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 September 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number 0-8908
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PUBLIC STORAGE PROPERTIES IV, LTD.
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(Exact name of registrant as specified in its charter)
California 95-3192402
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue
Glendale, California 91201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
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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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INDEX
Page
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PART I. FINANCIAL INFORMATION
Condensed balance sheets at September 30, 1997
and December 31, 1996 2
Condensed statements of income for the three and
nine months ended September 30, 1997 and 1996 3
Condensed statement of partners' deficit for the
nine months ended September 30, 1997 4
Condensed statements of cash flows for the
nine months ended September 30, 1997 and 1996 5
Notes to condensed financial statements 6
Management's discussion and analysis of
financial condition and results of operations 7-8
PART II. OTHER INFORMATION 9
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED BALANCE SHEETS
September 30, December 31,
1997 1996
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(Unaudited)
ASSETS
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Cash and cash equivalents $ 2,682,000 $ 2,440,000
Marketable securities of affiliate
(cost of $5,080,000 in 1997 and $3,791,000 in 1996) 10,205,000 9,211,000
Rent and other receivables 169,000 150,000
Real estate facilities, at cost:
Buildings and equipment 15,852,000 15,441,000
Land 5,244,000 5,244,000
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21,096,000 20,685,000
Less accumulated depreciation (10,671,000) (10,017,000)
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10,425,000 10,668,000
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Other assets 178,000 273,000
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Total assets $ 23,659,000 $ 22,742,000
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LIABILITIES AND PARTNERS' DEFICIT
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Accounts payable $ 210,000 $ 52,000
Deferred revenue 243,000 224,000
Mortgage note payable 25,647,000 26,338,000
Partners' deficit:
Limited partners' deficit, $500 per unit, 40,000 units
authorized, issued and outstanding (5,612,000) (6,892,000)
General partners' deficit (1,954,000) (2,400,000)
Unrealized gain on marketable securities 5,125,000 5,420,000
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Total partners' deficit (2,441,000) (3,872,000)
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Total liabilities and partners' deficit $ 23,659,000 $ 22,742,000
==================== ====================
See accompanying notes.
2
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
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1997 1996 1997 1996
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REVENUES:
Rental income $ 2,142,000 $ 1,868,000 $ 6,013,000 $ 5,490,000
Dividends from marketable securities of affiliate 76,000 65,000 217,000 196,000
Other income 31,000 26,000 99,000 58,000
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2,249,000 1,959,000 6,329,000 5,744,000
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COSTS AND EXPENSES:
Cost of operations 473,000 460,000 1,426,000 1,356,000
Management fees paid to affiliate 129,000 105,000 361,000 303,000
Depreciation 222,000 207,000 654,000 602,000
Administrative 18,000 20,000 49,000 47,000
Interest expense 698,000 722,000 2,113,000 2,182,000
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1,540,000 1,514,000 4,603,000 4,490,000
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NET INCOME $ 709,000 $ 445,000 $ 1,726,000 $ 1,254,000
================= ================= ================= ================
Limited partners' share of net income ($42.68 per
unit in 1997 and $31.00 per unit in 1996) $ 1,707,000 $ 1,240,000
General partners' share of net income 19,000 14,000
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$ 1,726,000 $ 1,254,000
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See accompanying notes.
3
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
Unrealized
Gain on Total
Limited General Marketable Partners'
Partners Partners Securities Deficit
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Balance at December 31, 1996 $(6,892,000) $(2,400,000) $5,420,000 $(3,872,000)
Unrealized loss on marketable securities - - (295,000) (295,000)
Net income 1,707,000 19,000 - 1,726,000
Equity transfer (427,000) 427,000 - -
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Balance at September 30, 1997 $(5,612,000) $(1,954,000) $5,125,000 $(2,441,000)
================= ================= ================= ================
See accompanying notes.
4
PUBLIC STORAGE PROPERTIES IV, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,726,000 $ 1,254,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 654,000 602,000
Increase in rent and other receivables (19,000) (28,000)
Amortization of prepaid loan fees 69,000 69,000
Decrease (increase) in other assets 26,000 (27,000)
Amortization of prepaid management fees - 265,000
Increase in accounts payable 158,000 119,000
Increase (decrease) in deferred revenue 19,000 (9,000)
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Total adjustments 907,000 991,000
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Net cash provided by operating activities 2,633,000 2,245,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities of affiliate (1,289,000) -
Additions to real estate facilities (411,000) (322,000)
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Net cash used in investing activities (1,700,000) (322,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage note payable (691,000) (622,000)
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Net cash used in financing activities (691,000) (622,000)
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Net increase in cash and cash equivalents 242,000 1,301,000
Cash and cash equivalents at beginning of period 2,440,000 967,000
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Cash and cash equivalents at end of period $ 2,682,000 $ 2,268,000
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Supplemental schedule of non-cash investing
and financing activities:
Decrease (increase) in fair market value of marketable securities 295,000 $ (1,077,000)
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Unrealized (loss) gain on marketable securities $ (295,000) $ 1,077,000
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See accompanying notes.
5
PUBLIC STORAGE PROPERTIES IV, LTD.
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 Partnership's Form 10-K for the year ended December 31,
1996.
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 Partnership's financial position
at September 30, 1997, the results of its operations for the three and nine
months ended September 30, 1997 and 1996 and its cash flows for the nine
months then ended.
3. The results of operations for the three and nine months ended September 30,
1997 are not necessarily indicative of the results expected for the full
year.
4. Marketable securities at September 30, 1997 consist of 344,480 shares of
common stock of Public Storage, Inc., a publicly traded real estate
investment trust and a general partner of the Partnership. The Partnership
has designated its portfolio of marketable securities as available for
sale. Accordingly, at September 30, 1997, the Partnership has recorded the
marketable securities at fair value, based upon the closing quoted prices
of the securities at September 30, 1997. Changes in market value of
marketable securities are reflected as unrealized gains or losses directly
in Partners' Equity and accordingly have no effect on net income.
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PUBLIC STORAGE PROPERTIES IV, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1996:
The Partnership's net income for the nine months ended September 30, 1997
was $1,726,000 compared to $1,254,000 for the nine months ended September 30,
1996, representing an increase of $472,000 or 38%. The Partnership's net income
for the three months ended September 30, 1997 was $709,000 compared to $445,000
for the three months ended September 30, 1996, representing an increase of
$264,000 or 59%. These increases are primarily a result of increased operating
results at the Partnership's mini-warehouse facilities combined with decreased
interest expense.
Rental income for the nine months ended September 30, 1997 was $6,013,000
compared to $5,490,000 for the nine months ended September 30, 1997,
representing an increase of $523,000 or 10%. Rental income for the nine months
September 30, 1997 was $2,142,000 compared to $1,868,000 for the three months
ended September 30, 1996, representing an increase of $274,000 or 15%. These
increases are primarily attributable to higher rental rates and occupancy
levels at the Partnership's mini-warehouse facilities. The weighted average
occupancy levels at the mini-warehouse facilities were 92% and 89% for the nine
months ended September 30, 1997 and 1996, respectively. Realized rent for the
nine months ended September 30, 1997 increased to $.83 per occupied square foot
from $.78 per occupied square foot for the nine months ended September 30,
1996.
Other income increased $41,000 for the nine months ended September 30, 1997
compared to the same period in 1996. This increase is primarily due to an
increase in invested cash balances.
Dividend income from marketable securities of affiliate increased $21,000
for the nine months ended September 30, 1997 compared to the same period in
1996 due to an increase in the number of shares owned in 1997 compared to the
same period in 1996.
Cost of operations (including management fees paid to affiliate) for the
nine months ended September 30, 1997 was $1,787,000 compared to $1,659,000 for
the nine months ended September 30, 1996, representing an increase of $128,000
or 8%. Cost of operations (including management fees paid to affiliate) for the
three months ended September 30, 1997 was $602,000 compared to $565,000 for the
three months ended September 30, 1996, representing an increase of $37,000 or
7%. This increase is mainly attributable to increases in management fees,
property taxes, repairs and maintenance and payroll expenses. Property taxes
increased due to an increase in property tax rates at some of the Partnership's
mini-warehouse facilities.
7
In 1995, the Partnership prepaid eight months of 1996 management fees on
its mini-warehouse operations discounted at the rate of 14% effective rate to
compensate for early payment. As a result, management fee expense for the nine
months ended September 30, 1996 was $26,000 lower than it would have been under
the customary undiscounted fee structure.
Interest expense decreased $69,000 to $2,113,000 in the nine months ended
September 30, 1997 from $2,182,000 in the same period in 1996. This decrease is
mainly attributable to a lower outstanding principal balances on the
Partnership's notes payable.
LIQUIDITY AND CAPITAL RESOURCES
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Cash flows from operating activities ($2,633,000 for the nine months ended
September 30, 1997) have been sufficient to meet all current obligations of the
Partnership.
At September 30, 1997, the Partnership held 344,480 shares of common stock
(marketable securities) with a fair value totaling $10,205,000 (cost basis of
$5,080,000 at September 30, 1997) in Public Storage, Inc. The Partnership
recognized $217,000 in dividends for the nine months ended September 30, 1997.
In the third quarter of 1991, quarterly distributions were discontinued to
enable the Partnership to make principal payments that commenced in 1990 and to
increase cash reserves in subsequent years through 1998, at which time the
remaining principal balance is due.
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PART II. OTHER INFORMATION
Items 1 through 5 are inapplicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) The following exhibit is 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: November 12, 1997
PUBLIC STORAGE PROPERTIES IV, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
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John Reyes
Senior Vice President and
Chief Financial Officer
9