================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 2001 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.)
================================================================================
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 2001 AND 2000
INDEX
Page(s)
-------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 2001 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES:
Schedule I: Schedule of Assets Held as of December 31, 2001 8
Schedule II: Schedule of Non-Exempt Transactions for the Year Ended
December 31, 2001 9
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, 2001 and 2000, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in net assets available for plan benefits for
the year ended December 31, 2001 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
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,
April 19, 2002.
-1-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
2001 2000
----------- ----------
Investments, at fair value (Note 3) $10,234,074 $9,424,805
Receivables:
Employee contributions 51,960 97,071
Employer matching contributions 29,629 56,337
Dividends 19,758 17,470
----------- ----------
Total receivables 101,347 170,878
----------- ----------
Administrative expenses payable (40,000) -
----------- ----------
Net assets available for plan benefits $10,295,421 $9,595,683
=========== ==========
The accompanying notes to financial statements and supplemental schedules are
an integral part of these statements.
-2-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
Additions to (deductions from) net assets attributed to:
Employee contributions $ 1,593,491
Employer matching contributions, net of forfeitures utilized 684,775
Interest and dividends 196,640
Net realized and unrealized depreciation
in fair value of investments (716,216)
Benefits paid to participants (1,018,952)
Administrative expenses (40,000)
------------
Net increase 699,738
Net assets available for plan benefits:
Beginning of year 9,595,683
------------
End of year $ 10,295,421
============
The accompanying notes to financial statements and supplemental schedules are
an integral part of these statements.
-3-
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 and 2000
1. DESCRIPTION OF THE PLAN
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. Participants 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").
At a special meeting scheduled for April 26, 2002, the shareholders of the
Company will vote upon a purchase and sale agreement providing for the
acquisition of the Company by Security Capital Group Incorporated. It is
anticipated that if the shareholders approve the transactions contemplated
by the purchase and sale agreement at the special meeting and the other
conditions to closing are satisfied, the transactions will close promptly
after the special meeting of the shareholders. The ultimate execution of
the purchase and sale agreement does not result in any termination of the
Plan.
With the discontinuance of Storage USA, Inc. common stock as an eligible
Plan investment, participants have been offered the opportunity to change
their future allocation percentages and direct the proceeds from the sale
of stock as of the closing date. The accounts and future allocation
percentages of those participants who do not provide direction to the Plan
administrator will be defaulted to the Prudential MoneyMart Assets Fund.
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 Prudential Insurance Company ("Prudential").
Prudential provides recordkeeping, accounting, daily trading and custodial
services. In 2000, these responsibilities were delegated to Putnam
Fiduciary Trust.
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 100% of elective
deferrals up to 3% of eligible compensation and 50% of elective deferrals
from 3% to 5% of eligible compensation.
-4-
1. DESCRIPTION OF THE PLAN (Continued)
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. For the Company's matching and discretionary
contributions plus actual earnings thereon attributable to Plan years prior
to January 1, 2000, vesting is based on years of continuous service using a
six year graded schedule. Participants 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
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 age 59-1/2 or over may withdraw
amounts upon request and in the event of financial hardship, earlier
withdrawals may be granted. Benefits are recorded when paid.
Forfeited Accounts
At December 31, 2001 and 2000, forfeited nonvested accounts available to be
used to reduce future employer contributions were approximately $27,000 and
$34,000, respectively. Forfeited nonvested accounts used to reduce future
employer contributions were approximately $91,000 for the year ended
December 31, 2001.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared under the accrual
basis of accounting.
Use of Estimates
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 settlement-date basis.
Dividends are recorded on the ex-dividend date.
-5-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Administrative Expenses
Expenses of maintaining the Plan were paid by the Company in 2000. In 2001,
in accordance with the Administrative Services Agreement Provided by the
Prudential Insurance Company (the "Agreement"), the Company and the
participants pay selective fees as defined in the Agreement. Administrative
expenses were approximately $40,000 for the year ended December 31, 2001
and under the Agreement, are to be charged against the participants'
accounts.
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
net assets:
December 31,
2001 2000
-------------- --------------
Putnam Equity Income Fund $ - $1,056,197
Putnam Global Growth Fund - 1,313,638
The Putnam Fund for Growth and Income - 1,816,176
Putnam Voyager Fund - 2,595,916
Putnam Money Market Fund - 1,590,068
Storage USA, Inc. Common Stock 1,171,587 803,591
Davis New York Venture Fund 1,107,368 -
PIMCO Total Return Bond Fund 546,622 -
Prudential Growth Fund of America 2,289,181 -
Prudential MoneyMart Assets Fund 1,650,096 -
Prudential EuroPacific Growth Fund 1,336,106 -
Prudential Stock Index Fund 1,673,187 -
During 2001, 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 $(1,021,941)
Common stock 305,725
--------------
$ (716,216)
==============
4. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Putnam
Investments in 2000 and Prudential Retirement Services in 2001, a division
of Prudential Insurance Company. 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 $42.10 and $31.75 per share
as of December 31, 2001 and 2000, respectively.
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% vested in their accounts.
-6-
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 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
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.
8. RECONCILIATION OF FINANCIAL STATEMENTS TO THE FORM 5500
The Form 5500 will be prepared on a modified cash basis based on
information provided by Prudential Trust Company, a division of Prudential
Insurance Company. The 2001 and 2000 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, 2001 and 2000 to the Form
5500:
2001 2000
----------- -------------
Net assets available for plan benefits per
the financial statements $10,295,421 $9,595,683
Less: Employee contributions receivable (51,960) (97,071)
Employer contributions receivable (29,629) (56,337)
Dividends receivable (19,758) (17,470)
Add: Administrative expenses payable 40,000 -
----------- -------------
Net assets available for plan benefits per Form 5500 $10,234,074 $9,424,805
=========== =============
The following is a reconciliation of employee and employer contributions,
interest and dividends and administrative expenses per the financial
statements for the year ended December 31, 2001 to the Form 5500:
Employee contributions per the financial statements $ 1,593,491
Less: Employee contributions receivable as of December 31, 2001 (51,960)
Add: Employee contributions receivable as of December 31, 2000 97,071
-------------
Employee contributions per Form 5500 $ 1,638,602
=============
Employer contributions per the financial statements $ 684,775
Less: Employer contributions receivable as of December 31, 2001 (29,629)
Add: Employer contributions receivable as of December 31, 2000 56,337
-------------
Employer contributions per Form 5500 $ 711,483
=============
Interest and dividends per the financial statements $ 196,640
Less: Dividends receivable as of December 31, 2001 (19,758)
Add: Dividends receivable as of December 31, 2000 17,470
-------------
Interest and dividends per Form 5500 $ 194,352
=============
Administrative expenses per the financial statements $ 40,000
Less: Administrative expenses payable as of December 31, 2001 (40,000)
-------------
Administrative expenses per Form 5500 $ -
=============
-7-
Schedule I
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
SCHEDULE OF ASSETS HELD
AS OF DECEMBER 31, 2001
Current
Identity of Issuer Description of Investments Value
- ----------------------- --------------------------------------- -----------
*Prudential Mutual Fund Van Kampen Real Estate Securities Fund $ 42,259
*Prudential Mutual Fund Davis New York Venture Fund 1,107,368
*Prudential Mutual Fund John Hancock Small Cap Value 341,375
*Prudential Mutual Fund PIMCO Total Return Bond Fund 546,622
*Prudential Mutual Fund Growth Fund of America 2,289,181
*Prudential Mutual Fund MoneyMart Assets Fund 1,650,096
*Prudential Mutual Fund EuroPacific Growth Fund 1,336,106
*Prudential Mutual Fund Franklin California Growth Fund 61,903
*Prudential Mutual Fund Stock Index Fund 1,673,187
*Prudential Mutual Fund Active Balanced Fund 14,390
*Storage USA, Inc. Common Stock 1,171,587
-----------
Total investments $10,234,074
===========
*Parties-in-interest (Note 4).
The accompanying notes to financial statements and supplemental schedules are
an integral part of this schedule.
-8-
Schedule II
STORAGE USA, INC. PROFIT SHARING AND 401(k) PLAN
SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
Description of transaction 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 $57,247 $13
due to inadvertent late transmission
of employee contributions withheld
from pay in May 2001, remitted
to the Plan on June 22, 2001.
-9-
SIGNATURES
----------
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
-----------------------
Christopher P. Marr
Chief Financial Officer
Date: May 8, 2002
Memphis, TN