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 September 30, 1998
------------------
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 balance sheets at September 30, 1998
and December 31, 1997 2
Condensed statements of income for the three
and nine months ended September 30, 1998 and 1997 3
Condensed statements of cash flows for the
nine months ended September 30, 1998 and 1997 4
Notes to condensed financial statements 5
Management's discussion and analysis of financial condition
and results of operations 6-10
PART II. OTHER INFORMATION
(Items 1 through 5 are not applicable)
Item 6 - Exhibits and Reports on Form 8-K 11
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-----------------------------------
(Unaudited)
(Restated - See Note 5)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $3,035,000 $1,293,000
Rent and other receivables 8,000 2,000
Real estate facility, at cost:
Land 101,000 101,000
Buildings and equipment 1,530,000 1,520,000
-----------------------------------
1,631,000 1,621,000
Less accumulated depreciation (630,000) (581,000)
-----------------------------------
1,001,000 1,040,000
Investment in real estate entities 16,203,000 17,513,000
Other assets 5,000 5,000
-----------------------------------
$20,252,000 $19,853,000
===================================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $143,000 $147,000
Advance payments from renters 12,000 12,000
Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 19,813,000 19,414,000
General partner's equity 284,000 280,000
-----------------------------------
Total partners' equity 20,097,000 19,694,000
-----------------------------------
$20,252,000 $19,853,000
===================================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED STATEMENTS OF INCOME
(Restated - See Note 5)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------------------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $82,000 $70,000 $223,000 $201,000
Equity in earnings of real estate entities 695,000 534,000 1,863,000 1,442,000
Interest income 40,000 12,000 91,000 24,000
-------------------------------------------------------------------
817,000 616,000 2,177,000 1,667,000
-------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of operations 31,000 24,000 86,000 83,000
Management fees 6,000 5,000 14,000 13,000
Depreciation and amortization 16,000 16,000 49,000 47,000
Administrative 41,000 39,000 125,000 118,000
-------------------------------------------------------------------
94,000 84,000 274,000 261,000
-------------------------------------------------------------------
NET INCOME $723,000 $532,000 $1,903,000 $1,406,000
===================================================================
Limited partners' share of net income
($13.55 per unit in 1998 and
$9.71 per unit in 1997) $1,735,000 $1,243,000
General partner's share of net income 168,000 163,000
-----------------------------------
$1,903,000 $1,406,000
===================================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Restated - See Note 5)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------------
1998 1997
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $1,903,000 $1,406,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 49,000 47,000
(Increase) decrease in rent and other receivables (6,000) 12,000
Decrease in other assets - 11,000
(Decrease) increase in accounts payable (4,000) 42,000
Decrease in advance payments from renters - (4,000)
Equity in earnings of real estate entities (1,863,000) (1,442,000)
-------------------------------------
Total adjustments (1,824,000) (1,334,000)
-------------------------------------
Net cash provided by operating activities 79,000 72,000
-------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from real estate entities 3,173,000 2,003,000
Additions to real estate facility (10,000) (7,000)
-------------------------------------
Net cash provided by investing activities 3,163,000 1,996,000
-------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (1,500,000) (1,500,000)
-------------------------------------
Net cash used in financing activities (1,500,000) (1,500,000)
-------------------------------------
Net increase in cash and cash equivalents 1,742,000 568,000
Cash and cash equivalents at the beginning of the period 1,293,000 227,000
-------------------------------------
Cash and cash equivalents at the end of the period $3,035,000 $795,000
=====================================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS IV, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 September 30, 1998, the results of operations for the three
and nine months ended September 30, 1998 and 1997 and cash flows for
the nine months then ended.
3. The results of operations for the three and nine months ended September
30, 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 were the Joint Venture's business parks in
exchange for a partnership interest in PSBPLP. The general partners 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:
Nine Months Ended September 30,
---------------------------------
1998 1997
----------- -----------
Total revenues......................... $72,973,000 $31,402,000
Minority interest in income............ $8,696,000 $6,795,000
Net income............................. $22,987,000 $4,101,000
5
<PAGE>
PS PARTNERS IV, 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 and in the reports for the
quarterly periods on Form 10-Q/A for the quarters ended March 31, 1998 and June
30, 1998.
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997:
The Partnership's net income for the three months ended September 30,
1998 was $723,000 compared to $532,000 for the three months ended September 30,
1997, representing an increase of $191,000, or 36%. 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 increased
interest income and a decrease in depreciation expense allocated to the
Partnership with respect to the Joint Venture.
Property Operations
- -------------------
Rental income for the Partnership's wholly-owned mini-warehouse
property was $82,000 compared to $70,000 for the three months ended September
30, 1998 and 1997, respectively, representing an increase of $12,000, or 17%.
Cost of operations (including management fees) increased $8,000, or 28%, to
$37,000 from $29,000 for the three months ended September 30, 1998 and 1997,
respectively. Accordingly, for the Partnership's wholly-owned mini-warehouse
property, property net operating income increased by $4,000, or 10%, from
$41,000 to $45,000 for the three months ended September 30, 1997 and 1998,
respectively.
Equity in Earnings of Real Estate Entities
- ------------------------------------------
Equity in earnings of real estate entities was $695,000 in the three
months ended September 30, 1998 as compared to $534,000 during the three months
ended September 30, 1997, representing an increase of $161,000, or 30%. This was
due primarily to the Partnership's share of improved operating results at the
Joint Venture's mini-warehouses, combined with a decrease in depreciation
expense allocated to the Partnership with respect to the Joint Venture.
6
<PAGE>
Depreciation and Amortization
- -----------------------------
Depreciation and amortization remained stable at $16,000 for the three
months ended September 30, 1997 and 1998, respectively.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997:
The Partnership's net income for the nine months ended September 30,
1998 was $1,903,000 compared to $1,406,000 for the nine months ended September
30, 1997, representing an increase of $497,000, or 35%. 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
increased interest income and a decrease in depreciation expense allocated to
the Partnership with respect to the Joint Venture.
Property Operations
- -------------------
Rental income for the Partnership's wholly-owned mini-warehouse
property was $223,000 compared to $201,000 for the nine months ended September
30, 1998 and 1997, respectively, representing an increase of $22,000, or 11%.
Cost of operations (including management fees) increased $4,000, or 4%, to
$100,000 from $96,000 for the nine months ended September 30, 1998 and 1997,
respectively. Accordingly, for the Partnership's wholly-owned mini-warehouse
property, property net operating income increased by $18,000, or 17%, from
$105,000 to $123,000 for the nine months ended September 30, 1997 and 1998,
respectively.
Equity in Earnings of Real Estate Entities
- ------------------------------------------
Equity in earnings of real estate entities was $1,863,000 in the nine
months ended September 30, 1998 as compared to $1,442,000 during the nine months
ended September 30, 1997, representing an increase of $421,000, or 29%. This was
due primarily to the Partnership's share of improved operating results at the
Joint Venture's mini-warehouses, combined with a decrease in depreciation
expense allocated to the Partnership with respect to the Joint Venture.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization increased $2,000, or 4%, from $47,000 to
$49,000 for the nine months ended September 30, 1997 and 1998, respectively.
This increase was primarily attributable to the depreciation of capital
expenditures made during 1997 and 1998.
7
<PAGE>
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 SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997:
Rental income for the Mini-Warehouse Properties was $3,342,000 compared
to $3,149,000 for the three months ended September 30, 1998 and 1997,
respectively, representing an increase of $193,000, or 6%. The increase in
rental income was primarily attributable to increased rental rates at the
Mini-Warehouse Properties, combined with increased average occupancy rates. The
monthly average realized rent per square foot for the Mini-Warehouse Properties
was $.66 compared to $.63 for the three months ended September 30, 1998 and
1997, respectively. The weighted average occupancy levels at the Mini-Warehouse
Properties increased from 91% to 92% for the three months ended September 30,
1997 and 1998, respectively. Cost of operations (including management fees)
increased $127,000, or 11%, to $1,318,000 from $1,191,000 for the three months
ended September 30, 1998 and 1997, respectively. This increase is primarily
attributable to an increases in advertising, advertising and promotion (due
primarily to the PSI national telephone reservation center) and payroll
expenses. Accordingly, for the Mini-Warehouse Properties, property net operating
income increased by $66,000, or 3%, from $1,958,000 to $2,024,000 for the three
months ended September 30, 1997 and 1998, respectively.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997:
Rental income for the Mini-Warehouse Properties was $9,613,000 compared
to $9,077,000 for the nine months ended September 30, 1998 and 1997,
respectively, representing an increase of $536,000, or 6%. The increase in
rental income was primarily attributable to increased rental rates at the
Mini-Warehouse Properties, combined with increased occupancy rates. The monthly
average realized rent per square foot for the Mini-Warehouse Properties was $.65
compared to $.62 for the nine months ended September 30, 1998 and 1997,
respectively. The weighted average occupancy levels at the Mini-Warehouse
Properties increased from 89% to 90% for the nine months ended September 30,
1997 and 1998, respectively. Cost of operations (including management fees)
increased $166,000, or 5%, to $3,745,000 from $3,579,000 for the nine months
ended September 30, 1998 and 1997, respectively. This increase was primarily
attributable to increases in advertising and promotion (due primarily to the PSI
national telephone reservation center) expenses. Accordingly, for the
Mini-Warehouse Properties, property net operating income increased by $370,000,
or 7%, from $5,498,000 to $5,868,000 for the nine months ended September 30,
1997 and 1998, respectively.
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
and distributions from real estate entities ($3,252,000 for the nine months
ended September 30, 1998) has been sufficient to meet all current obligations of
the Partnership.
During 1998, the Partnership anticipates approximately $11,000 of
capital improvements for the Partnership's wholly-owned property; total capital
improvements for the nine months ended September 30, 1998 with respect to this
property was $10,000.
The Partnership paid distributions to the limited and general partners
totaling $1,337,000 ($10.44 per unit) and $163,000, respectively, during the
first nine 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.
Impact of the Year 2000 Issue
- -----------------------------
PSI has completed an assessment of all of its hardware and software
applications to identify susceptibility to what is commonly referred to as the
"Y2K Issue" whereby certain computer programs have been written using two digits
rather than four to define the applicable year. Any of PSI's computer programs
or hardware with the Y2K Issue that have date-sensitive applications or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000, resulting in miscalculations or system failure causing disruptions of
operations.
Many of PSI's critical applications, relative to the direct management
of properties, have recently been replaced and PSI believes they are already
Year 2000 compliant. PSI has an implementation in process on the remaining
critical applications, including its general ledger and related systems, that
are believed to have Y2K issues. PSI expects the implementation to be complete
by June 1999. Contingency plans have been developed for use in case PSI's
implementations are not completed on a timely basis. While PSI presently
believes that the impact of the Y2K Issue on its systems can be mitigated, if
the plan for ensuring Year 2000 Compliance and the related contingency plans
were to fail, be insufficient, or not be implemented on a timely basis,
operations of the Partnership could be materially impacted.
Certain of PSI's other non-computer related systems that may be
impacted by the Y2K Issue, such as security systems, are currently being
evaluated, and PSI expects the evaluation to be complete by June 1999. PSI
expects the implementation of any required solutions to be complete in advance
9
<PAGE>
of December 31, 1999. PSI has not fully evaluated the impact of lack of Year
2000 compliance on these systems, but has no reason to believe that lack of
compliance would materially impact the operations of the Partnership.
The Partnership exchanges electronic data with certain outside vendors
in the banking and payroll processing areas. PSI has been advised by these
vendors that their systems are or will be Year 2000 compliant, but has requested
a Year 2000 compliance certification from these entities. PSI is not aware of
any other vendors, suppliers, or other external agents with a Y2K Issue that
would materially impact the Partnership's results of operations, liquidity, or
capital resources. However, PSI has no means of ensuring that external agents
will be Year 2000 compliant, and there can be no assurance that the Partnership
has identified all such external agents. The inability of external agents to
complete their Year 2000 compliance process in a timely fashion could materially
impact the Partnership. The effect of non-compliance by external agents is not
determinable.
The total cost of PSI's year 2000 compliance activities (which
primarily consists of the costs of new systems) will be allocated to all
entities that use the PSI computer systems. The amount to be allocated to the
Partnership and the Joint Venture is estimated at approximately $132,000. These
costs are capitalized.
The costs of the projects and the date on which PSI believes that it
will be Year 2000 compliant are based upon management's best estimates, and were
derived utilizing numerous assumptions of future events. There can be no
assurance that these estimates will be achieved, and actual results could differ
materially from those anticipated. There can be no assurance that PSI has
identified all potential Y2K Issues either within PSI and the Partnership or at
external agents. In addition, the impact of the Y2K issue on governmental
entities and utility providers and the resultant impact on the Partnership, as
well as disruptions in the general economy, may be material but cannot be
reasonably determined or quantified.
10
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 5 are not applicable.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) The following Exhibits are included herein:
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: March 18, 1999
PS PARTNERS IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
---------------------------------------------
John Reyes
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial and accounting officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000748901
<NAME> PS PARTNERS IV, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S.$
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,035,000
<SECURITIES> 0
<RECEIVABLES> 8,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,043,000
<PP&E> 1,631,000
<DEPRECIATION> (630,000)
<TOTAL-ASSETS> 20,252,000
<CURRENT-LIABILITIES> 155,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,097,000
<TOTAL-LIABILITY-AND-EQUITY> 20,252,000
<SALES> 0
<TOTAL-REVENUES> 2,177,000
<CGS> 0
<TOTAL-COSTS> 100,000
<OTHER-EXPENSES> 174,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,903,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,903,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,903,000
<EPS-PRIMARY> 13.55
<EPS-DILUTED> 13.55
</TABLE>
