SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 20, 2001
PS BUSINESS PARKS, INC.
-----------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 1-10709 95-4300881
---------- ------- ----------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
701 Western AVenue, Glendale, California 91201-2397
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
N/A
---
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
PS Business Parks, Inc., through its consolidated partnership (collectively
referred to as the "Company"), acquired 12 buildings known as the "Prosperity
Business Campus" and 12 buildings (including 24 acres of developable land) known
as the "Cornell Oaks Corporate Center" on June 1, 2001 and November 20, 2001,
respectively, at an aggregate purchase price of approximately $175.9 million.
The Company is not affiliated with the sellers and the purchase price was
established through arm's length negotiations. The acquisitions were funded with
the Company's existing cash balances and borrowings of $60 million from its
unsecured line of credit with Wells Fargo Bank.
The following table provides certain information concerning the facilities
acquired:
Name and Date of Purchase Net Rentable Occupancy
Location Seller Acquisition Property Type Price Square Footage at Closing
--------------------------- ---------------------- ------------- -------------- ------------- --------------- -------------
Prosperity Business Campus Olympia Properties,
Fairfax, Virginia L.L.C. 6/1/01 Industrial & $ 88,400,000 657,850 99%
Office
Cornell Oaks Corporate Talcott Realty I
Center Limited Partnership 11/20/01 Industrial & 87,500,000 684,554 95%
Beaverton, Oregon Office
------------- --------------- -------------
$175,900,000 1,342,404 97%
============= =============== =============
1
Item 7. Financial Statements and Exhibits
(a)(3) Financial Statements Specified by Rule 3.14 of Regulation S-X
-------------------------------------------------------------
Prosperity Business Campus
o Report of Independent Auditors
o Combined Statements of Certain Revenues and Certain Operating
Expenses for the nine months ended September 30, 2001 (unaudited)
and for the year ended December 31, 2000
o Notes to Combined Statements of Certain Revenues and Certain
Operating Expenses
Cornell Oaks Corporate Center
o Report of Independent Auditors
o Combined Statements of Certain Revenues and Certain Operating
Expenses for the nine months ended September 30, 2001 (unaudited)
and for the year ended December 31, 2000
o Notes to Combined Statements of Certain Revenues and Certain
Operating Expenses
(b) Pro Forma Consolidated Financial Statements
-------------------------------------------
(c) Exhibits
--------
23. Consent of Independent Auditors
2
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 hereunto duly authorized.
PS BUSINESS PARKS, INC.
Date: December 17, 2001 By: /S/ JACK CORRIGAN
-----------------
Jack Corrigan
Vice President and Chief Financial Officer
3
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of PS Business Parks, Inc.
We have audited the accompanying combined statement of certain revenues and
certain operating expenses of the Prosperity Business Campus (as defined in Note
1) ("Statement") for the year ended December 31, 2000. The Statement is the
responsibility of the Prosperity Business Campus' management. Our responsibility
is to express an opinion on the above mentioned Statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Statement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission.
In our opinion, the Statement presents fairly the combined certain revenues and
certain operating expenses of the Prosperity Business Campus for the year ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.
ERNST & YOUNG LLP
Los Angeles, California
July 14, 2001
4
THE PROSPERITY BUSINESS CAMPUS
Combined Statements of Certain Revenues and Certain Operating Expenses
Nine months ended Year ended
September 30, 2001 December 31, 2000
--------------------- ------------------
(Unaudited)
Certain rental revenues............... $ 9,731,000 $ 11,572,000
Certain operating expenses............ (2,625,000) (3,254,000)
--------------------- ------------------
Certain rental revenues in excess
certain operating expenses....... $ 7,106,000 $ 8,318,000
===================== ==================
See accompanying notes
5
THE PROSPERITY BUSINESS CAMPUS
Notes to Combined Statements of Certain Revenues and Certain Operating Expenses
1. Background and Basis for Presentation
The accompanying combined statements of certain revenues and certain
operating expenses include the accounts of the Prosperity Business
Campus located in Virginia and acquired by PS Business Parks, Inc.,
through its consolidated partnership (collectively referred to as the
"Company") on June 1, 2001. The statements are prepared in order to
comply with Rule 3.14 of Regulation S-X of the Securities and Exchange
Commission.
The combined statements of certain revenues and certain operating
expenses include only the accounts and activities of the Prosperity
Business Campus. Items that are not comparable to the future operations
of the Prosperity Business Campus have been excluded. Such items
include depreciation, amortization, management fees, interest income,
professional fees, miscellaneous income and straight line rent
adjustments.
An audited statement is being presented for the most recent fiscal year
available instead of the three most recent years based on the following
factors: (i) the Prosperity Business Campus was acquired from a single
unaffiliated party and (ii) based on the investigation of the
Prosperity Business Campus by the Company, management is not aware of
any material factors relating to the Prosperity Business Campus that
would cause this financial information not to be necessarily indicative
of future operating results other than the factors specifically
considered by the Company as described below.
In the decision to acquire the Prosperity Business Campus, the Company
considered the competition from other commercial property owners, the
location, the leases, the rental rates and the occupancy levels.
The Company has reviewed the expenses of the Prosperity Business
Campus, including salaries of on-site personnel, utilities, property
taxes, supplies, insurance and repairs and maintenance. The Company
expects that certain operating expenses in the future will be
consistent with those reported for 2000 and the nine months ended
September 30, 2001.
2. Summary of Significant Accounting Policies
Revenue Recognition
The Prosperity Business Campus leases space to tenants for which they
charge minimum rents and receive reimbursement for certain operating
expenses. The leases are accounted for as operating leases and are
non-cancelable with varying terms and expiration dates. Recoveries from
tenants are recognized as income in the period the applicable costs are
accrued.
Use of Estimates
The preparation of the statements of certain revenues and certain
operating expenses in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect the amounts reported in the statements of
certain revenues and certain operating expenses and accompanying notes.
Actual results could differ from those estimates.
6
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of PS Business Parks, Inc.
We have audited the accompanying combined statement of certain revenues and
certain operating expenses of the Cornell Oaks Corporate Center (as defined in
Note 1) ("Statement") for the year ended December 31, 2000. The Statement is the
responsibility of the Cornell Oaks Corporate Center's management. Our
responsibility is to express an opinion on the above mentioned Statement based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Statement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission.
In our opinion, the Statement presents fairly the combined certain revenues and
certain operating expenses of the Cornell Oaks Corporate Center for the year
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.
ERNST & YOUNG LLP
Los Angeles, California
December 7, 2001
7
CORNELL OAKS CORPORATE CENTER
Combined Statements of Certain Revenues and Certain Operating Expenses
Nine months ended Year ended
September 30, 2001 December 31, 2000
--------------------- ------------------
(Unaudited)
Certain rental revenues............... $ 7,625,000 $ 9,494,000
Certain operating expenses............ (1,758,000) (2,341,000)
--------------------- ------------------
Certain rental revenues in excess
certain operating expenses....... $ 5,867,000 $ 7,153,000
===================== ==================
See accompanying notes
8
CORNELL OAKS CORPORATE CENTER
Notes to Combined Statements of Certain Revenues and Certain Operating Expenses
1. Background and Basis for Presentation
The accompanying combined statements of certain revenues and certain
operating expenses include the accounts of the Cornell Oaks Corporate
Center located in Oregon and acquired by PS Business Parks, Inc.,
through its consolidated partnership (collectively referred to as the
"Company") on November 20, 2001. The statements are prepared in order
to comply with Rule 3.14 of Regulation S-X of the Securities and
Exchange Commission.
The combined statements of certain revenues and certain operating
expenses include only the accounts and activities of the Cornell Oaks
Corporate Center. Items that are not comparable to the future
operations of the Cornell Oaks Corporate Center have been excluded.
Such items include depreciation, amortization, management fees,
interest income, professional fees, miscellaneous income and straight
line rent adjustments.
An audited statement is being presented for the most recent fiscal year
available instead of the three most recent years based on the following
factors: (i) the Cornell Oaks Corporate Center were acquired from a
single unaffiliated party and (ii) based on the investigation of the
Cornell Oaks Corporate Center by the Company, management is not aware
of any material factors relating to the Cornell Oaks Corporate Center
would cause this financial information not to be necessarily indicative
of future operating results other than the factors specifically
considered by the Company as described below.
In the decision to acquire the Cornell Oaks Corporate Center, the
Company considered the competition from other commercial property
owners, the location, the leases, the rental rates and the occupancy
levels.
The Company has reviewed the expenses of the Cornell Oaks Corporate
Center, including salaries of on-site personnel, utilities, property
taxes, supplies, insurance and repairs and maintenance. The Company
expects that certain operating expenses in the future will be
consistent with those reported for 2000 and the nine months ended
September 30, 2001.
2. Summary of Significant Accounting Policies
Revenue Recognition
The Cornell Oaks Corporate Center leases space to tenants for which
they charge minimum rents and receive reimbursements for certain
operating expenses. The leases of the Cornell Oaks Corporate Center are
accounted for as operating leases and are non-cancelable with varying
terms and expiration dates. Recoveries from tenants are recognized as
income in the period the applicable costs are accrued.
Use of Estimates
The preparation of the combined statements of certain revenues and
certain operating expenses in conformity with accounting principles
generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the
combined statements of certain revenues and certain operating expenses
and accompanying notes. Actual results could differ from those
estimates.
9
ITEM 7 (B) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma consolidated financial statements were
prepared to reflect the acquisition of real estate facilities by PS Business
Parks, Inc., through its consolidated partnership (collectively referred to as
the "Company") during the period of June 1, 2001 and November 20, 2001. During
that period, the Company acquired 12 buildings known as the Prosperity Business
Campus and 12 buildings known as the Cornell Oaks Corporate Center at an
aggregate purchase price of approximately $175.9 million. The Company is not
affiliated with the sellers and the purchase price was established through arm's
length negotiations. The acquisitions were funded with the Company's existing
cash balances and borrowings of $60 million from its unsecured line of credit
with Wells Fargo Bank.
In addition to adjustments to reflect the recently acquired properties, pro
forma adjustments were made to reflect the following transactions:
1. On May 10, 2001 and June 18, 2001, the Company issued 1,840,000
and 800,000 depositary shares, respectively, each representing
1/1,000 of a share of the Company's 9 1/2% Cumulative Preferred
Stock, Series D at $25.00 per share. Net proceeds were
approximately $64.3 million and were used for investment in real
estate.
2. On September 21, 2001, the Company completed a private placement
of 2,120,000 preferred units with a preferred distribution rate of
9 1/4%. Net proceeds were approximately $51.6 million and were
used for investment in real estate.
The pro forma consolidated balance sheet at September 30, 2001 has been prepared
to reflect the subsequent acquisitions of commercial properties.
The pro forma consolidated statements of income for the nine months ended
September 30, 2001 and the year ended December 31, 2000 have been prepared
assuming (i) the aforementioned acquisitions of commercial properties and (ii)
the aforementioned public offerings of depositary shares representing fractional
interest in preferred stock and the private placement of preferred units, as if
all such transactions were consummated at the beginning of the periods
presented. The operations of all property acquisitions are based on historical
operating results.
The pro forma adjustments are based upon available information and upon certain
assumptions as set forth in the notes to the pro forma consolidated financial
statements that the Company believes is reasonable in the circumstances. The pro
forma consolidated financial statements and accompanying notes should be read in
conjunction with the historical financial statements of the Company and other
documents filed with the Securities and Exchange Commission (such as Form 8-K's
which reference property acquisitions) from time to time. The following pro
forma consolidated financial statements do not purport to represent what the
Company's results of operations would actually have been if the transactions had
in fact occurred at the beginning of the dates indicated or to project the
Company's results of operations for any future date or period.
10
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2001
(Unaudited)
(Amounts in thousands, except per share data)
Property
Acquisitions
Historical (Note 1) Pro Forma
ASSETS ------------------ --------------------- --------------------
------
Cash and cash equivalents................................. $ 66,291 $ (27,500) $ 38,791
Marketable securities..................................... 8,657 - 8,657
Real estate, net of accumulated depreciation.............. 941,998 87,500 1,029,498
Receivables and other assets.............................. 11,559 - 11,559
------------------ --------------------- --------------------
Total assets......................................... $ 1,028,505 $ 60,000 $ 1,088,505
================== ===================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accrued and other liabilities............................. $ 35,202 $ - $ 35,202
Line of credit............................................ - 60,000 60,000
Mortgage notes payable.................................... 30,354 - 30,354
Minority interests:
Preferred units........................................ 197,750 - 197,750
Common units........................................... 162,338 - 162,338
Shareholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares
authorized, 4,840 shares issued and outstanding at
September 30, 2001.................................. 121,000 - 121,000
Common stock, $0.01 par value, 100,000,000 shares
authorized, 21,704,067 shares issued and outstanding
at September 30, 2001............................... 217 - 217
Paid-in capital........................................ 426,546 - 426,546
Cumulative net income.................................. 162,134 - 162,134
Other comprehensive loss............................... (740) - (740)
Cumulative distributions............................... (106,296) - (106,296)
------------------ --------------------- --------------------
Total shareholders' equity......................... 602,861 - 602,861
------------------ --------------------- --------------------
Total liabilities and shareholders' equity............. $ 1,028,505 $ 60,000 $ 1,088,505
================== ===================== ====================
Book value per common share (Note 2)...................... $ 22.20 $ 22.20
================== ===================== ====================
Shares outstanding........................................ 21,704 21,704
================== ===================== ====================
See Accompanying Notes to Pro Forma Consolidated Balance Sheet
11
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2001
(Unaudited)
1. Property Acquisitions
---------------------
On November 20 2001, the Company acquired 12 buildings known as the
Cornell Oaks Corporate Center from an unaffiliated third party at an
aggregate cost of approximately $87.5 million.
The following pro forma adjustments have been made to the pro forma
consolidated balance sheet to reflect the aforementioned transaction as
if these properties had been owned by the Company as of September 30,
2001.
o Pro forma adjustments have been made to cash and cash equivalents
to reflect:
o The acquisition cost of the facilities acquired.. $(87,500,000)
o Borrowings from the line of credit to fund the
acquisition...................................... 60,000,000
---------------
$(27,500,000)
===============
o A pro forma adjustment has been made to real
estate facilities to reflect the acquisition cost
of the facilities acquired.......................... $ 87,500,000
===============
o A pro forma adjustment has been made to reflect
borrowings from the line of credit to fund the
acquisition........................................ $ 60,000,000
===============
2. Book value per common share
---------------------------
Book value per common share has been determined by dividing total
common shareholders' equity by the outstanding common shares. The
following summarizes the common shares outstanding:
Common shares
outstanding
---------------
o Historical shares outstanding at September 30, 2001 21,704,000
12
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 2001
(Unaudited)
(Amounts in thousands, except per share data)
Property Other
Acquisitions Adjustments
Historical (Note 1) (Note 2) Pro Forma
----------------- --------------- ----------------- ------------------
Revenues:
Rental income............................ $ 121,964 $ 12,983 $ - $ 134,947
Facility management fees primarily from
affiliates............................. 499 - - 499
Business services........................ 308 - - 308
Interest and dividend income............. 1,671 - - 1,671
----------------- --------------- ----------------- ------------------
124,442 12,983 - 137,425
----------------- --------------- ----------------- ------------------
Expenses:
Cost of operations....................... 32,852 3,302 - 36,154
Cost of facility management.............. 111 - - 111
Cost of business services................ 460 - - 460
Depreciation and amortization............ 30,058 2,453 - 32,511
General and administrative............... 3,157 - - 3,157
Interest expense......................... 932 - 1,378 2,310
----------------- --------------- ----------------- ------------------
67,570 5,755 1,378 74,703
----------------- --------------- ----------------- ------------------
Income (loss) before gain on real estate
investments and minority interest in income. 56,872 7,228 (1,378) 62,722
Gain on investment in Pacific Gulf
Properties, Inc.......................... 15 - - 15
----------------- --------------- ----------------- ------------------
Income (loss) before minority interest in
income...................................... 56,887 7,228 (1,378) 62,737
Minority interest in income - preferred (9,696) - (3,541) (13,237)
units....................................
Minority interest in income - common
units (Note 4)........................... (10,047) (1,764) 1,811 (9,999)
----------------- --------------- ----------------- ------------------
Net income (loss)........................... $ 37,144 $ 5,464 $ (3,108) $ 39,501
================= =============== ================= ==================
Net income (loss) allocation:
Allocable to preferred shareholders...... $ 6,014 $ - $ 2,504 $ 8,518
Allocable to common shareholders......... 31,130 5,464 (5,612) 30,983
----------------- --------------- ----------------- ------------------
$ 37,144 $ 5,464 $ (3,108) $ 39,501
================= =============== ================= ==================
Net income per common share (Note 3):
Basic.................................. $ 1.38 $ 1.37
================= ==================
Diluted................................ $ 1.37 $ 1.37
================= ==================
Weighted average common shares outstanding
(Note 3):
Basic.................................. 22,610 22,610
================= ==================
Diluted................................ 22,685 22,685
================= ==================
See Accompanying Notes to Pro Forma Consolidated Statements of Income
13
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2000
(Unaudited)
(Amounts in thousands, except per share data)
Property Other
Acquisitions Adjustments
Historical (Note 1) (Note 2) Pro Forma
----------------- --------------- ----------------- ------------------
Revenues:
Rental income............................ $ 144,171 $ 21,066 $ - $ 165,237
Facility management fees primarily from
affiliates............................. 581 - - 581
Business services........................ 505 - - 505
Interest and dividend income............. 5,377 - - 5,377
----------------- --------------- ----------------- ------------------
150,634 21,066 - 171,700
----------------- --------------- ----------------- ------------------
Expenses:
Cost of operations....................... 39,290 5,595 - 44,885
Cost of facility management.............. 111 - - 111
Cost of business services................ 344 - - 344
Depreciation and amortization............ 35,637 4,264 - 39,901
General and administrative............... 3,954 - - 3,954
Interest expense......................... 1,481 - 1,838 3,319
----------------- --------------- ----------------- ------------------
80,817 9,859 1,838 92,514
----------------- --------------- ----------------- ------------------
Income (loss) before gain on real estate
investments and minority interest in income. 69,817 11,207 (1,838) 79,186
Gain on disposition of real estate....... 256 - - 256
Gain on investment in Pacific Gulf
Properties, Inc.......................... 7,849 - - 7,849
----------------- --------------- ----------------- ------------------
Income (loss) before minority interest in
income...................................... 77,922 11,207 (1,838) 87,291
Minority interest in income - preferred (12,185) - (4,903) (17,088)
units....................................
Minority interest in income - common
units (Note 4)........................... (14,556) (2,690) 3,123 (14,123)
----------------- --------------- ----------------- ------------------
Net income.................................. $ 51,181 $ 8,517 $ (3,618) $ 56,080
================= =============== ================= ==================
Net income allocation:
Allocable to preferred shareholders...... $ 5,088 $ - $ 6,270 $ 11,358
Allocable to common shareholders......... 46,093 8,517 (9,888) 44,722
----------------- --------------- ----------------- ------------------
$ 51,181 $ 8,517 $ (3,618) $ 56,080
================= =============== ================= ==================
Net income per common share (Note 3):
Basic.................................. $ 1.98 $ 1.92
================= ==================
Diluted................................ $ 1.97 $ 1.91
================= ==================
Weighted average common shares outstanding
(Note 3):
Basic.................................. 23,284 23,284
================= ==================
Diluted................................ 23,365 23,365
================= ==================
See Accompanying Notes to Pro Forma Consolidated Statements of Income
14
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 2001
and the year ended December 31, 2000
(Unaudited)
1. Property Acquisitions
---------------------
The following pro forma adjustments have been made to reflect the
operations of the newly acquired properties as if such properties had
been owned and operated by the Company throughout the entire periods
presented:
Nine months ended Year ended
September 30, 2001 December 31, 2000
--------------------- ---------------------
(Amounts in thousands)
o Rental income has been adjusted to reflect:
o the pro forma rental income as if the acquired
properties were owned by the Company for the periods
presented:
Prosperity Business Campus........................... $ 9,731 $ 11,572
Cornell Oaks Corporate Center........................ 7,625 9,494
o the rental income of these properties which are already
included in the Company's historical amounts............ (4,373) -
--------------------- ---------------------
$ 12,983 $ 21,066
--------------------- ---------------------
o Cost of operations has been adjusted to reflect:
o the pro forma cost of operations as if the acquired
properties were owned by the Company for the periods
presented:
Prosperity Business Campus........................... $ 2,625 $ 3,254
Cornell Oaks Corporate Center........................ 1,758 2,341
o the cost of operations of these properties which are
already included in the Company's historical amounts..... (1,081) -
--------------------- ---------------------
$ 3,302 $ 5,595
===================== =====================
o A pro forma adjustment has been made to reflect the
incremental depreciation expense of the acquired properties
as if they were owned by the Company for the periods
presented.................................................... $ 2,453 $ 4,264
===================== =====================
o Minority interest in income allocable to common unitholders
has been adjusted based upon its pro rata ownership
interest in the pro forma adjustments above................... $ (1,764) $ (2,690)
===================== =====================
15
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 2001
and the year ended December 31, 2000
(Unaudited)
2. Other Pro Forma Adjustments
---------------------------
Nine months ended Year ended
September 30, 2001 December 31, 2000
--------------------- --------------------
(Amounts in thousands,
except per share data)
o Interest expense has been adjusted to reflect the interest
expense associated with the line of credit as if the
borrowings had been completed at the beginning of the
periods presented $ 1,378 $ 1,838
===================== ====================
o Minority interest in income - preferred has been adjusted
to reflect the incremental preferred distributions as if the
preferred unit offering had been completed at the beginning
of the periods presented.................................... $ (3,541) $ (4,903)
===================== ====================
o Net income allocable to preferred shareholders has been
adjusted to reflect the incremental preferred dividends as
if the preferred stock offering had been completed at the
beginning of the periods presented.......................... $ 2,504 $ 6,270
===================== ====================
o Minority interest in income allocable to common
unitholders has been adjusted based upon its pro rata
ownership interest in the above pro forma adjustments....... $ 1,811 $ 3,123
===================== ====================
16
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 2001
and the year ended December 31, 2000
(Unaudited)
3. Net income per common share has been computed as follows:
---------------------------------------------------------
Nine months ended Year ended
September 30, 2001 December 31, 2000
--------------------- --------------------
(Amounts in thousands,
except per share data)
Historical net income allocable to common shareholders........... $ 31,130 $ 46,093
====================== ====================
Historical weighted average common shares - basic................ 22,610 23,284
Dilutive effect of stock options............................ 75 81
--------------------- --------------------
Historical weighted average common shares - diluted.............. 22,685 23,365
====================== ====================
Historical net income per common share - basic................... $ 1.38 $ 1.98
Historical net income per common share - diluted................. $ 1.37 $ 1.97
---------------------------------------------------------------------------------------------------------------
Pro forma net income allocable to common shareholders............ $ 30,983 $ 44,722
====================== ====================
Pro forma weighted average common shares - basic................. 22,610 23,284
Dilutive effect of stock options............................ 75 81
--------------------- --------------------
Pro forma weighted average common shares - diluted............... 22,685 23,365
====================== ====================
Pro forma net income per common share - basic.................... $ 1.37 $ 1.92
Pro forma net income per common share - diluted.................. $ 1.37 $ 1.91
17
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 2001
and the year ended December 31, 2000
(Uuaudited)
4. Minority Interest
-----------------
Minority interest represents ownership interests of common OP units in
the consolidated Operating Partnership which are not owned by the
Company. The common OP units, subject to certain conditions of the
Operating Partnership Agreement, are convertible into common shares of
the Company on a one-for-one basis. The following table summarizes the
ownership interests:
Nine months ended Year ended
September 30, 2001 December 31, 2000
----------------------- ---------------------
(Amounts in thousands,
except per share data)
Pro forma weighted average common shares outstanding........... 22,610 23,284
Pro forma weighted average common OP units owned by minority
minority interests........................................... 7,307 7,363
----------------------- ---------------------
Pro forma weighted average common shares outstanding assuming
conversion of common OP units.................................. 29,917 30,647
======================= =====================
Percentage owned by common shareholders........................ 75.6% 76.0%
Percentage owned by common unitholders......................... 24.4% 24.0%
----------------------- ---------------------
Total ownership interest.................................. 100.0% 100.0%
======================= =====================
18