10-Q 1 partners4.txt PS PARTNERS IV, LTD. 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, 2001 ------------------ 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 0-14475 ------- PS PARTNERS IV, LTD. -------------------- (Exact name of registrant as specified in its charter) California 95-3931619 ---------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue Glendale, California 91201-2394 ---------------------------------------- ---------------------- (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 PART I. FINANCIAL INFORMATION Condensed balance sheets at September 30, 2001 and December 31, 2000 2 Condensed statements of income for the three and nine months ended September 30, 2001 and 2000 3 Condensed statements of cash flows for the nine months ended September 30, 2001 and 2000 4 Notes to condensed financial statements 5 Management's discussion and analysis of financial condition and results of operations 6-10 PART II. OTHER INFORMATION (Items 1 through 5 are not applicable) Item 6 - Exhibits and Reports on Form 8-K 11 PS PARTNERS IV, LTD. CONDENSED BALANCE SHEETS

See accompanying notes. 2 PS PARTNERS IV, LTD. CONDENSED STATEMENTS OF INCOME (UNAUDITED)

See accompanying notes. 3 PS PARTNERS IV, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

See accompanying notes. 4 PS PARTNERS IV, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (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, 2000. 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, 2001, the results of operations for the three and nine months ended September 30, 2001 and 2000 and cash flows for the nine months then ended. 3. The results of operations for the three and nine months ended September 30, 2001 are not necessarily indicative of the results to be expected for the full year. 4. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," as amended in June 2000 by Statement of Financial Accounting Standards No. 138 ("SFAS 138"), "Accounting for Certain Derivative Instruments and Certain Hedging Activities," which requires companies to recognize all derivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value. The Partnership adopted SFAS 133, as amended by SFAS 138, on January 1, 2001, and the adoption had no material impact on the Partnership's consolidated financial statements. 5. Summarized combined financial data with respect to the Real Estate Entities is as follows:

5 PS PARTNERS IV, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS -------------------------- When used within this document, the words "expects," "believes," "anticipates," "should," "estimates," and similar expressions are intended to identify "forward-looking statements" within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Partnership to be materially different from those expressed or implied in the forward looking statements. Such factors include the impact of competition from new and existing real estate facilities which could impact rents and occupancy levels at the real estate facilities in which the Partnership has an interest; the Partnership's ability to effectively compete in the markets in which it does business; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing Partnerships; and the impact of general economic conditions upon rental rates and occupancy levels at the real estate facilities in which the Partnership has an interest. RESULTS OF OPERATIONS --------------------- THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2000: Our net income for the three months ended September 30, 2001 was $942,000 compared to $900,000 for the three months ended September 30, 2000, representing an increase of $42,000 or 4.7%. The increase was primarily due to our share of improved property operations at the real estate facilities in which we have an interest and a decrease in depreciation expense allocated to the Partnership with respect to the Joint Venture. Property Operations ------------------- Rental income for our wholly-owned mini-warehouse property was $87,000 compared to $83,000 for the three months ended September 30, 2001 and 2000, respectively, representing an increase of $4,000 or 4.8%. Cost of operations (including management fees) increased $2,000 or 5.6%, to $38,000 from $36,000 for the three months ended September 30, 2001 and 2000, respectively. Accordingly, for our wholly-owned mini-warehouse property, property net operating income increased by $2,000 or 4.3%, from $47,000 to $49,000 for the three months ended September 30, 2000 and 2001, respectively. 6 Equity in Earnings of Real Estate Entities ------------------------------------------ Equity in earnings of real estate entities was $931,000 in the three months ended September 30, 2001 as compared to $835,000 during the three months ended September 30, 2000, representing an increase of $96,000 or 11.5%. The increase was primarily due to our share of improved property operations at the real estate facilities in which we have an interest and a decrease in depreciation expense allocated to the Partnership with respect to the Joint Venture. Interest Income --------------- Interest income decreased by $47,000, from $62,000 for the three months ended September 30, 2000 to $15,000 for the three months ended September 30, 2001, due to lower invested cash balances and lower interest rates. Depreciation and Amortization ----------------------------- Depreciation and amortization increased by $1,000, from $18,000 to $19,000 for the three months ended September 30, 2000 and 2001, respectively, due to capital improvements made to the Partnership's wholly-owned facility during 2000 and 2001. Administrative -------------- Administrative expense increased $8,000, to $34,000 for the three months ended September 30, 2001 as compared to $26,000 for the same period in 2000. NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2000: Our net income for the nine months ended September 30, 2001 was $2,860,000 compared to $2,467,000 for the nine months ended September 30, 2000, representing an increase of $393,000 or 15.9%. The increase was primarily due to our share of improved property operations at the real estate facilities in which we have an interest and a decrease in depreciation expense allocated to the Partnership with respect to the Joint Venture. 7 Property Operations ------------------- Rental income for our wholly-owned mini-warehouse property was $246,000 compared to $241,000 for the nine months ended September 30, 2001 and 2000, respectively, representing an increase of $5,000 or 2.1%. Cost of operations (including management fees) increased $2,000 or 1.9%, to $105,000 from $103,000 for the nine months ended September 30, 2001 and 2000, respectively. Accordingly, for our wholly-owned mini-warehouse property, property net operating income increased by $3,000 or 2.2%, from $138,000 to $141,000 for the nine months ended September 30, 2000 and 2001, respectively. Equity in Earnings of Real Estate Entities ------------------------------------------ Equity in earnings of real estate entities was $2,799,000 in the nine months ended September 30, 2001 as compared to $2,366,000 during the nine months ended September 30, 2000, representing an increase of $433,000 or 18.3%. The increase was primarily due to our share of improved property operations at the real estate facilities in which we have an interest and a decrease in depreciation expense allocated to the Partnership with respect to the Joint Venture. Interest Income --------------- Interest income decreased by $37,000, from $153,000 for the nine months ended September 30, 2000 to $116,000 for the nine months ended September 30, 2001, due to lower invested cash balances and lower interest rates. Depreciation and Amortization ----------------------------- Depreciation and amortization increased $5,000, from $52,000 to $57,000 for the nine months ended September 30, 2000 and 2001, respectively, due to capital improvements made to the Partnership's wholly-owned facility during 2000 and 2001. Administrative -------------- Administrative expense increased $1,000, to $139,000 for the nine months ended September 30, 2001 as compared to $138,000 for the same period in 2000. 8 SUPPLEMENTAL PROPERTY DATA -------------------------- Most of our net income is from the our share of the operating results of the Mini-Warehouse Properties. Therefore, in order to evaluate our operating results, the General Partners analyze the operating performance of the Mini-Warehouse Properties. THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2000: Rental income for the Mini-Warehouse Properties was $3,556,000 compared to $3,380,000 for the three months ended September 30, 2001 and 2000, respectively, representing an increase of $176,000 or 5.2%. The increase in rental income was primarily attributable to increased rental rates at the Mini-Warehouse Properties. The annual average realized rent per occupied square foot for the Mini-Warehouse Properties was $8.87 compared to $8.43 for the three months ended September 30, 2001 and 2000, respectively. The weighted average occupancy levels at the Mini-Warehouse Properties remained stable at 88% for the three months ended September 30, 2000 and 2001, respectively. Cost of operations (including management fees) increased $73,000 or 5.3%, to $1,448,000 from $1,375,000 for the three months ended September 30, 2001 and 2000, respectively. This increase is primarily attributable to increases in advertising and promotion expenses, and property tax expenses, offset partially by lower repairs and maintenance expenses. Accordingly, for the Mini-Warehouse Properties, property net operating income decreased by $103,000 or 5.1%, from $2,005,000 to $2,108,000 for the three months ended September 30, 2000 and 2001, respectively. NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2000: Rental income for the Mini-Warehouse Properties was $10,395,000 compared to $9,882,000 for the nine months ended September 30, 2001 and 2000, respectively, representing an increase of $513,000 or 5.2%. The increase in rental income was primarily attributable to increased rental rates partially offset by decreased average occupancy rates at the Mini-Warehouse Properties. The annual average realized rent per occupied square foot for the Mini-Warehouse Properties was $8.82 compared to $8.21 for the nine months ended September 30, 2001 and 2000, respectively. The weighted average occupancy levels at the Mini-Warehouse Properties decreased from 88% to 86% for the nine months ended September 30, 2000 and 2001, respectively. Cost of operations (including management fees) increased $77,000 or 2.0%, to $4,013,000 from $3,936,000 for the nine months ended September 30, 2001 and 2000, respectively. This increase is primarily attributable to increases in advertising and promotion expenses, and property tax expenses, offset partially by lower repairs and maintenance 9 expenses. Accordingly, for the Mini-Warehouse Properties, property net operating income increased by $436,000 or 7.3%, from $5,946,000 to $6,382,000 for the nine months ended September 30, 2000 and 2001, respectively. Liquidity and Capital Resources ------------------------------- We have adequate sources of cash to finance our 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 and distributions from real estate entities ($3,420,000 for the nine months ended September 30, 2001) has been sufficient to meet all of our current obligations. During 2001, we do not anticipate incurring significant costs for capital improvements for the Partnership's wholly-owned property. Total capital improvements for the nine months ended September 30, 2001 with respect to this property was $3,000. We paid distributions to the limited and general partners totaling $4,677,000 ($36.54 per unit) and $572,000, respectively, during the first nine months of 2001. Future distribution rates may be adjusted to levels which are supported by operating cash flow after capital improvements and any other necessary obligations. 10 PART II. OTHER INFORMATION ITEMS 1 through 5 are not applicable. Item 6 Exhibits and Reports on Form 8-K -------------------------------- (a) The following Exhibits are included herein: None (b) Reports on 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 13, 2001 PS PARTNERS IV, LTD. BY: Public Storage, Inc. General Partner BY: /s/ John Reyes -------------------------------------------- John Reyes Senior Vice President and Chief Financial Officer of Public Storage, Inc. (principal financial and accounting officer) 11

PS PARTNERS IV LTD 10-Q