-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TwQpHBJo0vAwLkXSob/DG71m0OLlnH6/0e4TVJdN0gbuzuH0JyM/K9kyD/xlElkJ ayHrktA+LJeEkfegeWILDA== 0000950147-99-000834.txt : 19990811 0000950147-99-000834.hdr.sgml : 19990811 ACCESSION NUMBER: 0000950147-99-000834 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARMORED STORAGE INCOME INVESTORS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000760719 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 860503193 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-95034 FILM NUMBER: 99682128 BUSINESS ADDRESS: STREET 1: 4425 NORTH 24TH STREET STREET 2: SUITE 225 CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 6022301655 MAIL ADDRESS: STREET 1: 3839 N 3RD ST STREET 2: STE 108 CITY: PHOENIX STATE: AZ ZIP: 85012 10-Q 1 QTRLY REPORT FOR QUARTER ENDING 6/30/99 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: Commission File Number: - ------------------ ----------------------- June 30, 1999 2-95034LA ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP ---------------------------------------------------- (Exact name of Registrant as specified in its charter) Arizona 85-0503193 - ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4425 North 24rd Street, Suite 225 Phoenix, Arizona 85016 -------------------------------------------------------- (Address of and zip code of principal executive offices) (602) 230-1656 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 [ ] ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS PAGE ---- Balance Sheets 3 Statements of Operations 4 Statements of Cash Flows 5 Notes to Unaudited Financial Statements 6 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership BALANCE SHEETS (Unaudited) June 30, June 30, 1999 1998 ---------- ---------- ASSETS Property Land $1,139,828 $1,139,828 Buildings 5,856,762 5,856,762 Furniture and fixtures 108,020 86,390 ---------- ---------- 7,104,610 7,082,980 Less accumulated depreciation 2,541,800 2,343,891 ---------- ---------- 4,562,810 4,739,089 Cash and cash equivalents 658,144 780,630 Other assets 15,165 18,165 ---------- ---------- $5,236,119 $5,537,884 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 100,767 $ 95,898 Commitments (Note 3) Partners' capital General partner $ 85,632 $ 76,720 Limited partners 5,049,720 5,365,266 ---------- ---------- $5,236,119 $5,537,884 ========== ========== See notes to financial statements. 3 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership STATEMENTS OF OPERATIONS (unaudited) For the Six Months For the Years Ended Ended ---------------------- ------------------------- June 30, June 30, Dec. 31, Dec. 31, 1999 1998 1998 1997 Income Rental $532,319 $559,002 $1,089,040 $1,105,613 Interest 7,717 11,917 21,353 18,426 -------- -------- ---------- ---------- 540,036 570,919 1,110,393 1,124,039 -------- -------- ---------- ---------- Expenses Property Operations 235,728 214,663 454,890 436,207 Administration 72,800 58,266 91,685 96,005 Amortization & Depreciation 99,000 99,000 197,909 195,224 -------- -------- ---------- ---------- 407,528 371,929 744,484 727,436 -------- -------- ---------- ---------- Net Income $132,508 $198,990 $ 365,909 $ 396,603 ======== ======== ========== ========== See notes to financial statements. 4 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership STATEMENTS OF CASH FLOWS (unaudited) For the six months ended ----------------------------- June 30, 1999 June 30, 1998 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 532,319 $ 559,002 Cash paid to suppliers (298,927) (269,436) Interest received 7,717 11,917 --------- --------- Net cash provided by (used in) operating activities $ 241,109 $ 301,483 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital improvements $ -- $ (11,814) --------- --------- Net cash used in investing activities -- (11,814) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities -- -- --------- --------- Increase (decrease) in cash $ 241,109 $ 289,669 Cash and cash equivalents: Beginning 417,035 490,961 --------- --------- Ending $ 658,144 $ 780,630 ========= --------- RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $ 132,508 $ 198,990 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 99,000 99,000 Increase (decrease) in accounts payable 9,601 3,493 --------- --------- Net cash provided by operating activities $ 241,109 $ 301,483 ========= ========= See notes to financial statements. 5 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership NOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 1999 NOTE 1. Partnership Organization Armored Storage Income Investors Limited Partnership ("the Partnership") was organized under the laws of the State of Arizona pursuant to an agreement of limited partnership filed December 4, 1984, for the purpose of acquiring, developing, owning and operating self-service storage facilities. The initial General Partners were Armored Storage, Inc., an Arizona corporation (the "Managing General Partner") and Armored Storage One Limited Partnership, an Arizona Limited Partnership. The Partnership commenced full activity on January 9, 1985. During 1986, the Partnership completed an offering of limited partnership units wherein 15,000 limited partnership units were purchased by investors for $7,500,000. In December 1987 Armored Storage, Inc., withdrew and Armored Storage One Limited Partnership, became the "Managing General Partner." NOTE 2. Summary of Significant Accounting Policies Property and equipment: Property and equipment is stated at cost. Depreciation is computed principally by the straight-line method over the following estimated useful lives: Years ----- Buildings 30 Furniture and fixtures 5 Rental Income: The Partnership receives rental income from its self-storage facilities. All rental agreements are for month-to-month tenancy. Rental income is recognized on the accrual basis in accordance with generally accepted accounting principles. 6 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership NOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 1999 NOTE 2. Summary of Significant Accounting Policies, continued Income taxes: The Partnership does not record a provision for income taxes, since Federal and state income tax regulations provide that any taxes on income of a Partnership are payable by the partners as individuals. The Partnership's tax returns are prepared on the accrual basis. Cash and cash equivalents: For purposes of reporting cash flows, the Partnership considers all money market funds to be cash equivalents. Unaudited financial statements: The financial statement for the six months ended June 30, 1999 are unaudited, however, in management's opinion they include all adjustments necessarily for a fair statement of the results of operations for such interim period. The interim period results of operations are not necessarily indicative of results for a full year. NOTE 3. Commitments The Partnership has the following commitments: The Partnership entered into agreements with Armored Management LLC, on January 1, 1999, to manage the Partnership's self-storage facilities. The term of the agreements are for one year and shall be renewed from year to year unless, and until, either party terminates the agreements. The agreements provide that the manager shall receive, as compensation for services, 6% of the actual gross cash receipts. 7 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership NOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 1999 NOTE 3 Commitments, continued The Partnership also entered into an agreement with Armored Management, LLC for the management of the Partnership's accounting, securities reporting, database and investor relations activities. The term of the agreement is for one year and shall be renewed from year to year unless either party terminates the agreement. The agreement provides for a flat fee of $5,000 per month as compensation for administration services. The Partnership reimburses the General Partner for the costs of goods and materials used by and for the Partnership and administrative services necessary to the operation of the Partnership. NOTE 4 Impact of Year 2000 The Company's assessment of its Year 2000 issues is complete. The Company has determined that there is likely to be no material adverse consequence of Year 2000 issues on the Company's business, results of operations, or financial condition. The Company has few information technology or non-information technology aspects which may be affected by Year 2000; those that may be affected are the computing system used to administer operations. Investigation and queries of the software and hardware suppliers have determined by written statements or other assurances that they are Year 2000 compliant. The Company has no major supplier, vendor, or customers which is likely to materially affect the Company if it is affected by the Year 2000 problem. The Company has determined that it is at little risk of material disruption of its business due to Year 2000 issues. In the event the computing system fails, the Company will purchase and replace the necessary hardware and software for critical systems and contact the software and hardware suppliers to replace, at their cost, the failed components for remaining computers. Costs for the Year 2000 compliance have been for investigation only and no remedial actions have or will be taken. The costs have been minimal and are not material to the financial condition of the Company. 8 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS RESULTS OF OPERATION The Partnership has three operating facilities, two located in Phoenix, Arizona, and one in Albuquerque, New Mexico. The Partnership's three facilities generated an aggregate gross operating revenue of $532,319 during the first six months of 1999 compared to $559,002 during the first six months of 1998. A decrease in income at the Bell Road facility is primarily responsible for the overall reduction. Management continues to work on ways to increase rental revenue, be it through increased marketing, rental rate adjustments, or employee incentive programs. Occupancies (based on number of available units) at the three facilities are summarized as follows: June 30, 1999 June 30, 1998 ------------------ ----------------- Bell Road 76% 90% 63rd Avenue 80% 77% Tramway 80% 77% Operational expenses through June 30, 1999 were $235,728 compared to $214,663 for 1998. Administrative expenses for 1999 were $72,800 compared to $58,266 for the corresponding period in 1998. Legal expenses incurred as a result of the pending sale are responsible for the increase. Expenses for 1999 should continue to be similar or slightly higher than 1998. Pursuant to the authority granted under the limited partnership agreement of the Registrant, the General Partner, on behalf of the Registrant, opened an escrow on April 6, 1999 with Everest Storage II, a California limited liability company to sell substantially all its assets, consisting of three mini-storage facilities, to Everest Storage II for a total sales price of $7,113,402. The General Partner has evaluated the offer and, after reviewing comparable sales and capitalization rates in the real estate market today, believes it to be in the best interest of the Registrant to proceed with the transaction. The terms of the contract, which became effective April 6, 1999, provide for no assumption of liabilities by the buyer, except for customary prorations of property taxes and prepaid rents. The contract is contingent on the buyer's evaluation of the properties. Everest Storage II had sixty days from the date the Registrant provides it with the required documentation to complete its due diligence. The buyer and seller extended due diligence period to August 16, 1999. Everest Storage II is an affiliate of Everest Investors 8, LLC, which owns 1.26% of the Registrant. 9 The terms of the contract provide that Everest Storage II will enter into a management contract with the current property manager, Armored Management, LLC, the general partner of the general partner of the Registrant, for a period of one year after the closing. It is anticipated that the terms of the management agreement will be substantially the same as the existing agreement in place with the Registrant. A six percent commission will be paid should the sale be consummated, split between the buyers broker, Everest Financial Inc. and the seller's broker, Dale D. Ulrich, a member of Armored Management, LLC. Should the sale occur, the Registrant has agreed to a limited non-competition covenant with Everest Storage II. Should the transaction be consummated, the General Partner would begin to wind up the affairs of the Registrant in order to make a liquidation distribution. The General Partner estimates the final distribution would be in the range of $425 to $445 per unit. It is anticipated the final distribution would be made 60 to 120 days after the transaction closes. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1999, the Partnership held cash and cash equivalents totaling $658,144 as compared to $780,630 for the corresponding quarter of 1998. Should the potential sale referred to above close, the Partnership's liquidity would increase substantially. 10 ARMORED STORAGE INCOME INVESTORS LIMITED PARTNERSHIP an Arizona Limited Partnership PART II OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS: Not applicable. ITEM 2: CHANGES IN SECURITIES: Not applicable. ITEM 3: DEFAULTS UPON SENIOR SECURITIES: Not applicable. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: Not applicable. ITEM 5: OTHER INFORMATION: Not applicable. 11 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. ARMORED STORAGE INCOME INVESTORS (Registrant) By: Armored Management L.L.C. Its General Partner By: /s/ Dale D. Ulrich --------------------------- Dale D. Ulrich Its: Member Dated: August 9, 1999 ------------------------- 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1999 JUN-30-1999 658,144 0 30,000 15,000 0 673,309 7,104,610 2,541,800 5,236,119 100,767 0 0 0 0 5,135,352 5,236,119 0 540,036 0 334,728 72,800 0 0 132,508 0 132,508 0 0 0 132,508 8.39 8.39
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