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, 1995 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 0-8908 ------ PUBLIC STORAGE PROPERTIES IV, LTD. - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3192402 - - -------------------------------------------- ------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 600 N. Brand Boulevard Glendale, California 91203 - - -------------------------------------------- ------------------------- (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 ----- ----- INDEX Page ---- PART I. FINANCIAL INFORMATION Condensed balance sheets at March 31, 1995 and December 31, 1994 2 Condensed statements of operations for the three months ended March 31, 1995 and 1994 3 Condensed statement of partners' deficit for the three months ended March 31, 1995 4 Condensed statements of cash flows for the three months ended March 31, 1995 and 1994 5 Notes to condensed financial statements 6-7 Management's discussion and analysis of financial condition and results of operations 8-9 PART II. OTHER INFORMATION 10 PUBLIC STORAGE PROPERTIES IV, LTD. CONDENSED BALANCE SHEETS March 31, December 31, 1995 1994 ---------- ------------ (Unaudited) ASSETS ------ Cash and cash equivalents $ 787,000 $ 551,000 Marketable securities of affiliate (cost of $3,392,000) 4,635,000 3,948,000 Rent and other receivables 103,000 88,000 Real estate facilities at cost: Buildings and equipment 14,720,000 14,703,000 Land 5,256,000 5,256,000 ----------- ----------- 19,976,000 19,959,000 Less accumulated depreciation (8,641,000) (8,461,000) ----------- ----------- 11,335,000 11,498,000 ----------- ----------- Other assets 398,000 420,000 ----------- ----------- Total assets $17,258,000 $16,505,000 =========== =========== LIABILITIES AND PARTNERS' DEFICIT --------------------------------- Accounts payable $ 42,000 $ 48,000 Advances to reconstruct real estate facility 237,000 237,000 Deferred revenue 252,000 292,000 Mortgage note payable 27,908,000 28,086,000 Partners' deficit: Limited partners' deficit, $500 per unit, 40,000 units authorized, issued and outstanding (9,215,000) (9,430,000) General partners' deficit (3,209,000) (3,284,000) Unrealized gain on marketable securities 1,243,000 556,000 ------------ ------------ Total partners' deficit (11,181,000) (12,158,000) ------------ ------------ Total liabilities and partners' deficit $ 17,258,000 $ 16,505,000 ============ ============ See accompanying notes. 2 PUBLIC STORAGE PROPERTIES IV, LTD. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, ------------------------- 1995 1994 ----------- ----------- (Restated) REVENUES: Rental income $1,700,000 $1,618,000 Dividends and other income (including dividends from marketable securities of affiliate) 118,000 93,000 ---------- ---------- 1,818,000 1,711,000 ---------- ---------- COSTS AND EXPENSES: Cost of operations 448,000 399,000 Management fees paid to affiliate 102,000 98,000 Depreciation and amortization 180,000 168,000 Administrative 41,000 16,000 Interest expense 757,000 774,000 ---------- ---------- 1,528,000 1,455,000 ---------- ---------- NET INCOME $ 290,000 $ 256,000 ========== ========== Limited partners' share of net income ($7.18 per unit in 1995 and $6.33 per unit in 1994) $ 287,000 $ 253,000 General partners' share of net income 3,000 3,000 ---------- ---------- $ 290,000 $ 256,000 ========== ========== 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 ------------ ------------- ---------- ------------- Balance at December 31, 1994 $(9,430,000) $(3,284,000) $ 556,000 $(12,158,000) Unrealized gain on marketable securities - - 687,000 687,000 Net income 287,000 3,000 - 290,000 Equity transfer (72,000) 72,000 - - ----------- ----------- ---------- ------------ Balance at March 31, 1995 $(9,215,000) $(3,209,000) $1,243,000 $(11,181,000) =========== =========== ========== ============ 4 PUBLIC STORAGE PROPERTIES IV, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, ------------------------ 1995 1994 ---------- ----------- Cash flows from operating activities: Net income $ 290,000 $ 256,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 180,000 168,000 Increase in rent and other receivables (15,000) (27,000) Decrease in other assets 22,000 18,000 Decrease in accounts payable (6,000) (520,000) Decrease in deferred revenue (40,000) (94,000) --------- ---------- Total adjustments 141,000 (455,000) --------- ---------- Net cash provided by (used in) operating activities 431,000 (199,000) --------- ---------- Cash flows from investing activities: Insurance proceeds relating to damaged real estate facility - 837,000 Purchase of marketable securities - (693,000) Expenditures to reconstruct damaged real estate facility - (262,000) Additions to real estate facilities (17,000) (49,000) --------- ---------- Net cash used in investing activities (17,000) (167,000) --------- ---------- Cash flows from financing activities: Principal payments on mortgage note payable (178,000) (160,000) --------- ---------- Net cash used in financing activities (178,000) (160,000) --------- ---------- Net increase (decrease) in cash and cash equivalents 236,000 (526,000) Cash and cash equivalents at the beginning of the period 551,000 2,807,000 --------- ---------- Cash and cash equivalents at the end of the period $ 787,000 $2,281,000 ========= ========== Supplemental schedule of non-cash investing and financing activities: Increase in fair value of marketable securities $(687,000) $ (477,000) ========= ========== Unrealized gain on marketable securities $ 687,000 $ 477,000 ========= ========== 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, 1994. 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 March 31, 1995, the results of its operations for the three months ended March 31, 1995 and 1994 and its cash flows for the three months then ended. 3. Certain prior year amounts have been reclassified to conform with the 1995 presentation. 4. The results of operations for the three months ended March 31, 1995 are not necessarily indicative of the results expected for the full year. 5. Marketable securities at March 31, 1995 consist of 274,675 common shares of Storage Equities, Inc. ("SEI"), a publicly traded real estate investment trust whose investment advisor is an affiliate of Public Storage, Inc. (a general partner of the Partnership). SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" requires marketable securities to be classified as trading or available for sale. The Partnership has designated its portfolio of marketable securities as available for sale. Accordingly, at March 31, 1995, the Partnership has recorded the marketable securities at fair value, based upon the closing quoted prices of the securities at March 31, 1995, and a corresponding unrealized gain totaling $1,243,000 as a credit to Partnership equity. 6 6. Substantially all of the Partnership's facilities were acquired prior to the time that it was customary to conduct environmental investigations in connection with property acquisitions. During the first quarter of 1995, the Partnership commenced environmental assessments on its properties. The results of those assessments have not been completed. The Partnership is not presently aware of any environmental matters with respect to any of its properties which would have a materially adverse effect on the Partnership's financial position. Included in administrative expenses on the statement of operations for the three months ended March 31, 1995 is approximately $25,000 incurred in connection with the environmental assessments. 7 PUBLIC STORAGE PROPERTIES IV, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE MONTHS ENDED MARCH 31, 1994: The Partnership's net income for the three months ended March 31, 1995 was $290,000 compared to $256,000 for the three months ended March 31, 1994, representing an increase of $34,000 or 13%. The increase is primarily a result of increased operating results at the Partnership's mini-warehouse facilities combined with decreased interest expense. Rental income was $1,700,000 compared to $1,618,000 for the three months ended March 31, 1995 and 1994, respectively, representing an increase of $82,000 or 5%. This increase is primarily attributable to an increase in rental rates at the Partnership's mini-warehouse facilities. The weighted average occupancy levels at the mini-warehouse facilities were 84% for both the three months ended March 31, 1995 and 1994. Other income increased $25,000 for the three months ended March 31, 1995 compared to the same period in 1994 as a result of an increase in dividend income on marketable securities of affiliate. The increase is primarily attributable to an increase in the number of shares owned in 1995 compared to the same period in 1994 and an increase in the dividend rate from $.21 to $.22 per quarter per share. Included in Other Income for the three months ended March 31, 1995 and 1994 are $49,000 and $52,000, respectively, of business interruption income on a mini-warehouse facility located in Miami, Florida which was damaged by Hurricane Andrew in August 1992. Cost of operations (including management fees paid to affiliate) increased by $53,000 to $550,000 from $497,000 for the three months ended March 31, 1995 and 1994, respectively. This increase is mainly attributable to increases in payroll, utilities and repairs and maintenance costs. Administrative expenses increased $25,000 for the three months ended March 31, 1995 compared to the same period in 1994 primarily as a result of cost incurred on environmental assessments on the Partnership's properties. Substantially all of the Partnership's facilities were acquired prior to the time that it was customary to conduct environmental investigations in connection with property acquisitions. During the first quarter of 1995, the Partnership commenced environmental assessments on its properties. The results of those assessments have not been completed. The Partnership is not presently aware of any 8 environmental matters with respect to any of its properties which would have a materially adverse effect on the Partnership' s financial position. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Cash flows from operating activities ($431,000 for the three months ended March 31, 1995) have been sufficient to meet all current obligations of the Partnership. During 1995, the Partnership anticipates approximately $348,000 of capital improvements. At March 31, 1995, the Partnership held 274,675 shares of common stock (marketable securities) with a fair value totaling $4,635,000 (cost basis of $3,392,000 at March 31, 1995) in Storage Equities, Inc. ("SEI"), a real estate investment trust whose investment advisor is an affiliate of Public Storage, Inc. (a general partner of the Partnership). The Partnership recognized $60,000 in dividends for the three months ended March 31, 1995 and included this in Other Income on the Condensed Statements of Operations. 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. 9 PART II. OTHER INFORMATION Items 1 through 4 are inapplicable. Item 5 Other Information ----------------- In April 1995, Public Storage, Inc. completed a cash tender offer for 16,302 of the 40,000 outstanding limited partnership units in the Partnership at $250 per unit. Item 6 is inapplicable. 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: April 28, 1995 PUBLIC STORAGE PROPERTIES IV, LTD. BY: Public Storage, Inc. General Partner BY: /s/ Ronald L. Havner, Jr. ---------------------------- Ronald L. Havner, Jr. Vice President and Chief Financial Officer (principal accounting and financial officer) 10