
Condensed statements of income for the three
months ended March 31, 1996 and 1995 3
Condensed statement of partners' deficit for the
three months ended March 31, 1996 4
Condensed statements of cash flows for the
three months ended March 31, 1996 and 1995 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 PARTNERS II, LTD.
CONDENSED BALANCE SHEETS
March 31, December 31,
1996 1995
---------- ----------
ASSETS
------
Cash and cash equivalents $ 112,000 $ --
Rent and other receivables 22,000 23,000
Real estate facilities at cost:
Building, land improvements and equipment 3,284,000 3,281,000
Land 1,268,000 1,267,000
---------- ----------
4,552,000 4,548,000
Less accumulated depreciation (2,305,000) (2,265,000)
---------- ----------
2,247,000 2,283,000
Other assets 247,000 279,000
---------- ----------
Total assets $ 2,628,000 $ 2,585,000
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 79,000 $ 35,000
Deferred revenue 75,000 74,000
Notes payable 8,447,000 8,602,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 10,000 units authorized, 9,890
issued and outstanding (4,430,000) (4,544,000)
General partners' deficit (1,543,000) (1,582,000)
---------- ----------
Total partners' deficit (5,973,000) (6,126,000)
Total liabilities and partners' deficit $ 2,628,000 $ 2,585,000
========== ==========
See accompanying notes.
2
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
----------------------
1996 1995
-------- --------
(restated)
REVENUES:
Rental income $567,000 $530,000
Other income -- 3,000
-------- --------
567,000 533,000
-------- --------
COSTS AND EXPENSES:
Cost of operations 117,000 111,000
Management fees paid to affiliate 31,000 32,000
Depreciation and amortization 40,000 36,000
Administrative 8,000 9,000
Environmental cost -- 10,000
Interest expense 218,000 243,000
-------- --------
414,000 441,000
-------- --------
NET INCOME $153,000 $ 92,000
======== ========
Limited partners'
share of net income
($15.27 per unit in 1996
and $9.20 per unit in 1995) $151,000 $ 91,000
General partners' share
of net income 2,000 1,000
-------- --------
$153,000 $ 92,000
======== ========
See accompanying notes.
3
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
Total
Limited General Partners'
Partners Partners Deficit
----------- ----------- ------------
Balance at December 31, 1995 $(4,544,000) $(1,582,000) $(6,126,000)
Net Income 151,000 2,000 153,000
Equity transfer (64,000) 64,000 --
----------- ----------- ------------
Balance at March 31, 1996 $(4,457,000) $(1,516,000) $(5,973,000)
=========== =========== ============
See accompanying notes.
4
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
----------------------
1996 1995
--------- ---------
(restated)
Cash flows from operating activities:
Net income $ 153,000 $ 92,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 40,000 36,000
Decrease (increase) in rent and other receivables 1,000 (10,000)
Decrease in prepaid loan fees 3,000 3,000
Amortization of prepaid management fees 31,000 --
Decrease (increase) in other assets (2,000) (1,000)
Increase (decrease) in accounts payable 44,000 (1,000)
Increase (decrease) in deferred revenue 1,000 13,000
--------- ---------
Total adjustments 118,000 40,000
--------- ---------
Net cash provided
by operating activities 271,000 132,000
--------- ---------
Cash flows from investing activities:
Additions to real estate facilities (4,000) (3,000)
--------- ---------
Net cash used in
investing activities (4,000) (3,000)
--------- ---------
Cash flows from financing activities:
Principal payments on note payable (155,000) (130,000)
--------- ---------
Net cash used in
financing activities (155,000) (130,000)
--------- ---------
Net increase (decrease) in
cash and cash equivalents 112,000 (1,000)
Cash and cash equivalents at
the beginning of the period -- 159,000
--------- ---------
Cash and cash equivalents at
the end of the period $ 112,000 $ 158,000
========= =========
See accompanying notes.
4
<PAGE>
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,
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 March 31, 1996, the results of its operations for the three months ended
March 31, 1996 and its cash flows for the three months then ended.
3. The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results expected for the full year.
4. In 1995, the Partnership prepaid eight months of 1996 management fees at a
total cost of $83,000. The Partnership expensed $31,000 of the 1996 prepaid
management fees for the three months ended March 31, 1996. The balance of
prepaid management fees, $52,000, is included in other assets in the
Balance Sheet at March 31, 1996.
5. Certain prior year amounts have been reclassified to conform with the 1996
classifications.
6
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Three months ended March 31, 1996 compared to three months ended March 31,
1995:
The Partnership's net income for the three months ended March 31, 1996 was
$153,000 compared to $92,000 for the three months ended March 31, 1995,
representing an increase of $61,000. This increase is primarily a result of
increased operating results at the Partnership's real estate facilities combined
with a decrease in interest expense.
Rental income was $567,000 compared to $530,000 for the three months ended
March 31, 1996 and 1995, respectively, representing an increase of $37,000. This
increase is 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 81% and 78% for the three months
ended March 31, 1996 and 1995, respectively. Realized rent for the three months
ended March 31, 1996 increased to $.88 per occupied square foot from $.86 per
occupied square foot for the three months ended March 31, 1995.
Cost of operations (including management fees paid to affiliate) increased
$5,000 to $148,000 from $143,000 for the three months ended March 31, 1996 and
1995, respectively. This increase is mainly attributable to increases in
property tax expense.
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 three
month period ended March 31, 1996, the Partnership expensed $31,000 of prepaid
management fees. The amount is included in management fees paid to affiliate in
the condensed statements of income. As a result of the prepayment, the
Partnership saved approximately $3,000 in management fees, based on the
management fees that would have been payable on rental income generated in the
three months ended March 31, 1996 compared to the amount prepaid.
7
<PAGE>
Interest expense decreased $25,000 to $218,000 from $243,000 for the three
months ended March 31, 1996 and 1995 respectively. This decrease is mainly
attributable to lower outstanding principal balances on the Partnership's notes
payable.
In 1995, the Partnership incurred cost of $10,000 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 generated from operations ($271,000 for the three months ended March
31, 1996) 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 November 2002, at which time the remaining principal is
due.
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: May 14, 1996
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
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000275915
<NAME> PUBLIC STORAGE PARTNERS II, LTD.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<CASH> 112,000
<SECURITIES> 0
<RECEIVABLES> 269,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 381,000
<PP&E> 4,552,000
<DEPRECIATION> (2,305,000)
<TOTAL-ASSETS> 2,628,000
<CURRENT-LIABILITIES> 154,000
<BONDS> 8,447,000
0
0
<COMMON> 0
<OTHER-SE> (5,973,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,628,000
<SALES> 0
<TOTAL-REVENUES> 567,000
<CGS> 0
<TOTAL-COSTS> 188,000
<OTHER-EXPENSES> 8,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218,000
<INCOME-PRETAX> 153,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 153,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 153,000
<EPS-PRIMARY> 15.27
<EPS-DILUTED> 15.27
</TABLE>
