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, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from to
-------- --------
Commission File Number 0-11186
-------
PS PARTNERS, LTD.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3729108
- -------------------------------- ------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
701 Western Avenue
Glendale, California 91201-2394
- --------------------------------------- ----------
(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
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at September 30, 1996
and December 31, 1995 2
Condensed consolidated statements of income for the three and nine
months ended September 30, 1996 and 1995 3
Condensed consolidated statements of cash flows for the nine
months ended September 30, 1996 and 1995 4
Notes to condensed consolidated financial statements 5
Management's discussion and analysis of financial condition
and results of operations 6-8
PART II. OTHER INFORMATION
(Items 1 through 4 are not applicable)
Item 5 - Other Information 9
Item 6 - Exhibits and Reports on Form 8-K 9
<PAGE>
<TABLE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1996 1995
--------------------- -------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 769,000 $ 511,000
Rent and other receivables 85,000 121,000
Real estate facilities, at cost:
Land 11,855,000 11,855,000
Buildings and equipment 46,339,000 45,866,000
--------------------- -------------------
58,194,000 57,721,000
Less accumulated depreciation (23,966,000) (22,175,000)
--------------------- -------------------
34,228,000 35,546,000
Other assets 178,000 129,000
--------------------- -------------------
$ 35,260,000 $ 36,307,000
===================== ===================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 692,000 $ 746,000
Advance payments from renters 382,000 391,000
Minority interest in general partnerships 20,878,000 21,317,000
Partners' equity:
Limited partners' equity, $500 per unit, 66,000
units authorized, issued and outstanding 13,132,000 13,671,000
General partner's equity 176,000 182,000
--------------------- -------------------
Total partners' equity 13,308,000 13,853,000
--------------------- -------------------
$ 35,260,000 $ 36,307,000
===================== ===================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------- --------------------------------------
1996 1995 1996 1995
------------------ ----------------- ------------------ -----------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 2,851,000 $ 2,804,000 $ 8,366,000 $ 8,153,000
Interest income 10,000 26,000 23,000 84,000
------------------ ----------------- ------------------ -----------------
2,861,000 2,830,000 8,389,000 8,237,000
------------------ ----------------- ------------------ -----------------
COSTS AND EXPENSES:
Cost of operations 871,000 831,000 2,714,000 2,532,000
Management fees 170,000 166,000 498,000 485,000
Depreciation and amortization 602,000 586,000 1,791,000 1,680,000
Administrative 35,000 20,000 77,000 99,000
------------------ ----------------- ------------------ -----------------
1,678,000 1,603,000 5,080,000 4,796,000
------------------ ----------------- ------------------ -----------------
Income before minority interest 1,183,000 1,227,000 3,309,000 3,441,000
Minority interest in income (458,000) (627,000) (1,454,000) (1,809,000)
------------------ ----------------- ------------------ -----------------
NET INCOME $ 725,000 $ 600,000 $ 1,855,000 $ 1,632,000
================== ================= ================== =================
Limited partners' share of net income
($24.23 per unit in 1996 and $18.45
per unit in 1995) $ 1,599,000 $ 1,218,000
General partner's share of net income 256,000 414,000
----------------- ----------------
$ 1,855,000 1,632,000
================= ================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
---------------------------------------------
1996 1995
--------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 1,855,000 $ 1,632,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,791,000 1,680,000
Decrease in rent and other receivables 36,000 13,000
Increase in other assets (49,000) (4,000)
(Decrease) increase in accounts payable (54,000) 5,000
Decrease in advance payments from renters (9,000) (21,000)
Minority interest in income 1,454,000 1,809,000
--------------------- ------------------
Total adjustments 3,169,000 3,482,000
--------------------- ------------------
Net cash provided by operating activities 5,024,000 5,114,000
--------------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (473,000) (580,000)
--------------------- ------------------
Net cash used in investing activities (473,000) (580,000)
--------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of minority interest (1,893,000) (1,886,000)
Distributions to partners (2,400,000) (4,023,000)
--------------------- ------------------
Net cash used in financing activities (4,293,000) (5,909,000)
--------------------- ------------------
Net increase (decrease) in cash and cash equivalents 258,000 (1,375,000)
Cash and cash equivalents at the beginning of the period 511,000 1,855,000
--------------------- ------------------
Cash and cash equivalents at the end of the period $ 769,000 $ 480,000
===================== ==================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. The accompanying unaudited condensed consolidated 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 consolidated 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
consolidated financial statements reflect all adjustments, consisting of
only normal accruals, necessary to present fairly the Partnership's
financial position at September 30, 1996, the results of operations for the
three and nine months ended September 30, 1996 and 1995 and cash flows for
the nine months then ended.
3. The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of the results to be expected for the
full year.
5
<PAGE>
PS PARTNERS, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995:
The Partnership's net income was $725,000 and $600,000 for the three months
ended September 30, 1996 and 1995, respectively, representing an increase of
$125,000, or 21%. This increase was primarily due to a decrease in minority
interest in income, partially offset by increases in depreciation expense and
general and administrative expenses.
Interest income decreased for the three months ended September 30, 1996
over the same period in 1995 as a result of a decrease in average invested cash
balances.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the three months ended September 30, 1996
increased $3,000, as rental income increased $47,000, or 2%, and costs of
operations (including management fees and excluding depreciation expense)
increased $44,000, or 4% compared to the same period in 1995. This increase was
due to improved operations at the mini-warehouse facilities.
Rental income for the Partnership's mini-warehouse operations was
$2,684,000 compared to $2,631,000 for the three months ended September 30, 1996
and 1995, respectively, representing an increase of $53,000, or 2%. This
increase was primarily attributable to increased rental rates and weighted
average occupancy levels. The monthly average realized rent per square foot for
the mini-warehouse facilities was $.60 compared to $.59 for the three months
ended September 30, 1996 and 1995, respectively. The weighted average occupancy
levels at the mini-warehouse facilities was 91% compared to 90% for the three
months ended September 30, 1996 and 1995, respectively. Cost of operations
(including management fees) for the mini-warehouses increased $39,000, or 4%, to
$975,000 from $936,000 for the three months ended September 30, 1996 and 1995,
respectively. This increase was primarily attributable to increases in
advertising and promotional expenses and property tax expenses. Accordingly, for
the Partnership's mini-warehouse operations, property net operating income
increased $14,000 or 1% from $1,695,000 to $1,709,000 for the three months ended
September 30, 1995 and 1996, respectively.
Rental income for the Partnership's business park operations decreased
$6,000, or 3%, to $167,000 from $173,000 for the three months ended September
30, 1996 and 1995, respectively. The weighted average occupancy levels at the
business park facilities was 93% compared to 94% for the three months ended
September 30, 1996 and 1995, respectively. The monthly average realized rent per
square foot for the business park facilities was $.63 compared to $.66 for the
three months ended September 30, 1996 and 1995, respectively. Cost of operations
(including management fees) for the business parks increased $5,000, or 6%, to
$66,000 from $61,000 for the three months ended September 30, 1996 and 1995,
respectively. Accordingly, for the Partnership's business park facilities,
property net operating income decreased $11,000, or 9%, from $112,000 to
$101,000 for the three months ended September 30, 1995 and 1996, respectively.
Administrative expenses increased $15,000 from $20,000 for the three months
ended September 30, 1995 compared to $35,000 for the same period in 1996. This
increase is partially attributable to an increase in accounting fees.
Minority interest in income decreased $169,000 to $458,000 from $627,000
for the three months ended September 30, 1996 and 1995, respectively. This
decrease was primarily attributable to the allocation of depreciation and
amortization expense (pursuant to the partnership agreement with respect to
those real estate facilities which are jointly owned with Public Storage, Inc.
("PSI")) to PSI of $303,000 for the three months ended September 30, 1996
6
<PAGE>
compared to $122,000 for the same period in 1995, partially offset by an
increase in operations at the Partnership's real estate facilities owned jointly
with PSI.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995:
The Partnership's net income was $1,855,000 and $1,632,000 for the nine
months ended September 30, 1996 and 1995, respectively, representing an increase
of $223,000, or 14%. This increase was primarily due to a decrease in minority
interest in income, combined with improved property operating results at the
Partnership's facilities and a decrease in general and administrative expenses,
partially offset by increases in depreciation expense and a decrease in interest
income.
Interest income decreased for the nine months ended September 30, 1996 over
the same period in 1995 as a result of a decrease in average invested cash
balances.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the nine months ended September 30, 1996
increased $18,000 as rental income increased $213,000, or 3%, and costs of
operations (including management fees and excluding depreciation expense)
increased $195,000, or 7%, compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$7,874,000 compared to $7,658,000 for the nine months ended September 30, 1996
and 1995, respectively, representing an increase of $216,000, or 3%. This
increase in rental income was primarily attributable to increased rental rates.
The monthly average realized rent per square foot for the mini-warehouse
facilities was $.60 compared to $.59 for the nine months ended September 30,
1996 and 1995, respectively. The weighted average occupancy levels at the
mini-warehouse facilities remained stable at 90% for the nine months ended
September 30, 1996 and 1995. Costs of operations (including management fees) for
the mini-warehouses increased $194,000, or 7%, to $2,997,000 from $2,803,000 for
the nine months ended September 30, 1996 and 1995, respectively. These increases
were primarily attributable to increases in property tax, repairs and
maintenance, and advertising expenses. Accordingly, for the Partnership's
mini-warehouse operations, property net operating income increased slightly from
$4,855,000 to $4,877,000 for the nine months ended September 30, 1995 and 1996,
respectively.
Rental income for the Partnership's business park operations decreased
slightly from $495,000 to $492,000 for the nine months ended September 30, 1995
and 1996, respectively. The weighted average occupancy level at the business
park facilities was 94% compared to 93% for the nine months ended September 30,
1996 and 1995, respectively. The monthly average realized rent per square foot
for the business park facilities was $.62 compared to $.66 for the nine months
ended September 30, 1996 and 1995, respectively. Cost of operations (including
management fees) for the business parks remained stable for the nine months
ended September 30, 1996 over the same period in 1995. Accordingly, for the
Partnership's business park facilities, property net operating income decreased
by $4,000, or 1%, from $281,000 to $277,000 for the nine months ended September
30, 1995 and 1996, respectively.
Administrative expenses decreased $22,000 from $99,000 in 1995 to $77,000
in 1996. This decrease is principally a result of a non-recurring expense in
1995, totaling $27,000, incurred in connection with environmental assessments of
the Partnership's facilities.
Minority interest in income decreased $355,000 to $1,454,000 from
$1,809,000 for the nine months ended September 30, 1996 and 1995, respectively.
This decrease was primarily attributable to the allocation of depreciation and
amortization expense (pursuant to the partnership agreement with respect to
7
<PAGE>
those real estate facilities which are jointly owned with Public Storage, Inc.
("PSI")) to PSI of $693,000 for the nine months ended September 30, 1996
compared to $322,000 for the same period in 1995, partially offset by an
increase in operations at the Partnership's real estate facilities owned jointly
with PSI.
Liquidity and Capital Resources
- -------------------------------
The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term basis, primarily from internally generated
cash from property operations and cash reserves. Cash generated from operations
($5,024,000 for the nine months ended September 30, 1996) has been sufficient to
meet all current obligations of the Partnership.
During 1996, the Partnership anticipates approximately $1,146,000 of
capital improvements (of which $463,000 represents PSI's joint venture share).
During 1995, the Partnership's property manager commenced a program to enhance
the visual appearance of the mini-warehouse facilities managed by it. Such
enhancements will include new signs, exterior color schemes, and improvements to
the rental offices. Included in the 1996 capital improvement budget are
estimated costs of $163,000 for such enhancements. Total capital improvements
were $473,000 for the nine months ended September 30, 1996 of which $298,000
represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $2,138,000 ($32.40 per unit) and $262,000, respectively, during the
first nine months of 1996. Future distribution rates may be adjusted to levels
which are supported by operating cash flow after capital improvements and any
other necessary obligations.
8
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 4 are not applicable.
Item 5 Other Information
-----------------
In September 1996, PSI completed a cash tender offer, which had commenced
in July 1996, pursuant to which PSI acquired a total of 4,532 limited
partnership units in the Partnership at $548 per unit.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) The following Exhibits are 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, 1996
PS PARTNERS, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner , Jr.
--------------------------
Ronald L. Havner, Jr.
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial officer)
BY: /s/ John Reyes
--------------
John Reyes
Vice President and Controller
of Public Storage, Inc.
(Principal accounting officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000702276
<NAME> PS PARTNERS, LTD.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 769,000
<SECURITIES> 0
<RECEIVABLES> 85,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 854,000
<PP&E> 58,194,000
<DEPRECIATION> (23,966,000)
<TOTAL-ASSETS> 35,260,000
<CURRENT-LIABILITIES> 1,074,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,308,000
<TOTAL-LIABILITY-AND-EQUITY> 35,260,000
<SALES> 0
<TOTAL-REVENUES> 8,389,000
<CGS> 0
<TOTAL-COSTS> 3,212,000
<OTHER-EXPENSES> 1,868,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,855,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,855,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,855,000
<EPS-PRIMARY> 24.23
<EPS-DILUTED> 24.23
</TABLE>
