Public Storage 1997 Annual Report Download - page 25

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Public Storage, Inc. 1997 Annual Report
Equity Stock
The Company is authorized to issue 200,000,000 shares of Equity Stock. The Articles of Incorporation provide that the Equity Stock may
be issued from time to time in one or more series and gives the Board of Directors broad authority to fix the dividend and distribution rights,
conversion and voting rights, redemption provisions and liquidation rights of each series of Equity Stock.
In June 1997, the Company contributed $22,500,000 (225,000 shares) of its Equity Stock, Series A (“Equity Stock”) to a partnership in
which the Company is the general partner. As a result of this contribution, the Company obtained a controlling interest in the Partnership
and began to consolidate the accounts of the Partnership and therefore the equity stock is eliminated in consolidation. The Equity Stock
ranks on a parity with Common Stock and junior to the Company’s Cumulative Senior Preferred Stock and Convertible Preferred Stock with
respect to general preference rights and has a liquidation amount of 10 times the amount paid to each Common Share up to a maximum of
$100 per share. Quarterly distributions per share on the Equity Stock are equal to the lesser of (i) 10 times the amount paid per Common
Stock or (ii) $2.20.
Dividends
The characterization of dividends for Federal income tax purposes is made based upon earnings and profits of the Company, as defined by
the Internal Revenue Code. Distributions declared by the Board of Directors (including distributions to the holders of preferred stock) in
1997, 1996 and 1995 were characterized as ordinary income.
The following summarizes dividends paid during 1997, 1996 and 1995 (with the exception of the Series G Preferred Stock distributions
which were accrued and unpaid at December 31, 1995):
1997 1996 1995
(In thousands, except per share data) Per share Total Per share Total Per share Total
Series A $ 2.500 $ 4,563 $ 2.500 $ 4,563 $ 2.500 $ 4,563
Series B 2.300 5,488 2.300 5,488 2.300 5,488
Series C 1.844 2,213 1.840 2,212 1.970 2,364
Series D 2.375 2,850 2.375 2,850 2.375 2,850
Series E 2.500 5,488 2.500 5,488 2.292 5,030
Series F 2.437 5,606 2.437 5,606 1.618 3,721
Series G 2.219 15,309 2.219 15,479 0.092 638
Series H 2.112 14,259 1.978 13,348
— —
Series I 2.156 8,625 0.359 1,438 — —
Series J 0.689 4,133
— — — —
Convertible 2.062 4,531 2.063 4,679 2.063 4,744
Series CC 260.000 15,328 97.500 5,748
— —
Mandatory Convertible Participating
— — 54.487 1,700 55.322 1,726
88,393 68,599 31,124
Common $ 0.880 86,181 $ 0.880 67,709 $ 0.880 38,586
$174,574 $136,308 $69,710
The dividend rate on the Series C Preferred Stock is adjusted quarterly and is equal to the highest of one of three U.S. Treasury indices
(Treasury Bill Rate, Ten Year Constant Maturity Rate, and Thirty Year Constant Maturity Rate) multiplied by 110%. However, the dividend
rate for any dividend period will not be less than 6.75% per annum nor greater than 10.75% per annum. The dividend rate with respect to
the first quarter of 1998 will be equal to 6.75% per annum.
The Mandatory Convertible Participating Preferred Stock was issued in connection with the acquisition of all of the limited partnership
interests in a real estate limited partnership in 1995. Dividends with respect to the Mandatory Convertible Participating Preferred Stock
varied depending on operating results of the underlying real estate facilities of the partnership. During June 1996, the Mandatory Convertible
Participating Preferred Stock was exchanged for common stock of the Company.
Note 11. Stock Options
The Company has a 1990 Stock Option Plan (which was adopted by the Board of Directors in 1990 and approved by the shareholders in
1991) (the “1990 Plan”) which provides for the grant of non-qualified stock options. The Company has a 1994 Stock Option Plan (which was
adopted by the Board of Directors and approved by the shareholders in 1994) (the “1994 Plan”) and a 1996 Stock Option and Incentive Plan
(which was adopted by the Board of Directors and approved by the shareholders in 1996 (the “1996 Plan”), each of which provides for the
grant of non-qualified options and incentive stock options. (The 1990 Plan, the 1994 Plan and the 1996 Plan are collectively referred to as
the “Plans”). Under the Plans, the Company has granted non-qualified options to certain directors, officers and key employees and service
providers to purchase shares of the Company’s common stock at a price equal to the fair market value of the common stock at the date of
grant. Generally, options under the Plans vest over a three-year period from the date of grant at the rate of one-third per year and expire