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:
March 31, 1999 33-2732
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ARMORED STORAGE INCOME INVESTORS 2 _
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(Exact name of Registrant as specified in its charter)
California 93-0930503
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4425 N. 24th 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
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<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
PART I
FINANCIAL INFORMATION
---------------------
ITEM 1 FINANCIAL STATEMENTS PAGE
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Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Unaudited Financial Statements 6
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2
a California Limited Partnership
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1999 1998
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ASSETS
Property
Land $ 242,825 $ 242,825
Buildings 1,100,520 1,100,520
Furniture and fixtures 25,446 25,446
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1,368,791 1,368,791
Less accumulated depreciation (453,541) (444,341)
----------- -----------
915,250 924,450
Cash and cash equivalents 62,186 63,113
Due from former General Partner(Note 4) 45,986 45,986
Other assets 3,200 3,200
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$ 1,026,622 $ 990,763
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable 14,311 23,398
Commitments (Note 3)
Partners' capital
General partner (6,068) (6,015)
Limited partners 1,018,379 1,019,366
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$ 1,026,622 $ 990,763
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See Notes to financial statements.
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
STATEMENT OF OPERATIONS
(unaudited)
For the Three Months For the Year For the Year
Ended Ended Ended
March March December December
31, 1999 31, 1998 31, 1998 31, 1997
--------- --------- --------- ---------
Income
Rental $ 56,028 $ 54,738 $ 216,513 $ 231,117
Interest 206 476 1,420 1,850
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56,234 55,214 217,933 232,967
--------- --------- --------- ---------
Expenses
Property Operations 30,681 24,203 103,495 107,676
Administration 17,393 26,901 56,537 52,718
Amortization &
Depreciation 9,200 9,000 36,879 35,610
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57,274 60,104 196,911 180,004
--------- --------- --------- ---------
Net Income (loss) $ (1,040) $ (4,898) $ 21,022 $ 36,963
========= ========= ========= =========
See notes to financial statements.
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
STATEMENTS OF CASH FLOW
(unaudited)
For the Three Months Ended
March 31, March 31,
1999 1998
Cash Flows From Operating Activities
Cash received from customers $ 56,028 $ 54,738
Cash paid to suppliers (57,161) (60,099)
Interest received 206 1,850
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Net cash provided by operating activities $ (927) (3,511)
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Cash Flows From Investing Activities
Additions to property -- (30,694)
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Cash Flows From Financing Activities
Distributions to partners -- --
-------- --------
Net cash used in financing activities -- --
-------- --------
Increase (decrease) in cash $ (927) $(34,205)
Cash and cash equivalents:
Beginning 63,113 99,503
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Ending $ 62,186 $ 65,298
======== ========
Reconciliation Of Net Income (Loss) To Net Cash
Provided By Operating Activities:
Net income (loss) $ (1,040) $ (4,890)
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Depreciation and amortization 9,200 9,000
Change in assets and liabilities:
Increase (decrease) in accounts payable (9,087) (7,621)
-------- --------
Net cash provided by operating activities $ (927) $ (3,511)
======== ========
See Notes to Financial Statements.
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
NOTES OF FINANCIAL STATEMENTS
March 31, 1999
NOTE 1: Partnership Organization
Armored Storage Income Investors 2 ("the Partnership") was organized
under the laws of the State of California pursuant to an agreement of
limited partnership filed January 13, 1986, for the purpose of
acquiring, developing and operating self-service storage facilities.
The Partnership was authorized to issue a total of 20,000 units for a
total offering of $10,000,000. Sales of the Partnership units commenced
in April of 1986. The Partnership reached its minimum funding
requirement of 2,400 units of limited partnership interests on
September 22, 1986, and has sold 4,210 units in total. The
Partnership's offering period closed on April 3, 1987.
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
-----
Building 30
Furniture and Fixtures 5
Rental income:
The Partnership receives rental income from its existing
self-storage facility. All rental agreements are for
month-to-month tenancy. Rental income is recognized on the
accrual basis in accordance with generally accepted accounting
principles.
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.
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
NOTES OF FINANCIAL STATEMENTS
March 31, 1999
NOTE 2. Summary of Significant Accounting Policies, continued
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 statements for the three months ended March 31,
1999 are unaudited, however, in management's opinion they
include all adjustments necessary for a fair statement of the
results of operations for such interim periods. 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:
(a) The Partnership entered into an agreement with Armored
Management, LLC on January 1, 1999, to manage the
Partnership's self-storage facility. The term of the agreement
is for one year and shall be renewed from year to year unless
and until either party terminates the agreement. The agreement
provides that the manager shall receive, as compensation for
services, 6% of the actual gross cash receipts.
(b) 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 and until
either party terminates the agreement. The agreement provides
for a flat fee of $3,000 per month as compensation for
administrative services.
(c) 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.
<PAGE>
ARMORED STORAGE INCOME INVESTORS 2,
a California Limited Partnership
NOTES OF FINANCIAL STATEMENTS
March 31, 1999
NOTE 4: Due From Former General Partner
Due from former General Partner represents a receivable to the
Partnership for those amounts reimbursed to the former Managing General
Partner for syndication fees incurred in excess of the percentage
allowable by the Partnership's prospectus with respect to the total
amount of limited partners capital raised. On April 3, 1987 the
offering was terminated. Based on actual units sold through the date of
termination, it was determined by the General Partner that too much had
been paid to the former Managing General Partner. The excess, which
amounted to $93,438, has been reclassified to due from former General
Partner. At March 31, 1999 the balance due from former General Partner
was $45,986.
NOTE 5: 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.
<PAGE>
PART I. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
The Partnership has one operating facility located in Phoenix, Arizona.
The Partnership's facility generated an aggregate gross operating revenue of
$56,028 during the first three months of 1999 compared to $54,738 during the
first three months of 1998. The facility maintained an occupancy level of 80% at
the end of March 1999, the same as the prior year.
Operating expenses through March 31, 1999 were $30,681 compared to
$24,203 for 1998. Advertising, salaries, and property taxes all were higher than
in 1998. Administrative expenses for 1999 were $17,393 opposed to $26,901 in
1998. Timing differences explain the variation between the two years.
The occupancy rate has stabilized at the property after a year and a
half decline. A small price increase and the completion of the maintenance
issues is expected to reverse the trend and lead to higher revenues over the
remainder of the year.
Liquidity and Capital Resources
As of March 31, 1999, the Partnership held cash and cash equivalents
totaling $62,186 as compared to $65,298 for the corresponding quarter of 1998.
<PAGE>
PART II
OTHER INFORMATION
Item 1: Legal Proceedings:
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Not applicable.
Item 2: Changes in securities:
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Not applicable.
Item 3: Defaults Upon Senior Securities:
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Not applicable.
Item 4: Submission of Matters to a Vote of Security Holders:
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Not applicable.
Item 5: Other information:
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Not applicable.
<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 2
(Registrant)
By: Armored Management L.L.C.
Its General Partner
By:/s/ Dale D. Ulrich
----------------------------
Dale D. Ulrich, Member
Dated: 5/11/99
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
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0
0
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<TOTAL-COSTS> 39,881
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<INCOME-PRETAX> (1,040)
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