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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 2000 Commission file number 1-12910
STORAGE USA, INC.
PROFIT SHARING AND 401(K) PLAN
(Full title of the plan)
STORAGE USA, INC.
175 Toyota Plaza, Suite 700
Memphis, TN 38103
Telephone: (901) 252-2000
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
62-1251239
(I.R.S. Employer Identification No.)
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STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
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DECEMBER 31, 2000 AND 1999
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INDEX
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Page(s)
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 2000 3
Notes To Financial Statements 4-8
SUPPLEMENTAL SCHEDULES:
Schedule I: Schedule of Assets Held for Investment Purposes
as of December 31, 2000 9
Schedule II: Schedule of Non-Exempt Transactions for the Year Ended
December 31, 2000 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Participants and Trustees of the
Storage USA, Inc. Profit Sharing and 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Storage USA, Inc. Profit Sharing and 401(k) Plan (the "Plan") as
of December 31, 2000 and 1999, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2000. These
financial statements and the supplemental schedules referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
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 and 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 2000 and 1999, and the changes in net assets available for plan benefits for
the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and of non-exempt transactions 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 have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 26, 2001.
-1-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
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AS OF DECEMBER 31, 2000 AND 1999
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1999
(As restated -
2000 see Note 2)
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Investments, at fair value (Note 3) $9,424,805 $7,629,005
Receivables:
Employee contributions 97,071 81,865
Employer matching and profit sharing contributions 56,337 878,056
Other employer contributions (Notes 1 and 2) - 606,915
Dividends 17,470 -
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170,878 1,566,836
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Net assets available for plan benefits $9,595,683 $9,195,841
========== ==========
The accompanying notes to financial statements are
an integral part of these statements.
-2-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
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FOR THE YEAR ENDED DECEMBER 31, 2000
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Additions to (deductions from) net assets attributed to:
Employee contributions $ 1,448,320
Employer contributions 320,864
Interest and dividends 708,869
Net realized and unrealized depreciation
in fair value of investments (1,049,504)
Benefits paid to participants (1,028,707)
-----------
Net increase 399,842
Net assets available for plan benefits:
Beginning of year (as restated, see Note 2) 9,195,841
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End of year $ 9,595,683
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The accompanying notes to financial statements are
an integral part of this statement.
-3-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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NOTES TO FINANCIAL STATEMENTS
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DECEMBER 31, 2000 and 1999
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1. DESCRIPTION OF THE PLAN:
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The following description of the Storage USA, Inc. Profit Sharing and 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 three months of service. Prior to
January 1, 2000, employees must have completed six months of service to
participate in the Plan. The Plan allows participants to make contributions to
the following Putnam Investment 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 and
the employer contributions in 5% 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").
Plan Administration
- -------------------
General administration of the Plan is the responsibility of the Company. The
Company has delegated certain aspects of its authority for purposes of day-to-
day administration to Putnam Fiduciary Trust Company (the "Trustee"). The
Trustee provides recordkeeping, accounting, daily trading and custodial
services.
Contributions
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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 100% of elective deferrals up to
3% of eligible compensation and 50% of elective deferrals from 3% to 5% of
eligible compensation. The Company could also elect to make discretionary
profit sharing contributions and made such a contribution for the year ended
December 31, 1999, totaling approximately $866,000 which is included in the
employer matching and profit sharing contributions receivable as of December 31,
1999. Effective January 1, 2000, the Plan was amended to eliminate the profit
sharing portion of the Plan and no such contribution was made for the year ended
December 31, 2000.
In addition, in 1999, the Company filed an application for Voluntary Compliance
Resolution with the Internal Revenue Service related to Plan years 1994 through
1998 resulting in additional employer contributions of approximately $607,000
(see Note 2). These additional employer contributions are included in other
employer contributions receivable on the statement of net assets available for
plan benefits as of December 31, 1999, and were paid to the Plan during 2000.
-4-
1. DESCRIPTION OF THE PLAN (Continued):
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Vesting
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Participants are immediately vested in their contributions plus actual earnings
thereon. Prior to January 1, 2000, vesting in the Company's matching and
discretionary contributions plus actual earnings thereon is based on years of
continuous service as follows:
Years of Continuous Service Vested Percentage
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Less than 2 years 0%
At least 2, but less than 3 20%
At least 3, but less than 4 40%
At least 4, but less than 5 60%
At least 5, but less than 6 80%
6 or more years 100%
Employees are fully vested in the Company's matching contributions made after
January 1, 2000.
Participant's Accounts
- ----------------------
Each participant's account is credited with the participant's contributions and
an allocation of the Company's contributions and Plan earnings. Allocations are
based on participant earnings or account balances, as defined. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's vested account.
Payment of Benefits
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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
addition, participants over age 59-1/2 may withdraw amounts upon request and in
the event of financial hardship, earlier withdrawals may be granted. Benefits
are recorded when paid.
Forfeited Accounts
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At December 31, 2000 and 1999, forfeited nonvested accounts total approximately
$34,000 and $125,000, respectively, and were invested in the Putnam Money Market
Fund. Forfeited nonvested accounts are used to reduce future employer
contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting
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The financial statements of the Plan have been prepared under the accrual basis
of accounting.
Restatement of Employer Contributions Receivable
- ------------------------------------------------
The statement of net assets available for plan benefits as of December 31, 1999,
as previously reported, was understated due to an omission of certain
receivables which had not been determined. The Company submitted to the
Internal Revenue Service a Voluntary Compliance Resolution application with
-5-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
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respect to certain errors in the Plan's administration for Plan years 1994
through 1998. The Company corrected the administrative errors by making a
contribution of approximately $607,000 to the Plan and received approval of its
remediation plan from the Internal Revenue Service. No penalties or fines have
been assessed against the Plan or the Company and the Company does not expect
any. Net assets as of December 31, 1999 have been restated from the amount
previously reported to reflect approximately $607,000 in other employer
contributions receivable.
Use of Estimates
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The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
changes therein and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Investment Valuation and Income Recognition
- -------------------------------------------
The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year end. The Company Stock is valued at its
quoted market price.
Purchases and sales of investments are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
Administrative Expenses
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Expenses of maintaining the Plan are paid by the Company.
3. INVESTMENTS:
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The following presents investments that represent 5% or more of the Plan's net
assets:
December 31,
2000 1999
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Putnam Equity Income Fund $1,056,197 $ 806,710
Putnam Global Growth Fund 1,313,638 1,447,695
The Putnam Fund for Growth and Income 1,816,176 1,377,709
Putnam Voyager Fund 2,595,916 2,254,335
Putnam Money Market Fund 1,590,068 994,330
Storage USA, Inc. Common Stock 803,591 574,714
During 2000, 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 $(1,083,139)
Common stock 33,635
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Total $(1,049,504)
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-6-
4. RELATED PARTY TRANSACTIONS:
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Certain Plan investments are shares of mutual funds managed by Putnam
Investments, a division of the Trustee. Therefore, these transactions qualify
as party-in-interest.
Additionally, Storage USA, Inc., as Plan Sponsor, is a related party.
Investments include shares of Storage USA, Inc.'s common stock. The market
value of the Storage USA, Inc. common stock was $31.75 and $30.25 per share as
of December 31, 2000 and 1999, respectively.
5. PLAN TERMINATION:
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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% vested in their accounts.
6. TAX STATUS:
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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.
Other than the matters addressed in the Voluntary Compliance Resolution
application (see Note 2), 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 subsequent to receipt of the latest
determination letter, however, the Plan's management believes the Plan is being
operated in compliance with applicable requirements and continues to be exempt
from Federal income taxes.
7. RISKS AND UNCERTAINTIES:
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Investments, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility risk. Due to the level of risk associated
with certain investments, it is reasonably possible that changes in the values
of investments will occur in the near term and that such changes could
materially affect amounts reported in the accompanying financial statements.
-7-
8. RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500:
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The Form 5500 was prepared on a modified cash basis based on information
provided by the Plan Trustee. The 2000 and 1999 Form 5500s varied from the
accompanying financial statements due to the accrual of certain receivables at
year end.
The following is a reconciliation of net assets available for plan benefits per
the financial statements at December 31, 2000 and 1999 to the Form 5500:
2000 1999
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Net assets available for plan benefits per
the financial statements $9,595,683 $ 9,195,841
Less: Employee contributions receivable (97,071) (81,865)
Employer contributions receivable (56,337) (1,484,971)
Dividends receivable (17,470) -
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Net assets available for plan benefits per Form 5500 $9,424,805 $ 7,629,005
========== ===========
The following is a reconciliation of employee and employer contributions per the
financial statements for the year ended December 31, 2000 to the Form 5500:
Employee contributions per the financial statements $1,448,320
Less: Employee contributions receivable as of December 31, 2000 (97,071)
Add: Employee contributions receivable as of December 31, 1999 81,865
----------
Employee contributions per Form 5500 $1,433,114
==========
Employer contributions per the financial statements $ 320,864
Less: Employer contributions receivable as of December 31, 2000 (56,337)
Add: Employer contributions receivable as of December 31, 1999 1,484,971
----------
Employer contributions per Form 5500 $1,749,498
==========
9. SUBSEQUENT EVENT:
----------------
Effective January 1, 2001, the Company changed trustees to Prudential Trust
Company. In conjunction with this change, the Company adopted a new prototype
plan document and changed the investment options to the following: Prudential
MoneyMart Assets, Prudential Target Total Return Bonus Fund, Prudential Active
Balanced Fund, Prudential Stock Index Fund, Prudential Target Large Cap Growth
Fund, Davis New York Venture Fund, Franklin California Growth Fund, John Hancock
Small Cap Value Fund, Euro Pacific Growth Fund and Vankampen Real Estate
Security Fund.
-8-
Schedule I
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
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AS OF DECEMBER 31, 2000
-----------------------
Description Current
Identity of Issuer of Investments Value
- --------------------- ---------------------------- ----------
*Putnam Mutual Fund Equity Income Fund $1,056,197
*Putnam Mutual Fund Global Growth Fund 1,313,638
*Putnam Mutual Fund U.S. Government Income Trust 249,219
*Putnam Mutual Fund Fund for Growth and Income 1,816,176
*Putnam Mutual Fund Voyager Fund 2,595,916
*Putnam Mutual Fund Money Market Fund 1,590,068
*Storage USA, Inc. Common Stock 803,591
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Total investments $9,424,805
==========
*Parties-in-interest (Note 4).
-9-
Schedule II
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
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SCHEDULE OF NON-EXEMPT TRANSACTIONS
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FOR THE YEAR ENDED DECEMBER 31, 2000
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Description of transactions Amount
Relationship to Plan, including maturity date, rate of
Identity of employer or other of interest, collateral, par Amount of Earnings/
Party Involved party-in-interest or maturity value Transaction Interest
- ------------------- -------------------- ------------------------------------ ------------ ---------
Storage USA, Inc. Plan Sponsor Use of Plan assets by the Company $19,795 $125
due to inadvertent late transmission
of employee contributions withheld
from pay in April 2000, remitted to
the Plan on September 19, 2000.
Interest was paid to the Plan on
December 14, 2000.
Storage USA, Inc. Plan Sponsor Use of Plan assets by the Company $97,071 $ 21
due to inadvertent late transmission
of employee contributions withheld
from pay in December 2000, remitted
to the Plan on January 24, 2001.
-10-
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the person
who administers the Plan has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
STORAGE USA, INC.
PROFIT SHARING AND 401(K) PLAN
By /s/ Christopher P. Marr
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Christopher P. Marr
Chief Financial Officer
Date: July 13, 2001
Memphis, TN