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, 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
---------------- ---------------
Commission File Number 0-14475
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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
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<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at June 30, 1998
and December 31, 1997 2
Condensed consolidated statements of income for the three
and six months ended June 30, 1998 and 1997 3
Condensed consolidated statements of cash flows for the
six months ended June 30, 1998 and 1997 4-5
Notes to condensed consolidated 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 IV, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-----------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $2,773,000 $1,523,000
Rent and other receivables 84,000 81,000
Real estate facilities, at cost:
Land 14,428,000 14,428,000
Buildings and equipment 46,469,000 46,279,000
-----------------------------------
60,897,000 60,707,000
Less accumulated depreciation (23,612,000) (22,444,000)
-----------------------------------
37,285,000 38,263,000
Investment in real estate entity 20,038,000 20,001,000
Other assets 107,000 106,000
-----------------------------------
$60,287,000 $59,974,000
===================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $731,000 $702,000
Advance payments from renters 450,000 389,000
Minority interest in general partnerships 39,232,000 39,189,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 19,593,000 19,414,000
General partner's equity 281,000 280,000
-----------------------------------
Total partners' equity 19,874,000 19,694,000
-----------------------------------
$60,287,000 $59,974,000
===================================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------------------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $3,208,000 $3,012,000 $6,271,000 $5,928,000
Equity in income of real estate entity 213,000 182,000 394,000 310,000
Interest income 31,000 8,000 52,000 12,000
-------------------------------------------------------------------
3,452,000 3,202,000 6,717,000 6,250,000
-------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of operations 1,059,000 1,016,000 2,048,000 2,032,000
Management fees 195,000 181,000 379,000 356,000
Depreciation and amortization 586,000 551,000 1,168,000 1,095,000
Administrative 64,000 60,000 84,000 79,000
-------------------------------------------------------------------
1,904,000 1,808,000 3,679,000 3,562,000
-------------------------------------------------------------------
Income before minority interest 1,548,000 1,394,000 3,038,000 2,688,000
Minority interest in income (902,000) (940,000) (1,858,000) (1,814,000)
-------------------------------------------------------------------
NET INCOME $646,000 $454,000 $1,180,000 $874,000
===================================================================
Limited partners' share of net income
($8.35 per unit in 1998 and
$5.98 per unit in 1997) $1,069,000 $766,000
General partner's share of net income 111,000 108,000
-----------------------------------
$1,180,000 $874,000
===================================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1998 1997
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $1,180,000 $874,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,168,000 1,095,000
(Increase) decrease in rent and other receivables (3,000) 47,000
(Increase) decrease in other assets (1,000) 125,000
Increase (decrease) in accounts payable 29,000 (499,000)
Increase in advance payments from renters 61,000 18,000
Equity in income of real estate entity (394,000) (310,000)
Minority interest in income 1,858,000 1,814,000
----------------------------------
Total adjustments 2,718,000 2,290,000
----------------------------------
Net cash provided by operating activities 3,898,000 3,164,000
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from real estate entity 357,000 -
Investment in real estate entity - (1,000)
Additions to real estate facilities (190,000) (370,000)
----------------------------------
Net cash provided by (used in) investing activities 167,000 (371,000)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of minority interest (1,815,000) (1,405,000)
Distributions to partners (1,000,000) (1,000,000)
----------------------------------
Net cash used in financing activities (2,815,000) (2,405,000)
----------------------------------
Net increase in cash and cash equivalents 1,250,000 388,000
Cash and cash equivalents at the beginning of the period 1,523,000 413,000
----------------------------------
Cash and cash equivalents at the end of the period $2,773,000 $801,000
==================================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1998 1997
----------------------------------
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C>
Investment in real estate entity $- $(19,650,000)
Transfer of real estate facilities for interest in real estate entity, net - 19,650,000
</TABLE>
See accompaying notes.
5
<PAGE>
PS PARTNERS IV, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(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, 1997.
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, 1998, the results of operations for the
three and six months ended June 30, 1998 and 1997 and cash flows for the
six months then ended.
3. The results of operations for the three and six months ended June 30, 1998
are not necessarily indicative of the results to be expected for the full
year.
6
<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, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997:
The Partnership's net income for the three months ended June 30, 1998 was
$646,000 compared to $454,000 for the three months ended June 30, 1997,
representing an increase of $192,000, or 42%. The increase was primarily due to
an increase in property operations at the Partnership's real estate facilities,
decreased minority interest in income for those properties held jointly with
PSI, and increased interest income.
Rental income for the Partnership's mini-warehouse operations was
$3,208,000 compared to $3,012,000 for the three months ended June 30, 1998 and
1997, respectively, representing an increase of $196,000, or 7%. The increase in
rental income was primarily attributable to increased rental rates at the
mini-warehouse facilities, combined with increased average occupancy rates. The
monthly average realized rent per square foot for the mini-warehouse facilities
was $.65 compared to $.62 for the three months ended June 30, 1998 and 1997,
respectively. The weighted average occupancy levels at the mini-warehouse
facilities increased from 89% to 91% for the three months ended June 30, 1997
and 1998, respectively. Cost of operations (including management fees) increased
$57,000, or 5%, to $1,254,000 from $1,197,000 for the three months ended June
30, 1998 and 1997, respectively. This increase is primarily attributable to
increases in advertising and promotion (due primarily to the PSI national
telephone reservations center) and property tax expenses. Accordingly, for the
Partnership's mini-warehouse operations, property net operating income increased
by $139,000, or 8%, from $1,815,000 to $1,954,000 for the three months ended
June 30, 1997 and 1998, respectively.
Interest income increased $23,000, or 288%, from $8,000 to $31,000 for the
three months ended June 30, 1997 and 1998, respectively. This increase was
primarily attributable to increased average invested cash balances.
Depreciation and amortization increased $35,000, or 6%, from $551,000 to
$586,000 for the three months ended June 30, 1997 and 1998, respectively. This
increase was primarily attributable to the depreciation of capital expenditures
made during 1997 and 1998.
Minority interest in income decreased $38,000, or 4%, to $902,000 from
$940,000 for the three months ended June 30, 1998 and 1997, respectively. This
decrease was primarily attributable to the 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
$200,000 for the three months ended June 30, 1998 compared to $48,000 for the
same period in 1997, partially offset by an increase in operations at the
Partnership's real estate facilities owned jointly with PSI.
7
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997:
The Partnership's net income for the six months ended June 30, 1998 was
$1,180,000 compared to $874,000 for the six months ended June 30, 1997,
representing an increase of $306,000, or 35%. The increase was primarily due to
an increase in property operations at the Partnership's real estate facilities,
combined with increased interest income, partially offset by increased minority
interest in income for those properties held jointly with PSI.
Rental income for the Partnership's mini-warehouse operations was
$6,271,000 compared to $5,928,000 for the six months ended June 30, 1998 and
1997, respectively, representing an increase of $343,000, or 6%. The increase in
rental income was primarily attributable to increased rental rates at the
mini-warehouse facilities, combined with increased occupancy rates. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.64
compared to $.61 for the six months ended June 30, 1998 and 1997, respectively.
The weighted average occupancy levels at the mini-warehouse facilities increased
from 88% to 90% for the six months ended June 30, 1997 and 1998, respectively.
Cost of operations (including management fees) increased $39,000, or 2%, to
$2,427,000 from $2,388,000 for the six months ended June 30, 1998 and 1997,
respectively. This increase was primarily attributable to increases in
advertising and promotion (due primarily to the PSI national telephone
reservations center) and property tax expenses, partially offset by a decrease
in payroll expenses. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $304,000, or 9%, from
$3,540,000 to $3,844,000 for the six months ended June 30, 1997 and 1998,
respectively.
Interest income increased $40,000, or 333%, from $12,000 to $52,000 for the
six months ended June 30, 1997 and 1998, respectively. This increase was
primarily attributable to increased average invested cash balances.
Depreciation and amortization increased $73,000, or 7%, from $1,095,000 to
$1,168,000 for the six months ended June 30, 1997 and 1998, respectively. This
increase was primarily attributable to the depreciation of capital expenditures
made during 1997 and 1998.
Minority interest in income was $1,858,000 in 1998 compared to $1,814,000
in 1997, representing an increase of $44,000, or 2%. This increase was primarily
attributable to an increase in operations at the Partnership's real estate
facilities owned jointly with PSI, partially offset by the the 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 $231,000 for the six months ended June 30, 1998 compared to $100,000
for the same period in 1997.
8
<PAGE>
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
($3,898,000 for the six months ended June 30, 1998) has been sufficient to meet
all current obligations of the Partnership.
During 1998, the Partnership anticipates approximately $850,000 of capital
improvements (of which $420,000 represents PSI's joint venture share). Total
capital improvements were $190,000 for the six months ended June 30, 1998 of
which $99,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $890,000 ($6.96 per unit) and $110,000, respectively, during the first
six 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.
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) 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: August 13, 1998
PS PARTNERS IV, 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> 0000748901
<NAME> PS PARTNERS IV, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,773,000
<SECURITIES> 0
<RECEIVABLES> 84,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,857,000
<PP&E> 60,897,000
<DEPRECIATION> (23,612,000)
<TOTAL-ASSETS> 60,287,000
<CURRENT-LIABILITIES> 1,181,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,874,000
<TOTAL-LIABILITY-AND-EQUITY> 60,287,000
<SALES> 0
<TOTAL-REVENUES> 6,717,000
<CGS> 0
<TOTAL-COSTS> 2,427,000
<OTHER-EXPENSES> 1,252,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,180,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,180,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,180,000
<EPS-PRIMARY> 8.35
<EPS-DILUTED> 8.35
</TABLE>