Public Storage 1998 Annual Report Download - page 27

Public Storage, Inc. 1998 Annual Report
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Holders of the Company’s preferred stock, except under certain conditions and as noted above, will not be entitled to vote on most matters.
In the event of a cumulative arrearage equal to six quarterly dividends or failure to maintain a Debt Ratio (as defined) of 50% or less, holders of all
outstanding series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve
on the Company’s Board of Directors until events of default have been cured. At December 31, 1998, there were no dividends in arrears and the
Debt Ratio was 2.4%.
Except under certain conditions relating to the Company’s qualification as a REIT, the Senior Preferred Stock are not redeemable prior to the
following dates: Series A — September 30, 2002, Series B — March 31, 2003, Series C — June 30, 1999, Series D — September 30, 2004,
Series E — January 31, 2005, Series F — April 30, 2005, Series G — December 31, 2000, Series H — January 31, 2001, Series I — October 31, 2001,
Series J — August 31, 2002, Series K — January 19, 2004, Series L — March 10, 2004. On or after the respective dates, each of the series of Senior
Preferred Stock will be redeemable at the option of the Company, in whole or in part, at $25 per share (or depositary share in the case of the Series H,
Series I, Series J, Series K, and Series L), plus accrued and unpaid dividends.
Common stock
During 1998, 1997 and 1996, the Company issued and repurchased shares of its common stock as follows:
1998 1997 1996
(dollar amounts in thousands) Shares Amount Shares Amount Shares Amount
Public offerings 7,951,821 $234,521 6,600,000 $181,448 6,151,200 $128,501
In connection with mergers (Note 3) 433,526 13,817 7,681,432 212,000 8,839,181 204,932
Exercise of stock options 219,596 3,339 94,786 1,075 100,663 1,037
Issuance to affiliates 853,700 26,362 — — 43,197 1,000
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 635,005 16,679 ————
Repurchases of stock (2,819,400) (72,256) ————
Conversion of 8.25% Convertible
Preferred Stock 3,589,552 53,308 179,651 2,666 102,721 1,526
10,863,800 $275,770 16,740,119 $456,144 16,848,227 $364,956
Shares of common stock issued to affiliates in 1998 were in exchange for interests in real estate entities. Shares of common stock issued to affiliates
in 1996 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.
On June 12, 1998, the Company announced that the Board of Directors authorized the repurchase from time to time of up to 10,000,000 shares of
the Company’s common stock on the open market or in privately negotiated transactions. Through December 31, 1998 the Company has repurchased a
total of 2,819,400 shares of common stock at an aggregate cost of approximately $72,256,000.
At December 31, 1998, the Company had 4,935,642 shares of common stock reserved in connection with the Company’s stock option plans (Note
11) and 7,000,000 shares of common stock reserved for the conversion of the Class B Common Stock.
On March 12, 1999, the Company issued approximately 13.0 million unaudited shares of common stock pursuant to the merger with Storage Trust
Realty and reserved approximately 1.0 million additional unaudited shares for issuance upon conversion of units in Storage Trust Realty’s operating
partnership (Note 13).
Class B Common Stock
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