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, 1998
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
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PS PARTNERS, LTD.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3729108
- --------------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of 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
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<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at March 31, 1998
and December 31, 1997 2
Condensed consolidated statements of income for the three
months ended March 31, 1998 and 1997 3
Condensed consolidated statements of cash flows for the three
months ended March 31, 1998 and 1997 4-5
Notes to condensed consolidated financial statements 6
Management's discussion and analysis of financial condition
and results of operations 7-8
PART II. OTHER INFORMATION
(Items 1 through 5 are not applicable)
Item 6 - Exhibits and Reports on Form 8-K 9
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,088,000 $ 819,000
Rent and other receivables 58,000 65,000
Real estate facilities, at cost:
Land 10,660,000 10,660,000
Buildings and equipment 44,893,000 44,834,000
--------------------------------------
55,553,000 55,494,000
Less accumulated depreciation (25,993,000) (25,402,000)
--------------------------------------
29,560,000 30,092,000
Investment in real estate entity 2,822,000 2,830,000
Other assets 138,000 136,000
--------------------------------------
$ 33,666,000 $ 33,942,000
======================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 668,000 $ 686,000
Advance payments from renters 407,000 374,000
Minority interest in general partnerships 19,394,000 19,727,000
Partners' equity:
Limited partners' equity, $500 per unit, 66,000
units authorized, issued and outstanding 13,022,000 12,980,000
General partner's equity 175,000 175,000
--------------------------------------
Total partners' equity 13,197,000 13,155,000
--------------------------------------
$ 33,666,000 $ 33,942,000
======================================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1998 1997
--------------------------------------
REVENUE:
<S> <C> <C>
Rental income $ 2,874,000 $ 2,688,000
Equity in income of real estate entity 54,000 38,000
Interest income 12,000 7,000
--------------------------------------
2,940,000 2,733,000
--------------------------------------
COSTS AND EXPENSES:
Cost of operations 904,000 923,000
Management fees 172,000 161,000
Depreciation and amortization 591,000 577,000
Administrative 17,000 16,000
--------------------------------------
1,684,000 1,677,000
--------------------------------------
Income before minority interest 1,256,000 1,056,000
Minority interest in income (414,000) (371,000)
--------------------------------------
NET INCOME $ 842,000 $ 685,000
======================================
Limited partners' share of net income
($11.44 per unit in 1998 and
$9.08 per unit in 1997) $ 755,000 $ 599,000
General partner's share of net income 87,000 86,000
--------------------------------------
$ 842,000 $ 685,000
======================================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1998 1997
-----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 842,000 $ 685,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 591,000 577,000
Decrease in rent and other receivables 7,000 34,000
(Increase) decrease in other assets (2,000) 67,000
Decrease in accounts payable (18,000) (35,000)
Increase in advance payments from renters 33,000 30,000
Equity in income of real estate entity (54,000) (38,000)
Minority interest in income 414,000 371,000
-----------------------------------
Total adjustments 971,000 1,006,000
-----------------------------------
Net cash provided by operating activities 1,813,000 1,691,000
-----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from real estate entity 62,000 -
Investment in real estate entity - (3,000)
Additions to real estate facilities (59,000) (237,000)
-----------------------------------
Net cash provided by (used in) investing activities 3,000 (240,000)
-----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of minority interest (747,000) (596,000)
Distributions to partners (800,000) (800,000)
-----------------------------------
Net cash used in financing activities (1,547,000) (1,396,000)
-----------------------------------
Net increase in cash and cash equivalents 269,000 55,000
Cash and cash equivalents at the beginning of the period 819,000 506,000
-----------------------------------
Cash and cash equivalents at the end of the period $ 1,088,000 $ 561,000
===================================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1998 1997
------------------------------------
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C>
Investment in real estate entity $ - $ (2,725,000)
Transfer of real estate facilities for interest in real estate entity, net - 2,725,000
</TABLE>
See accompanying notes.
5
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(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, 1997.
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 March 31, 1998, the results of operations for the
three months ended March 31, 1998 and 1997 and cash flows for the three
months then ended.
3. The results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full
year.
4. In January 1997, the Partnership and PSI and other related partnerships
transferred a total of 35 business parks to PS Business Parks, LP
("PSBPLP"), an operating partnership formed to own and operate business
parks in which PSI has a significant interest. Included among the
properties transferred was the Partnership's Signal Hill, California
business park in exchange for a partnership interest in PSBPLP. The
general partner of PSBPLP is PS Business Parks, Inc. Since January 1997,
PSBPLP manages the commercial operations of the Partnership's Webster,
Texas Property pursuant to the Management Agreement.
6
<PAGE>
PS PARTNERS, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Results of Operations:
- ----------------------
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997:
The Partnership's net income was $842,000 and $685,000 for the three
months ended March 31, 1998 and 1997, respectively, representing an increase of
$157,000, or 23%. The increase was primarily due to an increase in property
operations at the Partnership's real estate facilities, partially offset by an
increase in minority interest in income for those properties held jointly with
PSI.
Rental income for the Partnership's mini-warehouse operations was
$2,823,000 compared to $2,641,000 for the three months ended March 31, 1998 and
1997, respectively, representing an increase of $182,000, or 7%. The increase in
rental income was primarily attributable to increases in rental rates and
occupancy levels. The monthly average realized rent per square foot for the
mini-warehouse facilities was $.64 compared to $.62 for the three months ended
March 31, 1998 and 1997, respectively. The weighted average occupancy levels at
the mini-warehouse facilities was 91% compared to 87% for the three months ended
March 31, 1998 and 1997, respectively. Cost of operations (including management
fees) for the mini-warehouses decreased $3,000 to $1,053,000 from $1,056,000 for
the three months ended March 31, 1998 and 1997, respectively. Accordingly, for
the Partnership's mini-warehouse operations, property net operating income
increased $185,000, or 12%, from $1,585,000 to $1,770,000 for the three months
ended March 31, 1997 and 1998, respectively.
Rental income for the Partnership's business-park operations was $51,000
compared to $47,000 for the three months ended March 31, 1998 and 1997,
respectively, representing an increase of $4,000, or 9%. The increase in rental
income was primarily attributable to increases in both occupancy levels and
rental rates. The weighted average occupancy level at the Partnership's Webster,
Texas business park facilities was 92% compared to 90% for the three months
ended March 31, 1998 and 1997, respectively. The monthly average realized rent
per square foot for the Webster facility was $.73 compared to $.70 for the three
months ended March 31, 1998 and 1997, respectively. Cost of operations
(including management fees) for the business parks decreased $5,000, or 18%, to
$23,000 from $28,000 for the three months ended March 31, 1998 and 1997,
respectively. Accordingly, for the Partnership's business park facilities,
property net operating income increased by $9,000, or 47%, from $19,000 to
$28,000 for the three months ended March 31, 1997 and 1998, respectively.
Minority interest in income increased $43,000 to $414,000 from $371,000
for the three months ended March 31, 1998 and 1997, respectively. This increase
was primarily attributable to an increase in operations at the Partnership's
real estate facilities owned jointly with PSI, partially offset by an allocation
7
<PAGE>
of depreciation and amortization expense (pursuant to the partnership agreement
with respect to those real estate facilities which are jointly owned with PSI)
to PSI of $372,000 for the three months ended March 31, 1998 compared to
$311,000 for the same period in 1997.
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
($1,813,000 for the three months ended March 31, 1998) has been sufficient to
meet all current obligations of the Partnership.
During 1998, the Partnership anticipates approximately $867,000 of capital
improvements (of which $369,000 represents PSI's joint venture share). Total
capital improvements were $59,000 for the three months ended March 31, 1998 of
which $35,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $713,000 ($10.80 per unit) and $87,000, respectively, during the first
three months of 1998. 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 5 are not applicable.
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: May 13, 1998
PS PARTNERS, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
-----------------------------------------
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial and accounting
officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000702276
<NAME> PS PARTNERS, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,088,000
<SECURITIES> 0
<RECEIVABLES> 58,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,146,000
<PP&E> 55,553,000
<DEPRECIATION> (25,993,000)
<TOTAL-ASSETS> 33,666,000
<CURRENT-LIABILITIES> 1,075,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,197,000
<TOTAL-LIABILITY-AND-EQUITY> 33,666,000
<SALES> 0
<TOTAL-REVENUES> 2,940,000
<CGS> 0
<TOTAL-COSTS> 1,076,000
<OTHER-EXPENSES> 608,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 842,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 842,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 842,000
<EPS-PRIMARY> 11.44
<EPS-DILUTED> 11.44
</TABLE>
