-----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, HqGy/wmu2aXDVrx1q9GCqcOXyh75JLFzitZ1A0B0dWpv6PjXpDTINVUWndtlL897 kEqjpjOQTnS7XWASClXNEw== 0000202953-03-000007.txt : 20030814 0000202953-03-000007.hdr.sgml : 20030814 20030814130606 ACCESSION NUMBER: 0000202953-03-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE PROPERTIES LTD CENTRAL INDEX KEY: 0000202953 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 953196912 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08667 FILM NUMBER: 03845353 BUSINESS ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201-2397 BUSINESS PHONE: (818) 244-8080 MAIL ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201 10-Q 1 q203prop3.txt PUBLIC STORAGE PROPERTIES, LTD. 10-Q 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, 2003 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 0-8667 ------ PUBLIC STORAGE PROPERTIES, LTD. ------------------------------- (Exact name of registrant as specified in its charter) California 95-3196921 - ---------------------------------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Ave. Glendale, California 91201 - -------------------------------------- ----- (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 June 30, 2003 and December 31, 2002 2 Condensed statements of income for the three and six months ended June 30, 2003 and 2002 3 Condensed statement of partners' equity for the six months ended June 30, 2003 4 Condensed statements of cash flows for the six months ended June 30, 2003 and 2002 5 Notes to condensed financial statements 6-7 Management's discussion and analysis of financial condition and results of operations 8-9 Risk Factors 9-11 Controls and Procedures 11-12 PART II. OTHER INFORMATION (Items 2 - 4 not applicable) Item 1 Legal Proceedings 13 Item 6 Exhibits and Reports on Form 8-K 13 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED BALANCE SHEETS
June 30, December 31, 2003 2002 ----------------- ----------------- (Unaudited) ASSETS ------ Cash and cash equivalents $ 729,000 $ 538,000 Rent and other receivables 41,000 49,000 Real estate facilities, at cost: Building, land improvements and equipment 9,341,000 9,217,000 Land 2,476,000 2,476,000 ----------------- ----------------- 11,817,000 11,693,000 Less accumulated depreciation (8,415000) (8,152,000) ----------------- ----------------- 3,402,000 3,541,000 Other assets 23,000 50,000 ----------------- ----------------- Total assets $ 4,195,000 $ 4,178,000 ================= ================= LIABILITIES AND PARTNERS' EQUITY -------------------------------- Accounts payable $ 55,000 $ 52,000 Deferred revenue 180,000 160,000 Partners' equity: Limited partners' equity, $500 per unit, 20,000 units authorized, issued and outstanding 2,940,000 2,944,000 General partners' equity 1,020,000 1,022,000 ----------------- ----------------- Total partners' equity 3,960,000 3,966,000 ----------------- ----------------- Total liabilities and partners' equity $ 4,195,000 $ 4,178,000 ================= =================
See accompanying notes. 2 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------------- ----------------------------------- 2003 2002 2003 2002 ---------------- ---------------- ---------------- ---------------- REVENUES: Rental income $ 1,543,000 $ 1,470,000 $ 3,046,000 $ 2,951,000 Other income 11,000 10,000 22,000 19,000 ---------------- ---------------- ---------------- ---------------- 1,554,000 1,480,000 3,068,000 2,970,000 ---------------- ---------------- ---------------- ---------------- COSTS AND EXPENSES: Cost of operations 364,000 286,000 690,000 560,000 Management fees paid to affiliate 93,000 88,000 185,000 177,000 Depreciation 131,000 129,000 263,000 257,000 Administrative 24,000 35,000 50,000 57,000 Interest expense - 3,000 - 13,000 ---------------- ---------------- ---------------- ---------------- 612,000 541,000 1,188,000 1,064,000 ---------------- ---------------- ---------------- ---------------- NET INCOME $ 942,000 $ 939,000 $ 1,880,000 $ 1,906,000 ================ ================ ================ ================ Limited partners' share of net income ($69.75 per unit in 2003 and $94.35 per unit in 2002) $ 1,395,000 $ 1,887,000 General partners' share of net income 485,000 19,000 ---------------- ---------------- $ 1,880,000 $ 1,906,000 ================ ================
See accompanying notes. 3 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
Total Limited General Partners' Partners Partners Equity ------------------ ------------------ ------------------ Balance at December 31, 2002 $ 2,944,000 $ 1,022,000 $ 3,966,000 Net income 1,395,000 485,000 1,880,000 Distributions (1,400,000) (486,000) (1,886,000) Equity transfer 1,000 (1,000) - ------------------ ------------------ ------------------ Balance at June 30, 2003 $ 2,940,000 $ 1,020,000 $ 3,960,000 ================== ================== ==================
See accompanying notes. 4 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, -------------------------------------- 2003 2002 ----------------- ----------------- Cash flows from operating activities: Net income $ 1,880,000 $ 1,906,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 263,000 257,000 Decrease in rent and other receivables 8,000 59,000 Decrease in other assets 27,000 19,000 Increase (decrease) in accounts payable 3,000 (27,000) Increase in deferred revenue 20,000 17,000 ----------------- ----------------- Total adjustments 321,000 325,000 ----------------- ----------------- Net cash provided by operating activities 2,201,000 2,231,000 ----------------- ----------------- Cash flows from investing activities: Additions to real estate facilities (124,000) (104,000) ----------------- ----------------- Net cash used in investing activities (124,000) (104,000) ----------------- ----------------- Cash flows from financing activities: Distributions paid to partners (1,886,000) - Principal payments on note payable to commercial bank - (2,000,000) ----------------- ----------------- Net cash used in financing activities (1,886,000) (2,000,000) ----------------- ----------------- Net increase in cash and cash equivalents 191,000 127,000 Cash and cash equivalents at the beginning of the period 538,000 175,000 ----------------- ----------------- Cash and cash equivalents at the end of the period $ 729,000 $ 302,000 ================= =================
See accompanying notes. 5 PUBLIC STORAGE PROPERTIES, 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, 2002. 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 June 30, 2003, the results of its operations for the three and six months ended June 30, 2003 and 2002 and its cash flows for the six months then ended. 3. The results of operations for the three and six months ended June 30, 2003 are not necessarily indicative of the results expected for the full year. 4. During October 1998, we borrowed $12,400,000 from a commercial bank. The loan is unsecured and bears interest at the London Interbank Offering Rate ("LIBOR") plus 0.55%. The loan was scheduled to mature in October 2002. During the second quarter of 2002, the Partnership paid the loan in full without premium or penalty. 5. The Partnership Agreement requires that any cash available for distribution (cash flow from all sources less cash necessary for any obligations or capital improvement needs) be distributed at least quarterly. Cash distributions were suspended in the fourth quarter of 1990 due to debt service payments. The Partnership resumed distributions in the third quarter of 2002 because all debt was repaid at June 30, 2002. We paid distributions to the limited and general partners totaling $1,400,000 (70.00 per unit) and $486,000, respectively, for the six months ended June 30, 2003. Future distribution rates may be adjusted to levels which are supported by operating cash flow after capital improvements and any other necessary obligations. 6. We evaluate our real estate for impairment on a quarterly basis. We first evaluate these assets for indicators of impairment such as a) a significant decrease in the market price of real estate, b) a significant adverse change in the extent or manner in which real estate is being used or in its physical condition, c) a significant adverse change in legal factors or the business climate that could affect the value of the real estate, d) an accumulation of costs significantly in excess of the amount originally projected for the acquisition of construction of the real estate, or e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the real estate. When any such indicators of impairment are noted, we compare the carrying value of the real estate to the future estimated undiscounted cash flows attributable to the real estate. If the real estate's recoverable amount is less than the carrying value of the asset, then an impairment charge is booked for the excess of carrying value over the real estate's fair value. Our evaluations have identified no such impairment at June 30, 2003. Any real estate which we expect to sell or dispose of prior to their previously estimated useful life are stated at the lower of their estimated net realizable value or their carrying value, less cost to sell, and are evaluated throughout the sale process for impairment. 6 7. Related Party Transactions The Partnership has a Management Agreement with PSI. Under the terms of the agreement, PSI operates the mini-warehouse facilities for a fee equal to 6% of the facilities' gross revenue (as defined). For the six months ended June 30, 2003 and 2002, the Partnership paid PSI $185,000 and $177,000, respectively, pursuant to this management agreement. The Management Agreement between the Partnership and PSI provides that the Management Agreement may be terminated without cause upon 60 days written notice by the Partnership or six months notice by PSI. In addition, the Partnership combines its insurance purchasing power with PSI through a captive insurance company controlled by PSI, STOR-Re Mutual Insurance Corporation ("Stor-Re"). Stor-Re provides limited property and liability insurance to the Partnership at commercially competitive rates. The Partnership and PSI also utilize unaffiliated insurance carriers to provide property and liability insurance in excess of Stor-Re's limitations. 8. Commitments and Contingencies Legal Proceedings Serrao v. Public Storage, Inc. (Filed April 2003) ------------------------------------------------- (Superior Court - Orange County) -------------------------------- The plaintiff in this case filed a suit against Public Storage on behalf of a putative class of renters who rented self-storage units from Public Storage. Plaintiff alleges that Public Storage misrepresents the size of its storage units, has brought claims under California statutory and common law relating to consumer protection, fraud, unfair competition, and negligent misrepresentation, and is seeking monetary damages, restitution, and declaratory and injunctive relief. The claim in this case is substantially similar to those in Henriquez v. Public Storage, Inc., which was disclosed in prior reports. In January 2003, the plaintiff caused the Henriquez action to be dismissed. Based upon the uncertainty inherent in any putative class action, Public Storage cannot presently determine the potential damages, if any, or the ultimate outcome of this litigation. Public Storage is vigorously contesting the claims upon which this lawsuit is based. Salaam, et. Al V. Public Storage, Inc. (filed February 2000) ------------------------------------------------------------ (Superior Court - Los Angeles County) ------------------------------------- The plaintiffs in this case are suing the Company on behalf of a purported class of California resident property managers who claim that they were not compensated for all the hours they worked. The named plaintiffs have indicated that their claims total less than $20,000 in aggregate. This maximum potential liability cannot be estimated, but can only be increased if a class is certified or if claims are permitted to be brought on behalf of the others under the California Unfair Business Practices Act. The plaintiffs' motion for class certification was denied in August 2002; the plaintiffs have appealed this denial. This denial does not deal with the claim under the California Unfair Business Practices Act. The Partnership is a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time. The Partnership believes that the outcome of these other pending legal proceedings, in the aggregate, will not have a material adverse effect upon the operations or financial portion of the Partnership. 7 PUBLIC STORAGE PROPERTIES, 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 Exchange 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 are described in "Risk Factors" (as discussed below) and include changes in general economic conditions and in the markets in which the Partnership operates and the impact of competition from new and existing storage and commercial facilities and other storage alternatives, which could impact rents and occupancy levels at the Partnership's facilities; the impact of the regulatory environment as well as national, state, and local laws and regulations, which could increase the Partnership's expense and reduce the Partnership's cash available for distribution; and economic uncertainty due to the impact of war or terrorism could adversely affect our business plan. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this report. CRITICAL ACCOUNTING POLICIES - ---------------------------- IMPAIRMENT OF LONG LIVED ASSETS Substantially all of our assets consist of real estate. We quarterly evaluate our real estate for impairment. The evaluation of real estate for impairment requires determining whether indicators of impairment exist, which is a subjective process. When any indicators of impairment are found, the evaluation then entails projections of future operating cashflows, which also involves significant judgment. We have identified no such impairments at June 30, 2003. However, future events, or facts and circumstances that currently exist that we have not yet identified, could cause us to conclude in the future that our real estate is impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations. ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS Substantially all of our assets consist of depreciable, long-lived assets. We record depreciation expense with respect to these assets based upon their estimated useful lives. Any change in the estimated useful lives of those assets, caused by functional or economic obsolescence or other factors, could have a material adverse impact on our financial condition or results of operations. ACCRUALS FOR CONTINGENCIES We are exposed to business and legal liability risks with respect to events that have occurred, but in accordance with generally accepted accounting principles we have not accrued for such potential liabilities because the loss is either not probable or not estimable or because we are not aware of the event. Future events and the result of pending litigation could result in such potential losses becoming probable and estimable, which could have a material adverse impact on our financial condition or results of operations. Some of these potential losses which we are aware of, are described in Note 8 to the partnership's financial statements. 8 ACCRUALS FOR OPERATING EXPENSES We accrue for property tax expense and other operating expenses based upon estimates and historical trends and current and anticipated local and state government rules and regulations. If these estimates and assumptions are incorrect, our expenses could be misstated. RESULTS OF OPERATIONS - --------------------- THREE AND SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 2002: Our net income for the six months ended June 30, 2003 was $1,880,000 compared to $1,906,000 for the six months ended June 30, 2002, representing a decrease of $26,000 or 1%. Our net income for the three months ended June 30, 2003 was $942,000 compared to $939,000 for the three months ended June 30, 2002, representing an increase of $3,000. Rental income for the six months ended June 30, 2003 was $3,046,000 compared to $2,951,000 for the six months ended June 30, 2002, representing an increase of $95,000 or 3%. Rental income for the three months ended June 30, 2003 was $1,543,000 compared to $1,470,000 for the three months ended June 30, 2002, representing a decrease of $73,000 or 5%. Weighted average occupancy levels at the mini-warehouse facilities were 89% and 88% for the six months ended June 30, 2003 and 2002, respectively. Weighted average occupancy levels at the mini-warehouse facilities were 91% and 88% for the three months ended June 30, 2003 and 2002, respectively. Annual realized rent for the six months ended June 30, 2003 increased to $13.83 per occupied square foot compared $13.68 per occupied square foot for the six months ended June 30, 2002. Annual realized rent for the three months ended June 30, 2003 increased to $13.83 per occupied square foot compared $13.53 per occupied square foot for the three months ended June 30, 2002. Cost of operations (including management fees paid to an affiliate) for the six months ended June 30, 2003 was $875,000 compared to $737,000 for the six months ended June 30, 2002, representing an increase of $138,000 or 19%. Cost of operations (including management fees paid to an affiliate) for the three months ended June 30, 2003 was $457,000 compared to $374,000 for the three months ended June 30, 2002, representing an increase of $83,000 or 22%. The increase in cost of operations for the three and six months ended June 30, 2003, is primarily due to increases in payroll, advertising and promotion and property insurance costs. For the three and six months ended June 30, 2002, we incurred $3,000 and $13,000, respectively, of interest expense. As a result of the loan being paid in full during 2002, there was no interest expense incurred in the six months ended June 30, 2003. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash generated from operations ($2,201,000 for the six months ended June 30, 2003) has been sufficient to meet all current obligations of the Partnership. During October 1998, we borrowed $12,400,000 from a commercial bank. The loan is unsecured and bears interest at the London Interbank Offering Rate ("LIBOR") plus 0.55%. The loan was scheduled to mature October 2002. During the second quarter of 2002, the Partnership paid the loan in full without premium or penalty. We paid distributions to the limited and general partners totaling $1,400,000 ($70.00 per unit) and $486,000, respectively, for the six months ended June 30, 2003. RISK FACTORS - ------------ In addition to the other information in our Form 10-Q and Annual Report on Form 10-K for the year ended December 31, 2002, you should consider the following factors in evaluating the Partnership: 9 PUBLIC STORAGE HAS A SIGNIFICANT DEGREE OF CONTROL OVER THE PARTNERSHIP. Public Storage is general partner and owns approximately 31.4% of our outstanding limited partnership units. In addition, PS Orangeco Partnerships, Inc., an affiliate of Public Storage, owns an additional 0.1% of our outstanding limited partnership units. As a result, Public Storage has a significant degree of control over matters submitted to a vote of our unitholders, including amending our organizational documents, dissolving the Partnership and approving other extraordinary transactions. SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE ARE SUBJECT TO REAL ESTATE OPERATING RISKS. THE VALUE OF OUR INVESTMENTS MAY BE REDUCED BY GENERAL RISKS OF REAL ESTATE OWNERSHIP. Since we derive substantially all of our income from real estate operations, we are subject to the general risks of owning real estate-related assets, including: o lack of demand for rental spaces or units in a locale; o changes in general economic or local conditions; o changes in supply of or demand for similar or competing facilities in an area; o potential terrorists attacks; o the impact of environmental protection laws; o changes in interest rates and availability of permanent mortgage funds which may render the sale or financing of a property difficult or unattractive; and o changes in tax, real estate and zoning laws. THERE IS SIGNIFICANT COMPETITION AMONG SELF-STORAGE FACILITIES AND FROM OTHER STORAGE ALTERNATIVES. All of our properties are self-storage facilities, which generated all of our rental revenues. Local market conditions will play a significant part in how competition will affect us. Competition in the market areas in which many of our properties are located from other self-storage facilities and other storage alternatives is significant and has affected the occupancy levels, rental rates and operating expenses of some of our properties. Any increase in availability of funds for investment in real estate may accelerate competition. Further development of self-storage facilities may intensify competition among operators of self-storage facilities in the market areas in which we operate. WE MAY INCUR SIGNIFICANT ENVIRONMENTAL COSTS AND LIABILITIES. As an owner of real properties, under various federal, state and local environmental laws, we are required to clean up spills or other releases of hazardous or toxic substances on or from our properties. Certain environmental laws impose liability whether or not the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. In some cases, liability may not be limited to the value of the property. The presence of these substances, or the failure to properly remediate any resulting contamination, also may adversely affect the owner's or operator's ability to sell, lease or operate its property or to borrow using its property as collateral. 10 We have conducted preliminary environmental assessments on the properties the Partnership has an interest in to evaluate the environmental condition of, and potential environmental liabilities associated with, our properties. These assessments generally consist of an investigation of environmental conditions at the property (not including soil or groundwater sampling or analysis), as well as a review of available information regarding the site and publicly available data regarding conditions at other sites in the vicinity. In connection with these property assessments, we have become aware that prior operations or activities at some facilities or from nearby locations have or may have resulted in contamination to the soil or groundwater at these facilities. In this regard, some of our facilities are or may be the subject of federal or state environment investigations or remedial actions. Although we cannot provide any assurance, based on the preliminary environmental assessments, we believe we have funds available to cover any liability from environmental contamination or potential contamination and we are not aware of any environmental contamination of our facilities material to our overall business, financial condition or results of operation. PROPERTY TAXES CAN INCREASE AND CAUSE A DECLINE IN YIELDS ON INVESTMENTS. Each of our properties is subject to real property taxes. These real property taxes may increase in the future as property tax rates change and as our properties are assessed or reassessed by tax authorities. Such increases could adversely impact the Partnership's profitability. WE MUST COMPLY WITH THE AMERICANS WITH DISABILITIES ACT AND FIRE AND SAFETY REGULATIONS, WHICH CAN REQUIRE SIGNIFICANT EXPENDITURES: All our properties must comply with the Americans with Disabilities Act and with related regulations (the "ADA"). The ADA has separate compliance requirements for "public accomodations" and "commercial facilities," but generally requires that buildings be made accessible to persons with disabilities. Various state laws impose similar requirements. A failure to comply with the ADA or similar state laws could result in government imposed fines on us and the award of damages to individuals affected by the failure. In addition, we must operate our properties in compliance with numerous local fire and safety regulations, building codes, and other land use regulations. Compliance with these requirements can require us to spend substantial amounts of money, which would reduce cash otherwise available for distribution to Partners. Failure to comply with these requirements could also affect the marketability of our real estate facilities. TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE VALUE OF OUR ASSETS. Terrorist attacks and other acts of violence or war, such as those that took place on September 11, 2001, could have a material adverse impact on our business and operating results. There can be no assurance that there will not be further terrorist attacks against the United States or its businesses or interests. Attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate those properties and thereby impair our operating results. Further, we may not have insurance coverage for losses caused by a terrorist attack. Such insurance may not be available, or if it is available and we decide to obtain such terrorist coverage, the cost for the insurance may be significant in relationship to the risk overall. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse effect on our business and results of operations. Finally, further terrorist acts could cause the United States to enter into a wider armed conflict, which could further impact our business and operating results. CONTROLS AND PROCEDURES - ----------------------- The Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports the Partnership files and submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to the Partnership's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rules 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance. 11 As of the end of the fiscal quarter covered by this report, the Partnership carried out an evaluation, under the supervision and with the participation of the Partnership's management, including the Partnership's Chief Executive Officer and the Partnership's Chief Financial Officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures. Based upon this evaluation, the Partnership's Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures were effective. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 12 PART II. OTHER INFORMATION Item 1 Legal Proceedings ----------------- Serrao v. Public Storage, Inc. (Filed April 2003) ------------------------------------------------- (Superior Court - Orange County) -------------------------------- The plaintiff in this case filed a suit against Public Storage on behalf of a putative class of renters who rented self-storage units from Public Storage. Plaintiff alleges that Public Storage misrepresents the size of its storage units, has brought claims under California statutory and common law relating to consumer protection, fraud, unfair competition, and negligent misrepresentation, and is seeking monetary damages, restitution, and declaratory and injunctive relief. The claim in this case is substantially similar to those in Henriquez v. Public Storage, Inc., which was disclosed in prior reports. In January 2003, the plaintiff caused the Henriquez action to be dismissed. Based upon the uncertainty inherent in any putative class action, Public Storage cannot presently determine the potential damages, if any, or the ultimate outcome of this litigation. Public Storage is vigorously contesting the claims upon which this lawsuit is based. The Partnership is also a party to the actions described under "Item 3. Legal Proceedings" in the Partnership's 2002 annual report on Form 10-K. Except as described above, there have been no material developments in the actions described in the Partnership's 2002 annual report on Form 10-K. The Partnership is a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time. The Partnership believes that the outcome of these other pending legal proceedings, in the aggregate, will not have a material adverse effect upon the operations or financial portion of the Partnership. Items 2 through 5 are inapplicable. Item 6 Exhibits and Reports on Form 8-K. --------------------------------- (a) The following Exhibits are included herein: 31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 32 Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (b) Form 8-K None 13 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 14, 2003 PUBLIC STORAGE PROPERTIES, LTD. BY: Public Storage, Inc. General Partner BY: /s/ John Reyes -------------- John Reyes Senior Vice President and Chief Financial Officer 14 EX-31 3 q203prop3_311.txt CEO CERTIFICATION Exhibit 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Ronald L. Havner, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Public Storage Properties, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reports; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or person performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Ronald L. Havner, Jr. - -------------------------- Name: Ronald L. Havner, Jr. Title: Chief Executive Officer Date: August 14, 2003 EX-31 4 q203prop3_312.txt CFO CERTIFICATION Exhibit 31.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, John Reyes certify that: 1. I have reviewed this quarterly report on Form 10-Q of Public Storage Properties, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reports; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or person performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ John Reyes - --------------- Name: John Reyes Title: Chief Financial Officer Date: August 14, 2003 EX-32 5 q203prop3_32.txt CEO AND CFO CERTIFICATION Exhibit 32 CERTIFICATION OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Public Storage Properties, Ltd. (the "Partnership") for the quarterly period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Ronald L. Havner, Jr., as Chief Executive Officer of Public Storage, Inc., and John Reyes, as Chief Financial Officer of Public Storage, Inc., each hereby certifies, pursuant to 18 U.S.C.ss.1350, as adopted pursuant toss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Ronald L. Havner, Jr. - ------------------------------------ Name: Ronald L. Havner, Jr. Title: Chief Executive Officer of Public Storage, Inc., Corporate General Partner Date: August 14, 2003 /s/ John Reyes - ------------------------------------ Name: John Reyes Title: Chief Financial Officer of Public Storage, Inc., Corporate General Partner Date: August 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----