UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the year ended December 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to __________.
Commission file number: [ ]
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
STORAGE USA, INC.
165 Madison Avenue, Suite 1300
Memphis, Tennessee 38103
Required Information
1. Audited Statements of Net Assets Available for Plan Benefits - December
31, 1999 and 1998 (attached).
2. Audited Statements of Changes in Net Assets Available for Plan Benefits -
For the year ended December 31, 1999 (attached).
STORAGE USA, INC.
401(k) PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
for the year ended
December 31, 1999
Storage USA, Inc. 401(k) Plan
Index to Financial Statements and Supplemental Schedules
Page(s)
-------
Report of Independent Accountants 1-2
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 1999 and 1998 3
Statements of Changes in Net Assets Available
For Benefits For the Year Ended December 31, 1999 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Schedule of Assets Held for Investment
Purposes at End of Year as of December 31, 1999 10
Schedule of Reportable Transactions
For the Year Ended December 31, 1999 11
Report of Independent Accountants
To the Participants and Trustees of
Storage USA, Inc. 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of Storage USA, Inc. 401(k) Plan ("the Plan") as of December 31, 1999 and 1998,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
Except as discussed in the following paragraph, we conducted our audits 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts of disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 6, the financial statements referred to above as of
December 31, 1999 and 1998 and for the year ended December 31, 1999 omit certain
receivables from Storage USA, Inc., the plan sponsor, the amounts of which have
not yet been determined. The omission of these receivables results in an
understatement of total net assets, total contributions and total benefits paid
as of December 31, 1999 and 1998 and for the year ended December 31, 1999 by
such amounts.
In our opinion, except for the effects of potential adjustments described above,
the financial statements referred to in the first paragraph above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of Decembers 31, 1999 and 1998, and the changes in net assets
available for plan benefits for the year ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules on pages 10
and 11, are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, except for the effects of potential adjustments described in the third
paragraph, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PricewaterhouseCoopers LLP
Memphis, Tennessee
June 30, 2000
Storage USA, Inc. 401(k) Plan
Statement of Net Assets Available for Benefits
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
--------------- ----------------
Investments, at fair value (Note 3) $7,629,005 $4,544,949
Contributions receivable:
Employee 81,865 116,162
Employer (Note 6) 878,030 676,986
--------------- ----------------
959,895 793,148
--------------- ----------------
Net assets available for benefits $8,588,900 $5,338,097
=============== ================
The accompanying notes are an integral part of the financial statements.
Storage USA, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1999
- --------------------------------------------------------------------------------
Additions to net assets attributed to:
Employee contributions $1,293,360
Employer contributions (Note 6) 1,063,390
Interest and dividends 628,591
Net realized and unrealized appreciation
in fair value of investments 741,007
---------------
Total additions 3,726,348
---------------
Deductions from net assets attributable to:
Benefits paid to participants 474,787
Other 758
---------------
Total deductions 475,545
---------------
Net increase 3,250,803
Net assets available for benefits:
Beginning of year 5,338,097
---------------
End of year $8,588,900
===============
The accompanying notes are an integral part of the financial statements.
Storage USA, Inc. 401(k) Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1 - Description of Plan
The following description of the Storage USA, Inc. 401(k) Plan (the "Plan")
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
General
The Plan commenced its operations effective January 1, 1994. The Plan is a
defined contribution plan covering all eligible full time employees of Storage
USA, Inc. (the "Company") who have completed six months of service. The Plan
allows participants to make contributions to the following Putnam Investment's
mutual fund options: Equity income, Global growth, U.S. Government, Growth and
Income, Voyager, Money Market; and, in addition, Company Stock. The participant
may direct employee contributions in 5 percent increments in any or all of the
available options and may change their investment options at any time. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Contributions
Employee contributions are voluntary and are allowed up to a maximum of 15% of
their compensation. Each year the Company is obligated to make a matching
contribution on the employee's behalf equal to 50% of the participant's
contribution to the Plan, up to 2% of the participant's compensation. For 1999
and 1998, the Company also elected to make discretionary profit sharing
contributions totaling approximately $866,000 and $661,000, respectively.
Vesting
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching and discretionary contributions plus
actual earnings thereon is based on years of continuous service. An eligible
employee is 100 percent vested after 6 years of service. Prior to 6 years of
service, vesting occurs at 20 percent per year, beginning in the second year of
service.
Participant's Accounts
Earnings are allocated to the account of each participant in the ratio of each
participant's account balance to the total of all participant account balances
for such year. The Company's matching contributions are based upon the deferral
elected by the participant. The Company's discretionary contributions are
allocated to each eligible participant's account in the ratio of each eligible
participant's compensation to the total of all eligible participant compensation
for such year. To be eligible to receive an allocation of discretionary
contributions for a plan year, the participant must either be employed on the
last day of the plan year, complete more than 500 hours of service in the plan
year, or retire, die or become disabled in the plan year. The benefit to which
a participant is entitled is the benefit that can be provided from the
participant's vested account.
Payment of Benefits
Participants shall receive, at retirement age, the amount equal to the vested
value of their account in a lump-sum or in equal annual installments. In the
event of financial hardship, earlier withdrawals may be granted. Benefits are
recorded when paid.
Forfeited Accounts
At December 31, 1999 and 1998, forfeited nonvested accounts totaled
approximately $125,068 and $62,169, respectively, and were invested in the Money
Market Fund. Forfeited nonvested accounts are used to reduce future employer
contributions. Additional forfeited nonvested amounts, as determined upon
completion of the Company's
Storage USA, Inc. 401(k) Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Voluntary Compliance Review, will be used to offset the contribution from the
Company necessary to make the Plan whole (Note 6).
Note 2 - Summary of Significant Accounting policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates in Preparing Financial Statements
In preparing the financial statements in conformity with accounting principles
generally accepted in the United States, management is required to make
estimates and assumptions that affect the reported amount of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates.
Investment Valuation
The Plan's investments are held by a third party custodian. Mutual funds
investments are valued at the net asset value reported for the last day of the
year. The Company stock is valued at its quoted market price.
Net Appreciation (Depreciation) of Investments
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Interest and Dividend Income
Purchases and sales of investments are recorded on a trade-date basis. Dividend
income is recorded on the ex-dividend date. Interest income is recorded as
earned on an accrual basis.
Administrative Expenses
During 1999, administrative expenses of approximately $26,356 were paid by the
Company.
Storage USA, Inc. 401(k) Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 3 - Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets:
December 31,
1999 1998
-------------------------
Putnam Equity Income Fund, 57,870 and 42,902 shares,
respectively $ 806,710 $ 667,973
Putnam Global Growth Fund, 77,875 and 54,324 shares,
respectively 1,447,695 668,623
The Putnam Fund for Growth and Income, 73,478 and 47,911
shares, respectively 1,377,709 977,617
Putnam Voyager Fund, 72,814 and 51,271 shares,
respectively 2,254,335 1,104,708
Putnam Money Market Fund, 994,330 and 566,366 shares,
respectively 994,330 566,366
Storage USA, Inc. Common Stock, 18,999 and 12,625 shares,
respectively 574,714 407,945
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value as follows:
Mutual Funds $770,268
Common Stock (29,261)
---------------
Total $741,007
===============
Note 4 - Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Putnam
Investments. Putnam Fiduciary Trust Company is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-interest.
Additionally, Storage USA, as Plan Sponsor, is a related party. Investments
include shares of Storage USA's common stock. Purchases of $218,007 and sales
of $58,595 were made during 1999. The market value of the Storage USA common
stock was $30.25 and $32.3125 per share as of December 31, 1999 and 1998,
respectively.
Storage USA, Inc. 401(k) Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 5 - Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
Note 6 - Tax Status
The Plan qualifies under Sections 401(a) and 501(a) of the Internal Revenue Code
and is, therefore, not subject to tax under present income tax regulations. The
Company has submitted to the Internal Revenue Service a Voluntary Compliance
Resolution application with respect to certain failures in the Plan's operation
for Plan years 1994 through 1998 which may jeopardize the tax qualified status
of the Plan. The Company expects to correct such failures by making a
contribution to the Plan and also expects to receive a compliance statement from
the Internal Revenue Service, thereby relieving the Plan of any risk in losing
its tax qualified status as a result of such operational failure. The
determination of the amount necessary to correct such failures will be reduced
by the forfeitures of the nonvested portion of participants' accounts and will
also result in a liability to terminated participants for amounts that would
have been credited to such participants' accounts during the years of
operational failure. The Company does not expect the outcome to result in any
penalties or fines being assessed against the Plan or the Company. Other than
the matters being addressed in the Voluntary Compliance Resolution application,
the Company is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status. The Plan has
been amended (as discussed in Note 9) subsequent to receipt of the latest
determination letter.
Note 7 - Concentration of Credit Risk
Financial instruments which potentially subject the Plan to concentration of
credit risk are the Putnam Investments mutual funds. The Plan has no formal
policy requiring collateral to support the financial instruments subject to
credit risk.
Note 8 - Obligations for Terminated Participants
Net assets available for benefits as of December 31, 1999 and 1998 included
$822,518 and $143,452, respectively, due to terminated participants. Additional
obligations due to terminated participants, as determined upon completion of the
Company's Voluntary Compliance Resolution, will be included in net assets
available for benefits (Note 6).
Note 9 - Plan Amendment
The Plan was amended on December 20, 1999 with an effective date of January 1,
1999, to allow participants over age 59 1/2 to withdraw amounts upon request.
In addition, the amendment changes the definition of compensation for the
purpose of determining the amount and allocation of elective deferrals and
employer matching contributions from Form W-2 earnings to Form W-2 earnings less
bonuses, commissions and any reimbursements including
Storage USA, Inc. 401(k) Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
relocation, wellness and moving expenses, stock-based compensation including
stock option exercises and grants, and long-term disability payments. This
amendment allows the Company to make contributions necessary to meet certain IRS
regulations and maintain the tax-exempt nature of the Plan.
The Plan was also amended on December 20, 1999 with an effective date of January
1, 2000, to eliminate the profit sharing portion of the Plan. In addition, the
Plan changed the service requirements for elective deferrals and the employer
matching contribution from one 6-month eligibility period to one 3-month
eligibility period. The entry date service requirements were changed from the
first day of the month following the date the employee fulfills the requirements
to the first day of the second month and eighth month of the Plan year (semi-
annually). The employer matching contribution was changed from 50% of the
elective deferrals up to 2% of earnings to 100% of elective deferrals up to 3%
of earnings and 50% of elective deferrals from 3% to 5% of earnings.
Note 10 - Variances between the Financial Statements and Form 5500
Form 5500, "Annual Return Report of Employee Benefit Plan" was completed for the
years ended December 31, 1999 and 1998 on a modified cash basis based upon
information from the Plan's trustee. The 1999 and 1998 Forms 5500 varied from
these financial statements due to the accrual for the employer contribution
receivable of $878,030 and $676,986 at December 31, 1999 and 1998, respectively,
and for the employee contribution receivable of $81,865 and $116,162 at December
31, 1999 and 1998, respectively.
Storage USA, Inc. 401(k) Plan
Schedule of Assets Held for Investment Purposes at End of Year
Employer ID Number: 62-1251239
Plan Number: 001
December 31, 1999
- --------------------------------------------------------------------------------
Number of Current
Identity of Issuer Description of Investments Shares/Units Cost Value
- ---------------------------------------------------------------------------------------------------------
*Putnam Mutual Fund Equity Income Fund 57,870 $ 888,560 $ 806,710
*Putnam Mutual Fund Global Growth Fund 77,875 1,046,239 1,447,695
*Putnam Mutual Fund U.S. Government Fund 14,061 179,068 173,512
*Putnam Mutual Fund Growth and Income Fund 73,478 1,498,622 1,377,709
*Putnam Mutual Fund Voyager Fund 72,814 1,679,205 2,254,335
*Putnam Mutual Fund Money Market Fund 994,330 994,326 994,330
*Storage USA, Inc. Common Stock 18,999 621,370 574,714
----------------------------------
$6,907,390 $7,629,005
==================================
* Parties-in-interest
Storage USA, Inc. 401(k) Plan
Schedule of Reportable Transactions
Employer ID Number: 62-1251239
Plan Number: 001
For the year ended December 31, 1999
- --------------------------------------------------------------------------------
Number
of Trans- Purchase Selling
Identity of Party Involved Description of Investment actions Price Price
- ----------------------------------------------------------------------------------------------------------------
I. Single transaction in excess of
5% of the Plan's assets as of
January 1, 1999
Putnam Mutual Fund* Growth Income Fund (Class B) 1 $303,131
Putnam Mutual Fund* Voyager Fund (Class B) 1 296,229
Putnam Mutual Fund* Growth Income Fund (Class A) 1 $ 303,131
Putnam Mutual Fund* Voyager Fund (Class A) 1 296,229
Putnam Mutual Fund* Money Market Fund (Class A) 1 267,382
II. Series of transactions with
respect to any plan assets
other than securities in excess
of 5% of the Plan's assets as of None
January 1, 1999
III. Series of transactions with
respect to securities of the
same issue in excess of 5% of
the Plan's assets as of January
1, 1999:
Putnam Mutual Fund* Growth Income Fund (Class B) 16 329,859
Putnam Mutual Fund* Voyager Fund (Class B) 22 338,878
Putnam Mutual Fund* Growth Income Fund (Class A) 77 989,723
Putnam Mutual Fund* Global Growth Fund (Class A) 63 675,760
Putnam Mutual Fund* Voyager Fund (Class A) 83 1,120,984
Putnam Mutual Fund* Money Market Fund (Class A) 157 499,947
Putnam Mutual Fund* Equity Income Fund (Class A) 62 527,879
IV. Any transaction with respect
to securities with a person if
any prior or subsequent
transactions with such person
exceeded 5% of the Plan's assets
of January 1, 1999 None
Current
Value of
Asset on
Cost of Transaction Net
Identity of Party Involved Description of Investment Asset Date Gain
- ---------------------------------------------------------------------------------------------------------------------
I. Single transaction in excess of
5% of the Plan's assets as of
January 1, 1999
Putnam Mutual Fund* Growth Income Fund (Class B) $ 234,893 $ 303,131 $ 68,238
Putnam Mutual Fund* Voyager Fund (Class B) 169,556 296,229 126,673
Putnam Mutual Fund* Growth Income Fund (Class A) 303,131 303,131
Putnam Mutual Fund* Voyager Fund (Class B) 296,229 296,229
Putnam Mutual Fund* Money Market Fund (Class A) 267,382 267,382
II. Series of transactions with
respect to any plan assets
other than securities in excess
of 5% of the Plan's assets as of None
January 1, 1999
III. Series of transactions with
respect to securities of the
same issue in excess of 5% of
the Plan's assets as of January
1, 1999:
Putnam Mutual Fund* Growth Income Fund (Class B) 255,421 329,859 74,438
Putnam Mutual Fund* Voyager Fund (Class B) 198,163 338,878 140,715
Putnam Mutual Fund* Growth Income Fund (Class A) 989,723 989,723
Putnam Mutual Fund* Global Growth Fund (Class A) 675,760 675,760
Putnam Mutual Fund* Voyager Fund (Class A) 1,120,984 1,120,984
Putnam Mutual Fund* Money Market Fund (Class A) 499,947 499,947
Putnam Mutual Fund* Equity Income Fund (Class A) 527,879 527,879
IV. Any transaction with respect
to securities with a person if
any prior or subsequent
transactions with such person
exceeded 5% of the Plan's assets
of January 1, 1998 None
* Represents transactions with Party-In-Interest.
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Plan Administrator has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
Storage USA, Inc. Profit Sharing and 401(k) Plan
By: Storage USA, Inc.
-----------------
By: /s/ Christopher P. Marr
-----------------------
Christopher P. Marr
-------------------