<PAGE>
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, 1995
------------------
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 0-11981
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PS PARTNERS II, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3878680
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 North Brand Blvd.
Glendale, California 91203-1241
-------------------- ----------
(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
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at September 30,
1995 and December 31, 1994 2
Condensed consolidated statements of income for the three and nine
months ended September 30, 1995 and 1994 3
Condensed consolidated statements of cash flows for the nine
months ended September 30, 1995 and 1994 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 5 are not applicable)
Item 6 - Exhibits and Reports on Form 8-K 9
</TABLE>
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PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
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(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 563,000 $ 3,258,000
Rent and other receivables 56,000 28,000
Real estate facilities, at cost:
Land 17,414,000 17,414,000
Buildings and equipment 71,691,000 71,183,000
------------ ------------
89,105,000 88,597,000
Less accumulated depreciation (33,340,000) (30,887,000)
------------ ------------
55,765,000 57,710,000
Other assets 167,000 153,000
------------ ------------
$ 56,551,000 $ 61,149,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 586,000 $ 433,000
Advance payments from renters 450,000 439,000
Mortgage notes payable 2,286,000 2,326,000
Minority interest in general
partnerships 13,817,000 14,001,000
Partners' equity:
Limited partners' equity, $500
per unit, 128,000 units authorized,
issued and outstanding 38,936,000 43,430,000
General partner's equity 476,000 520,000
------------ ------------
Total partners' equity 39,412,000 43,950,000
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$ 56,551,000 $ 61,149,000
============ ============
</TABLE>
See accompanying notes.
2
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PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------------
1995 1994 1995 1994
---------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
REVENUE:
Rental income $3,818,000 $3,831,000 $11,145,000 $11,126,000
Interest income 36,000 15,000 149,000 29,000
---------- ---------- ----------- -----------
3,854,000 3,846,000 11,294,000 11,155,000
---------- ---------- ----------- -----------
COSTS AND EXPENSES:
Cost of operations 1,223,000 1,193,000 3,590,000 3,664,000
Management fees 223,000 224,000 651,000 651,000
Depreciation and amortization 850,000 836,000 2,452,000 2,593,000
Interest expense 45,000 17,000 134,000 263,000
Administrative 29,000 34,000 174,000 154,000
---------- ---------- ----------- -----------
2,370,000 2,304,000 7,001,000 7,325,000
---------- ---------- ----------- -----------
Income before minority interest 1,484,000 1,542,000 4,293,000 3,830,000
Minority interest in income 377,000 477,000 1,131,000 1,295,000
---------- ---------- ----------- -----------
NET INCOME $1,107,000 $1,065,000 $ 3,162,000 $ 2,535,000
========== ========== =========== ===========
Limited partners' share of net income
($18.50 per unit in 1995 and $18.70
per unit in 1994) $ 2,368,000 $ 2,394,000
General partner's share of net income 794,000 141,000
----------- -----------
$ 3,162,000 $ 2,535,000
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,162,000 $ 2,535,000
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 2,452,000 2,593,000
Increase in rent and other
receivables (28,000) (2,000)
Increase in other assets (14,000) (1,000)
Increase in accounts payable 154,000 247,000
Increase (decrease) in
advance payments from renters 11,000 (1,000)
Minority interest in income 1,131,000 1,295,000
----------- -----------
Total adjustments 3,706,000 4,131,000
----------- -----------
Net cash provided by
operating activities 6,868,000 6,666,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (508,000) (577,000)
----------- -----------
Net cash used in
investing activities (508,000) (577,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage
notes payable (40,000) (4,946,000)
Distributions to holder of
minority interest (1,315,000) (434,000)
Distributions to partners (7,700,000) (1,181,000)
----------- -----------
Net cash used in
financing activities (9,055,000) (6,561,000)
----------- -----------
Net decrease in cash and cash
equivalents (2,695,000) (472,000)
Cash and cash equivalents at the
beginning of the period 3,258,000 1,083,000
----------- -----------
Cash and cash equivalents at the end of
the period $ 563,000 $ 611,000
=========== ===========
See accompanying notes.
</TABLE>
4
<PAGE>
PS PARTNERS II, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(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,
1994.
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, 1995, the results of operations for the three and
nine months ended September 30, 1995 and 1994 and cash flows for the nine
months then ended.
3. The results of operations for the three and nine months ended September 30,
1995 are not necessarily indicative of the results to be expected for the
full year.
5
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PS 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, 1995 COMPARED TO THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1994:
The Partnership's net income was $3,162,000 and $2,535,000 for the nine
months ended September 30, 1995 and 1994, respectively, representing an increase
of $627,000. Net income was $1,107,000 and $1,065,000 for the three months
ended September 30, 1995 and 1994, respectively, representing an increase of
$42,000. These increases were primarily due to improved property operating
results at the Partnership's business park facilities combined with reductions
in depreciation and interest expenses, partially offset by an increase in
administrative expenses. During the fourth quarter of fiscal 1994, a mini-
warehouse facility was condemned by a governmental authority exercising its
right of eminent domain.
Net property income for the nine months ended September 30, 1995 was
$6,904,000 compared to $6,811,000 for the same period in 1994, representing an
increase of $93,000. However, net property income for 1994 includes $245,000
(none in 1995) relating to the condemned mini-warehouse facility. Accordingly,
for those facilities which were in operation throughout both the first nine
months of 1994 and 1995, net property income increased $338,000, or 5%. Net
property income for the three months ended September 30, 1995 was $2,372,000
compared to $2,414,000 for the same period in 1994, representing a decrease of
$42,000. However, net property income for 1994 includes $93,000 (none in 1995)
relating to the condemned mini-warehouse facility. Accordingly, for those
facilities which were in operation throughout both the third quarter of 1994 and
1995, net property income increased $51,000, or 2%.
Rental income for the nine months ended September 30, 1995 was $11,145,000
compared to $11,126,000 for the same period in 1994, representing an increase of
$19,000. Rental income for the condemned facility for the first nine months in
1994 was $374,000, accordingly, rental income for the remaining facilities
increased $393,000, or 4%. Rental income for the three months ended September
30, 1995 was $3,818,000 compared to $3,831,000 for the same period in 1994,
representing a decrease of $13,000. Rental income for the condemned facility
for the three months ended September 30, 1994 was $131,000, accordingly, rental
income for the remaining facilities increased $118,000, or 3%.
The increases in rental income were the result of increased average realized
rental rates at the Partnership's mini-warehouse and business park facilities
combined with increased occupancy levels at the business park facilities,
partially offset by a decrease in occupancy levels at the mini-warehouse
6
<PAGE>
PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
facilities. The weighted average occupancy levels at the mini-warehouse and
business park facilities were 91% and 97%, respectively, for the nine months
ended September 30, 1995 compared to 92% and 96% respectively, for the nine
months ended September 30, 1994. The monthly average realized rent per square
foot for the mini-warehouse and business park facilities was $.58 and $.80,
respectively, for the nine months ended September 30, 1995 and $.56 and $.70,
respectively, for the nine months ended September 30, 1994.
Rental income was $9,384,000 compared to $9,515,000 at the mini-warehouse
facilities for the nine months ended September 30, 1995 and 1994, respectively,
representing a decrease of $131,000. Rental income for the condemned facility
for the first nine months in 1994 was $374,000, accordingly, rental income for
the remaining facilities increased $243,000, or 3%. Rental income was
$3,214,000 and $3,286,000 at the mini-warehouse facilities for the three months
ended September 30, 1995 and 1994, respectively, representing a decrease of
$72,000. Rental income for the condemned facility for the three months ended
September 30, 1994 was $131,000, accordingly, rental income for the remaining
facilities increased $59,000, or 2%.
Rental income at the Partnership's business park facilities increased
$150,000, or 9%, from $1,611,000 to $1,761,000 for the nine months ended
September 30, 1994 and 1995, respectively. Rental income at the Partnership's
business park facilities increased $59,000, or 11%, from $545,000 to $604,000
for the three months ended September 30, 1994 and 1995, respectively.
Cost of operations (including management fees) was $4,241,000 and $4,315,000
for the nine months ended September 30, 1995 and 1994, respectively,
representing a decrease of $74,000. Cost of operations for the condemned
facility for the first nine months in 1994 was $129,000, accordingly, cost of
operations for the remaining facilities increased $55,000. Cost of operations
(including management fees) was $1,446,000 and $1,417,000 for the three months
ended September 30, 1995 and 1994, respectively, representing an increase of
$29,000. Cost of operations for the condemned facility for the three months
ended September 30, 1994 was $38,000, accordingly, cost of operations for the
remaining facilities increased $67,000 or 5%.
Interest expense decreased approximately $129,000 from $263,000 to $134,000
for the nine months ended September 30, 1994 and 1995, respectively, as a result
of overall debt reduction.
7
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PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Administrative expenses increased $20,000 from $154,000 in 1994 to $174,000
in 1995. This increase is principally a result of non-recurring expenses
totaling $43,000 incurred in connection with having the Partnership's facilities
undergo environmental studies.
Minority interest in income decreased $164,000 from $1,295,000 to $1,131,000
for the nine months ended September 30, 1995 and 1994, 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 SEI) to SEI of
$243,000 for the nine months ended September 30, 1995 compared to $59,000 for
the same period in 1994, partially offset by an increase in operations at the
Partnership's real estate facilities owned jointly with SEI.
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
($6,868,000 for the nine months ended September 30, 1995) has been sufficient to
meet all current obligations of the Partnership.
During 1995, the Partnership anticipates approximately $800,000 of capital
improvements (of which $123,000 represents SEI's joint venture share). Total
capital improvements were $508,000 for the nine months ended September 30, 1995
of which $431,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $6,862,000 ($53.61 per unit) and $838,000, respectively, during the
first nine months of 1995, including special distributions in the second and
third quarters. The special distributions, totaling $4,009,000 ($31.32 per
unit) to the limited partners and $490,000 to the general partners, were a
result of distributions of excess cash reserves. 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: November 10, 1995
PS PARTNERS II, LTD.
BY: Storage Equities, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
---------------------------------------
Ronald L. Havner, Jr.
Vice President - Storage Equities, Inc.
(principal financial and accounting
officer)
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 563,000
<SECURITIES> 0
<RECEIVABLES> 56,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 619,000
<PP&E> 89,105,000
<DEPRECIATION> (33,340,000)
<TOTAL-ASSETS> 56,551,000
<CURRENT-LIABILITIES> 1,036,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 39,412,000
<TOTAL-LIABILITY-AND-EQUITY> 56,551,000
<SALES> 11,145,000
<TOTAL-REVENUES> 11,294,000
<CGS> 4,241,000
<TOTAL-COSTS> 4,241,000
<OTHER-EXPENSES> 2,626,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,000
<INCOME-PRETAX> 3,162,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,162,000
<EPS-PRIMARY> 18.50
<EPS-DILUTED> 0.000
</TABLE>
