<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 0-13479
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PS PARTNERS III, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3920904
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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
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(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
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<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) 9
Item 6 - Exhibits and Reports on Form 8-K 9
</TABLE>
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PS PARTNERS III, 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 $ 685,000 $ 2,131,000
Rent and other receivables 71,000 59,000
Real estate facilities, at cost:
Land 15,392,000 15,392,000
Buildings and equipment 73,774,000 73,147,000
------------ ------------
89,166,000 88,539,000
Less accumulated depreciation (31,383,000) (28,884,000)
------------ ------------
57,783,000 59,655,000
Other assets 180,000 171,000
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$ 58,719,000 $ 62,016,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 858,000 $ 762,000
Advance payments from renters 533,000 567,000
Minority interest in general
partnerships 28,127,000 28,090,000
Partners' equity:
Limited partners' equity, $500 per
unit, 128,000 units authorized,
issued and outstanding 28,825,000 32,187,000
General partner's equity 376,000 410,000
------------ ------------
Total partners' equity 29,201,000 32,597,000
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$ 58,719,000 $ 62,016,000
============ ============
</TABLE>
See accompanying notes.
2
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PS PARTNERS III, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
1995 1994 1995 1994
-------------- ----------- ----------- -----------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $3,902,000 $3,802,000 $11,389,000 $10,994,000
Interest income 26,000 16,000 85,000 31,000
---------- ---------- ----------- -----------
3,928,000 3,818,000 11,474,000 11,025,000
---------- ---------- ----------- -----------
COSTS AND EXPENSES:
Cost of operations 1,239,000 1,204,000 3,697,000 3,608,000
Management fees 231,000 226,000 676,000 653,000
Depreciation and amortization 861,000 789,000 2,499,000 2,371,000
Administrative 33,000 25,000 152,000 111,000
---------- ---------- ----------- -----------
2,364,000 2,244,000 7,024,000 6,743,000
---------- ---------- ----------- -----------
Income before minority interest 1,564,000 1,574,000 4,450,000 4,282,000
Minority interest in income 815,000 798,000 2,344,000 2,283,000
---------- ---------- ----------- -----------
NET INCOME $ 749,000 $ 776,000 $ 2,106,000 $ 1,999,000
========== ========== =========== ===========
Limited partners' share of net income
($12.02 per unit in 1995 and $12.91
per unit in 1994) $ 1,539,000 $ 1,653,000
General partner's share of net income 567,000 346,000
----------- -----------
$ 2,106,000 $ 1,999,000
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS III, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,106,000 $ 1,999,000
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 2,499,000 2,371,000
Increase in rent and other
receivables (12,000) (3,000)
Increase in other assets (9,000) (15,000)
Increase in accounts payable 96,000 55,000
Decrease in advance payments
from renters (34,000) (74,000)
Minority interest in income 2,344,000 2,283,000
----------- -----------
Total adjustments 4,884,000 4,617,000
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Net cash provided by
operating activities 6,990,000 6,616,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (627,000) (275,000)
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Net cash used in
investing activities (627,000) (275,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of
minority interest (2,307,000) (2,270,000)
Distributions to partners (5,502,000) (3,300,000)
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Net cash used in
financing activities (7,809,000) (5,570,000)
----------- -----------
Net (decrease) increase in cash and
cash equivalents (1,446,000) 771,000
Cash and cash equivalents at the
beginning of the period 2,131,000 1,166,000
----------- -----------
Cash and cash equivalents at the end of
the period $ 685,000 $ 1,937,000
=========== ===========
</TABLE>
See accompanying notes.
4
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PS PARTNERS III, 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 III, 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 $2,106,000 and $1,999,000 for the nine
months ended September 30, 1995 and 1994, respectively, representing an increase
of $107,000. The increase for the nine months was primarily due to increases in
property operating results and interest income partially offset by increases in
depreciation, administrative expenses and minority interest in income for those
properties held in joint venture with Storage Equities, Inc. ("SEI"). Net
income was $749,000 and $776,000 for the three months ended September 30, 1995
and 1994, respectively, representing a decrease of $27,000. The decrease for
the three months was primarily due to increases in depreciation and
administrative expenses partially offset by increases in property operating
results and interest income.
Net property income for the nine months ended September 30, 1995 was
$7,016,000 compared to $6,733,000 for the same period in 1994, representing an
increase of $283,000, or 4%. Net property income for the three months ended
September 30, 1995 was $2,432,000 compared to $2,372,000 for the same period in
1994, representing an increase of $60,000, or 3%.
Rental income for the nine months ended September 30, 1995 was $11,389,000
compared to $10,994,000 for the same period in 1994, representing an increase
of $395,000, or 4%. This increase was due to improved rental income at both the
mini-warehouse and business park facilities. Rental income was $10,692,000 and
$10,314,000 at the mini-warehouse facilities for the nine months ended September
30, 1995 and 1994, respectively, representing an increase of $378,000, or 4%.
Rental income was $697,000 and $680,000 at the Partnership's business park
facilities for the nine months ended September 30, 1994 and 1995, respectively,
representing an increase of $17,000, or 3%.
Rental income for the three months ended September 30, 1995 was $3,902,000
compared to $3,802,000 for the same period in 1994, representing an increase of
$100,000, or 3%. Rental income was $3,661,000 and $3,579,000 at the
Partnership's mini-warehouse facilities for the three months ended September 30,
1995 and 1994, respectively, representing an increase of $82,000, or 2%. Rental
income increased from $223,000 to $241,000 at the Partnership's business park
facilities for the three months ended September 30, 1994 and 1995, respectively,
representing and increase of $18,000, or 8%.
6
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PS PARTNERS III, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The increases in rental income were the result of increased occupancy levels
at the Partnership's business park facilities combined with increased average
realized rental rates at the mini-warehouse facilities partially offset by
decreased average realized rental rates at the business park facility. The
weighted average occupancy levels at the mini-warehouse and business park
facilities were 90% and 97%, respectively, for the nine months ended September
30, 1995 compared to 90% and 94%, 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 $.54 and $.52, respectively, for
the nine months ended September 30, 1995 and $.53 for both mini-warehouse and
business park facilities, for the nine months ended September 30, 1994.
Cost of operations (including management fees) was $4,373,000 and $4,261,000
for the nine months ended September 30, 1995 and 1994, respectively,
representing an increase of $112,000, or 3%. Cost of operations (including
management fees) was $1,470,000 and $1,430,000 for the three months ended
September 30, 1995 and 1994, respectively, representing an increase of $40,000,
or 3%. These increases were primarily attributable to increases in insurance,
property tax, utilities and commercial tenant improvement expenses, partially
offset by decreases in repair and maintenance expenses.
Administrative expenses increased $41,000 from $111,000 to $152,000 in 1995.
This increase is principally a result of non-recurring expenses totaling $45,000
incurred in connection with having the Partnership's facilities undergo
environmental studies.
Minority interest in income increased $61,000 to $2,344,000 from $2,283,000
for the nine months ended September 30, 1995 and 1994, respectively. This
increase was primarily attributable to improved operations at the Partnership's
real estate facilities for those properties owned jointly with SEI, partially
offset by an 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 $118,000 for the nine months ended September
30, 1995 compared to $92,000 for the same period in 1994.
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.
7
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PS PARTNERS III, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash generated from operations ($6,990,000 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 $969,000 of capital
improvements (of which $300,000 represents SEI's joint venture share). Total
capital improvements were $627,000 for the nine months ended September 30, 1995
of which $445,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $4,901,000 ($38.29 per unit) and $601,000, respectively, during the
first nine months of 1995, including a special distribution in the third
quarter. The special distribution, totaling $891,000 ($6.96 per unit) to the
limited partners and $109,000 to the general partners, was the result of the
distribution 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 III, 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> 685,000
<SECURITIES> 0
<RECEIVABLES> 71,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 756,000
<PP&E> 89,166,000
<DEPRECIATION> (31,383,000)
<TOTAL-ASSETS> 58,719,000
<CURRENT-LIABILITIES> 1,391,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 29,201,000
<TOTAL-LIABILITY-AND-EQUITY> 58,719,000
<SALES> 11,389,000
<TOTAL-REVENUES> 11,474,000
<CGS> 4,373,000
<TOTAL-COSTS> 4,373,000
<OTHER-EXPENSES> 2,651,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,106,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,106,000
<EPS-PRIMARY> 12.02
<EPS-DILUTED> 0.000
</TABLE>
