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 September 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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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
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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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<PAGE>
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Condensed balance sheets at September 30, 1997
and December 31, 1996 2
Condensed statements of income for the three and nine
months ended September 30, 1997 and 1996 3
Condensed statement of partners' deficit for the
nine months ended September 30, 1997 4
Condensed statements of cash flows for the
nine months ended September 30, 1997 and 1996 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
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------- ------------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 524,000 $ 163,000
Rent and other receivables 21,000 17,000
Real estate facilities, at cost:
Buildings, land improvements and equipment 3,461,000 3,360,000
Land 1,267,000 1,267,000
------------------- ------------------
4,728,000 4,627,000
Less accumulated depreciation (2,572,000) (2,434,000)
------------------- ------------------
2,156,000 2,193,000
------------------- ------------------
Other assets 184,000 193,000
------------------- ------------------
Total assets $ 2,885,000 $ 2,566,000
=================== ==================
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 12,000 $ 4,000
Deferred revenue 70,000 66,000
Note payable 7,611,000 7,984,000
Partner's deficit:
Limited partners' deficit, $500 per unit, 10,000
units authorized, 9,890 issued and outstanding (3,566,000) (4,071,000)
General partner's deficit (1,242,000) (1,417,000)
------------------- ------------------
Total partners' deficit (4,808,000) (5,488,000)
------------------- ------------------
Total liabilities and partners' deficit $ 2,885,000 $ 2,566,000
=================== ==================
</TABLE>
See accompanying notes.
2
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------- --------------------------------
1997 1996 1997 1996
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Rental income $ 632,000 $ 593,000 $ 1,819,000 $ 1,720,000
Other income 6,000 1,000 13,000 2,000
---------------- ---------------- --------------- ----------------
638,000 594,000 1,832,000 1,722,000
---------------- ---------------- --------------- ----------------
COSTS AND EXPENSES:
Cost of operations 113,000 121,000 340,000 352,000
Management fees paid to affiliate 38,000 33,000 109,000 95,000
Depreciation 48,000 44,000 138,000 125,000
Administrative 7,000 9,000 29,000 27,000
Interest expense 176,000 215,000 536,000 655,000
---------------- ---------------- --------------- ----------------
382,000 422,000 1,152,000 1,254,000
---------------- ---------------- --------------- ----------------
NET INCOME $ 256,000 $ 172,000 $ 680,000 $ 468,000
================ ================ =============== ================
Limited partners' share of net income ($68.05
per unit in 1997 and $46.81 per unit in 1996) $ 673,000 $ 463,000
General partner's share of net income 7,000 5,000
--------------- ----------------
$ 680,000 $ 468,000
=============== ================
</TABLE>
See accompanying notes.
3
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partner Deficit
----------------- ---------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1996 $(4,071,000) $(1,417,000) $(5,488,000)
Net income 673,000 7,000 680,000
Equity transfer (168,000) 168,000 -
----------------- ---------------- ---------------
Balance at September 30, 1997 $(3,566,000) $(1,242,000) $(4,808,000)
================= ================ ===============
</TABLE>
See accompanying notes.
4
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------
1997 1996
----------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 680,000 $ 468,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 138,000 125,000
Increase in rent and other receivables (4,000) (4,000)
Amortization of prepaid loan fees 8,000 8,000
Amortization of prepaid management fees - 83,000
Decrease (increase) in other assets 1,000 (5,000)
Increase (decrease) in accounts payable 8,000 (17,000)
Increase (decrease) in deferred revenue 4,000 (6,000)
----------------- -------------------
Total adjustments 155,000 184,000
----------------- -------------------
Net cash provided by operating activities 835,000 652,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (101,000) (76,000)
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Net cash used in investing activities (101,000) (76,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable (373,000) (439,000)
----------------- -------------------
Net cash used in financing activities (373,000) (439,000)
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Net increase in cash and cash equivalents 361,000 137,000
Cash and cash equivalents at the beginning of the period 163,000 -
----------------- -------------------
Cash and cash equivalents at the end of the period $ 524,000 $ 137,000
================= ===================
</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,
1996.
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, 1997, the results of its operations for the three and nine
months ended September 30, 1997 and 1996 and its cash flows for the nine
months then ended.
3. The results of operations for the three and nine months ended September 30,
1997 are not necessarily indicative of the results expected for the full
year.
6
<PAGE>
PUBLIC STORAGE PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1996:
The Partnership's net income for the nine months ended September 30, 1997
was $680,000 compared to $468,000 for the nine months ended September 30, 1996,
representing an increase of $212,000 or 45%. The Partnership's net income for
the three months ended September 30, 1997 was $256,000 compared to $172,000 for
the three months ended September 30, 1996, representing an increase of $84,000
or 49%. 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 for the nine months ended September 30, 1997 was $1,819,000
compared to $1,720,000 for the nine months ended September 30, 1996,
representing an increase of $99,000 or 6%. Rental income for the three months
ended September 30, 1997 was $632,000 compared to $593,000 for the three months
ended September 30, 1996, representing an increase of $39,000 or 7%. These
increases are 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 89% and 86% for the nine
months ended September 30, 1997 and 1996, respectively. Realized rent for the
nine months ended September 30, 1997 increased to $.90 per occupied square foot
from $.88 per occupied square foot for the nine month ended September 30, 1996.
Cost of operations (including management fees paid to an affiliate) for the
nine months ended September 30, 1997 was $449,000 compared to $447,000 for the
nine months ended September 30, 1996, representing an increase of $2,000 or 1%.
This increase is mainly attributable to an increase in management fees
partially offset by a decrease of repairs and maintenance expense. Cost of
operations (including management fees paid to an affiliate) for the three
months ended September 30, 1997 was $151,000 compared to $154,000 for the three
months ended September 30, 1996, representing a decrease of $3,000 or 2%. This
decrease is mainly attributable to a decrease in repairs and maintenance
expense partially offset by an increase in management fees expense.
7
<PAGE>
In 1995, the Partnership prepaid eight months of 1996 management fees on
its mini-warehouse operations discounted at the rate of 14% effective rate to
compensate for early payment. As a result, management fee expense for the nine
months ended September 30, 1996 was $8,000 lower than it would have been under
the customary undiscounted fee structure.
Interest expense decreased $119,000 to $536,000 in the nine months ended
September 30, 1997 from $655,000 in the same period in 1996. This decrease is
mainly attributable to lower outstanding principal balances on the
Partnership's note payable.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash generated from operations ($835,000 for the nine months ended
September 30, 1997) 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
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: November 12, 1997
PUBLIC STORAGE PARTNERS II, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/John Reyes
--------------
John Reyes
Senior Vice President and
Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000275915
<NAME> Public Storage Partners II, Ltd.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> 524,000
<SECURITIES> 0
<RECEIVABLES> 21,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 545,000
<PP&E> 4,728,000
<DEPRECIATION> (2,572,000)
<TOTAL-ASSETS> 2,885,000
<CURRENT-LIABILITIES> 82,000
<BONDS> 7,611,000
0
0
<COMMON> 0
<OTHER-SE> (4,808,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,885,000
<SALES> 0
<TOTAL-REVENUES> 1,832,000
<CGS> 0
<TOTAL-COSTS> 449,000
<OTHER-EXPENSES> 167,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536,000
<INCOME-PRETAX> 680,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 680,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 680,000
<EPS-PRIMARY> 68.05
<EPS-DILUTED> 68.05
</TABLE>
