<PAGE> 1
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 quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-4057
PORTSMOUTH SQUARE, INC.
(Exact Name of Registrant as Specified in its Charter)
California 94-1674111
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
Mailing Address: P.O. Box 80037
San Diego, CA 92138
Street Address: 2251 San Diego Avenue, Suite A-151
San Diego, CA 92110
(619) 298-7201
(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, and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding at May 10, 1996
--------------------- ---------------------------
No Par Value Common 750,000 shares
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
Portsmouth Square, Inc.
Balance Sheet
<TABLE>
<CAPTION> March 31 December 31
1996 1995
------------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,117,237 $ 1,206,138
Deferred income taxes 45,480 45,480
Receivable due from Justice Investors 18,000
---------- ----------
Total current assets 1,162,717 1,269,618
Investment in Justice Investors 383,138 364,259
Deferred income taxes 1,207 1,207
---------- ----------
Total assets $ 1,547,062 $ 1,635,084
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Amount owed to Santa Fe $ 24,620 $ 35,951
Acccounts payable and accrued expenses 6,589 148
Income taxes payable 119,639 81,203
---------- ----------
Total current liabilities 150,848 117,302
Shareholders' equity:
Common stock, no par value:
Authorized shares - 750,000
Issued and outstanding shares - 750,000 2,092,300 2,092,300
Additional paid - in capital 1,240,291 1,240,291
Accumulated deficit (1,936,377) (1,814,809)
---------- ----------
Total shareholders' equity 1,396,214 1,517,782
---------- ----------
Total liabilities and shareholders' equity $ 1,547,062 $ 1,635,084
========== ==========
See accompanying notes.
</TABLE>
<PAGE> 3
Portsmouth Square, Inc.
Income Statement
(Unaudited)
<TABLE>
<CAPTION> First Quarter ended March 31
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Partnership income $ 332,619 $ 304,659
Interest income 17,033 17,325
Miscellaneous income 6,872 1,500
--------- ---------
356,524 323,484
Cost and expenses:
General and administrative 47,329 42,676
Legal and professional fees 11,125 21,403
--------- ---------
58,454 64,079
Income before income taxes 298,070 259,405
Income taxes 119,639 104,120
--------- ---------
Net income $ 178,431 $ 155,285
========= =========
Net income per share $ 0.24 $ 0.21
========= =========
Dividends per share $ 0.40 $ 0.35
========= =========
See accompanying notes.
</TABLE>
<PAGE> 4
Portsmouth Square, Inc.
Statement of Cash Flow
(Unaudited)
<TABLE>
<CAPTION> Three Months Ending March 31
1996 1995
------------ ------------
<S> <C> <C>
Operating activities
Net income $ 178,431 $ 155,285
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Equity in net income of Justice Investors (332,619) (304,659)
Decrease in accounts receivable 18,000 -
Increase in accounts payable, accrued
expenses and income taxes 33,547 119,616
---------- ----------
Net cash provided by (used in) operating
activities (102,641) (29,758)
Investing activities
Cash distribution from Justice Investors 313,740 313,740
---------- ----------
Net cash provided by investing activities 313,740 313,740
Financing activities
Dividends paid (300,000 (262,500)
---------- ----------
Net cash used in financing activities (300,000 (262,500)
---------- ----------
Net increase (decrease) in cash and cash
equivalents (88,901) 21,482
Cash and cash equivalenets at the beginning
of the year 1,206,138 1,103,421
---------- ----------
Cash and cash equivalents at the end of the
period $ 1,117,237 $ 1,124,903
========== ==========
See accompanying notes.
<PAGE> 5
<FN>
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation and Significant Accounting Policies
---------------------------------------------------------
The financial statements included herein have been prepared by Portsmouth
Square, Inc. (the "Company"), without audit, according to the rules and
regulations of the Securities and Exchange Commission. Certain information
and foot note 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 the
Company believes the disclosures that are made are adequate to make the
information presented not misleading. Further, the financial statements
reflect, in the opinion of management, all adjustments (which included only
normal recurring adjustments) necessary to state fairly the financial
position and results of operations as of and for the periods indicated.
It is suggested that these financial statements be read in conjunction with
the audited financial statements and the notes therein included in the
Company's Form 10-K.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of results to be expected for the full fiscal year
ending December 31, 1996.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standard No. 121, (Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.) The adoption of the
new standard had no effect on the financial statements.
</TABLE>
<PAGE> 6
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATION
For the First Three Months of 1996 Compared to 1995
Comparison of the first quarter results of 1996 to the first quarter of 1995
shows that gross revenues increased 10.2 %, expenses decreased approximately
8.7%, income before taxes increased 14.9% and net income increased 14.9%.
The increase in gross revenues reflects a decline in expenses at the
partnership level and an increase in fees received by the Company from the
partnership. The decline in expenses is primarily attributable to certain
annual audit fees which were billed in the first quarter of 1995 whereas
this expense is usually reflected in the second quarter.
LIQUIDITY AND SOURCES OF CAPITAL
Registrant's major source of revenue continues to be its 49.8% investment in
Justice Investors, a limited partnership, which derives the majority of its
income from a lease with Holiday Inn.
The Company remains very liquid and management believes that its capital
resources are adequate for any foreseeable requirements. During the first
three months of the current fiscal year, the Company's cash resources
declined by approximately $7,600 after the payment of a dividend equal
to $.40 per share during the quarter.
<PAGE> 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
The Annual Meeting of Shareholders of the Company was held on May 7, 1996,
at the Westgate Hotel in San Diego, California. At that meeting all of
management's nominees, John V. Winfield, Jerold R. Babin, Janice
Braly-Nelsen, Josef A. Grunwald and William J. Nance were elected Directors
of Portsmouth to serve until the next Annual Meeting. The shareholders also
voted to ratify the appointment of Ernst & Young LLP as the Company's
independent auditor for the year ending December 31, 1996.
A tabulation of the vote follows:
<TABLE>
<CAPTION>
Proposal (1) - Directors: Votes For Against Abstained Broker Non-Vote
--------- ------- --------- ---------------
<S> <C> <C> <C>
John V. Winfield 666,992 4,390
Jerold R. Babin 669,825 1,557
Janice Braly-Nelsen 666,989 4,393
Josef A. Grunwald 666,989 4,393
William J. Nance 666,989 4,393
Proposal (2) Accountants:
Ernst & Young LLP 669,462 790 1,130 0
</TABLE>
Item 5. Other Information.
At a meeting of the Board of Directors held on May 7, 1996, after the Annual
Meeting of Shareholders, the following persons were elected as officers of
the Company: John V. Winfield, President and Chairman of the Board;
William J. Nance, Vice President and Secretary; and L. Scott Shields,
Treasurer.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - the Financial Data Schedule is filed
as an exhibit to this report.
(b) Registrant filed the following Reports on Form 8-K
during the period covered by this report:
Date of Report Item(s) Reported
-------------- ----------------
January 11, 1996 Declaration of special
dividend and resignation
of Director G. Richard O'Connor
February 23, 1996 Appointment of Jerold R. Babin
as Director
<PAGE> 8
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.
PORTSMOUTH SQUARE, INC.
(Registrant)
Date: May 13, 1996
by /s/ John V. Winfield
- - -------------------------------------
John V. Winfield, President
and Chairman of the Board
Date: May 13, 1996
by /s/ L. Scott Shields
- - -------------------------------------
L. Scott Shields, Treasurer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND INCOME STATEMENT OF PORTSMOUTH
SQUARE, INC. SET FORTH IN ITS FORM 10-Q REPORT FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 10-Q REPORT.
<CIK> 0000079661
<NAME> PORTSMOUTH SQUARE, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> MAR-31-1996
<CASH> 1117237
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1547062
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1547062
<CURRENT-LIABILITIES> 150848
<BONDS> 0
0
0
<COMMON> 2092300
<OTHER-SE> (696086)
<TOTAL-LIABILITY-AND-EQUITY> 1547062
<SALES> 332619
<TOTAL-REVENUES> 356524
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 58454
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 298070
<INCOME-TAX> 119639
<INCOME-CONTINUING> 298070
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178431
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
