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, 1999 2-95034LA
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ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
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(Exact name of Registrant as specified in its charter)
Arizona 85-0503193
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4425 North 24rd Street, Suite 225
Phoenix, Arizona 85016
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(Address of and zip code of principal executive offices)
(602) 230-1655
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(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
2
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ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
BALANCE SHEETS
(Unaudited)
September 30 September 30
1999 1998
---------- ----------
ASSETS
Property
Land $1,139,828 $1,139,828
Buildings 5,856,762 5,856,762
Furniture and fixtures 108,020 99,942
---------- ----------
7,104,610 7,096,532
Less accumulated depreciation 2,591,300 2,393,891
---------- ----------
4,513,310 4,702,641
Cash and cash equivalents 837,171 344,119
Other assets 15,165 18,165
---------- ----------
$5,365,646 $5,064,924
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 128,199 $ 149,754
Commitments (Note 3)
Partners' capital
General partner $ 90,737 $ 80,377
Limited partners 5,146,710 4,834,793
---------- ----------
$5,365,646 $5,064,924
========== ==========
3
See notes to financial statements.
<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,
1999 1998 1998 1997
-------- ---------- ---------- ----------
Income
Rental $811,159 $ 835,217 $1,089,040 $1,105,613
Interest 14,296 18,192 21,353 18,426
-------- ---------- ---------- ----------
825,455 853,409 1,110,393 1,124,039
-------- ---------- ---------- ----------
Expenses
Property Operations 357,311 358,040 454,890 436,207
Administration 85,043 74,194 91,685 96,005
Amortization &
Depreciation 148,500 149,000 197,909 195,224
-------- ---------- ---------- ----------
590,854 581,234 744,484 727,436
-------- ---------- ---------- ----------
Net Income $234,601 $ 272,175 $ 365,909 $ 396,603
======== ========== ========== ==========
See notes to financial statements.
4
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ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
-----------------------------
Sept 30, 1999 Sept 30, 1998
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 811,159 $ 835,217
Cash paid to suppliers (405,319) (374,885)
Interest received 14,296 18,192
--------- ---------
Net cash provided by (used in)
operating activities $ 420,136 $ 478,524
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital improvements $ -- $ (25,366)
--------- ---------
Net cash used in investing activities -- (25,366)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Distribution to partners -- (600,000)
---------
Net cash used in financing activities -- (600,000)
--------- ---------
Increase (decrease) in cash $ 420,136 $(146,842)
Cash and cash equivalents:
Beginning 417,035 490,961
--------- ---------
Ending $ 837,171 $ 344,119
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 234,601 $ 272,175
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 148,500 149,000
Increase (decrease) in accounts payable 37,035 57,349
--------- ---------
Net cash provided by operating activities $ 420,136 $ 478,524
========= =========
See notes to financial statements.
5
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ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1999
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
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, 1999
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.
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, 1999
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, 1999, 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, 1999
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.
NOTE 4. IMPACT OF YEAR 2000
The Company's assessment of its Year 2000 issues is complete. The
Company has determined that there is likely to be no material adverse
consequence of Year 2000 issues on the Company's business, results of
operations, or financial condition. The Company has few information
technology or non-information technology aspects which may be affected
by Year 2000; those that may be affected are the computing system used
to administer operations. Investigation and queries of the software
and hardware suppliers have determined by written statements or other
assurances that they are Year 2000 compliant. The Company has no major
supplier, vendor, or customers which is likely to materially affect
the Company if it is affected by the Year 2000 problem. The Company
has determined that it is at little risk of material disruption of its
business due to Year 2000 issues.
In the event the computing system fails, the Company will purchase and
replace the necessary hardware and software for critical systems and
contact the software and hardware suppliers to replace, at their cost,
the failed components for remaining computers. Costs for the Year 2000
compliance have been for investigation only and no remedial actions
have or will be taken. The costs have been minimal and are not
material to the financial condition of the Company.
8
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1999
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 $811,159 during the first nine
months of 1999 compared to $835,217 during the first nine months of 1998. A
decrease in income at the Bell Road facility is primarily responsible for the
overall reduction.
Occupancies (based on number of available units) at the three facilities
are summarized as follows:
Sept. 30, 1999 Sept. 30, 1998
-------------- --------------
Bell Road 71% 85%
63rd Avenue 79% 81%
Tramway 81% 79%
Operational expenses through September 30, 1999 were $357,311 compared to
$358,040 for 1998. Administrative expenses for 1999 were $85,043 compared to
$74,194 for the corresponding period in 1998. Legal expenses incurred as a
result of the pending sale are responsible for the increase.
Pursuant to the authority granted under the limited partnership agreement
of the Registrant, the General Partner, on behalf of the Registrant, opened an
escrow on April 6, 1999 with Everest Storage II, a California limited liability
company to sell substantially all its assets, consisting of three mini-storage
facilities, to Everest Storage II for a total sales price of $7,113,402. Everest
Storage II is an affiliate of Everest Investors 8, LLC, which owns 1.26% of the
Registrant.
9
<PAGE>
On November 5, 1999 the sale to Everest Storage II was consummated at a
sales price of $7,013,402. After prorations, commissions, and closing costs the
Partnership received approximately $6,400,000.
The General Partner will begin to wind up the affairs of the Registrant in
order to make a liquidation distribution. The General Partner estimates the
final distribution will be in the range of $450 to $475 per unit. It is
anticipated the final distribution will be made in the next 30 to 60 days.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, the Partnership held cash and cash equivalents
totaling $837,171 as compared to $344,119 for the corresponding quarter of 1998.
As a result of the sale referred to above, the Partnership's liquidity increased
substantially on November 5, 1999.
10
<PAGE>
ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP
an Arizona Limited Partnership
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.
11
<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 Storage One Limited Partnership
Its General Partner
By: /s/ Dale D. Ulrich
---------------------------------------
Dale D. Ulrich, Member
Armored Management, L.L.C.,
general partner of
Armored Storage One LP
Dated: 11/10/99
------------------------------------
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 837,171
<SECURITIES> 0
<RECEIVABLES> 30,000
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 852,336
<PP&E> 7,104,610
<DEPRECIATION> 2,591,300
<TOTAL-ASSETS> 5,365,646
<CURRENT-LIABILITIES> 128,199
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,237,447
<TOTAL-LIABILITY-AND-EQUITY> 5,365,646
<SALES> 0
<TOTAL-REVENUES> 825,455
<CGS> 0
<TOTAL-COSTS> 505,811
<OTHER-EXPENSES> 85,043
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 234,601
<INCOME-TAX> 0
<INCOME-CONTINUING> 234,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234,601
<EPS-BASIC> 14.86
<EPS-DILUTED> 14.86
</TABLE>
