SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number:
September 30, 1998 2-95034LA
- ------------------ -----------------------
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Arizona 85-0503193
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3839 North 3rd Street, Suite 108
Phoenix, Arizona 85012
------------------------------------------------------
(Address of and zip code of principal executive offices)
(602) 230-1655
----------------------------------------------------
(Registrant's telephone number, including area code)
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>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
PART I
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS PAGE
----
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Unaudited Financial Statements 6
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
BALANCE SHEETS
(Unaudited)
September 30, September 30,
1998 1997
------------- -------------
ASSETS
Property
Land $1,139,828 $1,139,828
Buildings 5,856,761 5,856,761
Furniture and fixtures 99,942 74,576
---------- ----------
7,096,531 7,071,165
Less accumulated depreciation 2,393,891 2,196,667
---------- ----------
4,702,640 4,874,498
Cash and cash equivalents 344,119 369,189
Other assets 18,165 13,183
---------- ----------
$5,064,924 $5,256,870
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable 149,754 104,885
Commitments (Note 3)
Partners' capital
General partner $ 80,377 $ 62,221
Limited partners 4,834,793 5,089,764
---------- ----------
$5,064,924 $5,256,870
========== ==========
See notes to financial statements.
3
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
STATEMENTS OF OPERATIONS
(unaudited)
For the Nine Months For the Years
Ended Ended
----------------------- -------------------------
Sept. 30, Sept. 30, Dec. 31, Dec. 31,
1998 1997 1997 1996
-------- ---------- ---------- ----------
Income
Rental $835,217 $ 832,660 $1,105,613 $1,118,127
Interest 18,192 15,079 18,426 7,084
-------- ---------- ---------- ----------
853,409 847,739 1,124,039 1,125,211
-------- ---------- ---------- ----------
Expenses
Property Operations 358,040 314,370 436,207 393,958
Administration 74,194 80,776 96,005 84,114
Amortization &
Depreciation 149,000 147,000 195,224 196,585
-------- ---------- ---------- ----------
581,234 542,146 727,436 674,657
-------- ---------- ---------- ----------
Net Income (loss) $272,175 $ 305,593 $ 396,603 $ 450,554
======== ========== ========== ==========
See notes to financial statements.
4
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
---------------------------------
Sept. 30, 1998 Sept. 30, 1997
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 835,217 $ 832,660
Cash paid to suppliers (374,885) (375,112)
Interest received 18,192 15,079
--------- ---------
Net cash provided by
operating activities $ 478,524 $ 472,627
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (25,366) --
--------- ---------
Net cash provided by (used in)
Investing activities $ (25,366) $ --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (600,000) (530,303)
--------- ---------
Net cash used in financing activities (600,000) (530,303)
--------- ---------
Increase (decrease) in cash $(146,842) $ (57,676)
Cash and cash equivalents:
Beginning 490,961 426,865
--------- ---------
Ending $ 344,119 $ 369,189
========= ---------
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 272,175 $ 305,593
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 149,000 147,000
Increase (decrease) in accounts payable 57,349 20,034
--------- ---------
Net cash provided by
operating activities $ 478,524 $ 472,627
========= =========
See notes to financial statements.
5
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1998
NOTE 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 and Armored Storage One Limited
Partnership, became the "Managing General Partner."
NOTE 2. Summary of Significant Accounting Policies
Property and equipment:
Property and equipment is 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
Interest, real estate taxes and other costs related directly to
properties under long-term development contracts were capitalized.
Costs were not capitalized beyond net realizable value. Costs
related to operating properties are expensed as incurred.
Acquisition fees are allocated to the Partnership's property based
on the expected total capitalized cost of the respective property.
Development fees are allocated to the Partnership's property based
on the expected total capitalized cost of the respective property.
Loan acquisition costs:
Loan acquisition costs which are included in other assets are
amortized over the life of the note payable of 9 years.
Rental income:
The Partnership receives rental income from its self-storage
facilities. All rental agreements are for month-to-month tenancy.
Rental income is recognized on the accrual basis in accordance with
generally accepted accounting principles.
6
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1998
NOTE 2. Summary of Significant Accounting Policies, continued
Income taxes:
The Partnership does not record a provision for income taxes, since
Federal and state income tax regulations provide that any taxes on
income of a Partnership are payable by the partners as individuals.
The Partnership's tax returns are prepared on the accrual basis.
Syndication fees:
Syndication fees are those expenses incurred in the issuing and
marketing of partnership interests. These expenses include broker
and registration fees, legal fees, tax and accounting fees, and
printing costs. These fees are not amortizable and are presented as
a reduction in partners' capital in the financial statements.
Organization costs:
Organization costs which are included in other assets consist of
legal fees incident to the creation of the Partnership, accounting
fees for establishing an accounting system and filing fees. These
costs are being amortized using the straight-line method over 60
months.
Cash and cash equivalents:
For purposes of reporting cash flows, the Partnership considers all
money market funds to be cash equivalents.
Unaudited financial statements:
The financial statement for the nine months ended September 30, 1998
are unaudited, however, in management's opinion they include all
adjustments necessarily for a fair statement of the results of
operations for such interim period. The interim period results of
operations are not necessarily indicative of results for a full
year.
NOTE 3. Commitments
The Partnership has the following commitments:
The Partnership entered into agreements with Armored Management, LLC
on January 1, 1998, to manage the Partnership's self-storage
facilities. The term of the agreements are for one year and shall be
renewed from year to year unless, and until, either party terminates
the agreements. The agreements provide that the manager shall
receive, as compensation for services, 6% of the actual gross cash
receipts.
7
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1998
NOTE 3 Commitments, continued
The Partnership also entered into an agreement with Armored
Management, LLC for the management of the Partnership's accounting,
securities reporting, database and investor relations activities.
The term of the agreement is for one year and shall be renewed from
year to year unless either party terminates the agreement. The
agreement provides for a flat fee of $5,000 per month as
compensation for administration services.
The Partnership reimburses the General Partner for the costs of
goods and materials used by and for the Partnership and
administrative services necessary to the operation of the
Partnership.
8
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSIONS AND ANALYSIS
Results of Operations
The Partnership has three operating facilities, two located in Phoenix,
Arizona, and one in Albuquerque, New Mexico. The Partnership's three facilities
generated an aggregate gross operating revenue of $835,217 during the first nine
months of 1998 compared to $832,660 during the first nine months of 1997.
Revenue dropped slightly at Bell Road but the decrease was offset by gains at
the other two facilities.
Occupancies (based on number of available units) at the three facilities
are summarized as follows:
Sept. 30, 1998 Sept. 30, 1997
-------------- --------------
Bell Road 85% 85%
63rd Avenue 81% 73%
Tramway 79% 78%
Operational expenses through September 30, 1998 were $358,040 compared to
$314,370 for 1997. Increased property tax assessments were the primary cause of
the increase. Administrative expenses for 1998 were $74,194 compared to $80,776
for the corresponding period in 1997.
Liquidity and Capital Resources
As of September 30, 1998, the Partnership held cash and cash equivalents
totaling $344,119 as compared to $369,189 for the corresponding quarter of 1997.
9
<PAGE>
PART II
OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS:
Not applicable.
ITEM 2: CHANGES IN SECURITIES:
Not applicable.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES:
Not applicable.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
ITEM 5: OTHER INFORMATION:
Not applicable.
10
<PAGE>
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.
ARMORED STORAGE INCOME INVESTORS
(Registrant)
By: Armored Management L.L.C.
Its General Partner
By: /s/ Dale D. Ulrich
------------------------------
Dale D. Ulrich
Its: Member
Dated: 11/5/98
----------------------------
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 344,119
<SECURITIES> 0
<RECEIVABLES> 26,366
<ALLOWANCES> 13,183
<INVENTORY> 0
<CURRENT-ASSETS> 362,284
<PP&E> 7,096,531
<DEPRECIATION> 2,393,891
<TOTAL-ASSETS> 5,064,924
<CURRENT-LIABILITIES> 149,754
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,915,170
<TOTAL-LIABILITY-AND-EQUITY> 5,064,924
<SALES> 0
<TOTAL-REVENUES> 853,409
<CGS> 0
<TOTAL-COSTS> 507,040
<OTHER-EXPENSES> 74,194
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 272,175
<INCOME-TAX> 0
<INCOME-CONTINUING> 272,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272,175
<EPS-PRIMARY> 17.24
<EPS-DILUTED> 17.24
</TABLE>