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
For the transition period from to
---------------- -------------------
Commission File Number 1-10850
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PUBLIC STORAGE PROPERTIES XX, INC.
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(Exact name of registrant as specified in its charter)
California 95-4300893
- - ------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue
Glendale, California 91201-2349
- - ---------------------------------------- -------------------
(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
-- ---
The number of shares outstanding of the Company's classes of common stock as of
March 31, 1996:
870,734 shares of $.01 par value Series A shares
90,859 shares of $.01 par value Series B shares
257,432 shares of $.01 par value Series C shares
------------------------------------------------
<PAGE>
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Condensed Balance Sheets at March 31, 1996
and December 31, 1995 2
Condensed Statements of Income for the three
months ended March 31, 1996 and 1995 3
Condensed Statement of Shareholders' Equity for the
three months ended March 31, 1996 4
Condensed Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
PART II. OTHER INFORMATION 10
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
CONDENSED BALANCE SHEETS
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
------
Cash and cash equivalents $ 439,000 $ 538,000
Marketable securities of affiliate,
at market value (cost of $148,000) 204,000 190,000
Rent and other receivables 23,000 28,000
Prepaid expenses 90,000 129,000
Real estate facilities at cost:
Building, land improvements and equipment 11,740,000 11,731,000
Land 5,824,000 5,824,000
------------ ------------
17,564,000 17,555,000
Less accumulated depreciation (2,819,000) (2,701,000)
------------ ------------
14,745,000 14,854,000
------------ ------------
Total assets $ 15,501,000 $ 15,739,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable $ 410,000 $ 396,000
Dividends payable 269,000 558,000
Advance payments from renters 89,000 88,000
Shareholders' equity:
Series A common, $.01 par value,
1,393,165 shares authorized,
870,734 shares issued and
outstanding (870,734 shares
issued and outstanding in 1995) 8,000 8,000
Convertible Series B common, $.01 par
value, 90,859 shares authorized,
issued and outstanding 1,000 1,000
Convertible Series C common, $.01 par
value, 257,432 shares authorized,
issued and outstanding 3,000 3,000
Paid-in-capital 15,823,000 15,823,000
Cumulative income 4,022,000 3,731,000
Cumulative distributions (5,180,000) (4,911,000)
Unrealized gain in marketable securities 56,000 42,000
------------ ------------
Total shareholders' equity 14,733,000 14,697,000
------------ ------------
Total liabilities and shareholders' equity $ 15,501,000 $ 15,739,000
============ ============
See accompanying notes.
2
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
-------------------------
1996 1995
--------- ---------
REVENUES:
Rental income $748,000 $687,000
Interest and other income
(including $2,000 of dividends from marketable
securities of affiliate in both 1996 and 1995) 7,000 14,000
--------- ---------
755,000 701,000
--------- ---------
COSTS AND EXPENSES:
Cost of operations 273,000 218,000
Management fees paid to affiliate 38,000 41,000
Depreciation 118,000 117,000
Administrative 33,000 29,000
Interest expense 2,000 -
--------- ---------
464,000 405,00
--------- ---------
NET INCOME $291,000 $296,000
======== ========
Primary earnings per share - Series A $0.31 $0.29
======== ========
Fully diluted earnings per share - Series A $0.24 $0.23
======== ========
Dividends declared per share:
Series A $0.28 $0.26
======== ========
Series B $0.28 $0.26
======== ========
Weighted average Common shares outstanding:
Primary - Series A 870,734 923,834
======== ========
Fully diluted - Series A 1,219,025 1,272,125
========= =========
See accompanying notes.
3
<PAGE>
Public Storage Properties XX, Inc.
Condensed Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Convertible Convertible Cumulative
Series A Series B Series C Paid-in Net
Shares Amount Shares Amount Shares Amount Capital Income
------- ------ ------ ------ ------- ------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1995 870,734 $8,000 90,859 $1,000 257,432 $3,000 $15,823,000 $3,731,000
Net income - - - - - - - 291,000
Unrealized gain in
marketable securities - - - - - - - -
Cash distributions declared:
$.28 per share - Series A - - - - - - - -
$.28 per share - Series B - - - - - - - -
------- ------ ------ ------ ------- ------ ----------- ----------
Balances at March 31, 1996 870,734 $8,000 90,859 $1,000 257,432 $3,000 $15,823,000 $4,022,000
======= ====== ====== ====== ======= ====== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Unrealized gain Total
Cumulative in marketable Shareholders'
Distributions securities Equity
----------- ------- -----------
<S> <C> <C> <C>
Balances at
December 31, 1995 ($4,911,000) $42,000 $14,697,000
Net income - - 291,000
Unrealized gain in
marketable securities - 14,000 14,000
Cash distributions declared:
$.28 per share - Series A (243,000) - (243,000)
$.28 per share - Series B (26,000) - (26,000)
----------- ------- -----------
Balances at March 31, 1996 ($5,180,000) $56,000 $14,733,000
=========== ======= ===========
</TABLE>
See accompanying notes.
4
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
------------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 291,000 $ 296,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 118,000 117,000
Decrease (increase) in rent and other receivables 5,000 (5,000)
Decrease in prepaid expenses 1,000 --
Amortization of prepaid management fees 38,000 --
Increase (decrease) in accounts payable 14,000 (8,000)
Increase (decrease) in advance payments from renters 1,000 (4,000)
--------- ---------
Total adjustments 177,000 100,000
--------- ---------
Net cash provided by operating activities 468,000 396,000
--------- ---------
Cash flows from investing activities:
Additions to real estate facilities (9,000) --
--------- ---------
Net cash used in investing activities (9,000) --
--------- ---------
Cash flows from financing activities:
Distributions paid to shareholders (558,000) (436,000)
Purchase of Company Series A common stock -- (407,000)
--------- ---------
Net cash used in financing activities (558,000) (843,000)
--------- ---------
Net decrease in cash
and cash equivalents (99,000) (447,000)
Cash and cash equivalents at
the beginning of the period 538,000 1,347,000
--------- ---------
Cash and cash equivalents at
the end of the period $ 439,000 $ 900,000
========= =========
Supplemental schedule of non-cash
investing and financing activities:
Increase in fair value of marketable securities $ (14,000) $ (25,000)
========= =========
Unrealized gain on marketable securities $ 14,000 $ 25,000
========= =========
See accompanying notes.
5
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited condensed 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 financial statements should be
read in conjunction with the financial statements and related notes
appearing in the Company's Form 10-K for the year ended December 31, 1995.
2. In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
accruals, necessary to present fairly the Company's financial position at
March 31, 1996 and December 31, 1995, the results of its operations for the
three months ended March 31, 1996 and 1995 and its 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 expected for the full year.
4. In 1995, the Company prepaid eight months of 1996 management fees at a
total cost of $103,000. The Company expensed $38,000 of the 1996 prepaid
management fees for the three months ended March 31, 1996. The balance of
prepaid management fees, $65,000, is included in prepaid expenses in the
Balance Sheet at March 31, 1996.
6
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors occurring during the periods presented in the accompanying
Condensed Financial Statements.
RESULTS OF OPERATIONS.
- - ----------------------
The Company's net income for the three months ended March 31, 1996 was
$291,000 compared to $296,000 for the three months ended March 31, 1995,
representing a decrease of $5,000 or 2%. This decrease is primarily the result
of an increase in cost of operations.
Rental income for the three months ended March 31, 1996 and 1995 was
$748,000 and $687,000, respectively, representing an increase of $61,000 or 9%.
This increase is primarily due to increased occupancy levels and rental rates at
a majority of the Company's properties.
The Company's mini-warehouse operations had weighted average occupancy
levels of 92% and 88% for the three month periods ended March 31, 1996 and 1995,
respectively.
Cost of operations (including management fees paid to affiliate and
depreciation expense) increased to $429,000 from $376,000 for the three months
ended March 31, 1996 and 1995, respectively, representing an increase of $53,000
or 14%. This increase is primarily attributable to an increase in property tax
expense due to a one-time tax refund of $44,000 received in the first quarter of
1995 from appealing a prior year tax assessment at the Company's Los Angeles,
California property.
In 1995, the Company prepaid eight months of 1996 management fees on its
mini-warehouse operations (based on the management fees for the comparable
period during the calendar year immediately preceding the prepayment) discounted
at the rate of 14% per year to compensate for early payment. During the three
month period ended March 31, 1996, the Company expensed $38,000 of prepaid
management fees. The amount is shown as management fees paid to affiliate in the
condensed statements of income. As a result of the prepayment, the Company saved
approximately $7,000 in management fees, based on the management fees that would
have been payable on rental income generated in the three months ended March 31,
1996 compared to the amount prepaid.
7
<PAGE>
During the three months ended March 31, 1996, the Company incurred $2,000
in interest expense on its line of credit facility. No such expense was incurred
during the same period in 1995 since the Company did not have a credit facility.
LIQUIDITY AND CAPITAL RESOURCES.
- - --------------------------------
Cash flows from operating activities ($468,000 for the three months ended
March 31, 1996) and cash reserves were sufficient to meet all current
obligations and distributions of the Company during the three months ended March
31, 1996. Management expects cash flows from operations will be sufficient to
fund capital expenditures and quarterly distributions.
In December 1995, the Company obtained an unsecured revolving credit
facility with a bank for borrowings up to $750,000 for working capital purposes
and to repurchase the Company's stock. Outstanding borrowings on the credit
facility, at the Company's option, bear interest at either the bank's prime rate
plus .25% (8.5% at March 31, 1996) or the bank's LIBOR rate plus 2.25% (7.75% at
March 31, 1996). Interest is payable monthly. On December 31, 1999, all unpaid
principal and accrued interest is due and payable. During the first quarter of
1996, the Company borrowed and repaid $150,000 on its line of credit facility.
At March 31, 1996, there was no outstanding balance on the credit facility.
The Company's Board of Directors has authorized the Company to purchase up
to 300,000 Series A common stock. As of March 31, 1996, the Company had
repurchased 174,140 shares of Series A common stock, none of which were
purchased in the first quarter of 1996.
In February 1994, the Company purchased 10,000 common shares of Public
Storage, Inc., a publicly traded real estate investment trust and an affiliate
of the Company, for $148,000. The market value of these securities at March 31,
1996 was $204,000. The Company recognized $2,000 in dividends for the three
months ended March 31, 1996 and included this amount in other income in the
condensed statements of income.
The Company has elected and intends to continue to qualify as a real estate
investment trust ("REIT") for federal income tax purposes. As a REIT, the
Company must meet, among other tests, sources of income, share ownership, and
certain asset tests. The Company is not taxed on that portion of its taxable
income which is distributed to its shareholders provided that at least 95% of
its taxable income is so distributed to its shareholders prior to filing of the
Company's tax return. The primary difference between book income and taxable
income is depreciation expense. In 1995, the Company's federal tax depreciation
was $294,000.
The bylaws of the Company provide that, during 1999, unless shareholders
have previously approved such a proposal, the shareholders will be presented
with a proposal to approve or disapprove (a) the sale or financing of all or
substantially all of the properties and (b) the distribution of the proceeds
from such transaction and, in the case of a sale, the liquidation of the
Company.
8
<PAGE>
SUPPLEMENTAL INFORMATION.
- - -------------------------
The Company's funds from operations ("FFO") is defined generally by the
National Association of Real Estate Investment Trusts as net income before loss
on early extinguishment of debt and gain on disposition of real estate, plus
depreciation and amortization. FFO for the three months ended March 31, 1996 and
1995 was $409,000 and $413,000, respectively. FFO is a supplemental performance
measure for equity Real Estate Investment Trusts used by industry analysts. FFO
does not take into consideration principal payments on debt, capital
improvements, distributions and other obligations of the Company. The only
depreciation or amortization that is added to income to derive FFO is
depreciation and amortization directly related to physical real estate. All
depreciation and amortization reported by the Company relates to physical real
estate and does not include any depreciation or amortization related to
goodwill, deferred financing costs or other intangibles. FFO is not a substitute
for the Company's net cash provided by operating activities or net income
computed in accordance with generally accepted accounting principles, as a
measure of liquidity or operating performance.
9
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 5 are inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A) EXHIBITS: The following exhibit is included herein:
(27) Financial Data Schedule
B) REPORTS ON 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 13, 1996
PUBLIC STORAGE PROPERTIES XX, INC.
BY: /s/ Ronald L. Havner, Jr.
-----------------------------
Ronald L. Havner, Jr.
Vice President and
Chief Financial Officer
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000870541
<NAME> PUBLIC STORAGE PROPERTIES XX, INC.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<CASH> 439,000
<SECURITIES> 204,000
<RECEIVABLES> 113,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 756,000
<PP&E> 17,564,000
<DEPRECIATION> (2,819,000)
<TOTAL-ASSETS> 15,501,000
<CURRENT-LIABILITIES> 768,000
<BONDS> 0
0
0
<COMMON> 12,000
<OTHER-SE> 14,721,000
<TOTAL-LIABILITY-AND-EQUITY> 15,501,000
<SALES> 0
<TOTAL-REVENUES> 755,000
<CGS> 0
<TOTAL-COSTS> 429,000
<OTHER-EXPENSES> 33,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 291,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 291,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291,000
<EPS-PRIMARY> .31
<EPS-DILUTED> .24
</TABLE>
