Public Storage 1997 Annual Report Download - page 24

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Public Storage, Inc. 1997 Annual Report
The Convertible Preferred Stock is convertible at any time at the option of the holders of such stock into shares of the Company’s common
stock at a conversion rate of 1.6835 shares of common stock for each share of Convertible Preferred Stock, subject to adjustment in certain
circumstances. On or after July 1, 1998, the Convertible Stock will be redeemable for shares of the Company’s common stock at the option
of the Company, in whole or in part, at a redemption price of 1.6835 shares of common stock for each share of Convertible Stock (subject to
adjustment in certain circumstances), if for 20 trading days within any period of 30 consecutive trading days (including the last trading day
of such period), the closing price of the common stock on its principal trading market exceeds $14.85 per share (subject to adjustment in
certain circumstances). The Convertible Preferred Stock is not redeemable for cash.
Common stock
During 1997, 1996 and 1995, the Company issued shares of its common stock as follows:
1997 1996 1995
(Dollar amounts in thousands) Shares Amount Shares Amount Shares Amount
Public offerings 6,600,000 $181,448 6,151,200 $128,501 5,482,200 $ 82,068
In connection with mergers (Note 3) 7,681,432 212,000 8,839,181 204,932 36,113,800 573,756
Issuance costs of mergers
————— (2,527)
Exercise of stock options 94,786 1,075 100,663 1,037 46,670 403
Issuance to affiliates
— — 43,197 1,000 40,000 582
Conversion of Mandatory Convertible
Preferred Stock
— — 1,611,265 27,960 — —
Conversion of Series CC Convertible
Preferred Stock 2,184,250 58,955
— — — —
Acquisition of interests in real
estate entities
— — — — 257,067 4,034
Acquisition of real estate
facilities (Note 4)
— — — — 747,355 10,598
Conversion of 8.25% Convertible
Preferred Stock 179,651 2,666 102,721 1,526
— —
16,740,119 $456,144 16,848,227 $364,956 42,687,092 $668,914
Shares of common stock issued to affiliates in 1996 and 1995 were issued for cash. All the shares of common stock, with the exception of
the shares issued in connection with the exercise of stock options, were issued at the prevailing market price at the time of issuance.
At December 31, 1997, the Company had 5,155,238 shares of common stock reserved in connection with the Company’s stock option
plans (Note 11) and 10,589,662 shares of common stock reserved for the conversion of the Convertible Preferred Stock and the Class B
Common Stock.
From January 1, 1998 through March 2, 1998, the Company issued approximately 6.4 million shares of Common Stock raising an
aggregate of approximately $189 million. The Company intends to use the net proceeds from this offering to make investments in real estate
and fund the activities of its portable self-storage operations.
Class B common stock
The Class B Common Stock was issued in connection with the PSMI Merger. Under the terms of the merger agreement, the issuance of the
Class B Common Stock was subject to certain conditions which were satisfied in December 1995 and the Class B Common Stock was issued
on January 2, 1996. The Company has reflected the Class B Common Stock as outstanding as of December 31, 1995.
The Class B Common Stock will (i) not participate in distributions until the later to occur of funds from operations (“FFO”) per Common
Share as defined below, aggregating $1.80 during any period of four consecutive calendar quarters, or January 1, 2000; thereafter, the Class B
Common Stock will participate in distributions (other than liquidating distributions), at the rate of 97% of the per share distributions on the
Common Stock, provided that cumulative distributions of at least $0.22 per quarter per share have been paid on the Common Stock, (ii) not
participate in liquidating distributions, (iii) not be entitled to vote (except as expressly required by California law) and (iv) automatically
convert into Common Stock, on a share for share basis, upon the later to occur of FFO per Common Share aggregating $3.00 during any
period of four consecutive calendar quarters or January 1, 2003.
For these purposes FFO means net income (loss) (computed in accordance with generally accepted accounting principles) before
(i) gain (loss) on early extinguishment of debt, (ii) minority interest in income and (iii) gain (loss) on disposition of real estate, adjusted as
follows: (i) plus depreciation and amortization (including the Company’s pro-rata share of depreciation and amortization of unconsolidated
equity interests and amortization of assets acquired in the Merger, including property management agreements and goodwill), and (ii) less
FFO attributable to minority interest. For these purposes, FFO per Common Share means FFO less preferred stock dividends (other than
dividends on convertible preferred stock) divided by the outstanding weighted average shares of Common Stock assuming conversion of all
outstanding convertible securities and the Class B Common Stock.
For these purposes, FFO per share of Common Stock (as defined) was $1.85 for the year ended December 31, 1997.