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 [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
incorporation or organization) Identification Number)
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 June 30, 1996
and December 31, 1995 2
Condensed consolidated statements of income for the three and six
months ended June 30, 1996 and 1995 3
Condensed consolidated statements of cash flows for the six
months ended June 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>
June 30, December 31,
1996 1995
----------------- ----------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 678,000 $ 511,000
Rent and other receivables 57,000 121,000
Real estate facilities, at cost:
Land 11,855,000 11,855,000
Buildings and equipment 46,132,000 45,866,000
----------------- ----------------
57,987,000 57,721,000
Less accumulated depreciation (23,364,000) (22,175,000)
----------------- ----------------
34,623,000 35,546,000
Other assets 158,000 129,000
----------------- ----------------
$ 35,516,000 $ 36,307,000
================= ================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $ 663,000 $ 746,000
Advance payments from renters 408,000 391,000
Minority interest in general partnerships 21,063,000 21,317,000
Partners' equity:
Limited partners' equity, $500 per unit, 66,000
units authorized, issued and outstanding 13,205,000 13,671,000
General partners' equity 177,000 182,000
----------------- ----------------
Total partners' equity 13,382,000 13,853,000
----------------- ----------------
$ 35,516,000 $ 36,307,000
================= ================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ -------------------------------------
1996 1995 1996 1995
---------------- --------------- ---------------- ----------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 2,820,000 $ 2,702,000 $ 5,515,000 $ 5,349,000
Interest income 7,000 29,000 13,000 58,000
---------------- --------------- ---------------- ----------------
2,827,000 2,731,000 5,528,000 5,407,000
---------------- --------------- ---------------- ----------------
COSTS AND EXPENSES:
Cost of operations 882,000 837,000 1,843,000 1,701,000
Management fees 168,000 161,000 328,000 319,000
Depreciation and amortization 598,000 542,000 1,189,000 1,094,000
Administrative 27,000 51,000 42,000 79,000
---------------- --------------- ---------------- ----------------
1,675,000 1,591,000 3,402,000 3,193,000
---------------- --------------- ---------------- ----------------
Income before minority interest 1,152,000 1,140,000 2,126,000 2,214,000
Minority interest in income (520,000) (609,000) (996,000) (1,182,000)
---------------- --------------- ---------------- ----------------
NET INCOME $ 632,000 $ 531,000 $ 1,130,000 1,032,000
================ =============== ================ ================
Limited partners' share of net income
($14.55 per unit in 1996 and $13.20
per unit in 1995) $ 960,000 $ 871,000
General partners' share of net income 170,000 161,000
---------------- ----------------
$ 1,130,000 $ 1,032,000
================ ================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1996 1995
---------------- ---------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,130,000 $ 1,032,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,189,000 1,094,000
Decrease in rent and other receivables 64,000 13,000
Increase in other assets (29,000) -
Decrease in accounts payable (83,000) (52,000)
Increase in advance payments from renters 17,000 3,000
Minority interest in income 996,000 1,182,000
---------------- ---------------
Total adjustments 2,154,000 2,240,000
---------------- ---------------
Net cash provided by operating activities 3,284,000 3,272,000
---------------- ---------------
Cash flows from investing activities:
Additions to real estate facilities (266,000) (251,000)
---------------- ---------------
Net cash used in investing activities (266,000) (251,000)
---------------- ---------------
Cash flows from financing activities:
Distributions to holder of minority interest (1,250,000) (1,308,000)
Distributions to partners (1,601,000) (1,523,000)
---------------- ---------------
Net cash used in financing activities (2,851,000) (2,831,000)
---------------- ---------------
Net increase in cash and cash equivalents 167,000 190,000
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 $ 678,000 $ 2,045,000
================ ===============
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 June 30, 1996, the results of operations for the
three and six months ended June 30, 1996 and 1995 and 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 to be expected for the full
year.
5
<PAGE>
Results of Operations:
- ----------------------
Three months ended June 30, 1996 compared to three months ended June 30, 1995:
The Partnership's net income was $632,000 and $531,000 for the three months
ended June 30, 1996 and 1995, respectively, representing an increase of
$101,000, or 19%. This increase was primarily due to improved property operating
results at the Partnership's facilities combined with 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 three months ended June 30, 1996 over the
same periods 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 June 30, 1996
increased $66,000 or 4%, as rental income increased $118,000 or 4%, and costs of
operations (including management fees and excluding depreciation expense)
increased $52,000 or 5% 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
$2,651,000 compared to $2,537,000 for the three months ended June 30, 1996 and
1995, respectively, representing an increase of $114,000, or 5%. 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 $.58 for the three months ended
June 30, 1996 and 1995, respectively. The weighted average occupancy levels at
the mini-warehouse facilities was 90% compared to 89% for the three months ended
June 30, 1996 and 1995, respectively. Cost of operations (including management
fees) for the mini-warehouses increased $48,000 or 5%, to $970,000 from $922,000
for the three months ended June 30, 1996 and 1995, respectively. This increase
was primarily attributable to increases in repairs and maintenance and property
tax expenses. Accordingly, for the Partnership's mini-warehouse operations,
property net operating income increased $66,000 or 4% from $1,615,000 to
$1,681,000 for the three months ended June 30, 1995 and 1996, respectively.
Rental income for the Partnership's business park operations increased
$4,000, or 2% to $169,000 from $165,000 for the three months ended June 30, 1996
and 1995, respectively. The weighted average occupancy levels at the business
park facilities was 95% compared to 93% for the three months ended June 30, 1996
and 1995, respectively. The monthly average realized rent per square foot for
the business park facilities was $.63 compared to $.67 for the three months
ended June 30, 1996 and 1995, respectively. Cost of operations (including
management fees) for the business parks increased $4,000 or 5%, to $80,000 from
$76,000 for the three months ended June 30, 1996 and 1995, respectively.
Accordingly, for the Partnership's business park facilities, property net
operating income remained stable at $89,000 for the three months ended June 30,
1996 and 1995.
Administrative expenses decreased $24,000 from $51,000 for the three months
ended June 30, 1995 compared to $27,000 for the same period 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 $89,000 to $520,000 from $609,000 for
the three months ended June 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
$223,000 for the three months ended June 30, 1996 compared to $93,000 for the
same period in 1995, partially offset by an increase in operations at the
Partnership's real estate facilities owned jointly with PSI.
6
<PAGE>
PS PARTNERS, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Six months ended June 30, 1996 compared to six months ended June 30, 1995:
The Partnership's net income was $1,130,000 and $1,032,000 for the six
months ended June 30, 1996 and 1995, respectively, representing an increase of
$98,000, or 10%. This increase was primarily due to improved property operating
results at the Partnership's facilities combined with 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 six months ended June 30, 1996 over the
same periods 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 six months ended June 30, 1996
increased $15,000 or .5%, as rental income increased $166,000 or 3%, and costs
of operations (including management fees and excluding depreciation expense)
increased $151,000 or 8% compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$5,190,000 compared to $5,027,000 for the six months ended June 30, 1996 and
1995, respectively, representing an increase of $163,000, or 3%. These increases
in rental income were primarily attributable to increased rental rates, and
weighted average occupancy levels. The weighted average occupancy levels at the
mini-warehouse facilities was 89% compared to 88% for the six months ended June
30, 1996 and 1995, respectively. The monthly average realized rent per square
foot for the mini-warehouse facilities was $.60 compared to $.58 for the six
months ended June 30, 1996 and 1995, respectively. Costs of operations
(including management fees) for the mini-warehouses increased $155,000 or 8%, to
$2,022,000 from $1,867,000 for the six months ended June 30, 1996 and 1995,
respectively. These increases were primarily attributable to increases in
repairs and maintenance and property tax expenses. Accordingly, for the
Partnership's mini-warehouse operations, property net operating income increased
$8,000 or .3% from $3,160,000 to $3,168,000 for the six months ended June 30,
1995 and 1996, respectively.
Rental income for the Partnership's business park operations increased
$3,000, or .9% to $325,000 from $322,000 for the six months ended June 30, 1996
and 1995, respectively. The weighted average occupancy levels at the business
park facilities was 94% compared to 93% for the six months ended June 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 six months ended
June 30, 1996 and 1995, respectively. Cost of operations (including management
fees) for the business parks decreased $4,000 or 3%, to $149,000 from $153,000
for the six months ended June 30, 1996 and 1995, respectively. Accordingly, for
the Partnership's business park facilities, property net operating income
increased by $7,000 or 4%, from $169,000 to $176,000 for the six months ended
June 30, 1995 and 1996, respectively.
Administrative expenses decreased $37,000 from $79,000 in 1995 to $42,000
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 $186,000 to $996,000 from $1,182,000
for the six months ended June 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
$390,000 for the six months ended June 30, 1996 compared to $ 195,000 for the
same period in 1995, partially offset by an increase in operations at the
Partnership's real estate facilities owned jointly with PSI.
7
<PAGE>
PS PARTNERS, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
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
($3,284,000 for the six months ended June 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 $266,000 for the six months ended June 30, 1996 of which $168,000
represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $1,426,000 ($21.60 per unit) and $175,000, respectively, during the
first six 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 July 1996, Public Storage, Inc. commenced a cash tender offer to
purchase up to 14,000 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: August 13, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 678,000
<SECURITIES> 0
<RECEIVABLES> 57,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 735,000
<PP&E> 57,987,000
<DEPRECIATION> (23,364,000)
<TOTAL-ASSETS> 35,516,000
<CURRENT-LIABILITIES> 1,071,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,382,000
<TOTAL-LIABILITY-AND-EQUITY> 35,516,000
<SALES> 0
<TOTAL-REVENUES> 5,528,000
<CGS> 0
<TOTAL-COSTS> 2,171,000
<OTHER-EXPENSES> 1,231,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,130,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,130,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,130,000
<EPS-PRIMARY> 14.55
<EPS-DILUTED> 14.55
</TABLE>
