Public Storage 1998 Annual Report Download - page 28

Public Storage, Inc. 1998 Annual Report
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assets acquired in a 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 $2.11 for the year ended December 31, 1998.
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 ten 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 unaudited 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 and 1996
were characterized entirely as ordinary income. For 1998, the Company’s dividends for the first, third, and fourth quarter were characterized as ordinary
income in their entirety. For the second quarter of 1998, 86.11% of the Company’s dividends were characterized as ordinary income, and the remainder
was characterized as a capital gain.
The following summarizes dividends paid during 1998, 1997 and 1996:
1998 1997 1996
(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 $1.688 2,024 $ 1.844 2,213 $ 1.840 2,212
Series D $2.375 2,850 $ 2.375 2,850 $ 2.375 2,850
Series E $2.500 5,488 $ 2.500 5,488 $ 2.500 5,488
Series F $2.437 5,606 $ 2.437 5,606 $ 2.437 5,606
Series G $2.219 15,309 $ 2.219 15,309 $ 2.219 15,479
Series H $2.112 14,259 $ 2.112 14,259 $ 1.978 13,348
Series I $2.156 8,625 $ 2.156 8,625 $ 0.359 1,438
Series J $2.000 12,000 $ 0.689 4,133 — —
Convertible $1.032 2,163 $ 2.062 4,531 $ 2.063 4,679
Series CC — — $260.000 15,328 $97.500 5,748
Mandatory Convertible Participating ————$54.487 1,700
78,375 88,393 68,599
Common $0.880 100,726 $ 0.880 86,181 $ 0.880 67,709
$179,101 $174,574 $136,308
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 1999 will be equal to
6.75% per annum.
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