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, 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
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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)
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
-- --
<PAGE>
INDEX
Page
PART I. FINANCIAL INFORMATION
Condensed balance sheets at June 30, 1996
and December 31, 1995 2
Condensed statements of operations for the three and six
months ended June 30, 1996 and 1995 3
Condensed statement of partners' deficit for the
six months ended June 30, 1996 4
Condensed statements of cash flows for the
six months ended June 30, 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>
<TABLE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
-------------------- ---------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 57,000 $ -
Rent and other receivables 13,000 23,000
Real estate facilities, at cost:
Buildings and equipment 3,320,000 3,281,000
Land 1,267,000 1,267,000
-------------------- ---------------------
4,587,000 4,548,000
Less accumulated depreciation (2,346,000) (2,265,000)
-------------------- ---------------------
2,241,000 2,283,000
-------------------- ---------------------
Other assets 252,000 279,000
-------------------- ---------------------
Total assets $ 2,563,000 $ 2,585,000
==================== =====================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 20,000 $ 35,000
Deferred revenue 74,000
66,000
Notes payable 8,307,000 8,602,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 10,000 units authorized,
9,890 issued and outstanding (4,324,000) (4,544,000)
General partners' deficit (1,506,000) (1,582,000)
-------------------- ---------------------
Total partners' deficit (5,830,000) (6,126,000)
-------------------- ---------------------
Total liabilities and partners' deficit $ 2,563,000 $ 2,585,000
==================== =====================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------- -------------------------------------
1996 1995 1996 1995
------------------ ------------------ ----------------- -----------------
(Restated)
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 560,000 $ 558,000 $ 1,127,000 $ 1,088,000
Dividends and other income
(including dividends from marketable
securities of affiliate in 1995) 1,000 2,000 1,000 5,000
------------------ ------------------ ----------------- -----------------
561,000 560,000 1,128,000 1,093,000
------------------ ------------------ ----------------- -----------------
COSTS AND EXPENSES:
Cost of operations 114,000 97,000 231,000 208,000
Management fees paid to affiliate 31,000 34,000 62,000 66,000
Depreciation 41,000 36,000 81,000 72,000
Administrative 10,000 9,000 18,000 18,000
Environmental cost - - - 10,000
Interest expense 222,000 239,000 440,000 482,000
------------------ ------------------ ----------------- -----------------
418,000 415,000 832,000 856,000
------------------ ------------------ ----------------- -----------------
NET INCOME $ 143,000 $ 145,000 $ 296,000 $ 237,000
================== ================== ================= =================
Limited partners' share of net income
($29.63 per unit in 1996 and $23.76
per unit in 1995) $ 293,000 $ 235,000
General partners' share of net income 3,000 2,000
---------------- -----------------
$ 296,000 $ 237,000
================= =================
</TABLE>
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 293,000 3,000 296,000
Equity transfer (73,000) 73,000 -
------------- ------------ -----------
Balance at June 30, 1996 ($4,324,000) ($1,506,000) ($5,830,000)
============= ============ ===========
See accompanying notes.
4
<PAGE>
<TABLE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
-------------------------------------------
1996 1995
-------------------- -------------------
(restated)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 296,000 $ 237,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 81,000 72,000
Decrease (increase) in rent and other receivables 10,000 (6,000)
Decrease in prepaid loan fees 5,000 5,000
Amortization of prepaid management fees 62,000 --
Increase in other assets (40,000) (1,000)
Decrease in accounts payable (15,000) (9,000)
(Decrease) increase in deferred revenue (8,000) 3,000
--------- ---------
Total adjustments 95,000 64,000
--------- ---------
Net cash provided by operating activities 391,000 301,000
--------- ---------
Cash flows from investing activities:
Additions to real estate facilities (39,000) (3,000)
--------- ---------
Net cash used in investing activities (39,000) (3,000)
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage notes payable (295,000) (262,000)
--------- ---------
Net cash used in financing activities (295,000) (262,000)
--------- ---------
Net increase in cash and cash equivalents 57,000 36,000
Cash and cash equivalents at the beginning of the period -- 159,000
--------- ---------
Cash and cash equivalents at the end of the period $ 57,000 $ 195,000
========= =========
Supplemental schedule of noncash 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
<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 June 30, 1996, the results of its operations for the three and six
months ended June 30, 1996 and 1995 and its cash flows for the six months
then ended.
3. The results of operations for the three and six months ended June 30, 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 $62,000 of the prepaid
management fees for the six months ended June 30, 1996. The balance of
prepaid management fees, $21,000, is included in other assets in the
Balance Sheet at June 30, 1996.
5. Certain prior year amounts have been reclassified to conform with the 1996
presentation.
6
<PAGE>
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, 1996 compared to three and six months
ended June 30, 1995:
The Partnership's net income for the six months ended June 30, 1996 was
$296,000 compared to $237,000 for the six months ended June 30, 1995,
representing an increase of $59,000, or 25%. The Partnership's net income for
the three months ended June 30, 1996 was $143,000 compared to $145,000 for the
three months ended June 30, 1995, representing a decrease of $2,000. 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 was $1,127,000 compared to $1,088,000 for the six months
ended June 30, 1996 and 1995, respectively, representing an increase of $39,000
or 4%. Rental income was $560,000 compared to $558,000 for the three months
ended June 30, 1996 and 1995, respectively, representing an increase of $2,000.
The increase for the six months ended is primarily attributable to an increase
in occupancy levels at the Partnership's mini-warehouse facilities. The weighted
average occupancy levels at the mini-warehouse facilities were 86% and 82% for
the six months ended June 30, 1996 and 1995, respectively. Realized rent for the
six months ended June 30, 1996 remained constant at $.87 per occupied square
foot for both six month periods ended June 30, 1996 and 1995.
Cost of operations (including management fees paid to an affiliate)
increased $19,000 or 7% to $293,000 from $274,000 for the six months ended June
30, 1996 and 1995, respectively. This increase is mainly attributable to
increases in repairs and maintenance, payroll, and advertising expenses. Cost of
operations (including management fees paid to an affiliate) increased $14,000 or
11% to $145,000 from $131,000 for the three months ended June 30, 1996 and 1995
respectively. This increase is mainly attributable to an increase in repairs and
maintenance 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 six
month period ended June 30, 1996, the Partnership expensed $62,000 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 $5,000 in management fees, based on the
management fees that would have been payable on rental income generated in the
six months ended June 30, 1996 compared to the amount prepaid.
7
<PAGE>
Interest expense decreased $42,000 to $440,000 from $482,000 for the six
months ended June 30, 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 ($391,000 for the six months ended June 30,
1996) has been sufficient to meet all current obligations of the Partnership,
including principal repayments of the Partnership's notes payable.
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.
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 13, 1996
PUBLIC STORAGE PARTNERS II, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
-----------------------------
Ronald L. Havner, Jr.
Senior Vice President and Chief
Financial Officer
(principal financial officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000275915
<NAME> PUBLIC STORAGE PARTNERS II, LTD.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 57,000
<SECURITIES> 0
<RECEIVABLES> 13,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,000
<PP&E> 4,587,000
<DEPRECIATION> (2,346,000)
<TOTAL-ASSETS> 2,563,000
<CURRENT-LIABILITIES> 86,000
<BONDS> 8,307,000
0
0
<COMMON> 0
<OTHER-SE> (5,830,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,563,000
<SALES> 0
<TOTAL-REVENUES> 1,128,000
<CGS> 0
<TOTAL-COSTS> 293,000
<OTHER-EXPENSES> 99,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 440,000
<INCOME-PRETAX> 296,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 296,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 296,000
<EPS-PRIMARY> 29.63
<EPS-DILUTED> 29.63
</TABLE>
