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, 1996
------------------
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 0-14475
-------
PS PARTNERS IV, LTD.
---------------------------------
(Exact name of registrant as specified in its charter)
California 95-3931619
- ---------------------------- -----------------
(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
--- ---
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at September 30, 1996
and December 31, 1995 2
Condensed consolidated statements of income for the three and nine
months ended September 30, 1996 and 1995 3
Condensed consolidated statements of cash flows for the nine
months ended September 30, 1996 and 1995 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
<PAGE>
<TABLE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1996 1995
------------------- --------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 724,000 $ 464,000
Rent and other receivables 92,000 55,000
Real estate facilities, at cost:
Land 19,957,000 19,957,000
Buildings and equipment 72,290,000 71,328,000
------------------- --------------------
92,247,000 91,285,000
Less accumulated depreciation (33,263,000) (30,692,000)
------------------- --------------------
58,984,000 60,593,000
Other assets 215,000 158,000
------------------- --------------------
$ 60,015,000 $ 61,270,000
=================== ====================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 1,218,000 $ 1,128,000
Advance payments from renters 396,000 418,000
Minority interest in general partnerships 38,343,000 37,887,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 19,775,000 21,536,000
General partner's equity 283,000 301,000
------------------- --------------------
Total partners' equity 20,058,000 21,837,000
------------------- --------------------
$ 60,015,000 $ 61,270,000
=================== ====================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- ------------------------------------
1996 1995 1996 1995
----------------- ---------------- ---------------- ------------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 3,819,000 $ 3,683,000 $ 11,340,000 $ 10,858,000
Interest income 5,000 20,000 14,000 67,000
----------------- ---------------- ---------------- ------------------
3,824,000 3,703,000 11,354,000 10,925,000
----------------- ---------------- ---------------- ------------------
COSTS AND EXPENSES:
Cost of operations 1,513,000 1,431,000 4,420,000 4,201,000
Management fees 221,000 213,000 654,000 628,000
Depreciation and amortization 870,000 831,000 2,571,000 2,400,000
Administrative 38,000 33,000 118,000 138,000
----------------- ---------------- ---------------- ------------------
2,642,000 2,508,000 7,763,000 7,367,000
----------------- ---------------- ---------------- ------------------
Income before minority interest 1,182,000 1,195,000 3,591,000 3,558,000
Minority interest in income (961,000) (960,000) (2,871,000) (2,807,000)
----------------- ---------------- ---------------- ------------------
NET INCOME $ 221,000 $ 235,000 $ 720,000 $ 751,000
================= ================ ================ ==================
Limited partners' share of net income
($3.63 per unit in 1996 and $2.80
per unit in 1995) $ 465,000 $ 358,000
General partner's share of net income 255,000 393,000
---------------- ------------------
$ 720,000 $ 751,000
================ ==================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
------------------------------------------
1996 1995
------------------ --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 720,000 $ 751,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,571,000 2,400,000
Increase in rent and other receivables (37,000) (22,000)
Increase in other assets (57,000) (10,000)
Increase in accounts payable 90,000 184,000
Decrease in advance payments from renters (22,000) (35,000)
Minority interest in income 2,871,000 2,807,000
------------------ --------------------
Total adjustments 5,416,000 5,324,000
------------------ --------------------
Net cash provided by operating activities 6,136,000 6,075,000
------------------ --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (962,000) (648,000)
------------------ --------------------
Net cash used in investing activities (962,000) (648,000)
------------------ --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of minority interest (2,415,000) (2,595,000)
Distributions to partners (2,499,000) (3,897,000)
------------------ --------------------
Net cash used in financing activities (4,914,000) (6,492,000)
------------------ --------------------
Net increase (decrease) in cash and cash equivalents 260,000 (1,065,000)
Cash and cash equivalents at the beginning of the period 464,000 1,712,000
------------------ --------------------
Cash and cash equivalents at the end of the period $ 724,000 $ 647,000
================== ====================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS IV, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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, 1995.
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, 1996, the results of operations for the
three and nine months ended September 30, 1996 and 1995 and cash flows for
the nine months then ended.
3. The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of the results to be expected for the
full year.
5
<PAGE>
PS PARTNERS IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
- ----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995:
The Partnership's net income was $221,000 and $235,000 for the three months
ended September 30, 1996 and 1995, respectively, representing a decrease of
$14,000, or 6%. This decrease was primarily due to an increase in depreciation
expense, combined with a decrease in interest income, partially offset by
increases in property operating results.
Interest income decreased for the three months ended September 30, 1996
over the same period in 1995 as a result of a decrease in average invested cash
balances.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the three months ended September 30, 1996
increased $46,000 as rental income increased $136,000, or 4%, and costs of
operations (including management fees and excluding depreciation expense)
increased $90,000, or 6%, compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$3,005,000 compared to $2,872,000 for the three months ended September 30, 1996
and 1995, respectively, representing an increase of $133,000, or 5%. This
increase in rental income was primarily attributable to increased rental rates
and weighted average occupancy levels. The weighted average occupancy levels at
the mini-warehouse facilities were 93% compared to 90% for the three months
ended September 30, 1996 and 1995, respectively. The monthly average realized
rent per square foot for the mini-warehouse facilities was $.59 compared to $.58
for the three months ended September 30, 1996 and 1995, respectively. Cost of
operations (including management fees) for the mini-warehouses increased
$131,000, or 12%, to $1,216,000 from $1,085,000 for the three months ended
September 30, 1996 and 1995, respectively. This increase was primarily
attributable to increases in property tax, advertising, and payroll expenses.
Accordingly, for the Partnership's mini-warehouse operations, property net
operating income increased $2,000 from $1,787,000 to $1,789,000 for the three
months ended September 30, 1995 and 1996, respectively.
Rental income for the Partnership's business park operations increased
$3,000 to $814,000 from $811,000 for the three months ended September 30, 1996
and 1995, respectively. This increase in rental income was primarily
attributable to increased rental rates, partially offset by decreased weighted
average occupancy levels. The monthly average realized rent per square foot for
the business park facilities was $.87 compared to $.85 for the three months
ended September 30, 1996 and 1995, respectively. The weighted average occupancy
levels at the business park facilities were 95% compared to 97% for the three
months ended September 30, 1996 and 1995, respectively. Cost of operations
(including management fees) for the business parks decreased $41,000, or 7%, to
$518,000 from $559,000 for the three months ended September 30, 1996 and 1995,
respectively. This decrease was primarily attributable to decreases in repairs
and maintenance and utilities expenses. Accordingly, for the Partnership's
business park facilities, property net operating income increased $44,000, or
18%, to $296,000 from $252,000 for the three months ended September 30, 1996 and
1995, respectively.
Administrative expenses increased $5,000 from $33,000 for the three months
ended September 30, 1995 to $38,000 for the same period in 1996. This increase
is partially attributable to an increase in accounting expense.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1995:
The Partnership's net income was $720,000 and $751,000 for the nine months
ended September 30, 1996 and 1995, respectively, representing a decrease of
$31,000, or 4%. This decrease was primarily due to increases in depreciation
6
<PAGE>
PS PARTNERS IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
expense and minority interest in income for those properties held in joint
venture with Public Storage, Inc. ("PSI"), combined with a decrease in interest
income, partially offset by increased property operating results and a decrease
in administrative expenses.
Interest income decreased for the nine months ended September 30, 1996 over
the same period in 1995 as a result of a decrease in average invested cash
balances.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the nine months ended September 30, 1996
increased $237,000, or 4%, as rental income increased $482,000, or 4%, and costs
of operations (including management fees and excluding depreciation expense)
increased $245,000, or 5%, compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$8,683,000 compared to $8,330,000 for the nine months ended September 30, 1996
and 1995, respectively, representing an increase of $353,000, or 4%. This
increase was primarily attributable to increased rental rates and weighted
average occupancy levels. The weighted average occupancy levels at the
mini-warehouse facilities was 91% compared to 89% for the nine months ended
September 30, 1996 and 1995, respectively. The monthly average realized rent per
square foot for the mini-warehouse facilities was $.58 compared to $.57 for the
nine months ended September 30, 1996 and 1995, respectively. Costs of operations
(including management fees) for the mini-warehouses increased $221,000, or 7%,
to $3,474,000 from $3,253,000 for the nine months ended September 30, 1996 and
1995, respectively. This increase was primarily attributable to increases in
property tax, advertising, management fees, and office expenses. Accordingly,
for the Partnership's mini-warehouse operations, property net operating income
increased $132,000, or 3%, from $5,077,000 to $5,209,000 for the nine months
ended September 30, 1995 and 1996, respectively.
Rental income for the Partnership's business park operations increased
$129,000, or 5%, to $2,657,000 from $2,528,000 for the nine months ended
September 30, 1996 and 1995, respectively. This increase was primarily
attributable to increased rental rates. The monthly average realized rent per
square foot for the business park facilities was $.92 compared to $.89 for the
nine months ended September 30, 1996 and 1995, respectively. The weighted
average occupancy levels at the business park facilities remained stable at 97%
for the nine months ended September 30, 1996 and 1995. Cost of operations
(including management fees) for the business parks increased $24,000, or 2%, to
$1,600,000 from $1,576,000 for the nine months ended September 30, 1996 and
1995, respectively. This increase was primarily attributable to an increase in
property tax expense, partially offset by a decrease in leasing commissions
expense. Accordingly, for the Partnership's business park facilities, property
net operating income increased by $105,000, or 11%, from $952,000 to $1,057,000
for the nine months ended September 30, 1995 and 1996, respectively.
Administrative expenses decreased from $138,000 in 1995 to $118,000 in
1996, or $20,000. This decrease is principally a result of non-recurring
expenses in 1995, totaling $30,000, incurred in connection with environmental
assessments of the Partnership's facilities.
Minority interest in income increased $64,000 to $2,871,000 from $2,807,000
for the nine months ended September 30, 1996 and 1995, respectively. This
increase was primarily attributable to improved operations at the Partnership's
real estate facilities for those properties owned jointly with PSI, 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 PSI) to PSI of $37,000 for the nine months ended September
30, 1996. There was no allocation of depreciation and amortization to PSI for
the nine months ended September 30, 1995.
7
<PAGE>
PS PARTNERS IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
($6,136,000 for the nine months ended September 30, 1996) has been sufficient to
meet all current obligations of the Partnership.
During 1996, the Partnership anticipates approximately $1,774,000 of
capital improvements (of which $723,000 represents PSI's joint venture share).
The anticipated increase in capital improvements in 1996 is mainly due to
$975,000 of budgeted improvements at the Partnership's business parks;
specifically to include renovations to common areas, roof replacements, and
tenant improvement on vacated spaces. During 1995, the Partnership's property
manager commenced a program to enhance the visual appearance of the
mini-warehouse facilities managed by it. Such enhancements will include new
signs, exterior color schemes, and improvements to the rental offices. Included
in the 1996 capital improvement budget are estimated costs of $121,000 for such
enhancements. Total capital improvements were $962,000 for the nine months ended
September 30, 1996 of which $554,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $2,227,000 ($17.40 per unit) and $272,000, respectively, during the
first nine months of 1996. The quarterly distribution amount per unit was
reduced to $3.48 per unit in the third quarter of 1996. The reduction reflected
the Partnership's need to replenish cash reserves that have been depleted due to
the Partnership's making capital expenditures to modernize the appearance of the
mini-warehouse buildings and facility signage. 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 12, 1996
PS PARTNERS IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner Jr.
------------------------
Ronald L. Havner, Jr.
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial officer)
BY: /s/ John Reyes
------------------------
John Reyes
Vice President and Controller
of Public Storage, Inc.
(principal accounting officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000748901
<NAME> PS PARTNERS IV, LTD.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 724,000
<SECURITIES> 0
<RECEIVABLES> 92,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 816,000
<PP&E> 92,247,000
<DEPRECIATION> (33,263,000)
<TOTAL-ASSETS> 60,015,000
<CURRENT-LIABILITIES> 1,614,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,058,000
<TOTAL-LIABILITY-AND-EQUITY> 60,015,000
<SALES> 0
<TOTAL-REVENUES> 11,354,000
<CGS> 0
<TOTAL-COSTS> 5,074,000
<OTHER-EXPENSES> 2,689,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 720,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 720,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720,000
<EPS-PRIMARY> 3.63
<EPS-DILUTED> 3.63
</TABLE>
