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 June 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 June 30, 1996
and December 31, 1995 2
Condensed consolidated statements of income for the three and six
months ended June 30, 1996 and 1995 3
Condensed consolidated statements of cash flows for the six
months ended June 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>
June 30, December 31,
1996 1995
-------------------- --------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 268,000 $ 464,000
Rent and other receivables 75,000 55,000
Real estate facilities, at cost:
Land 19,957,000 19,957,000
Buildings and equipment 71,803,000 71,328,000
-------------------- --------------------
91,760,000 91,285,000
Less accumulated depreciation (32,393,000) (30,692,000)
-------------------- --------------------
59,367,000 60,593,000
Other assets 189,000 158,000
-------------------- --------------------
$ 59,899,000 $ 61,270,000
==================== ====================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 963,000 $ 1,128,000
Advance payments from renters 415,000 418,000
Minority interest in general partnerships 38,184,000 37,887,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 20,100,000 21,536,000
General partners' equity 237,000 301,000
-------------------- --------------------
Total partners' equity 20,337,000 21,837,000
-------------------- --------------------
$ 59,899,000 $ 61,270,000
==================== ====================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- --------------------------------------
1996 1995 1996 1995
----------------- ----------------- ------------------- -----------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 3,770,000 $ 3,648,000 $ 7,521,000 $ 7,175,000
Interest income 5,000 22,000 9,000 47,000
----------------- ----------------- ------------------ -----------------
3,775,000 3,670,000 7,530,000 7,222,000
----------------- ----------------- ------------------ -----------------
COSTS AND EXPENSES:
Cost of operations 1,468,000 1,365,000 2,907,000 2,770,000
Management fees 217,000 211,000 433,000 415,000
Depreciation and amortization 853,000 780,000 1,701,000 1,569,000
Administrative 63,000 50,000 80,000 105,000
----------------- ----------------- ------------------ -----------------
2,601,000 2,406,000 5,121,000 4,859,000
----------------- ----------------- ------------------ -----------------
Income before minority interest 1,174,000 1,264,000 2,409,000 2,363,000
Minority interest in income (956,000) (960,000) (1,910,000) (1,847,000)
----------------- ----------------- ------------------ -----------------
NET INCOME $ 218,000 $ 304,000 $ 499,000 $ 516,000
================= ================= ================== =================
Limited partners' share of net income
($2.70 per unit in 1996 and $2.45
per unit in 1995) $ 346,000 $ 313,000
General partners' share of net income 153,000 203,000
================== =================
$ 499,000 $ 516,000
================== =================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30,
------------------------------------------
1996 1995
------------------ --------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 499,000 $ 516,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,701,000 1,569,000
Increase in rent and other receivables (20,000) (10,000)
(Increase) decrease in other assets (31,000) 1,000
Decrease in accounts payable (165,000) (162,000)
Decrease in advance payments from renters (3,000) (27,000)
Minority interest in income 1,910,000 1,847,000
------------------ --------------------
Total adjustments 3,392,000 3,218,000
------------------ --------------------
Net cash provided by operating activities 3,891,000 3,734,000
------------------ --------------------
Cash flows from investing activities:
Additions to real estate facilities (475,000) (341,000)
------------------ --------------------
Net cash used in investing activities (475,000) (341,000)
------------------ --------------------
Cash flows from financing activities:
Distributions to holder of minority interest (1,613,000) (1,657,000)
Distributions to partners (1,999,000) (2,000,000)
------------------ --------------------
Net cash used in financing activities (3,612,000) (3,657,000)
------------------ --------------------
Net decrease in cash and cash equivalents (196,000) (264,000)
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 $ 268,000 $ 1,448,000
================== ====================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS IV, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 June 30, 1996, the results of operations for the
three and six months ended June 30, 1996 and 1995 and cash flows for the
six months then ended.
3. The results of operations for the three and six months ended June 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 June 30, 1996 compared to three months ended June 30, 1995:
The Partnership's net income was $218,000 and $304,000 for the three months
ended June 30, 1996 and 1995, respectively, representing a decrease of $86,000,
or 29%. This decrease were primarily due to increases in depreciation expense
partially offset by an increase in administrative expenses.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the three months ended June 30, 1996
increased $13,000 or .6%, as rental income increased $122,000 or 3%, and costs
of operations (including management fees and excluding depreciation expense)
increased $109,000 or 7% compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$2,888,000 compared to $2,754,000 for the three months ended June 30, 1996 and
1995, respectively, representing an increase of $134,000, 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 was 91% compared to 89% for the three months ended
June 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
three months ended June 30, 1996 and 1995, respectively. Cost of operations
(including management fees) for the mini-warehouses increased $107,000 or 10%,
to $1,157,000 from $1,050,000 for the three months ended June 30, 1996 and 1995,
respectively. These increases were primarily attributable to increases in
office, advertising, and property tax expenses. Accordingly, for the
Partnership's mini-warehouse operations, property net operating income increased
$27,000 or 2% from $1,704,000 to $1,731,000 for the three months ended June 30,
1995 and 1996, respectively.
Rental income for the Partnership's business park operations decreased
$12,000 or 1%, to $882,000 from $894,000 for the three months ended June 30,
1996 and 1995, respectively. The monthly average realized rent per square foot
for the business park facilities was $.91 compared to $.94 for the three months
ended June 30, 1996 and 1995, respectively. The weighted average occupancy
levels at the business park facilities remained stable at 98% for both three
month periods ended June 30, 1996 and 1995. Cost of operations (including
management fees) for the business parks increased $2,000, or .4%, to $528,000
from $526,000 for the three months ended June 30, 1996 and 1995, respectively.
Accordingly, for the Partnership's business park facilities, property net
operating income decreased $14,000, or 4%, to $354,000 from $368,000 for the
three months ended June 30, 1996 and 1995, respectively.
Administrative expenses increased from $50,000 for the three months ended
June 30, 1995 to $63,000 for the same period in 1996. This increase is
principally a result of increases in refinancing costs and provision for state
income taxes, partially offset by non-recurring expenses in 1995, totaling
$15,000, incurred in connection with environmental assessments of the
Partnership's facilities.
Six months ended June 30, 1996 compared to six months ended June 30, 1995:
The Partnership's net income was $499,000 and $516,000 for the six months
ended June 30, 1996 and 1995, respectively, representing a decrease of $17,000,
or 3%. This decrease were primarily due to increases in minority interest in
income for those properties held in joint venture with Public Storage, Inc.
("PSI") and depreciation expense, partially offset by a decrease in
administrative expenses.
6
<PAGE>
PS PARTNERS IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the six months ended June 30, 1996
increased $191,000 or 5%, as rental income increased $346,000 or 5%, and costs
of operations (including management fees and excluding depreciation expense)
increased $155,000 or 5% compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$5,678,000 compared to $5,458,000 for the six months ended June 30, 1996 and
1995, respectively, representing an increase of $220,000, 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 90% compared to 88% for the six months ended June 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 six months ended
June 30, 1996 and 1995, respectively. Costs of operations (including management
fees) for the mini-warehouses increased $89,000 or 4%, to $2,258,000 from
$2,169,000 for the six months ended June 30, 1996 and 1995, respectively. This
increase was primarily attributable to increases in office, advertising, and
property tax expenses. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased $131,000 or 4% from
$3,289,000 to $3,420,000 for the six months ended June 30, 1995 and 1996,
respectively.
Rental income for the Partnership's business park operations increased
$126,000 or 7%, to $1,843,000 from $1,717,000 for the six months ended June 30,
1996 and 1995, respectively. Rental income for the Partnership's business park
operations decreased $12,000 or 1%, to $882,000 from $894,000 for the three
months ended June 30, 1996 and 1995, respectively The weighted average occupancy
levels at the business park facilities was 98% compared to 97% for the six
months ended June 30, 1996 and 1995, respectively. The monthly average realized
rent per square foot for the business park facilities was $.95 compared to $.91
for the six months ended June 30, 1996 and 1995, respectively. Cost of
operations (including management fees) for the business parks increased $66,000
or 7%, to $1,082,000 from $1,016,000 for the six months ended June 30, 1996 and
1995, respectively. Accordingly, for the Partnership's business park facilities,
property net operating income increased by $60,000 or 9%, from $701,000 to
$761,000 for the six months ended June 30, 1995 and 1996, respectively.
Administrative expenses decreased from $105,000 in 1995 to $80,000 in 1996
or $25,000. 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 $63,000 to $1,910,000 from $1,847,000
for the six months ended June 30, 1996 and 1995, respectively. This increase was
primarily attributable to increased operations at the Partnership's real estate
facilities for those properties owned jointly with Public Storage, Inc. ("PSI").
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
($3,891,000 for the six months ended June 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 $475,000 for the six months ended
June 30, 1996 of which $278,000 represents the Partnership's share.
7
<PAGE>
PS PARTNERS IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Partnership paid distributions to the limited and general partners
totaling $1,782,000 ($13.92 per unit) and $217,000, respectively, during the
first six months of 1996. 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: August 13, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 268,000
<SECURITIES> 0
<RECEIVABLES> 75,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 343,000
<PP&E> 91,760,000
<DEPRECIATION> (32,393,000)
<TOTAL-ASSETS> 59,899,000
<CURRENT-LIABILITIES> 1,378,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,337,000
<TOTAL-LIABILITY-AND-EQUITY> 59,899,000
<SALES> 0
<TOTAL-REVENUES> 7,530,000
<CGS> 0
<TOTAL-COSTS> 3,340,000
<OTHER-EXPENSES> 3,691,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 499,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 499,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 499,000
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.70
</TABLE>
