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 June 30, 1995
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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 __________________
Commission File Number 0-11981
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PS PARTNERS II, LTD.
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(Exact name of registrant as specified in its charter)
California 95-3878680
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 North Brand Blvd.
Glendale, California 91203-1241
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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
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at June 30, 1995
and December 31, 1994 2
Condensed consolidated statements of income for the three
and six months ended June 30, 1995 and 1994 3
Condensed consolidated statements of cash flows for the
six months ended June 30, 1995 and 1994 4
Notes to condensed consolidated financial statements 5
Management's discussion and analysis of financial condition
and results of operations 6-8
PART II. OTHER INFORMATION
(Items 1 through 5 are not applicable)
Item 6 - Exhibits and Reports on Form 8-K 9
1
PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 2,613,000 $ 3,258,000
Rent and other receivables 39,000 28,000
Real estate facilities, at cost:
Land 17,414,000 17,414,000
Buildings and equipment 71,389,000 71,183,000
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88,803,000 88,597,000
Less accumulated depreciation (32,489,000) (30,887,000)
------------ ------------
56,314,000 57,710,000
Other assets 155,000 153,000
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$ 59,121,000 $ 61,149,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 441,000 $ 433,000
Advance payments from renters 483,000 439,000
Mortgage notes payable 2,299,000 2,326,000
Minority interest in general partnerships 13,893,000 14,001,000
Partners' equity:
Limited partners' equity, $500
per unit, 128,000 units
authorized, issued and outstanding 41,503,000 43,430,000
General partner's equity 502,000 520,000
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Total partners' equity 42,005,000 43,950,000
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$ 59,121,000 $ 61,149,000
============ ============
See accompanying notes.
2
PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
REVENUE:
Rental income $3,738,000 $3,737,000 $7,327,000 $7,295,000
Interest income 58,000 7,000 113,000 14,000
---------- ---------- ---------- ----------
3,796,000 3,744,000 7,440,000 7,309,000
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of operations 1,190,000 1,257,000 2,367,000 2,471,000
Management fees 218,000 219,000 428,000 427,000
Depreciation and amortization 792,000 835,000 1,602,000 1,757,000
Interest expense 44,000 88,000 89,000 246,000
Administrative 89,000 35,000 145,000 120,000
---------- ---------- ---------- ----------
2,333,000 2,434,000 4,631,000 5,021,000
---------- ---------- ---------- ----------
Income before minority interest 1,463,000 1,310,000 2,809,000 2,288,000
Minority interest in income 380,000 431,000 754,000 818,000
---------- ---------- ---------- ----------
NET INCOME $1,083,000 $ 879,000 $2,055,000 $1,470,000
========== ========== ========== ==========
Limited partners' share of net
income ($12.80 per unit in
1995 and $10.76 per unit in 1994) $1,638,000 $1,377,000
General partner's share of net income 417,000 93,000
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$2,055,000 $1,470,000
========== ==========
See accompanying notes.
3
PS PARTNERS II, LTD.,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
--------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,055,000 $ 1,470,000
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 1,602,000 1,757,000
(Increase) decrease in rent and
other receivables (11,000) 19,000
Increase in other assets (2,000) (8,000)
Increase in accounts payable 8,000 58,000
Increase in advance payments from
renters 44,000 28,000
Minority interest in income 754,000 818,000
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Total adjustments 2,395,000 2,672,000
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Net cash provided by
operating activities 4,450,000 4,142,000
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CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to real estate facilities (206,000) (268,000)
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Net cash used in
investing activities (206,000) (268,000)
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CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on mortgage
notes payable (27,000) (2,155,000)
Distributions to holder of
minority interest (862,000) (448,000)
Distributions to partners (4,000,000) (790,000)
----------- -----------
Net cash used in
financing activities (4,889,000) (3,393,000)
----------- -----------
Net (decrease) increase in cash and
cash equivalents (645,000) 481,000
Cash and cash equivalents at the
beginning of the period 3,258,000 1,083,000
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Cash and cash equivalents at the end of
the period $ 2,613,000 $ 1,564,000
=========== ===========
See accompanying notes.
4
PS PARTNERS II, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(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,
1994.
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 June 30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994 and cash flows for the six months then
ended.
3. The results of operations for the three and six months ended June 30, 1995
are not necessarily indicative of the results to be expected for the full
year.
5
PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
----------------------
THREE AND SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE AND SIX MONTHS ENDED
JUNE 30, 1994:
The Partnership's net income was $2,055,000 and $1,470,000 for the six months
ended June 30, 1995 and 1994, respectively, representing an increase of
$585,000. Net income was $1,083,000 and $879,000 for the three months ended
June 30, 1995 and 1994, respectively, representing an increase of $204,000.
These increases were primarily due to improved property operating results at the
mini-warehouse facilities combined with reductions in depreciation expense and
interest expense, partially offset by an increase in general and administrative
expenses. Depreciation expense decrease due to the full amortization of certain
tenant improvements at the business park facilities.
Rental income for the six months ended June 30, 1995 was $7,327,000 compared
to $7,295,000 for the same period in 1994, representing an increase of $32,000.
This increase was due to improved rental income at the business park facilities
were rental income increase from $1,066,000 to $1,157,000 for the six months
ended June 30, 1994 and 1995, respectively, representing an increase of $91,000
or 8.0%. Rental income was $6,170,000 and $6,230,000 at the mini-warehouse
facilities for the six months ended June 30, 1995 and 1994, respectively,
representing a decrease of $60,000. However, rental income for 1994 includes
$243,000 (none in 1995) relating to a mini-warehouse facility which was
condemned during the fourth quarter of fiscal 1994 by a governmental authority
exercising its right of eminent domain. Accordingly, for those mini-warehouse
facilities which were in operation throughout each of the first six months of
1994 and 1995, rental income increased from $5,987,000 to $6,170,000,
respectively, representing an increase of $183,000, or 3%.
Rental income for the three months ended June 30, 1995 was $3,738,000
compared to $3,737,000 for the same period in 1994, representing an increase of
$1,000. Rental income was $3,184,000 and $3,133,000 at the mini-warehouse
facilities for the three months ended June 30, 1995 and 1994, respectively,
representing a decrease of $50,000. Rental income for 1994 includes $124,000
(none in 1995) relating to the condemned facility. Accordingly, for those
facilities which were in operation throughout the second quarter of 1994 and
1995, rental income increased from $3,060,000 to $3,133,000 for the three months
ended June 30, 1994 and 1995, respectively, representing an increase of $73,000,
or 2%. Rental income at the Partnership's business park facilities increased
from $554,000 to $604,000
6
PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the three months ended June 30, 1994 and 1995, respectively, representing an
increase of $50,000 or 9%.
The weighted average occupancy levels at the mini-warehouse and business park
facilities were 90% and 96%, respectively, for the six months ended June 30,
1995 compared to 92% and 95% respectively, for the six months ended June 30,
1994. The monthly average realized rent per square foot for the mini-warehouse
and business park facilities was $.58 and $.80, respectively, for the six months
ended June 30, 1995 and $.55 and $.69, respectively, for the six months ended
June 30, 1994.
Cost of operations (including management fees) were $2,795,000 and $2,898,000
for the six months ended June 30, 1995 and 1994, respectively, representing a
decrease of $103,000. Cost of operations for the first six months in 1994, for
the condemned facility were $91,000, accordingly, cost of operations for the
remaining facilities decreased $12,000. Cost of operations (including
management fees) were $1,408,000 and $1,476,000 for the three months ended June
30, 1995 and 1994, respectively, representing a decrease of $68,000. Cost of
operations for the three months ended June 30, 1994, for the condemned facility
were $40,000, accordingly, cost of operations for the remaining facilities
decreased $28,000 or 2%.
Interest expense decreased approximately $157,000 from $246,000 to $89,000
for the six months ended June 30, 1994 and 1995, respectively, as a result of
overall debt reduction.
General and administrative expenses increased from $120,000 in 1994 to
$145,000 in 1995 or $25,000. This increase is principally a result of non-
recurring expenses totaling $43,000 incurred in connection with having the
Partnership's facilities undergo environmental studies.
Minority interest in income decreased $64,000 to $754,000 from $818,000 for
the six months ended June 30, 1995 and 1994, respectively. These decreases were
primarily attributable to the increased allocation of depreciation expense to
the minority interest which offsets the increase in operations at the
Partnership's real estate facilities for those properties owned jointly with
SEI.
7
PS PARTNERS II, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
($4,450,000 for the six months ended June 30, 1995) has been sufficient to meet
all current obligations of the Partnership.
During 1995, the Partnership anticipates approximately $800,000 of capital
improvements (of which $123,000 represents SEI's joint venture share). Total
capital improvements were $206,000 for the six months ended June 30, 1995 of
which $179,000 represents the Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $3,565,000 ($27.85 per unit) and $435,000, respectively, during the
first six months of 1995, including a special distribution in the second
quarter. The special distribution, totaling $1,782,000 ($13.92 per unit), was a
result of the distributions of excess cash reserves. Future distribution rates
may be adjusted to levels which are supported by operating cash flow after
capital improvements and any other necessary obligations.
8
PART II. OTHER INFORMATION
ITEMS 1 through 5 are not applicable.
Item 6 Exhibits and Reports on Form 8-K
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(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: August 8, 1995
PS PARTNERS II, LTD.
BY: Storage Equities, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
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Ronald L. Havner, Jr.
Vice President - Storage
Equities, Inc.
(principal financial and
accounting officer)
9