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 0-13479
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PS PARTNERS III, LTD.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3920904
- ---------------------------------------- ----------------------
(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
Notes to condensed 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
<PAGE>
PS PARTNERS III, 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 $1,552,000 $1,222,000
Rent and other receivables 85,000 133,000
Real estate facilities, at cost:
Land 3,558,000 3,558,000
Buildings and equipment 12,841,000 12,770,000
------------------------------------
16,399,000 16,328,000
Less accumulated depreciation (6,824,000) (6,659,000)
------------------------------------
9,575,000 9,669,000
Investment in real estate entities 14,456,000 14,813,000
Other assets 25,000 20,000
------------------------------------
$25,693,000 $25,857,000
====================================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $119,000 $200,000
Advance payments from renters 82,000 77,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 25,153,000 25,240,000
General partner's equity 339,000 340,000
------------------------------------
Total partners' equity 25,492,000 25,580,000
------------------------------------
$25,693,000 $25,857,000
====================================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS III, 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 $682,000 $640,000
Equity in earnings of real estate entities 669,000 577,000
Interest income 20,000 6,000
------------------------------------
1,371,000 1,223,000
------------------------------------
COSTS AND EXPENSES:
Cost of operations 231,000 242,000
Management fees 41,000 38,000
Depreciation and amortization 165,000 158,000
Administrative 22,000 22,000
------------------------------------
459,000 460,000
------------------------------------
NET INCOME $912,000 $763,000
====================================
Limited partners' share of net income
($6.28 per unit in 1998 and
$5.13 per unit in 1997) $804,000 $656,000
General partner's share of net income 108,000 107,000
------------------------------------
$912,000 $763,000
====================================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS III, 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 $912,000 $763,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 165,000 158,000
Decrease in rent and other receivables 48,000 15,000
(Increase) decrease in other assets (5,000) 15,000
Decrease in accounts payable (81,000) (78,000)
Increase in advance payments from renters 5,000 -
Equity in earnings of real estate entities (669,000) (577,000)
---------------------------------------
Total adjustments (537,000) (467,000)
---------------------------------------
Net cash provided by operating activities 375,000 296,000
---------------------------------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Distributions from real estate entities 1,026,000 728,000
Additions to real estate facilities (71,000) (107,000)
---------------------------------------
Net cash provided by investing activities 955,000 621,000
---------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions to partners (1,000,000) (1,000,000)
---------------------------------------
Net cash used in financing activities (1,000,000) (1,000,000)
---------------------------------------
Net increase in cash and cash equivalents 330,000 (83,000)
Cash and cash equivalents at the beginning of the period 1,222,000 289,000
---------------------------------------
Cash and cash equivalents at the end of the period $1,552,000 $206,000
=======================================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS III, 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 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 was the Joint Venture's business park in
exchange for a partnership interest 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........................... $18,056,000 $9,221,000
Minority interest in income.............. $2,814,000 $1,813,000
Net income............................... $4,999,000 $1,259,000
5
<PAGE>
PS PARTNERS III, 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 $912,000 compared to $763,000 for the three months ended March 31, 1997,
representing an increase of $149,000, or 20%. 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, combined with a decrease in
depreciation allocated to the Partnership with respect to the Joint Venture.
Rental income for the Partnership's wholly-owned mini-warehouse
properties was $682,000 compared to $640,000 for the three months ended March
31, 1998 and 1997, respectively, representing an increase of $42,000, or 7%.
Cost of operations (including management fees) decreased $8,000, or 3%, to
$272,000 from $280,000 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 $50,000, or 14%, from
$360,000 to $410,000 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 $669,000 in the three
months ended March 31, 1998 as compared to $577,000 during the three months
ended March 31, 1997, representing an increase of $92,000, or 16%. This was due
primarily to the Partnership's share of improved operating results at the Joint
Venture's mini-warehouse properties and a decrease in depreciation allocated to
the Partnership with respect to the Joint Venture.
6
<PAGE>
Depreciation and Amortization
- -----------------------------
Depreciation and amortization increased $7,000, or 4%, from $158,000 to
$165,000 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 $3,846,000 compared
to $3,706,000 for the three months ended March 31, 1998 and 1997, respectively,
representing an increase of $140,000, or 4%. The increase in rental income was
primarily attributable to increased rental rates. The monthly average realized
rent per square foot for the Mini-Warehouse Properties was $.59 compared to $.57
for the three months ended March 31, 1998 and 1997, respectively. The weighted
average occupancy levels at the Mini-Warehouse Properties remained stable at 89%
for the three months ended March 31, 1997 and 1998. Cost of operations
(including management fees) decreased $25,000, or 2%, to $1,504,000 from
$1,529,000 for the three months ended March 31, 1998 and 1997, respectively.
Accordingly, for the Mini-Warehouse Properties, property net operating income
increased by $165,000, or 8%, from $2,177,000 to $2,342,000 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 ($1,401,000 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 $313,000 of
capital improvements with respect to the Partnership's wholly-owned facilities.
Total capital improvements were $71,000 for the three months ended March 31,
1998 with respect to these properties.
7
<PAGE>
The Partnership paid distributions to the limited and general partners
totaling $891,000 ($6.96 per unit) and $109,000, respectively, during the first
three months of 1998. Future distribution rates may be adjusted to levels which
are supported by operating cash flow after capital improvements and any other
necessary obligations.
8
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 5 are not applicable.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) The following Exhibits are included herein:
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: March 18, 1999
PS PARTNERS III, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
--------------------------------------------
John Reyes
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial and accounting officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000741513
<NAME> PS PARTNERS III, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S.$
<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> 1,552,000
<SECURITIES> 0
<RECEIVABLES> 85,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,637,000
<PP&E> 16,399,000
<DEPRECIATION> (6,824,000)
<TOTAL-ASSETS> 25,693,000
<CURRENT-LIABILITIES> 201,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,492,000
<TOTAL-LIABILITY-AND-EQUITY> 25,693,000
<SALES> 0
<TOTAL-REVENUES> 1,371,000
<CGS> 0
<TOTAL-COSTS> 272,000
<OTHER-EXPENSES> 187,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 912,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 912,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 912,000
<EPS-PRIMARY> 6.28
<EPS-DILUTED> 6.28
</TABLE>
