UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 1998
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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
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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
- ----------------------------------------- ---------------------------------
(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
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<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Condensed balance sheets at March 31, 1998
and December 31, 1997 2
Condensed statements of income for the three
months ended March 31, 1998 and 1997 3
Condensed statements of cash flows for the three
months ended March 31, 1998 and 1997 4-5
Notes to condensed financial statements 6
Management's discussion and analysis of financial condition
and results of operations 7-9
PART II. OTHER INFORMATION
(Items 1 through 5 are not applicable)
Item 6 - Exhibits and Reports on Form 8-K 10
<PAGE>
PS PARTNERS II, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------------------------------
(Unaudited)
(Restated - See Note 5)
ASSETS
<S> <C> <C>
Cash and cash equivalents $1,550,000 $888,000
Rent and other receivables 26,000 33,000
Real estate facilities, at cost:
Land 2,319,000 2,319,000
Buildings and equipment 12,611,000 12,584,000
---------------------------------------
14,930,000 14,903,000
Less accumulated depreciation (6,887,000) (6,728,000)
---------------------------------------
8,043,000 8,175,000
Investment in real estate entities 28,076,000 28,599,000
Other assets 30,000 75,000
---------------------------------------
$37,725,000 $37,770,000
=======================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $32,000 $26,000
Advance payments from renters 80,000 74,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 37,155,000 37,211,000
General partner's equity 458,000 459,000
---------------------------------------
Total partners' equity 37,613,000 37,670,000
---------------------------------------
$37,725,000 $37,770,000
=======================================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS II, LTD.
CONDENSED STATEMENTS OF INCOME
(Restated - See Note 5)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
1998 1997
-------------------------------------
REVENUE:
<S> <C> <C>
Rental income $694,000 $666,000
Equity in earnings of real estate entities 851,000 773,000
Interest income 19,000 15,000
-------------------------------------
1,564,000 1,454,000
-------------------------------------
COSTS AND EXPENSES:
Cost of operations 200,000 195,000
Management fees 43,000 40,000
Depreciation and amortization 159,000 152,000
Administrative 19,000 20,000
-------------------------------------
421,000 407,000
-------------------------------------
NET INCOME $1,143,000 $1,047,000
=====================================
Limited partners' share of net income
($7.92 per unit in 1998 and
$6.63 per unit in 1997) $1,014,000 $848,000
General partner's share of net income 129,000 199,000
-------------------------------------
$1,143,000 $1,047,000
=====================================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Restated - See Note 5)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1998 1997
-----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $1,143,000 $1,047,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 159,000 152,000
Decrease in rent and other receivables 7,000 24,000
Decrease in other assets 45,000 21,000
Increase (decrease) in accounts payable 6,000 (211,000)
Increase (decrease) in advance payments from renters 6,000 (2,000)
Equity in earnings of real estate entities (851,000) (773,000)
Total adjustments (628,000) (789,000)
-----------------------------------------
Net cash provided by operating activities 515,000 258,000
-----------------------------------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Distributions from real estate entities 1,374,000 924,000
Investment in real estate entities - (1,000)
Additions to real estate facilities (27,000) (61,000)
-----------------------------------------
Net cash provided by investing activities 1,347,000 862,000
-----------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions to partners (1,200,000) (1,905,000)
-----------------------------------------
Net cash used in financing activities (1,200,000) (1,905,000)
-----------------------------------------
Net increase (decrease) in cash and cash equivalents 662,000 (785,000)
Cash and cash equivalents at the beginning of the period 888,000 1,075,000
-----------------------------------------
Cash and cash equivalents at the end of the period $1,550,000 $290,000
=========================================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS II, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Restated - See Note 5)
(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 entities $- $(8,539,000)
Transfer of real estate facilities for interest in real estate
entities, net - 8,539,000
</TABLE>
See accompanying notes.
5
<PAGE>
PS PARTNERS II, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1998
(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/A for the year ended December 31,
1997.
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 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, the Joint Venture, 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 were the Partnership's and Joint Venture's business
parks in exchange for respective partnership interests in PSBPLP. The
general partner of PSBPLP is PS Business Parks, Inc.
5. Previously, the Partnership consolidated the Joint Venture in its financial
statements. The accompanying financial statements have been restated to
de-consolidate the Joint Venture. This restatement had no impact upon net
income or Partner's Equity.
6. Summarized combined financial data with respect to the Real Estate Entities
is as follows:
Three Months Ended March 31,
-------------------------------------
1998 1997
-------------------------------------
Total revenues...................... $17,527,000 $8,708,000
Minority interest in income......... $2,814,000 $1,813,000
Net income.......................... $5,394,000 $1,731,000
6
<PAGE>
PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
- --------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations contains "forward looking" statements that involve risks and
uncertainties and are based upon a number of assumptions. Actual results and
trends may differ materially depending upon a number of factors. Information
regarding these factors is contained in the Partnership's Annual Report on Form
10-K/A for the fiscal year ended December 31, 1997.
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997:
The Partnership's net income for the three months ended March 31, 1998
was $1,143,000 compared to $1,047,000 for the three months ended March 31, 1997,
representing an increase of $96,000, or 9%. The increase was primarily due to
the Partnership's share of improved property operations at the real estate
facilities that the Partnership has an interest in.
Property Operations
- -------------------
Rental income for the Partnership's wholly-owned mini-warehouse properties
was $694,000 compared to $666,000 for the three months ended March 31, 1998 and
1997, respectively, representing an increase of $28,000, or 4%. Cost of
operations (including management fees) increased $8,000, or 3%, to $243,000 from
$235,000 for the three months ended March 31, 1998 and 1997, respectively.
Accordingly, for the Partnership's wholly-owned mini-warehouse properties,
property net operating income increased by $20,000, or 5%, from $431,000 to
$451,000 for the three months ended March 31, 1997 and 1998, respectively.
Equity in Earnings of Real Estate Entities
- ------------------------------------------
Equity in earnings of real estate entities was $851,000 in the three
months ended March 31, 1998 as compared to $773,000 during the three months
ended March 31, 1997, representing an increase of $78,000, or 10%. This was due
primarily to the Partnership's share of improved operating results at the Joint
Venture's mini-warehouse properties.
7
<PAGE>
Depreciation and Amortization
- -----------------------------
Depreciation and amortization increased $7,000, or 5%, from $152,000 to
$159,000 for the three months ended March 31, 1997 and 1998, respectively. This
increase was primarily attributable to the depreciation of capital expenditures
made during 1997 and 1998.
SUPPLEMENTAL PROPERTY DATA
- --------------------------
Most of the Partnership's net income is from the Partnership's share of
the operating results of the Mini-Warehouse Properties. Therefore, in order to
evaluate the Partnership's operating results, the General Partners analyze the
operating performance of the Mini-Warehouse Properties.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997:
Rental income for the Mini-Warehouse Properties was $3,378,000 compared
to $3,253,000 for the three months ended March 31, 1998 and 1997, respectively,
representing an increase of $125,000, or 4%. The increase in rental income was
primarily attributable to increased rental rates at the Mini-Warehouse
Properties. The monthly average realized rent per square foot for the
Mini-Warehouse Properties was $.65 compared to $.62 for the three months ended
March 31, 1998 and 1997, respectively. The weighted average occupancy levels at
the Mini-Warehouse Properties remained stable at 88% for the three months ended
March 31, 1997 and 1998. Cost of operations (including management fees)
increased $67,000, or 5%, to $1,323,000 from $1,256,000 for the three months
ended March 31, 1998 and 1997, respectively. This increase was primarily
attributable to an increase in advertising and repairs and maintenance expenses.
Accordingly, for the Mini-Warehouse Properties, property net operating income
increased by $58,000, or 3%, from $1,997,000 to $2,055,000 for the three months
ended March 31, 1997 and 1998, respectively.
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
and distributions from real estate entities ($1,889,000 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 $226,000 of
capital improvements for the Partnership's wholly-owned properties; total
capital improvements for the three months ended March 31, 1998 with respect to
8
<PAGE>
these properties were $27,000. The Partnership paid distributions to the limited
and general partners totaling $1,070,000 ($8.36 per unit) and $130,000,
respectively, during the first three months of 1998. Future distribution rates
may be adjusted to levels which are supported by operating cash flow and
distributions from Real Estate Entities after capital improvements and any other
necessary obligations.
9
<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: March 11, 1999
PS PARTNERS II, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
---------------------------------------------
John Reyes
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial and accounting officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000727069
<NAME> PS PARTNERS II, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,550,000
<SECURITIES> 0
<RECEIVABLES> 26,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,576,000
<PP&E> 14,930,000
<DEPRECIATION> (6,887,000)
<TOTAL-ASSETS> 37,725,000
<CURRENT-LIABILITIES> 112,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,613,000
<TOTAL-LIABILITY-AND-EQUITY> 37,725,000
<SALES> 0
<TOTAL-REVENUES> 1,564,000
<CGS> 0
<TOTAL-COSTS> 243,000
<OTHER-EXPENSES> 178,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,143,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,143,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,143,000
<EPS-PRIMARY> 7.92
<EPS-DILUTED> 7.92
</TABLE>
