UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 1996
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
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Commission File Number 0-15800
-------
PS PARTNERS VII, LTD., a California Limited Partnership
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-4018460
- ------------------------------- ------------------------
(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 consolidated balance sheets at March 31, 1996
and December 31, 1995 2
Condensed consolidated statements of income for the three
months ended March 31, 1996 and 1995 3
Condensed consolidated statements of cash flows for the three
months ended March 31, 1996 and 1995 4
Notes to condensed consolidated financial statements 5
Management's discussion and analysis of financial condition
and results of operations 6-7
PART II. OTHER INFORMATION
(Items 1 through 4 are not applicable)
Item 5 - Other Information 8
Item 6 - Exhibits and Reports on Form 8-K 8
<PAGE>
PS PARTNERS VII, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 31,
1996 1995
------------------- ------------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 258,000 $ 535,000
Rent and other receivables 32,000 48,000
Real estate facilities, at cost:
Land 18,782,000 18,782,000
Buildings and equipment 50,567,000 50,187,000
------------------- ------------------
69,349,000 68,969,000
Less accumulated depreciation (18,864,000) (18,271,000)
------------------- ------------------
50,485,000 50,698,000
Other assets 129,000 125,000
------------------- ------------------
$ 50,904,000 $ 51,406,000
=================== ==================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $ 891,000 $ 970,000
Advance payments from renters 433,000 387,000
Minority interest in general partnerships 21,306,000 21,167,000
Partners' equity:
Limited partners' equity, $500 per unit, 150,000
units authorized, 108,831 issued and outstanding 27,920,000 28,522,000
General partners' equity 354,000 360,000
------------------- ------------------
Total partners' equity 28,274,000 28,882,000
------------------- ------------------
$ 50,904,000 $ 51,406,000
=================== ==================
</TABLE>
See accompanying notes.
2
<PAGE>
PS PARTNERS VII, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
Three Months Ended
March 31,
-----------------------------------------------
1996 1995
-------------------- -------------------
REVENUE:
<S> <C> <C>
Rental income $ 2,588,000 $ 2,531,000
Interest income 5,000 29,000
-------------------- -------------------
2,593,000 2,560,000
-------------------- -------------------
COSTS AND EXPENSES:
Cost of operations 816,000 767,000
Management fees 153,000 150,000
Depreciation and amortization 593,000 542,000
Administrative 19,000 28,000
-------------------- -------------------
1,581,000 1,487,000
-------------------- -------------------
Income before minority interest 1,012,000 1,073,000
Minority interest in income 519,000 537,000
-------------------- -------------------
NET INCOME $ 493,000 $ 536,000
==================== ===================
Limited partners' share of net income
($3.48 per unit in 1996 and $3.88
per unit in 1995) $ 379,000 $ 422,000
General partners' share of net income 114,000 114,000
-------------------- -------------------
$ 493,000 $ 536,000
==================== ===================
</TABLE>
See accompanying notes.
3
<PAGE>
PS PARTNERS VII, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Three Months Ended
March 31,
-------------------------------------------
1996 1995
------------------- -------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 493,000 $ 536,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 593,000 542,000
Decrease (increase) in rent and other receivables 16,000 (1,000)
Increase in other assets (4,000) -
Decrease in accounts payable (79,000) (90,000)
Increase (decrease) in advance payments from renters 46,000 (5,000)
Minority interest in income 519,000 537,000
------------------- -------------------
Total adjustments 1,091,000 983,000
------------------- -------------------
Net cash provided by operating activities 1,584,000 1,519,000
------------------- -------------------
Cash flows from investing activities:
Additions to real estate facilities (380,000) (45,000)
------------------- -------------------
Net cash used in investing activities (380,000) (45,000)
------------------- -------------------
Cash flows from financing activities:
Distributions to holder of minority interest (380,000) (437,000)
Distributions to partners (1,101,000) (1,101,000)
------------------- -------------------
Net cash used in financing activities (1,481,000) (1,538,000)
------------------- -------------------
Net decrease in cash and cash equivalents (277,000) (64,000)
Cash and cash equivalents at the beginning of the period 535,000 1,844,000
------------------- -------------------
Cash and cash equivalents at the end of the period $ 258,000 $ 1,780,000
=================== ===================
</TABLE>
See accompanying notes.
4
<PAGE>
PS PARTNERS VII, LTD.,
a California Limited Partnership
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. The accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures contained herein are adequate
to make the information presented not misleading. These unaudited
condensed consolidated financial statements should be read in
conjunction with the financial statements and related notes appearing
in the Partnership's Form 10-K for the year ended December 31, 1995.
2. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting
of only normal accruals, necessary to present fairly the Partnership's
financial position at March 31, 1996, the results of operations for the
three months ended March 31, 1996 and 1995 and cash flows for the three
months then ended.
3. The results of operations for the three months ended March 31, 1996
are not necessarily indicative of the results to be expected for the
full year.
5
<PAGE>
PS PARTNERS VII, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
Three months ended March 31, 1996 compared to three months ended March 31, 1995:
The Partnership's net income for the three months ended March 31, 1996 was
$493,000 compared to $536,000 for the three months ended March 31, 1995,
representing a decrease of $43,000 or 8%. This decrease was primarily due to an
increase in depreciation combined with a decrease in interest income, partially
offset by increased property operating results at the Partnership's facilities
combined with a reduction in minority interest in income for those properties
held in joint venture with Public Storage, Inc. ("PSI").
Net property operating income (rental income less cost of operations and
management fees and excluding depreciation expense) increased by $5,000, as
rental income increased by $57,000 or 2%, and cost of operations (including
management fees and excluding depreciation expense) increased by $52,000 or 6%.
Rental income for the Partnership's mini-warehouse operations was
$2,369,000 compared to $2,291,000 for the three months ended March 31, 1996 and
1995, respectively, representing an increase of $78,000 or 3%. The increase in
rental income was primarily attributable to increased rental rates at the
mini-warehouse facilities combined with increased occupancy levels. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.61
compared to $.59 for the three months ended March 31, 1996 and 1995,
respectively. The weighted average occupancy levels at the mini-warehouse
facilities increased to 88% from 87% for the three months ended March 31, 1996
and 1995, respectively. Cost of operations (including management fees) increased
$40,000 or 5% to $865,000 from $825,000 for the three months ended March 31,
1996 and 1995, respectively. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $38,000 or 3% from
$1,466,000 to $1,504,000 for the three months ended March 31, 1995 and 1996,
respectively.
Rental income for the Partnership's business park operations was $219,000
compared to $240,000 for the three months ended March 31, 1996 and 1995,
respectively, representing a decrease of $21,000 or 9%. Rental income in 1995
includes $36,000 from a lease buyout. Excluding the buyout, the increase in
rental income of $15,000 was primarily attributable to increased rental rates
combined with an increase in the occupancy level. The monthly average realized
rent per square foot for the business park facilities was $.50 compared to $.48
for the three months ended March 31, 1996 and 1995, respectively. The weighted
average occupancy level at the business park facilities increased from 97% to
100% for the three months ended March 31, 1995 and 1996, respectively. Cost of
operations (including management fees) increased $12,000 or 14% to $104,000 from
$92,000 for the three months ended March 31, 1996 and 1995, respectively.
Accordingly, for the Partnership's business park facilities, property net
operating income decreased by $33,000 or 23% from $148,000 to $115,000 for the
three months ended March 31, 1995 and 1996, respectively.
6
<PAGE>
Minority interest in income decreased $18,000 or 3% to $519,000 from
$537,000 for the three months ended March 31, 1996 and 1995, respectively. This
decrease was primarily attributable to the allocation of depreciation and
amortization expense (pursuant to the partnership agreement with respect to
those real estate facilities which are jointly owned with PSI) to PSI of $26,000
for the three months ended March 31, 1996, partially offset by increased
operations at the Partnership's real estate facilities for those properties
owned jointly with PSI.
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
($1,584,000 for the three months ended March 31, 1996) has been sufficient to
meet all current obligations of the Partnership.
During 1996, the Partnership anticipates approximately $569,000 of capital
improvements (of which $161,000 represents PSI's joint venture share). During
1995, the Partnership's property manager commenced a program to enhance the
visual appearance of the mini-warehouse facilities managed by it. Such
enhancements will include new signs, exterior color schemes, and improvements to
the rental offices. Included in the 1996 capital improvement budget are
estimated costs of $105,000 for such enhancements. Total capital improvements
were $380,000 for the three months ended March 31, 1996 of which $278,000
represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $981,000 ($9.01 per unit) and $120,000, respectively, during the first
three months of 1996. Beginning with the second quarter of 1996, the Partnership
intends to reduce the distribution rate from $9.01 to $7.00 per quarter. In
mid-1995, the Partnership made a special distribution of $8.19 that
significantly reduced the Partnership's cash reserves. Over the last year there
has been no significant improvement to the Partnership's operations. The General
Partners believe that modest increases in the Partnership's operations should
enable the Partnership to maintain distributions at a level of $7.00 per
quarter, while making necessary capital improvements to the Partnership's
properties and replenishing the Partnership's cash reserves.
7
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 4 are not applicable.
Item 5 Other Information
-----------------
In May 1996, PSI commenced a cash tender offer to purchase up to 30,000
limited partnership units at a net cash price per unit of $357.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------------
(a) The following Exhibits are included herein:
(27) Financial Data Schedule
(b) 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: May 14, 1996
PS PARTNERS VII, LTD.,
a California Limited Partnership
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner Jr.
-------------------------------
Ronald L. Havner, Jr.
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial officer)
BY: /s/ John Reyes
-------------------------------
John Reyes
Vice President and Controller
of Public Storage, Inc.
(principal accounting officer)
8
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000781850
<NAME> PS Partner VII
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> Jan-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 258,000
<SECURITIES> 0
<RECEIVABLES> 32,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 290,000
<PP&E> 69,349,000
<DEPRECIATION> (18,864,000)
<TOTAL-ASSETS> 50,904,000
<CURRENT-LIABILITIES> 1,324,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,274,000
<TOTAL-LIABILITY-AND-EQUITY> 50,904,000
<SALES> 2,588,000
<TOTAL-REVENUES> 2,593,000
<CGS> 969,000
<TOTAL-COSTS> 969,000
<OTHER-EXPENSES> 612,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 493,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 493,000
<EPS-PRIMARY> 3.48
<EPS-DILUTED> 0.000
</TABLE>
