UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ---- ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
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: 2-95034LA
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
(an Arizona Limited Partnership)
--------------------------------
(Exact name of registrant as specified in its charter)
Arizona 86-0503193
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3839 N. 3rd St., Ste. 108, Phoenix, Arizona 85012
------------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (602) 230-1655
-----------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
- -------------------------
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
X
- ----
Indicated 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
---- ----
As of March 1, 1996, 15,000 Limited Partnership Units were outstanding. Such
Limited Partnership Units were sold at $500 per Unit. However, no market for the
Limited Partnership Units of the Registrant exists and therefore the aggregate
market value of the Units held by non-affiliates of the Registrant is not
determinable.
Documents Incorporated by Reference
- -----------------------------------
The Registrant's Prospectus dated March 9, 1985 filed pursuant to Rule 424 (c)
under the Securities Act of 1933 as amended is incorporated by reference into
Parts I, II and III of this report pursuant to Rule 12b-23 under the Securities
Exchange Act of 1934.
<PAGE>
PART I
Item 1. Business
--------
(a) General Development of Business
-------------------------------
Armored Storage Income Investors Limited Partnership (the "Registrant") is a
limited partnership formed on December 4, 1984 under the laws of the State of
Arizona to acquire, develop, own and operate self-storage facilities using a
minimum of mortgage indebtedness. The Registrant sold $7,500,000 in Limited
Partnership Interests to the public pursuant to a Registration Statement on Form
S-18 under the Securities Act of 1933 (Registration Statement No. 2-95034LA), as
amended. The offering commenced on March 8, 1985 and terminated on February 28,
1986.
(b) Financial Information About Industry Segments
---------------------------------------------
The Registrant operates in only one industry segment, the acquisition,
development, operation and holding for investment of self-storage facilities.
Information relating to the Registrant's revenues, operating profit and
identifiable assets attributable thereto for the fiscal year ended December 31,
1995 is set forth under Item 8 below.
(c) Narrative Description of Business
---------------------------------
The Self-Service Storage Association (SSSA) estimates that approximately
one-half of the population relocates every three years. Urban areas are becoming
more congested, houses are getting smaller and people are requiring outside
storage space to meet their needs. Business owners, too, are feeling the crunch
as the square foot cost of office space increases. They need an affordable
alternative to using expensive office space for the storage of records and
supplies.
Self-storage is an innovation responding to the needs of the community. The
facilities owned and operated by the Registrant are designed to offer low cost,
accessible and secure storage space for business and personal use. In addition
to indoor units, special parking areas are available for convenient storage of
recreational vehicles. Computerized entry systems and on-site, live-in managers
provide an extra measure of security. The facilities of the Registrant are
designed for a comfortable architectural blend with the surrounding residential,
commercial and retail areas.
The Partnership's principal investment objectives are: (i) to provide
distributions of Cash Flow from operations; (ii) realize capital appreciation of
the Partnership's Properties; (iii) to preserve and protect the Limited
Partner's capital; and, (iv) to develop a geographically diversified investment
portfolio of self-storage properties. There can be no assurance that these
objectives will be attained.
Markets and Competition.
- ------------------------
The Phoenix and Albuquerque markets have one of the greatest saturations of
storage facilities per capita in the country. To meet the competition the
Registrant is, and intends to continue, taking steps to maximize efficient
operations and to differentiate its facilities from the competition.
General Risks of Real Estate Ownership.
- ---------------------------------------
The Registrant's investments are subject to the risks generally incident to the
ownership of real property. These risks include the uncertainty of cash flow to
meet fixed obligations, adverse changes in national economic conditions, changes
in the relative demand for space in the locale of the facility (and thus the
relative price which can be charged), adverse local market conditions due to
changes in general or local economic conditions or neighborhood values, changes
in interest rates and in the availability, cost and terms of mortgage funds, the
financial condition of tenants and sellers of properties, changes in real estate
tax rates and other operating expenses, governmental rules and fiscal policies
including possible proposals for rent controls, as well as acts of God,
uninsured losses and other factors.
Seasonality.
- -----------
The business of the Registrant is not generally subject to seasonal variations.
Employees.
- ---------
The Registrant has no full-time employees.
(d) Financial Information About Foreign and Domestic Operations and Export Sales
----------------------------------------------------------------------------
The registrant does not derive any revenue from foreign operations or export
sales.
Item 2. Description of Property
-----------------------
The Partnership has three self-storage facilities, two of which are located in
Phoenix, Arizona and one located in Albuquerque, New Mexico.
Bell Road, Phoenix, Arizona
- ---------------------------
The Partnership owns a three-story enclosed self-storage facility at 1025 E.
Bell Road, Phoenix, Arizona ("Bell Road"). This facility consists of
approximately 81,500 gross square feet, built on 1.5 acres of land. The storage
facility includes 807 indoor spaces, 54 safety deposit boxes, and 114 mail
boxes. The property was acquired from an affiliate of the General Partner at a
cost of $2,249,632 of which $2,049,632 was allocated for the building, and
$200,000 allocated for the land. The purchase price represented the affiliate's
cost in the land and improvements. The facility was acquired in November 1985
while still in the developmental stage and became operational in January 1986.
As of January 31, 1996, the facility had an occupancy level of 81%.
63rd Avenue and McDowell
- ------------------------
The Partnership owns a self-storage facility at 63rd Avenue and McDowell Road in
Phoenix, Arizona ("63rd Avenue"). This facility consists of 76,325 gross square
feet of rentable space consisting of eight separate single level buildings built
on 3.9 acres of land. A two-story building houses the office and the manager's
apartment. The Registrant acquired the facility in December 1986 for a purchase
price of $2,300,000. As of January 31, 1996, the facility had an occupancy level
of 78%.
Tramway - Albuquerque, New Mexico
- ---------------------------------
The Partnership owns a three-story enclosed facility located at 12920 Indian
School Road, at the intersection of Tramway Boulevard in Albuquerque, New Mexico
("Tramway"). This facility consists of approximately 82,000 gross square feet,
built on 1.2 acres of land. The Partnership purchased the undeveloped property
from an affiliate of the General Partner in October 1985 for a purchase price of
$298,566, which represented the affiliate's cost in the land. Construction of
the facility was completed in September 1987 at a cost of approximately
$1,691,501. As of January 31, 1996, the facility had an occupancy level of 74%.
Additional information relative to the Properties is provided elsewhere in this
report and is incorporated herein by reference.
Item 3. Legal Proceedings.
-----------------
The Registrant is not subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of Limited Partnership Unit Holders during
the fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
------------------------------------------------------------------------
Matters
-------
(a) Market Information. No market for Limited Partnership Units exists or is
expected to develop.
(b) Holders. The approximate number of holders of the Registrant's Limited
Partnership Units as of the close of business on December 31, 1995 was 1067.
(c) Dividends. During the years ended December 31, 1991 through 1994, the
Partnership made distributions of cash to the Limited Partners. No distributions
were made in 1995. The source of the distributions were as follows:
1991 1992 1993 1994 1995
------- ------- ------- ------- -----
From net income $ 77,324 $143,644 $152,881 $209,961 $ -0-
From partners' capital 122,638 131,339 147,119 90,039 -0-
-------- -------- -------- -------- -----
$199,962 $274,983 $300,000 $300,000 $ -0-
-------- -------- -------- -------- -----
The Registrant will make annual distributions, to the extent available, of Cash
Available for Distribution. There is, however, no assurance as to when or
whether such cash will be available for distribution to the Limited Partners.
Cash Available for Distribution is generally the Partnership's Excess Reserves
and Cash Flow after reduction for any additions to reserves, and after payment
of all operating cash expenses.
To the extent available, Cash Available for Distribution for any Partnership
fiscal year will be distributed 95% to the Limited Partners and 5% to the
General Partner. As referred to in Item 11, the general partner is to be
allocated a minimum of 1% of the cash available for distribution.
If in any period the General Partner determines that Partnership working capital
reserves are in excess of the amount deemed necessary for Partnership operations
(such excess being called "Excess Reserves"), such Excess Reserves may be
distributed as Cash Available for Distribution.
Cash Available for Distribution will be distributed to the Limited Partners of
record as of the end of the applicable period in the ratio which the Units owned
by such Limited Partner bears to the total Units owned by all Limited Partners
entitled to such distribution.
Item 6. Selected Financial Data
-----------------------
The following selected financial data should be read in conjunction with the
financial statements and notes thereto included under Item 8 of this report.
This data is not covered by the opinion of independent certified public
accountants.
For the Period
Jan. 1, 1989 Jan. 1, 1990 Jan. 1, 1991 Jan. 1, 1992
Statement of Thru Thru Thru Thru
Income Information: Dec 31, 1989 Dec 31, 1990 Dec 31, 1991 Dec 31, 1992
------------ ------------ ------------ ------------
Total Revenues $ 622,689 $ 747,517 $ 832,283 $ 896,654
Net Income (Loss) $ ( 94,487) $ 34,052 $ 81,394 $ 151,204
Net Income (Loss) Per
Limited Partnership Unit $ (6.24) $ 2.16 $ 5.15 $ 9.58
Jan 1, 1993 Jan 1, 1994 Jan 1, 1995
Statement of Thru Thru Thru
Income Information: Dec 31, 1993 Dec 31, 1994 Dec 31, 1995
------------ ------------ ------------
Total Revenues $ 898,749 $ 976,287 $ 1,095,127
Net Income (Loss) $ 160,927 $ 221,012 $ 317,140
Net Income (Loss) Per
Limited Partnership Unit $ 10.19 $ 14.00 $ 20.08
As of As of As of As of
Balance Sheet Information: Dec 31, 1989 Dec 31, 1990 Dec 31, 1991 Dec 31, 1992
----------- ------------ ------------ ------------
Total Assets $ 6,453,651 $ 6,466,880 $ 6,351,974 $ 6,209,730
Long-Term Debt $ 941,533 $ 937,265 $ 932,765 $ 926,704
Partners' Capital $ 5,425,004 $ 5,459,056 $ 5,338,640 $ 5,211,911
Distributions Per Unit $ -0- $ -0- $ 13.34 $ 18.33
As of As of As of
Dec 31, 1993 Dec 31, 1994 Dec 31, 1995
------------ ------------ ------------
Total Assets $ 6,054,998 $ 5,973,592 $ 5,396,037
Long-Term Debt $ 917,325 $ 904,267 -0-
Partners' Capital $ 5,069,808 $ 4,987,790 $ 5,304,930
Distributions Per Unit $ 20.00 $ 20.00 -0-
Item 7. Management's Discussion and Analysis of Financial Condition and Results
------------------------------------------------------------------------
of Operations
-------------
(a)(1) and (a)(2) Liquidity and Capital Resources
-------------------------------
The Registrant was organized in December 1984 and its offering of Limited
Partnership Units was declared effective March 8, 1985. The entire offering of
$7,500,000 was sold during the offering period.
The cash balance at December 31, 1995 of $156,104 will be used primarily as
working capital reserves and, when appropriate, for distributions to the Limited
Partners. It is anticipated that capital resources will increase during the
coming year with a corresponding increase in the Registrant's liquidity as the
facilities increase in occupancy.
The registrant has acquired and developed all of its properties, therefore, no
significant additional outlays of funds are expected beyond those items already
budgeted.
(a)(3) Results of Operations
---------------------
The Partnership's three operating facilities and dates opened are as follows:
Facility Date Opened
-------- -----------
Bell Road January 1986
63rd Avenue December 1986
Tramway September 1987
In 1995 the Registrant's facilities generated $1,070,463 in rental income, an
increase of 11% over 1994. Occupancy figures are summarized as follows:
Average Occupancy High Low 12/31/95
----------------- ---- --- --------
Bell Road 90% 96% 81% 81%
63rd Avenue 77% 82% 74% 78%
Tramway 85% 95% 74% 74%
Income increased while occupancies decreased at both Bell Road and Tramway.
Significant rate hikes early in 1995 were responsible for this result.
Additionally, road construction on Bell road hurt occupancies late in 1995 and
will continue through at least the first half of 1996. The 63rd Avenue facility
experienced a 12% income gain although vacancies remained high. Revenues are
expected to increase modestly in 1996 due to increased competition, a slow down
in the Phoenix residential construction market, and the road construction along
Bell Road.
Expenses relating to property operations were $406,069 in 1995, approximately
$28,000 higher than 1994. Maintenance costs and new computer software were the
main factors for the increase in operating expenses. Partnership administration
expenses were similar to prior years.
Net cash generated from operations of $530,452 was used to retire the mortgage
on the 63rd Avenue property. As rent increases take effect and the facilities
continue to achieve higher occupancies cash flow will increase accordingly.
Inflation has historically been a contributing factor to the increase in rental
income levels and capital appreciation of income producing real estate. The most
significant trends or uncertainties having an impact on the Partnership's
revenues are those associated with inflation, changes in demand for self-storage
spaces and fluctuations in rental and occupancy rates of the Partnership
properties. The modest inflation levels of the past several years have kept rent
increases to a minimum. We continue to monitor the properties performance to
maximize long-term capital appreciation which is consistent with the
Partnership's objectives.
Item 8: Financial Statements and Supplementary Data.
-------------------------------------------
See Index to Financial Statements and Schedules attached hereto.
Item 9 Changes In and Disagreements With Accountants on Accounting
--------------------------------------------------------------
and Financial Disclosures
-------------------------
None
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The Registrant is managed by its General Partner, Armored Storage One Limited
Partnership. Armored Storage One Limited Partnership is managed by Armored
Management, L.L.C, the members of which are Carl R. Spiekerman and Dale D.
Ulrich.
The Partnership entered into an agreement with QuestCor, Inc. to manage the
Partnership's self-storage facilities. The terms of the agreement are for one
year and shall be renewed on a month-to-month basis unless and until either
party terminates the agreement. The agreement provides that the manager shall
receive, as compensation for services, the greater of $1000 per month or 6% of
the actual gross cash receipts from the prior month for each of the three
facilities it manages.
The Partnership entered into an agreement with QuestCor to provide
administrative services to the Partnership, such as investor relations, database
management (including data processing of investor subscriptions, fund
distributions, ownership changes, and subscription input), accounting,
preparation and/or coordinating the preparation of periodic regulatory reports
and tax related forms. The term of the agreement is for one year and shall
continue on a month-to-month basis unless either party terminates the agreement.
The agreement provides that QuestCor shall receive a fixed fee of $4500 per
month as compensation for its services. Additionally, QuestCor bills the
Partnership for its cost of participation in the annual partnership audit.
(a) Identification of Directors
---------------------------
Carl R. Spiekerman and Dale D. Ulrich are the managing members of Armored
Management L.L.C. Mr. Spiekerman, 52, is the sole shareholder and Chief
Executive Officer of The Environmental Group, Inc., a Phoenix based real estate
development firm. Mr. Spiekerman holds a Bachelor's Degree from the University
of Puget Sound, Tacoma, Washington, and a Master's Degree from the University of
Washington. Mr. Ulrich, 42, is a C.P.A. and a shareholder of QuestCor Inc. He is
also a panel trustee for the District of Arizona Bankruptcy Court and former
president of the Arizona Society of CPA's. Mr. Ulrich graduated from Marquette
University, Milwaukee, Wisconsin.
(b) Identification of Executive Officers
------------------------------------
None
(c) Significant Employees
---------------------
None
(d) Family Relationships
--------------------
None
(e) Legal Proceedings
-----------------
None
Item 11. Executive Compensation
----------------------
The General Partner, and its affiliates, earned fees, commissions, and expense
reimbursements, as permitted in the Limited Partnership Agreement, as follows:
For the Year Ended: 12/31/95 12/31/94 12/31/93
-------- -------- --------
Direct expenses relating to administration
of the Partnership which were reimbursed
or are to be reimbursed to the Managing
General Partner, or affiliates thereof $6000 $5500 $6450
General Partner's distributive share of cash
cash available for distribution None(1) $3030 $3030
Real estate commission upon the sale of
Partnership property payable to the
General Partner None(2) None None
General Partner's share of sale or refinancing
proceeds None(3) None None
(1)Cash Available for Distribution, if any, shall be Distributed 95% to the
Limited Partners, and 5% to the General Partner, with the General Partner's
share subordinated to a 10% annual cumulative, noncompounded return with respect
to the Limited Partners' Adjusted Capital Contributions.
If at any time the allocation and distribution provisions of the Limited
Partnership Agreement do not result in the allocation or distribution to the
General Partners of an aggregate of at least one percent (1%) of the item being
allocated or distributed, the Limited Partnership Agreement states that the
General Partners are to be allocated or distributed so much more of such item as
will cause the General Partners to be allocated or distributed one percent (1%)
thereof.
(2)The General Partner, or an affiliate, is entitled to receive a subordinated
real estate commission in an amount not to exceed the lesser of one-half the
amount customarily charged by others rendering similar services or 3% of the
sale price.
(3)Sale or refinancing proceeds will be distributed to Limited Partners in
accordance with their Capital Accounts in an amount equal to their Adjusted
Capital Contributions, then to the Limited Partners in an amount, if any, by
which actual Distributions of Cash Available for Distribution were less than the
preferred 10% return, then to the General Partner, a subordinated unpaid 5% of
Cash Available for Distribution, and the remaining 85% to the Limited Partner,
and 15% to the General Partner.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
There is no person known to the Registrant who owns beneficially or of record
more than 5% of the voting securities of the Registrant. However, the General
Partner has discretionary control over most of the decisions made by or for the
Registrant pursuant to the terms of the Partnership Agreement. The Registrant
has no directors or officers.
There are no arrangements known to the Registrant, the operation of which may,
at a subsequent date, result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
During the years ended December 31, 1995, 1994 and 1993 QuestCor received the
following compensation:
1995 1994 1993
------- ------- ------
Property management $63,807 $57,547 $54,403
Partnership administration $54,000 $54,000 $48,000
Audit assistance $ 5,000 $ 5,000 $ 5,000
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a)(1) and (a)(2) List of Financial Statements and Schedules as a Part of this
------------------------------------------------------------
Report
------
Reports of Independent Certified Public Accountants
FINANCIAL STATEMENTS
Balance sheet
Statement of operations
Statement of changes in partners' equity
Statement of cash flows
Notes to financial statements
(a)(3) List of Exhibits Filed as Part of this Report
---------------------------------------------
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
By: Armored Storage One Limited
Partnership
Its: General Partner
Dated: 3/27/96 By: /s/ Carl R. Spiekerman
- --------------- --------------------------
Carl R. Spiekerman,
Member, Armored Management L.L.C.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person in the capacity on the date
indicated.
Signature Title Date
/s/ Carl R. Spiekerman for Armored Management, L.L.C. 3/27/96
- ----------------------- Managing General Partner of -------
Carl R. Spiekerman Armored Storage One Limited
Partnership, the General
Partner of the Registrant
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
DECEMBER 31, 1995
CONTENTS
Page
Independent auditor's report 1
Financial statements:
Balance sheets 2
Statements of operations 3
Statements of changes in partners' equity 4
Statements of cash flows 5 - 6
Notes to financial statements 7 - 11
<PAGE>
To the Partners of
Armored Storage Income Investors
Limited Partnership
Phoenix, Arizona
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Armored Storage
Income Investors Limited Partnership as of December 31, 1995 and 1994 and the
related statements of operations, changes in partners' equity, and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Armored Storage
Income Investors Limited Partnership as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles.
TOBACK CPAs, P.C.
Phoenix, Arizona
March 14, 1996
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
-------------- ---------------
Rental property and equipment:
Land $ 1,139,828 $ 1,139,828
Building 5,856,762 5,835,812
Furniture and fixtures 74,576 74,576
-------------- --------------
7,071,166 7,050,216
Less accumulated depreciation (1,854,441) (1,659,851)
-------------- --------------
5,216,725 5,390,365
Cash and cash equivalents 156,104 332,727
Certificates of deposit - 219,201
Accounts receivable, net of allowance
of $21,684 and $27,000 21,684 27,000
Other assets, less accumulated amortization
of $13,246 and $34,709 1,524 4,299
-------------- --------------
Total assets $ 5,396,037 $ 5,973,592
============== ==============
LIABILITIES AND PARTNERS' EQUITY
Note payable, bank (Note 4) $ - $ 904,267
Accounts payable and accrued expenses 51,514 41,363
Unearned rent 39,593 40,172
-------------- --------------
Total liabilities 91,107 985,802
-------------- --------------
Commitments (Note 5)
Partners' equity (Note 6):
General partner 33,504 17,647
Limited partners; 15,000 units outstanding 5,271,426 4,970,143
-------------- --------------
5,304,930 4,987,790
-------------- --------------
Total liabilities and partners' equity $ 5,396,037 $ 5,973,592
============== ==============
The accompanying notes are an
integral part of these financial statements.
2
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
--------- --------- ---------
Rental income $ 1,070,463 $ 964,399 $ 888,481
Interest income 24,664 11,888 10,268
------------ --------- ---------
1,095,127 976,287 898,749
------------ --------- ---------
Expenses:
Property operations 406,069 378,120 354,321
Partnership administration 87,566 83,985 88,164
Depreciation and amortization 197,365 206,530 198,347
Interest 86,987 86,640 96,990
------------ --------- ---------
777,987 755,275 737,822
------------ --------- ---------
Net income $ 317,140 $ 221,012 $ 160,927
============ ========= ===========
Net income allocated to
general partner $ 15,857 11,051 8,046
Net income allocated to
limited partners 301,283 209,961 152,881
------------ --------- ---------
Net income $ 317,140 $ 221,012 $ 160,927
============ ========== ===========
Net income allocated to limited
partners per limited
partnership unit (Note 6) $ 20.08 $ 14.00 $ 10.19
=========== ========== ==========
Distributions per
limited partnership unit $ - $ 20.00 $ 20.00
=========== ========== ==========
Number of limited partnership
units outstanding 15,000 15,000 15,000
=========== ========== ==========
The accompanying notes are an
integral part of these financial statements.
3
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited
partner partners Total
--------- ---------- -------
Balance, December 31, 1992 $ 4,610 $ 5,207,301 $ 5,211,911
Distributions to partners (3,030) (300,000) (303,030)
Net income 8,046 152,881 160,927
----------- ----------- -----------
Balance, December 31, 1993 9,626 5,060,182 5,069,808
Distributions to partners (3,030) (300,000) (303,030)
Net income 11,051 209,961 221,012
---------- ----------- -----------
Balance, December 31, 1994 17,647 4,970,143 4,987,790
Distributions to partners (Note 6) - - -
Net Income 15,857 301,283 317,140
---------- ----------- -----------
Balance, December 31, 1995
(Note 6) $ 33,504 $ 5,271,426 $ 5,304,930
========== =========== ===========
The accompanying notes are an
integral part of these financial statements.
4
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ---------- ---------
Cash flows from operating activities:
Cash received from customers $ 1,075,200 $ 962,847 $ 901,996
Cash paid to suppliers and
service providers (483,484) (461,749) (443,874)
Interest received 25,723 11,799 9,298
Interest paid (86,987) (86,640) (96,990)
----------- ---------- ---------
Net cash provided
by operating activities 530,452 426,257 370,430
----------- ---------- ---------
Cash flows from investing activities:
Proceeds from maturities of
certificates of deposit 218,142 428,402 316,604
Purchase of certificates of deposit - (434,346) (421,329)
Purchase of rental property and equipment (20,950) (8,835) -
----------- ---------- ---------
Net cash provided by (used in)
investing activities 197,192 (14,779) (104,725)
----------- ---------- ---------
Cash flows from financing activities:
Principal payments on
note payable to bank (904,267) (13,058) (9,379)
Distributions to partners - (303,030) (303,030)
----------- ---------- ---------
Net cash used in financing activities (904,267) (316,088) (312,409)
----------- ---------- ---------
Increase (decrease) in cash
and cash equivalents (176,623) 95,390 (46,704)
Cash and cash equivalents, beginning 332,727 237,337 284,041
----------- ---------- ---------
Cash and cash equivalents, ending $ 156,104 $ 332,727 $ 237,337
=========== ========== =========
The accompanying notes are an
integral part of these financial statements.
5
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
--------- --------- ---------
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 317,140 $ 221,012 $ 160,927
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 197,365 206,530 198,347
Changes in assets and liabilities:
Decrease (increase) in certificates
of deposits accrued interest 1,059 (89) (970)
Decrease (increase)
in accounts receivable 5,316 (14,866) 15,376
Increase (decrease)
in accounts payable
and accrued expenses 10,151 356 (1,389)
Increase (decrease)
in unearned rent (579) 13,314 (1,861)
--------- --------- ---------
Net cash provided by operating activities $ 530,452 $ 426,257 $ 370,430
========= ========= =========
The accompanying notes are an
integral part of these financial statements.
6
<PAGE>
ARMORED STORAGE INCOME INVESTORS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. Partnership organization:
Armored Storage Income Investors Limited Partnership (the Partnership) was
organized under the laws of the State of Arizona pursuant to an
agreement of limited partnership filed December 4, 1984, for the
purpose of acquiring, developing, owning and operating self-service
storage facilities. The initial general partners were Armored Storage,
Inc., an Arizona corporation (the Managing General Partner) and Armored
Storage One Limited Partnership, an Arizona limited partnership. The
Partnership commenced full activity on January 9, 1985. During 1986,
the Partnership completed an offering of limited partnership units
wherein 15,000 limited partnership units were purchased by investors
for $7,500,000. In December, 1987, Armored Storage, Inc. withdrew from
the Partnership and Armored Storage One Limited Partnership then became
the Managing General Partner and assumed the partner's capital account
of Armored Storage, Inc. In February, 1994, Armored Management Limited
Liability Corporation (L.L.C.) was appointed the general partner of
Armored Storage One Limited Partnership.
2. Summary of significant accounting policies:
Rental property and equipment:
Rental property and equipment are stated at cost. Depreciation is computed
principally by the straight-line method over the following estimated
useful lives:
Years
-----
Buildings 30
Furniture and fixtures 5
Rental income:
The Partnership generates rental income from month-to-month rental
agreements for space at its self-storage facilities. Rental income is
recognized on the accrual basis.
Accounts receivable are recorded for rental payments that are delinquent
at year end. An allowance is recorded for management's estimate of
uncollectible rental receivables. After a receivable is 90 days
delinquent, the contents of the unit are sold and the proceeds are used
to reduce the receivable balance.
Income taxes:
The Partnership does not record a provision for income taxes as any income
or loss from the partnership is recognized by the individual partners
for tax reporting purposes.
Cash and cash equivalents:
For reporting in the statements of cash flows, the Partnership considers
all certificates of deposit and money market funds purchased with a
maturity of three months or less to be cash equivalents.
The carrying amount of cash and cash equivalents approximates fair value
because of the short maturity of those instruments.
Advertising costs:
Advertising costs are charged to operations as incurred.
Accounting estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
3. Rental property and equipment:
Rental property and equipment consist of the following:
1995 1994
--------------- -----------------
Land:
Phoenix - Bell Road $ 214,058 $ 214,058
Phoenix - 63rd Avenue 606,222 606,222
Albuquerque - Tramway Boulevard 319,548 319,548
--------------- ---------------
1,139,828 1,139,828
--------------- ---------------
Buildings:
Phoenix - Bell Road 2,214,474 2,193,524
Phoenix - 63rd Avenue 1,810,050 1,810,050
Albuquerque - Tramway Boulevard 1,832,238 1,832,238
--------------- ---------------
5,856,762 5,835,812
--------------- ---------------
1995 1994
--------------- ---------------
Furniture and fixtures:
Phoenix - Bell Road 32,624 32,624
Phoenix - 63rd Avenue 24,853 24,853
Albuquerque - Tramway Boulevard 17,099 17,099
--------------- ---------------
74,576 74,576
--------------- ---------------
$ 7,071,166 $ 7,050,216
=============== ===============
4. Note payable, bank:
During 1995, the note payable, bank, which consisted of a mortgage secured
by a deed of trust and assignment of rents on the 63rd Avenue Storage
Facility was paid in full. The remaining related loan acquisition costs
were also fully amortized during 1995.
5. Commitments and related party transactions:
The Partnership entered into an agreement with Chris Cap Corporation dba
QuestCor, Inc. (QuestCor) to manage the Partnership's self-storage
facilities. The term of the agreement is for one year through December,
1996, to be renewed on a month-to-month basis unless either party
terminates the agreement. The agreement provides that the manager shall
receive, as compensation for services, the greater of $1,000 per month
or 6% of the gross cash receipts from the prior month for each of the
three facilities it manages.
The Partnership entered into an agreement with QuestCor to provide
administrative services to the Partnership, such as investor relations,
database management (including data processing of investor
subscriptions, fund distributions, ownership changes, and subscription
input), accounting, preparation and coordination of the preparation of
periodic regulatory reports and tax related forms. The term of the
agreement is for one year through December, 1996 and shall continue on
a month-to-month basis unless either party terminates the agreement.
The agreement provided for QuestCor to receive a monthly fixed fee of
$4,500 in 1995, $4,500 in 1994, and $4,000 in 1993 as compensation for
its services. Additionally, the Partnership pays QuestCor approximately
$5,000 per annum for its cost of participation in the annual
partnership audit. A 50% member of Armored Management, L.L.C. is also a
50% shareholder of QuestCor.
The following are the approximate fees paid to QuestCor, Inc. for the
years ended December 31, 1995, 1994 and 1993:
1995 1994 1993
---------- --------- ---------
Property management $ 64,000 $ 58,000 $ 54,000
Partnership administration 54,000 54,000 48,000
Audit assistance 5,000 5,000 5,000
During the years ended December 31, 1995 and 1993, an affiliate of the
General Partner received $6,000 and $6,450, respectively, in direct
expense reimbursements associated with a market study of the
facilities.
6. Partners' equity:
The limited partnership agreement provides that profits, losses and cash
available for distribution shall be allocated as follows:
Allocation of net income:
Net income is to be allocated to the limited partners, ninety-five
percent (95%) in accordance with their capital percentages and to the
general partner, five percent (5%), until such time as the limited
partners have received in cash from all sources (other than cash
available for distribution) an amount equal to one hundred percent
(100%) of their capital thereafter to the Limited Partners,
eighty-five percent (85%) in accordance with their capital
percentages, and to the general partner, fifteen percent (15%).
Allocation of net loss:
Net losses are to be allocated to the limited partners, ninety-nine
percent (99%) in accordance with their capital percentages and to the
general partner, one percent (1%), until such time as the limited
partners have received distributions of cash from all sources (other
than cash available for distribution) in an amount equal to one
hundred percent (100%) of their capital contributions; thereafter to
the limited partners, eighty-five percent (85%) in accordance with
their capital percentages and to the general partner, fifteen percent
(15%).
Cash available for distribution:
All cash available for distribution, if any, realized by or available
to the Partnership, shall be distributed no less frequently than
annually in the following percentages: (1) to the limited partners,
ninety-five percent (95%) in accordance with their capital
percentages; and (2) to the general partner five percent (5%)
subordinated to a ten percent (10%) annual cumulative noncompounded
return with respect to the limited partner's adjusted capital
contributions determined as of the first day of each calendar
quarter, which distribution must be made before the general partner
is entitled to participate in cash available for distribution.
Cash available for distribution is generally the Partnership's net
cash flow less amounts set aside as reserves.
During 1995, the Partnership paid in full its outstanding note
payable with a bank. As a result, the Partnership did not make
partner distributions during the year.
If in any period the general partner determines that Partnership
working capital reserves are in excess of the amount deemed necessary
for Partnership operations, such excess reserves may be distributed
as cash available for distribution.
If, at any time, the allocation and distribution provisions of the
Limited Partnership Agreement do not result in the allocation or
distribution to the general partners of an aggregate of at least one
percent (1%) of the item being allocated or distributed, the limited
partnership agreement states that the general partner is to be
allocated or distributed so much more of such item as will cause the
general partner to be allocated or distributed one percent (1%)
thereof.
7. Property operations:
Included in property operations are the following expenses:
1995 1994 1993
----------- ----------- ------------
Accounting fees $ 19,182 $ 18,615 $ 20,072
Advertising 21,900 16,682 15,592
Property taxes 84,239 80,208 79,403
Repairs and maintenance 24,804 14,109 11,908
Utilities 50,143 56,855 52,461
Wages and payroll taxes 92,173 88,665 92,126
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 156,104
<SECURITIES> 0
<RECEIVABLES> 43,368
<ALLOWANCES> 21,684
<INVENTORY> 0
<CURRENT-ASSETS> 177,788
<PP&E> 7,071,166
<DEPRECIATION> 1,854,441
<TOTAL-ASSETS> 5,396,037
<CURRENT-LIABILITIES> 91,107
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,304,930
<TOTAL-LIABILITY-AND-EQUITY> 5,396,037
<SALES> 0
<TOTAL-REVENUES> 1,095,127
<CGS> 0
<TOTAL-COSTS> 603,434
<OTHER-EXPENSES> 87,566
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,987
<INCOME-PRETAX> 317,140
<INCOME-TAX> 0
<INCOME-CONTINUING> 317,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 317,140
<EPS-PRIMARY> 20.09
<EPS-DILUTED> 20.09
</TABLE>
