UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended December 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from to
---- ------
Commission File Number 1-10850
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PUBLIC STORAGE PROPERTIES XX, INC.
----------------------------------
(Exact name of registrant as specified in its charter)
California 95-4300893
- --------------------------------- --------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
701 Western Avenue
Glendale, California 91201-2349
- --------------------------------- --------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
Securities registered pursuant to Section 12(b) of the Act
Common Stock Series A, $.01 par value American Stock Exchange
- --------------------------------- -------------------------------------------
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act
None
--------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
--
The aggregate market value of the voting stock held by non-affiliates of the
Company as of February 28, 1997:
Common Stock Series A, $.01 Par Value-$18,608,150 (computed on the basis of
$22 per share which was the reported closing sale price of the Company's
Common Stock Series A on the American Stock Exchange on February 28, 1997).
The number of shares outstanding of the Company's classes of common stock as of
February 28, 1997:
Common Stock, $.01 Par Value - Series A 860,734 shares
Common Stock, $.01 Par Value - Series B 90,859 shares
Common Stock, $.01 Par Value - Series C 257,432 shares
------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
(a) Information required by Part III will be included in an amendment to
this Form 10-K under cover of a Form 10-K/A filed within 120 days of the
Company's 1996 fiscal year, which information is incorporated by reference into
Part III.
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
PART I.
ITEM 1. BUSINESS
--------
General
- -------
Public Storage Properties XX, Inc. (the "Company") is a real estate
investment trust ("REIT") organized as a California corporation that was formed
to succeed to the business of Public Storage Properties XX, Ltd., a California
limited partnership (the "Partnership"), in a reorganization transaction
completed on August 27, 1991.
The Partnership offered 100,000 units of limited partnership interest (the
"Units") to the public in July 1989; 41,377 units were sold. The Partnership's
general partners were PSI Associates II, Inc. ("PSA"), a California corporation,
and B. Wayne Hughes ("Hughes"). PSA was an affiliate of Public Storage
Management, Inc., a California corporation (see below).
Effective August 27, 1991, the Partnership transferred all of its assets
and liabilities to the Company pursuant to a plan of Reorganization approved by
a majority of the limited partners. In exchange for the Partnership's assets and
liabilities, the Company issued 1,044,874 shares of common stock Series A
("Series A shares"), 90,859 shares of common stock Series B ("Series B shares")
and 257,432 shares of common stock Series C ("Series C shares") of the Company
to the Partnership. The Partnership then made a liquidating distribution to the
limited partners by distributing 99 percent of the Series A shares (on the basis
of 25 Series A shares for each Unit). The remaining 1 percent of the Series A
shares and all of the Series B shares and Series C shares were distributed to
the general partners in respect of their interests in the Partnership.
Subsequent thereto, the Partnership was dissolved. The Company has elected to be
taxed as a REIT for Federal income tax purposes.
The Company is a finite life REIT, with a term until December 31, 2038 (the
same as the predecessor Partnership). However, pursuant to the Company's
by-laws, in 1999 the Company will be required to present the shareholders with a
proposal for the sale or financing of the properties and, in the case of a sale,
a liquidation of the Company, unless the properties have already been sold or
financed. See " Sale or Financing" below.
The Company's investment objectives are (as were the Partnership's) to
maximize cash flow from operations and to maximize capital appreciation.
The Company has acquired 7 properties, all of which are in operation. The
Company believes that its mini-warehouses have attractive operating
characteristics.
The Company's senior officers have been responsible for the acquisition of
more than 350 mini-warehouses, the development of more than 650 mini-warehouses
and the management of more than 1,000 mini-warehouses during their average 18
years of experience with the Public Storage organization.
In 1995, there were a series of mergers among Public Storage Management,
Inc. (which was the Company's mini-warehouse operator), Public Storage, Inc. and
their affiliates (collectively, "PSMI"), culminating in the November 16, 1995
merger (the "PSMI Merger") of PSMI into Storage Equities, Inc., a REIT listed on
the New York Stock Exchange. In the PSMI Merger, Storage Equities, Inc. was
renamed Public Storage, Inc. ("PSI") and PSI acquired substantially all of
PSMI's United States real estate operations and became the operator of the
Company's mini-warehouse properties. Hughes, the Company's Chief Executive
Officer, and members of his family (the "Hughes Family") are the major
shareholders of PSI. As a result of the PSMI Merger, PSI owns all of the shares
of the Company's common stock that was owned by PSMI or its affiliates, and PSI
has an option to acquire all of the shares of the Company's common stock owned
by Hughes.
Investments in Facilities
- -------------------------
At December 31, 1996, the Company owned 7 mini-warehouse facilities located
in 5 states: California (2), Illinois (2), Minnesota (1), Missouri (1) and Ohio
(1).
2
<PAGE>
The Company believes that its operating results have benefited from
favorable industry trends and conditions. Notably, the level of new
mini-warehouse construction has decreased while consumer demand has increased.
In addition, the Company's mini-warehouses are characterized by a low level of
capital expenditures to maintain their condition and appearance.
Mini-warehouses
---------------
Mini-warehouses, which comprise the Company's investments, are designed to
offer accessible storage space for personal and business use at a relatively low
cost. A user rents a fully enclosed space which is for the user's exclusive use
and to which only the user has access on an unrestricted basis during business
hours. On-site operation is the responsibility of resident managers who are
supervised by area managers. Some mini-warehouses also include rentable
uncovered parking areas for vehicle storage. Leases for mini-warehouse space may
be on a long-term or short-term basis, although typically spaces are rented on a
month-to-month basis. Rental rates vary according to the location of the
property and the size of the storage space.
Users of space in mini-warehouses include both individuals and large and
small businesses. Individuals usually employ this space for storage of, among
other things, furniture, household appliances, personal belongings, motor
vehicles, boats, campers, motorcycles and other household goods. Businesses
normally employ this space for storage of excess inventory, business records,
seasonal goods, equipment and fixtures.
Mini-warehouses in which the Company has invested generally consist of
three to seven buildings containing an aggregate of between 350 to 750 storage
spaces, most of which have between 25 and 400 square feet and an interior height
of approximately 8 to 12 feet.
The Company experiences minor seasonal fluctuations in the occupancy levels
of mini-warehouses with occupancies higher in the summer months than in the
winter months. The Company believes that these fluctuations result in part from
increased moving activity during the summer.
The Company's mini-warehouses are geographically diversified and are
generally located in heavily populated areas and close to concentrations of
apartment complexes, single family residences and commercial developments.
However, there may be circumstances in which it may be appropriate to own a
property in a less populated area, for example, in an area that is highly
visible from a major thoroughfare and close to, although not in, a heavily
populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby less populated areas.
As with most other types of real estate, the conversion of mini-warehouses
to alternative uses in connection with a sale or otherwise would generally
require substantial capital expenditures. However, the Company does not intend
to convert its mini-warehouses to other uses.
Operating Strategies
- --------------------
The Company's mini-warehouses are operated by PSI under the "Public
Storage" name, which the Company believes is the most recognized name in the
mini-warehouse industry. The major elements of the Company's operating
strategies are as follows:
* CAPITALIZE ON "PUBLIC STORAGE'S" NAME RECOGNITION. PSI, together with its
predecessor, has more than 20 years of operating experience in the
mini-warehouse business, and is the largest operator of mini-warehouses in
the United States. PSI believes that its marketing and advertising programs
improve its competitive position in the market. PSI's in-house Yellow Pages
staff designs and places advertisements in approximately 700 directories.
Commencing in early 1996, PSI began to experiment with a telephone
reservation system designed to provide added customer service. Customers
calling either PSI's toll-free telephone referral system, (800) 44-STORE,
or a mini-warehouse facility are directed to PSI's reservation system where
a trained representative discusses with the customer space requirements,
price and location preferences and also informs the customer of other
products and services provided by PSI. As of December 31, 1996, the
telephone reservation system was supporting rental activity at all of the
Company's properties. PSI's toll-free telephone referral system services
approximately 120,000 calls per month from potential customers inquiring as
to the nearest Public Storage mini-warehouse.
3
<PAGE>
* MAINTAIN HIGH OCCUPANCY LEVELS AND INCREASE REALIZED RENTS. Subject to
market conditions, the Company generally seeks to achieve average occupancy
levels in excess of 90% and to eliminate promotions prior to increasing
rental rates. Average occupancy for the Company's mini-warehouses has
increased from 92% in 1995 to 94% in 1996. Realized monthly rents per
occupied square foot increased from $.65 in 1995 to $.70 in 1996. The
Company has increased rental rates in many markets where it has achieved
high occupancy levels and eliminated or minimized promotions.
* SYSTEMS AND CONTROLS. PSI has an organizational structure and a property
operation system, "CHAMP" (Computerized Help and Management Program), which
links its corporate office with each mini-warehouse. This enables PSI to
obtain daily information from each mini-warehouse and to achieve
efficiencies in operations and maintain control over its space inventory,
rental rates, promotional discounts and delinquencies. Expense management
is achieved through centralized payroll and accounts payable systems and a
comprehensive property tax appeals department, and PSI has an extensive
internal audit program designed to ensure proper handling of cash
collections.
* PROFESSIONAL PROPERTY OPERATION. In addition to the approximately 150
support personnel at the Public Storage corporate offices, there are
approximately 2,700 on-site personnel who manage the day-to-day operations
of the mini-warehouses in the Public Storage system. These on-site
personnel are supervised by 110 district managers, 15 regional managers and
three divisional managers (with an average of 13 years' experience in the
mini-warehouse industry) who report to the president of the mini-warehouse
property operator (who has 12 years of experience with the Public Storage
organization). PSI carefully selects and extensively trains the operational
and support personnel and offers them a progressive career path. See
"Property Operator."
Property Operator
- ----------------
The Company's mini-warehouse properties are managed by PSI under a
Management Agreement (as amended, the "Management Agreement").
Under the supervision of the Company, PSI coordinates the operation of the
facilities, establishes rental policies and rates, directs marketing activity,
and directs the purchase of equipment and supplies, maintenance activity, and
the selection and engagement of all vendors, supplies and independent
contractors.
PSI engages, at the expense of the Company, employees for the operation of
the Company's facilities, including resident managers, assistant managers,
relief managers, and billing and maintenance personnel. Some or all of these
employees may be employed on a part-time basis and may also be employed by other
persons, partnerships, REITs or other entities owning facilities operated by
PSI.
In the purchasing of services such as advertising (including broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that it operates. Facilities operated by
PSI have historically carried comprehensive insurance, including fire,
earthquake, liability and extended coverage.
PSI has developed systems for space inventory, accounting and handling
delinquent accounts, including a computerized network linking PSI operated
facilities. Each project manager is furnished with detailed operating procedures
and typically receives facilities management training from PSI. Form letters
covering a variety of circumstances are also supplied to the project managers. A
record of actions taken by the project managers when delinquencies occur is
maintained.
The Company's facilities are typically advertised via signage, yellow
pages, flyers and broadcast media advertising (television and radio) in
geographic areas in which many of the Company's facilities are located.
Broadcast media and other advertising costs are charged to the Company's
facilities located in geographic areas affected by the advertising. From time to
time, PSI adopts promotional programs, such as temporary rent reductions, in
selected areas or for individual facilities.
For as long as the Management Agreement is in effect, PSI has granted the
Company a non-exclusive license to use two PSI service marks and related
designs, including the "Public Storage" name, in conjunction with rental and
operation of facilities managed pursuant to the Management Agreement. Upon
termination of the Management Agreement, the Company would no longer have the
right to use the service marks and related designs except as described below.
Management believes that the loss of the right to use the service marks and
related designs could have a material adverse effect on the Company's business.
4
<PAGE>
The Management Agreement, as amended in February 1995, provides that (i)
the Management Agreement will expire in February 2002 provided that in February
of each year it shall be automatically extended for one year (thereby
maintaining a seven-year term) unless either party notifies the other that the
Management Agreement is not being extended, in which case it expires on the
first anniversary of its then scheduled expiration date. The Management
Agreement may also be terminated by either party for cause, but if terminated
for cause by the Company, the Company retains the rights to use the service
marks and related designs until the then scheduled expiration date, if
applicable, or otherwise a date seven years after such termination.
Certain of the directors and officers of the Company are also directors and
officers of PSI.
Competition
- -----------
Competition in the market areas in which the Company operates is
significant and affects the occupancy levels, rental rates and operating
expenses of certain of the Company's facilities. Competition may be accelerated
by any increase in availability of funds for investment in real estate. Recent
increases in plans for development of mini-warehouses is expected to further
intensify competition among mini-warehouse operators in certain market areas. In
addition to competition from mini-warehouses operated by PSI, there are three
other national firms and numerous regional and local operators. The Company
believes that the significant operating and financial experience of its
executive officers and directors, PSI and the "Public Storage" name, should
enable the Company to continue to compete effectively with other entities.
Other Business Activities
- -------------------------
A corporation owned by the Hughes Family reinsures policies against losses
to goods stored by tenants in the Company's mini-warehouses. The Company
believes that the availability of insurance reduces the potential liability of
the Company to tenants for losses to their goods from theft or destruction. This
corporation receives the premiums and bears the risks associated with the
insurance.
A corporation, in which PSI has a 95% economic interest and the Hughes
Family has a 5% economic interest, sells locks, boxes and tape to tenants to be
used in securing their spaces and moving their goods. PSI believes that the
availability of locks, boxes and tape for sale promotes the rental of spaces.
Sale or Financing
- -----------------
The by-laws of the Company provide that, during 1999, unless shareholders
have previously approved such a proposal, the shareholders will be presented
with a proposal to approve or disapprove (a) the sale or financing of all or
substantially all of the properties and (b) the distribution of the proceeds
from such transaction and, in the case of a sale, the liquidation of the
Company.
Employees
- ---------
As of December 31, 1996, the Company had 30 employees, 10 persons who
render services on behalf of the Company on a full-time basis and 20 persons who
render services on a part-time basis (5 of whom were executive officers). These
persons include resident managers, assistant managers, relief managers, district
managers, and administrative and maintenance personnel.
Federal Income Tax
- ------------------
The Company intends to continue to operate in a manner so as to qualify as
a REIT under the Internal Revenue Code of 1986, as amended, but no assurance can
be given that the Company will be able to continue to qualify at all times. By
qualifying as a REIT, the Company can deduct dividend distributions to its
shareholders for Federal income tax purposes, thus effectively eliminating the
"double taxation" (at the corporate and shareholder levels) that typically
applies to corporate dividends. The Company believes it is in compliance with
these requirements and, accordingly, no provision for income taxes has been
made.
5
<PAGE>
ITEM 2. PROPERTIES.
----------
The following table sets forth information as of December 31, 1996 about
properties owned by the Company:
<TABLE>
<CAPTION>
Size of Net Rentable Number of Completion
Location Parcel Area Spaces Date
- ------------------------------------- -------------- ---------------- ------------- --------------
CALIFORNIA
<S> <C> <C> <C> <C>
Los Angeles, Airdrome St. 1.20 acres 56,000 sq. ft. 670 Sep. 1989
Santa Rosa, Hopper Ave. 2.31 acres 55,000 sq. ft. 575 Nov. 1989
ILLINOIS
Aurora, Farnsworth Ave. 5.45 acres 60,000 sq. ft. 530 Jul. 1989
Chicago, So. Chicago Ave. 1.38 acres 52,000 sq. ft. 580 Dec. 1991
MINNESOTA
Golden Valley, Winnetka Ave. 2.03 acres 44,000 sq. ft. 474 Dec. 1989
MISSOURI
St. Louis, Benham Rd. 3.95 acres 63,000 sq. ft. 568 Nov. 1990
OHIO
Cleveland, 117th St. 4.11 acres 70,000 sq. ft. 631 Apr. 1989
</TABLE>
- -----------------
Substantially all of the Company's facilities were acquired prior to the
time that it was customary to conduct environmental investigations in connection
with property acquisitions. During the fourth quarter of 1995, the Company
completed environmental assessments of its properties to evaluate the
environmental condition of, and potential environmental liabilities of such
properties. These assessments were performed by an independent environmental
consulting firm. Based on the assessments, the Company expensed $156,000 in 1995
for known environmental remediation requirements.
The Company's properties are operated to maximize cash flow through the
regular review of and, when warranted by market conditions, adjustments to
scheduled rents. As reflected in the table below, the Company has experienced
overall improved property operations:
<TABLE>
<CAPTION>
For the year ended December 31,
---------------------------------------------
1996 1995 1994
--------- ------- ---------
<S> <C> <C> <C>
Weighted average occupancy level 94% 92% 89%
Realized monthly rent per occupied
square foot (1) $.70 $.65 $.64
Operating margin: (2)
Before reduction for depreciation expense 62% 61% 59%
After reduction for depreciation expense 47% 45% 41%
</TABLE>
(1) Realized rent per square foot represents the actual revenue earned per
occupied square foot. Management believes this is a more relevant measure
than the posted rental rates, since posted rates can be discounted through
the use of promotions. Includes administrative and late fees.
(2) Operating margin (before reduction for depreciation expense) is computed by
dividing rental income less cost of operations by rental income. Operating
margin (after reduction for depreciation expense) is computed by dividing
rental income less cost of operations and depreciation by rental income.
6
<PAGE>
Additional information is set forth below with respect to the Santa
Rosa/Hopper Avenue, Los Angeles/Airdrome Street, Aurora/Farnsworth Avenue, St.
Louis/Benham, Cleveland/117th Street and Chicago/South Chicago Avenue properties
because they each have a book value of at least 10% of the estimated total
assets of the Company or that have accounted for gross revenues of at least 10%
of the aggregate gross revenues of the Company.
SANTA ROSA/HOPPER AVENUE. This mini-warehouse is located in Santa Rosa,
California, approximately 50 miles north of San Francisco in Sonoma County. The
surrounding area includes commercial, industrial and residential developments.
The 2.31-acre property, which was completed in November 1989, has
approximately 55,000 net rentable square feet divided into 575 units. No tenant
occupies 10% or more of the rentable area. As of December 31, 1996, the property
was 96% occupied by 553 tenants.
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the property at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- --------------------- ----------------- -------------------
December 31, 1996 96% $8.40
December 31, 1995 93 7.56
December 31, 1994 91 6.96
LOS ANGELES/AIRDROME STREET. This mini-warehouse is located in Los Angeles,
California, approximately seven miles west of downtown Los Angeles. The property
is visible from Venice Boulevard, a major traffic thoroughfare in the area. The
area surrounding the site contains residential units, commercial developments
and office buildings.
The 1.2-acre property, which was completed in September 1989, has
approximately 56,000 net rentable square feet divided into 670 units. No tenant
occupies 10% or more of the rentable area. As of December 31, 1996, the property
was 84% occupied by 564 tenants.
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the facility at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- ---------------------- ------------------- ----------------
December 31, 1996 84% $15.72
December 31, 1995 87 12.24
December 31, 1994 89 11.64
AURORA/FARNSWORTH AVENUE. This mini-warehouse is located approximately 32
miles southwest of downtown Chicago, Illinois, in an area which has experienced
increased development in recent years. The property is located near commercial,
office and industrial developments as well as single and multi-family
residential units.
The 5.45-acre property, which was completed in July 1989, has approximately
60,000 net rentable square feet divided into 530 units. No tenant occupies 10%
or more of the rentable area. As of December 31, 1996, the property was 91%
occupied by 481 tenants.
7
<PAGE>
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the facility at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- --------------------- ---------------- ------------------
December 31, 1996 91% $9.24
December 31, 1995 93 7.08
December 31, 1994 96 6.24
ST. LOUIS/BENHAM. This mini-warehouse is located approximately 11 miles
northwest of downtown St. Louis, Missouri. The surrounding area includes a
combination of residential and commercial developments.
The 3.95-acre property, which was completed in November 1990, has
approximately 63,000 net rentable square feet divided into 568 units. The
property commenced operations on November 21, 1990. No tenant occupies 10% or
more of the rentable area. As of December 31, 1996, the property was 93%
occupied by 526 tenants.
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the facility at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- --------------------- ---------------- ------------------
December 31, 1996 93% $8.04
December 31, 1995 95 6.00
December 31, 1994 90 5.40
CLEVELAND/117TH STREET. This mini-warehouse is located five miles from
downtown Cleveland, Ohio at the intersection of 117th Street and Western Avenue.
The property is visible from 117th Street, which is a busy thoroughfare linking
three major highways in the area: the 71 Freeway, Interstate 90 and the 2
Freeway. The local area includes industrial developments and single and
multi-family units.
The 4.11-acre property, which was completed in April 1989, has
approximately 70,000 net rentable square feet divided into 631 units. No tenant
occupies 10% or more of the rentable area. As of December 31, 1996, the property
was 92% occupied by 580 tenants.
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the facility at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- --------------------- ---------------- ------------------
December 31, 1996 92% $8.28
December 31, 1995 93 6.36
December 31, 1994 89 5.88
CHICAGO/SOUTH CHICAGO AVENUE. This mini-warehouse is located approximately
ten miles southeast of downtown Chicago on South Chicago Avenue. Development in
the surrounding area includes a combination of residential units, commercial
development and light manufacturing.
The 1.38-acre property, which was completed in December 1991, has
approximately 52,000 net rentable square feet divided into 580 units. No tenant
occupies 10% or more of the rentable area. As of December 31, 1996, the property
was 92% occupied by 531 tenants.
8
<PAGE>
Set forth below is a schedule showing the occupancy rate and the rent per
square foot for the facility at the dates indicated:
Annual Scheduled
Rent Per
Date Occupancy Rate Square Foot
- --------------------- ---------------- ------------------
December 31, 1996 92% $12.60
December 31, 1995 92 9.00
December 31, 1994 86 9.12
ITEM 3. LITIGATION.
----------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
The Company held an annual meeting of shareholders on December 17, 1996.
Proxies for the annual meeting were solicited pursuant to Regulation 14 under
the Securities Exchange Act of 1934. The annual meeting involved the election of
directors, and the vote was as follows (the common Stock Series A, Series B and
Series C vote together as a single class):
<TABLE>
<CAPTION>
Number of Shares of Number of Shares of
Common Stock Series A Common Stock Series B
---------------------------- ----------------------------
Name Voted For Withheld Voted For Withheld
- ----------------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C>
B. Wayne Hughes 463,444 7,538 90,859 -
---------- ---------- ------------ ---------
Vern O. Curtis 462,444 8,538 90,859 -
---------- ---------- ------------ ---------
Jack D. Steele 462,444 8,538 90,859 -
---------- ---------- ------------ ---------
Number of Shares of
Common Stock Series C Total Common Stock
---------------------------- ----------------------------
Name Voted For Withheld Voted For Withheld
- ----------------------- ---------- ---------- ------------ ---------
B. Wayne Hughes 257,432 - 811,735 7,538
---------- ---------- ------------ ---------
Vern O. Curtis 257,432 - 811,735 8,538
---------- ---------- ------------ ---------
Jack D. Steele 257,432 - 810,735 8,538
---------- ---------- ------------ ---------
</TABLE>
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
---------------------------------------------------------------------
The Company's Series A shares are registered under Section 12(b) of the
Securities Exchange Act of 1934 on the American Stock Exchange ("AMEX"), and
commenced trading on September 16, 1991 under the symbol PSZ. The Series B and
Series C shares were not registered under Section 12 of the Securities Exchange
Act of 1934 and no public trading market exists for the Series B and Series C
shares.
The Company's Articles of Incorporation provide that the Series B shares
and Series C shares will convert automatically into Series A shares on a
share-for-share basis (the "Conversion") when (A) the sum of (1) all cumulative
dividends and other distributions from all sources paid with respect to the
Series A shares (including liquidating distributions, but not including payments
made to redeem such stock other than in liquidation) and (2) the cumulative
Partnership distributions from all sources with respect to all Units (including
the General Partners' 1% interest) equals (B) the product of $20 multiplied by
the number of the then outstanding "Original Series A shares". The term
"Original Series A shares" means the Series A shares issued in the
Reorganization.
9
<PAGE>
In general, the Series A shares, Series B shares and Series C shares have
equal voting rights. The Company's bylaws provide that during the period prior
to the conversion of the Series B and Series C shares into Series A shares, in
all shareholder matters voted on by the Partnership's general partners (the
"General Partners") or their successors in interest as holders of Series B and
Series C shares, other than the election and removal of directors and other
proposals relating to the control of the Company and its business, the General
Partners and any successors in interest have agreed to vote their Series B and
Series C shares with the holders of a majority of the outstanding unaffiliated
Series A shares entitled to vote.
Market Prices and Dividends
- ---------------------------
The following table sets forth the high and low sales prices on the AMEX
composite tape per Series A share and dividends per Series A share and Series B
share for fiscal 1995 and 1996:
Sales Price
----------------------- Cash Dividends
Year Quarter Ended High Low Declared*
- ---------- ----------------------- --------- --------- --------------
1995 March 31 $15-5/8 $12-7/8 $0.26
June 30 15-1/2 14-3/8 0.28
September 30 16-1/4 14-5/8 0.28
December 31 17 15-1/4 0.58 (1)
1996 March 31 $17-3/8 $16-1/4 $0.28
June 30 17-3/8 16-3/8 0.28
September 30 19-1/2 16-3/8 0.28
December 31 22-1/4 19-1/8 0.75 (2)
* No dividends were declared on the Series C shares.
(1) Includes special dividend of $.30.
(2) Includes special dividend of $.47.
As of December 31, 1996, there were approximately 756 holders of record of
the Company's Series A shares.
Holders of Series A shares are entitled to receive distributions when, as
and if declared by the Board of Directors out of any funds legally available for
that purpose. The Company, as a REIT, is required to distribute, prior to filing
its tax return, at least 95% of its "real estate investment trust taxable
income," which, as defined by the relevant tax statutes and regulations, is
generally equivalent to net taxable ordinary income. Under certain
circumstances, the Company can rectify a failure to meet this distribution
requirement by paying dividends after the close of a particular taxable year.
A principal policy of the Company is to make quarterly cash distributions.
The Company intends to make quarterly cash distributions out of funds legally
available, as determined by the Company's Board of Directors.
For Federal income tax purposes, distributions to shareholders are treated
as ordinary income, capital gains, return of capital or a combination thereof,
and for the past three years all distributions have been classified as ordinary
income.
Under generally accepted accounting principles, the amount of distributions
declared to shareholders exceeded income by $80,000, $287,000 and $19,000 during
1996, 1995 and 1994, respectively.
Series A shares are entitled to participate equally in distributions when
declared by the Board of Directors and in the Company's net assets upon
dissolution and liquidation after repayment of the Company's liabilities. The
Series B shares (prior to conversion into Series A shares) are not entitled to
participate in distributions attributable to sales or financings of the
properties or the liquidation of the Company, but will participate in other
distributions on the same basis as the Series A shares. The Series C shares
(prior to conversion into Series A shares) are not entitled to participate in
any distributions, including liquidating distributions.
10
<PAGE>
Repurchase of Company's common stock
- ------------------------------------
If considered to be an attractive investment opportunity or in other
appropriate circumstances, the Company may repurchase its Series A shares out of
legally available funds, if approved by the Board of Directors.
As of February 27, 1997, the Board of Directors has authorized the Company
to repurchase up to 300,000 Series A shares. From September 16, 1991 through
February 28, 1997, the Company has repurchased 184,140 Series A shares. The
Company repurchased 10,000 Series A shares during 1996 and no additional Series
A shares between January 1, 1997 and February 28, 1997.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
-----------------------
The following selected historical financial information has been derived
from the audited financial statements of the Company.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
(In thousands, except per share data)
Operating data:
- ---------------
REVENUES:
<S> <C> <C> <C> <C> <C>
Rental income $3,192 $2,913 $2,742 $2,426 $1,976
Interest and other income 34 43 57 33 41
------ ------ ------ ------ ------
3,226 2,956 2,799 2,459 2,017
------ ------ ------ ------ ------
EXPENSES:
Cost of operations 1,045 969 969 912 881
Management fees paid to affiliate 169 175 164 146 119
Depreciation 469 471 483 480 475
General and administrative 102 100 109 115 125
Environmental cost - 156 - - -
Interest expense 2 - - - -
------ ------ ------ ------ ------
1,787 1,871 1,725 1,653 1,600
------ ------ ------ ------ ------
NET INCOME $1,439 $1,085 $1,074 $806 $417
====== ====== ====== ====== ======
Net income per Series A share:
Primary $1.49 $1.06 $1.00 $0.71 $0.35
Fully diluted $1.18 $0.85 $0.81 $0.59 $0.30
Dividends declared per share:
Series A $1.59 $1.40 $1.03 $0.87 $0.55
Series B $1.59 $1.40 $1.03 $0.87 $0.55
Weighted average Common
shares outstanding:
Primary- Series A 867 898 982 1,019 1,035
Fully diluted- Series A 1,216 1,246 1,330 1,368 1,383
Other data:
- -----------
Net cash provided by
operating activities $1,959 $1,629 $1,557 $1,282 $900
Net cash used in investing activities (64) (41) (172) (44) (38)
Net cash used in financing activities (1,552) (2,397) (2,006) (1,025) (524)
Funds from operations (1) 1,908 1,712 1,557 1,286 892
Capital expenditures
to maintain facilities (64) (41) (24) (44) (38)
Balance sheet data:
- -------------------
Total assets $15,726 $15,739 $16,819 $17,763 $17,981
Shareholders' equity 14,548 14,697 16,085 16,984 17,395
</TABLE>
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
-----------------------------------
(1) Funds from operations (FFO) is defined by the Company, consistent with the
definition of FFO by the National Association of Real Estate Investment
Trusts (NAREIT), as net income (loss) (computed in accordance with
generally accepted accounting principles) before depreciation and
extraordinary or non-recurring items. FFO is presented because the Company,
as well as many industry analysts, consider FFO to be one measure of the
performance of the Company, ie, one that generally reflects changes in the
Company's net operating income. FFO does not take into consideration
scheduled principal payments on debt and capital improvements. Accordingly,
FFO is not necessarily a substitute for the Company's cash flow or net
income as a measure of the Company's liquidity or operating performance or
ability to pay distributions. Furthermore, the NAREIT definition of FFO
does not address the treatment of certain items and all REITs do not treat
items the same way in computing FFO. Accordingly, comparisons of levels of
FFO among REITs may not necessarily be meaningful.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
---------------------------------------------------------------
RESULTS OF OPERATIONS.
- ----------------------
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995. Net
income in 1996 was $1,439,000 compared to $1,085,000 in 1995, representing an
increase of $354,000 or 33%. Net income per fully diluted Series A share was
$1.18 in 1996 compared to $.85 in 1995, representing an increase of $.33 or 39%
per share. These increases are primarily due to an increase in property net
operating income combined with the favorable impact of comparing to expenses for
1995 which included a non-recurring charge for environmental assessments and
provision for future remediation costs.
During 1996, property net operating income (rental income less cost of
operations, management fees paid to an affiliate and depreciation expense)
increased $211,000 from $1,298,000 in 1995 to $1,509,000 in 1996. This increase
is primarily attributable to an increase in rental income at the Company's
mini-warehouse operations.
Rental income for the mini-warehouse operations increased $279,000 or 10%
from $2,913,000 in 1995 to $3,192,000 in 1996. Cost of operations (including
management fees paid to an affiliate of the Company) increased $70,000 or 6%
from $1,144,000 in 1995 to $1,214,000 in 1996. The results of these changes was
a net increase in property net operating income before depreciation expense of
$209,000 or 12% from $1,769,000 in 1995 to $1,978,000 in 1996. Rental income
increased primarily due to an increase in rental rates at all seven of the
Company's properties. The increase in cost of operations is mainly due to
increases in payroll, advertising and property tax expense. The increase in
property taxes is mainly attributable to a one-time tax refund received at the
Company's Los Angeles, California property in early 1995 from appealing prior
years tax assessments.
Weighted average occupancy levels for the Company's mini-warehouse
facilities were 94% and 92% in 1996 and 1995, respectively.
In 1995, the Company prepaid eight months of 1996 management fees on its
mini-warehouse operations (based on the management fees for the comparable
period during the calendar year immediately preceding the prepayment) discounted
at the rate of 14% per year to compensate for early payment. In 1996, the
Company expensed the prepaid management fees. The amount is included in
management fees paid to affiliate in the statements of income. As a result of
the prepayment, the Company saved approximately $22,000 in management fees,
based on the management fees that would have been payable on rental income
generated in 1996 compared to the amount prepaid.
During 1996, the Company incurred $2,000 in interest expense on its line of
credit facility.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994. Net
income in 1995 was $1,085,000 compared to $1,074,000 in 1994, representing an
increase of $11,000 or 1%. Net income per fully diluted Series A share was $.85
in 1995 compared to $.81 in 1994, representing an increase of $.04 or 5% per
share. This increase is primarily due to an increase in property net operating
income offset by environmental costs incurred on the Company's properties in the
fourth quarter of 1995 (see discussion below). The increase in net income per
share in 1995 benefited by the reduction in the number of Series A shares
outstanding due to the Company's repurchase of Series A shares.
During 1995, property net operating income (rental income less cost of
operations, management fees paid to an affiliate and depreciation expense)
increased $172,000 from $1,126,000 in 1994 to $1,298,000 in 1995. This increase
is primarily attributable to an increase in rental income at the Company's
mini-warehouse operations.
Rental income for the mini-warehouse operations increased $171,000 or 6%
from $2,742,000 in 1994 to $2,913,000 in 1995. Cost of operations (including
management fees paid to an affiliate of the Company) increased $11,000 or 1%
from $1,133,000 in 1994 to $1,144,000 in 1995. The results of these changes was
a net increase in property net operating income before depreciation expense of
$160,000 or 10% from $1,609,000 in 1994 to $1,769,000 in 1995. Rental income
increased primarily due to an increase in occupancy levels and rental rates at a
majority of the Company's properties. The increase in cost of operations is
mainly due to increases in payroll expense and repairs and maintenance offset by
a decrease in property tax expense. Repairs and maintenance increased due to
costs for such items as doors, landscaping and roof repairs. The decrease in
property taxes is mainly attributable to tax refunds received from appealing
prior year assessments on the Company's Los Angeles, California property
totaling $53,000 in 1995.
14
<PAGE>
Substantially all of the Company's facilities were acquired prior to the
time that it was customary to conduct environmental investigations in connection
with property acquisitions. During the fourth quarter of 1995, the Company
completed environmental assessments of its properties to evaluate the
environmental condition of, and potential environmental liabilities of such
properties. These assessments were performed by an independent environmental
consulting firm. Based on the assessments, the Company expensed $156,000 in 1995
for known environmental remediation requirements. Although there can be no
assurance, the Company is not aware of any environmental contamination of any of
its property sites which individually or in the aggregate would be material to
the Company's overall business, financial condition, or results of operations.
Weighted average occupancy levels for the Company's mini-warehouse
facilities were 92% and 89% in 1995 and 1994, respectively.
Mini-warehouse Operating Trends.
- --------------------------------
The following table illustrates the operating trends for the Company's 7
mini-warehouses:
<TABLE>
<CAPTION>
For the year ended December 31,
----------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Weighted average occupancy level 94% 92% 89%
Realized monthly rent per occupied
square foot (1) $.70 $.65 $.64
Operating margin: (2)
Before reduction for depreciation expense 62% 61% 59%
After reduction for depreciation expense 47% 45% 41%
</TABLE>
- -------------
(1) Realized rent per square foot represents the actual revenue earned per
occupied square foot. Management believes this is a more relevant measure
than the posted rental rates, since posted rates can be discounted through
the use of promotions. Includes administrative and late fees.
(2) Operating margin (before reduction for depreciation expense) is computed
by dividing rental income less cost of operations by rental income.
Operating margin (after reduction for depreciation expense) is computed by
dividing rental income less cost of operations and depreciation by rental
income.
Liquidity and Capital Resources.
- --------------------------------
CAPITAL STRUCTURE. The Company's financial profile has been characterized
by increasing net income, increasing cash provided by operating activities and
increasing funds from operations ("FFO").
NET CASH PROVIDED BY OPERATING ACTIVITIES AND FUNDS FROM OPERATIONS. The
Company believes that important measures of its performance as well as liquidity
are net cash provided by operating activities and FFO.
Net cash provided by operating activities (net income plus depreciation)
reflects the cash generated from the Company's business before distributions to
shareholders, capital expenditures and principal payments on debt. Net cash
provided by operating activities has increased over the past years from
$1,557,000 in 1994 to $1,959,000 in 1996.
FFO is defined by the Company, consistent with the definition of FFO by the
National Association of Real Estate Investment Trusts (NAREIT), as net income
(loss) (computed in accordance with generally accepted accounting principles)
before depreciation and extraordinary or non-recurring items. FFO for the years
ended December 31, 1996 and 1995 was $1,908,000 and $1,712,000, respectively.
FFO is presented because the Company, as well as many industry analysts,
consider FFO to be one measure of the performance of the Company, i.e., one that
generally reflects changes in the Company's net operating income. FFO does not
take into consideration scheduled principal payments on debt and capital
improvements. Accordingly, FFO is not necessarily a substitute for the Company's
cash flow or net income, as a measure of the Company's liquidity or operating
performance or ability to pay distributions. Furthermore, the NAREIT definition
of FFO does not address the treatment of certain items and all REITs do not
treat items the same way in computing FFO. Accordingly, comparisons of levels of
FFO among REITs may not necessarily be meaningful.
15
<PAGE>
The Company has an unsecured revolving credit facility with a bank for
borrowings up to $750,000 for working capital purposes and to repurchase the
Company's stock. Outstanding borrowings on the credit facility, at the Company's
option, bear interest at either the bank's prime rate plus .25% or the LIBOR
rate plus 2.25%. Interest is payable monthly until maturity. On December 31,
1999, all unpaid principal and accrued interest is due and payable. During the
first quarter of 1996, the Company borrowed and repaid $150,000 on its line of
credit facility. At December 31, 1996, there was no outstanding balance on the
credit facility.
The following table summarizes the Company's ability to make capital
improvements to maintain its facilities through the use of cash provided by
operating activities. The remaining cash flow is available to the Company to pay
distributions to shareholders and repurchase its stock.
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net income $1,439,000 $1,085,000 $1,074,000
Environmental cost - 156,000 -
Depreciation 469,000 471,000 483,000
---------- ---------- ----------
Funds from operations
(Net cash provided by operating activities
before changes in working capital components) 1,908,000 1,712,000 1,557,000
Capital improvements to maintain facilities (64,000) (41,000) (24,000)
---------- ---------- ----------
Funds available for distributions to
shareholders and repurchase of stock 1,844,000 1,671,000 1,533,000
Cash distributions to shareholders (1,363,000) (1,250,000) (1,130,000)
---------- ---------- ----------
Excess funds available for principal
payments, cash distributions to
shareholders and repurchase of stock $481,000 $421,000 $403,000
========== ========== ==========
</TABLE>
The Company believes that its rental revenues and interest and other income
will be sufficient over at least the next twelve months to meet the Company's
operating expenses, capital improvements and distributions to shareholders. For
1997, the Company anticipates expending approximately $159,000 for capital
improvements. During 1995, the Company's property operator commenced a program
to enhance the visual appearance of the mini-warehouse facilities operated by
it. Such enhancements include new signs, exterior color schemes, and
improvements to the rental offices. The vast majority of the costs associated
with these enhancements were incurred in 1995 and 1996.
In February 1994, the Company purchased 10,000 common shares of Public
Storage, Inc. ("PSI"), a publicly traded real estate investment trust and an
affiliate of the Company, for $148,000. The market value of these securities at
December 31, 1996 was $310,000. The Company recognized $9,000 in dividends
during 1996 and 1995.
The Company believes its geographically diverse portfolio has resulted in a
relatively stable and predictable investment portfolio.
On November 12, 1996, the Company's Board of Directors declared a regular
quarterly distribution per share of $0.28. In addition, consistent with the
Company's REIT distribution requirements, the Company's Board of Directors
declared a special distribution of $0.47 per share. The distributions are
payable on January 15, 1997 to shareholders of record on December 31, 1996.
In August 1995, the Management Agreement for the mini-warehouse facilities
was amended to provide that upon demand from PSI made prior to December 15,
1995, the Company agreed to prepay (within 15 days after such demand) up to 12
months of management fees (based on the management fees for the comparable
period during the calendar year immediately preceding such prepayment)
discounted at the rate of 14% per year to compensate for early payment. In
November 1995, the Company prepaid, to PSI, 8 months of 1996 management fees at
a cost of $102,000. The amount has been expensed as management fees paid to
affiliate during 1996.
16
<PAGE>
Distributions
- -------------
The Company has established a conservative distribution policy. The
aggregate amount of dividends paid or accrued to the shareholders in each year
since inception of the Company were as follows:
Series A Series B Total
----------- ------------ -------------
1988 $52,000 $4,000 $56,000
1989 196,000 17,000 213,000
1990 209,000 18,000 227,000
1991 339,000 30,000 369,000
1992 568,000 50,000 618,000
1993 884,000 79,000 963,000
1994 999,000 94,000 1,093,000
1995 1,243,000 129,000 1,372,000
1996 1,373,000 146,000 1,519,000
----------- ------------ -------------
Total $5,863,000 $567,000 $6,430,000
=========== ============ =============
The Convertible Series B shares and Convertible Series C shares will
convert automatically into Series A shares on a share-for-share basis (the
"Conversion") when (A) the sum of (1) all cumulative dividends and other
distributions from all sources paid with respect to the Series A shares
(including liquidating distributions, but not including payments made to redeem
such stock other than in liquidation) and (2) the cumulative Partnership
distributions from all sources with respect to all units equals (B) the product
of $20 multiplied by the number of the then outstanding "Original Series A
shares". The term "Original Series A shares" means the Series A shares issued in
the Reorganization. Through December 31, 1996, the Company has made and declared
cumulative cash distributions of approximately $5,863,000 with respect to the
Series A shares. Accordingly, assuming no repurchases or redemptions of Series A
shares after December 31, 1996, Conversion will occur when $11,352,000 in
additional distributions with respect to the Series A shares have been made.
REIT DISTRIBUTION REQUIREMENT
- -----------------------------
The Company has elected and intends to continue to qualify as REIT for
Federal income tax purposes. As a REIT, the Company must meet, among other
tests, sources of income, share ownership, and certain asset tests. As a REIT,
the Company is not taxed on that portion of its taxable income which is
distributed to its shareholders provided that at least 95% of its taxable income
is so distributed to its shareholders prior to filing the Company's tax return.
Under certain circumstances, the Company can rectify a failure to meet the 95%
distribution test by making distributions after the close of a particular
taxable year and attributing those distributions to the prior year's taxable
income. The Company has satisfied the REIT distribution requirement for 1994,
1995 and 1996 by attributing distributions in 1995, 1996 and 1997 to the prior
year's taxable income. The extent to which the Company will be required to
attribute distributions to the prior year will depend on the Company's operating
results (taxable income) and the level of distributions as determined by the
Board of Directors. The primary difference between book income and taxable
income is depreciation expense. In 1996, the Company's Federal tax depreciation
was $296,000.
The Company's Board of Directors has authorized the Company to purchase up
to 300,000 shares of Series A common stock. As of December 31, 1996, the Company
had purchased and retired 184,140 shares of Series A common stock.
17
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-------------------------------------------
Company's financial statements are included elsewhere herein. Reference is
made to the Index to Financial Statements and Financial Statement Schedule in
Item 14(a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
---------------------------------------------------------------
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
-----------------------------------------------
Incorporated by reference herein is information required by this item,
which is to be included in an amendment on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
Incorporated by reference herein is information required by this item,
which is to be included in an amendment on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------
Incorporated by reference herein is information required by this item,
which is to be included in an amendment on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
Incorporated by reference herein is information required by this item,
which is to be included in an amendment on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
----------------------------------------------------------------
(a) List of Documents filed as part of the Report.
1. Financial Statements: See Index to Financial Statements and
Financial Statement Schedule.
2. Financial Statement Schedules: See Index to Financial Statements
and Financial Statement Schedule.
3. Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed during the last quarter of the period ended
December 31, 1996:
None.
(c) Exhibits:
See Exhibit Index contained herein.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
PUBLIC STORAGE PROPERTIES XX, INC.
Dated: March 27, 1997 By:/s/ Harvey Lenkin
--------------------------
Harvey Lenkin, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- ------------------------- --------------------------------------- -------------------
<S> <C> <C>
/s/ B. Wayne Hughes Chairman of the Board, Chief Executive March 27, 1997
- ------------------------- Officer and Director
B. Wayne Hughes (Principal Executive Officer)
/s/ Vern O. Curtis Director March 27, 1997
- -------------------------
Vern O. Curtis
/s/ Jack D. Steele Director March 27, 1997
- -------------------------
Jack D. Steele
/s/ David P. Singelyn Vice President and Chief Financial Officer March 27, 1997
- --------------------- (Principal Financial Officer and
David P. Singelyn Principal Accounting Officer)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
INDEX TO
FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULE
(Item 14 (a))
Page
References
----------
<S> <C>
Report of Independent Auditors F-1
Financial Statements and Schedule:
Balance Sheets as of December 31, 1996 and 1995 F-2
For each of the three years in the period ended December 31, 1996:
Statements of Income F-3
Statements of Shareholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-9
Schedule for the years ended December 31, 1996, 1995 and 1994:
III Real Estate and Accumulated Depreciation F-10 - F-11
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
<PAGE>
Report of Independent Auditors
The Board of Directors and Shareholders
Public Storage Properties XX, Inc.
We have audited the accompanying balance sheets of Public Storage Properties XX,
Inc. as of December 31, 1996 and 1995, and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. Our audits also included the schedule listed in the
index at item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Public Storage Properties XX,
Inc. at December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
February 18, 1997
Los Angeles, California
F-1
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
BALANCE SHEETS
December 31, 1996 and 1995
1996 1995
----------- -----------
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $881,000 $538,000
Marketable securities of affiliate,
at market value (cost of $148,000) 310,000 190,000
Rent and other receivables 40,000 28,000
Prepaid expenses 46,000 129,000
Real estate facilities at cost:
Building, land improvements and equipment 11,795,000 11,731,000
Land 5,824,000 5,824,000
----------- -----------
17,619,000 17,555,000
Less accumulated depreciation (3,170,000) (2,701,000)
----------- -----------
14,449,000 14,854,000
----------- -----------
Total assets $15,726,000 $15,739,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable $383,000 $396,000
Dividends payable 714,000 558,000
Advance payments from renters 81,000 88,000
Shareholders' equity:
Series A common, $.01 par value,
1,393,165 shares authorized,
860,734 shares issued and
outstanding (870,734 shares
issued and outstanding in 1995) 8,000 8,000
Convertible Series B common, $.01 par
value, 90,859 shares authorized,
issued and outstanding 1,000 1,000
Convertible Series C common, $.01 par
value, 257,432 shares authorized,
issued and outstanding 3,000 3,000
Paid-in-capital 15,634,000 15,823,000
Cumulative net income 5,170,000 3,731,000
Cumulative distributions (6,430,000) (4,911,000)
Unrealized gain in marketable securities 162,000 42,000
----------- -----------
Total shareholders' equity 14,548,000 14,697,000
----------- -----------
Total liabilities and shareholders' equity $15,726,000 $15,739,000
=========== ===========
</TABLE>
See accompanying notes.
F-2
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
STATEMENTS OF INCOME
For each of the three years in the
period ended December 31, 1996
1996 1995 1994
---------- ---------- ----------
REVENUES:
<S> <C> <C> <C>
Rental income $3,192,000 $2,913,000 $2,742,000
Dividends from marketable securities of affiliate 9,000 9,000 9,000
Interest income 25,000 34,000 48,000
---------- ---------- ----------
3,226,000 2,956,000 2,799,000
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of operations 1,045,000 969,000 969,000
Management fees paid to affiliate 169,000 175,000 164,000
Depreciation 469,000 471,000 483,000
Administrative 102,000 100,000 109,000
Interest expense 2,000 - -
Environmental cost - 156,000 -
---------- ---------- ----------
1,787,000 1,871,000 1,725,000
---------- ---------- ----------
NET INCOME $1,439,000 $1,085,000 $1,074,000
========== ========== ==========
Primary earnings per share-Series A $1.49 $1.06 $1.00
========== ========== ==========
Fully diluted earnings per share-Series A $1.18 $0.85 $0.81
========== ========== ==========
Dividends declared per share:
Series A $1.59 $1.40 $1.03
========== ========== ==========
Series B $1.59 $1.40 $1.03
========== ========== ==========
Weighted average Common shares outstanding:
Primary- Series A 867,309 898,001 981,784
========== ========== ==========
Fully diluted- Series A 1,215,600 1,246,292 1,330,075
========== ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For each of the three years in the period ended
December 31, 1996
Convertible Convertible
Series A Series B Series C
Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1993 1,009,534 $10,000 90,859 $1,000 257,432 $3,000
Net income
Repurchase of shares (64,000) (1,000)
Unrealized loss
in marketable securities
Cash distributions declared:
$1.03 per share-Series A
$1.03 per share-Series B
-----------------------------------------------------------------------------------
Balances at December 31, 1994 945,534 9,000 90,859 1,000 257,432 3,000
Net income
Repurchase of shares (74,800) (1,000)
Unrealized gain
in marketable securities
Cash distributions declared:
$1.40 per share-Series A
$1.40 per share-Series B
-----------------------------------------------------------------------------------
Balances at December 31, 1995 870,734 8,000 90,859 1,000 257,432 3,000
Net income
Repurchase of shares (10,000) -
Unrealized gain
in marketable securities
Cash distributions declared:
$1.59 per share-Series A
$1.59 per share-Series B
-----------------------------------------------------------------------------------
Balances at December 31, 1996 860,734 $8,000 90,859 $1,000 257,432 $3,000
===================================================================================
</TABLE>
<TABLE>
Unrealized
Cumulative gain (loss) Total
Paid-in net Cumulative in marketable shareholders'
Capital income distributions securities equity
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1993 $17,844,000 $1,572,000 ($2,446,000) $0 $16,984,000
Net income 1,074,000 1,074,000
Repurchase of shares (875,000) (876,000)
Unrealized loss
in marketable securities (4,000) (4,000)
Cash distributions declared:
$1.03 per share-Series A (999,000) (999,000)
$1.03 per share-Series B (94,000) (94,000)
-----------------------------------------------------------------------
Balances at December 31, 1994 16,969,000 2,646,000 (3,539,000) (4,000) 16,085,000
Net income 1,085,000 1,085,000
Repurchase of shares (1,146,000) (1,147,000)
Unrealized gain
in marketable securities 46,000 46,000
Cash distributions declared:
$1.40 per share-Series A (1,243,000) (1,243,000)
$1.40 per share-Series B (129,000) (129,000)
-----------------------------------------------------------------------
Balances at December 31, 1995 15,823,000 3,731,000 (4,911,000) 42,000 14,697,000
Net income 1,439,000 1,439,000
Repurchase of shares (189,000) (189,000)
Unrealized gain
in marketable securities 120,000 120,000
Cash distributions declared:
$1.59 per share-Series A (1,373,000) (1,373,000)
$1.59 per share-Series B (146,000) (146,000)
-----------------------------------------------------------------------
Balances at December 31, 1996 $15,634,000 $5,170,000 ($6,430,000) $162,000 $14,548,000
=======================================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
STATEMENTS OF CASH FLOWS
For each of the three years in the
period ended December 31, 1996
1996 1995 1994
---------- ---------- ----------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $1,439,000 $1,085,000 $1,074,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 469,000 471,000 483,000
(Increase) decrease in rent and other receivables (12,000) (9,000) 9,000
Increase in prepaid expenses (19,000) (2,000) (1,000)
Amortization (payment) of prepaid management fees 102,000 (102,000) -
(Decrease) increase in accounts payable (13,000) 182,000 -
Increase (decrease) in advance payments from renters (7,000) 4,000 (8,000)
---------- ---------- ----------
Total adjustments 520,000 544,000 483,000
---------- ---------- ----------
Net cash provided by operating activities 1,959,000 1,629,000 1,557,000
---------- ---------- ----------
Cash flows from investing activities:
Purchase of marketable securities of affiliate - - (148,000)
Additions to real estate facilities (64,000) (41,000) (24,000)
---------- ---------- ----------
Net cash used in investing activities (64,000) (41,000) (172,000)
---------- ---------- ----------
Cash flows from financing activities:
Distributions paid to shareholders (1,363,000) (1,250,000) (1,130,000)
Borrowing on credit facility 150,000 - -
Repayment of borrowing on credit facility (150,000) - -
Purchase of Company Series A common stock (189,000) (1,147,000) (876,000)
---------- ---------- ----------
Net cash used in financing activities (1,552,000) (2,397,000) (2,006,000)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 343,000 (809,000) (621,000)
Cash and cash equivalents at the beginning of the year 538,000 1,347,000 1,968,000
---------- ---------- ----------
Cash and cash equivalents at the end of the year $881,000 $538,000 $1,347,000
========== ========== ==========
Supplemental schedule of non-cash
investing and financing activities:
(Increase) decrease in fair value of
marketable securities of affiliate $(120,000) $(46,000) $4,000
========== ========== ==========
Unrealized gain (loss) on
marketable securities of affiliate $120,000 $46,000 $(4,000)
========== ========== ==========
</TABLE>
See accompanying notes.
F-5
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. DESCRIPTION OF BUSINESS
Public Storage Properties XX, Inc. (the "Company") is a California
corporation which has elected to qualify as a real estate investment
trust ("REIT") for Federal income tax purposes. The Company succeeded
to the business of Public Storage Properties XX, Ltd. (the
"Partnership") in a reorganization transaction which was effective
August 27, 1991 (the "Reorganization").
The Company owns and operates self-storage facilities.
The term of the Company is until all properties have been sold
and, in any event, not later than December 31, 2038. The bylaws of the
Company provide that, during 1999, unless shareholders have previously
approved such a proposal, the shareholders will be presented with a
proposal to approve or disapprove (a) the sale or financing of all or
substantially all of the properties and (b) the distribution of the
proceeds from such transaction and, in the case of a sale, the
liquidation of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
Certain prior year amounts have been reclassified in order to
conform with the 1996 presentation.
Income Taxes:
The Company has and intends to continue to qualify as a REIT, as
defined in Section 856 of the Internal Revenue Code (the Code). As a
REIT, the Company is not taxed on that portion of its taxable income
which is distributed to its shareholders provided that the Company
meets the requirements of the Code. The Company believes it is in
compliance with these requirements and, accordingly, no provision for
income taxes has been made.
Statements of Cash Flows:
For purposes of financial statement presentation, the Company
considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.
Real Estate Facilities:
Cost of land includes appraisal and legal fees related to
acquisition and closing costs. Buildings, land improvements and
equipment reflect costs incurred through December 31, 1996 and 1995 to
develop mini-warehouse facilities. The mini-warehouse facilities
provide self-service storage spaces for lease, usually on a
month-to-month basis, to the general public. The buildings and
equipment are depreciated on the straight-line basis over estimated
useful lives of 25 and 5 years, respectively.
In 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 ("Statement 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Statement 121 requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that
are expected to be disposed of. The Company adopted Statement 121 in
1996 and based on current circumstances, such adoption did not have any
effect on the financial statements.
F-6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Real Estate Facilities (continued):
At December 31, 1996, the basis of real estate facilities
(excluding land) for Federal income tax purposes (after adjustment for
accumulated depreciation of $1,947,000) is $9,246,000.
Revenue Recognition:
Property rents are recognized as earned.
Investment in Affiliate:
In February 1994, the Company purchased 10,000 common shares of
Public Storage, Inc. (PSI), a publicly traded REIT and an affiliate of
the Company, for $148,000. The Company has designated its portfolio of
marketable securities as being available for sale. Accordingly, at
December 31, 1996 and 1995, the Company has recorded the marketable
securities at fair value, based upon the closing quoted price of the
securities at December 31, 1996 and 1995, and has recorded a
corresponding unrealized gain totaling $120,000 and $46,000,
respectively, in shareholders' equity. The Company recognized $9,000 in
dividends in 1996, 1995 and 1994.
Net Income Per Share:
Net income per share is based on net income attributable to each
series of common shares and the weighted average number of such shares
outstanding during the periods presented.
Net income per share is presented on a primary and fully diluted
basis. Primary earnings per share represents the Series A shareholders'
rights to distributions out of the respective period's net income,
which is calculated by dividing net income after reduction for
distributions to the Convertible Series B shareholders (Series C
shareholders are not entitled to cash distributions) by the weighted
average number of outstanding Series A shares (Note 4). Fully diluted
earnings per share assumes conversion of the Convertible Series B and
Series C shares into Series A shares.
Use of Estimates:
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Environmental Cost:
Substantially all of the Company's facilities were acquired prior
to the time that it was customary to conduct environmental
investigations in connection with property acquisitions. During the
fourth quarter of 1995, the Company completed environmental assessments
of its properties to evaluate the environmental condition of, and
potential environmental liabilities of such properties. These
assessments were performed by an independent environmental consulting
firm. Based on the assessments, the Company expensed $156,000 in 1995
for known environmental remediation requirements. Although there can be
no assurance, the Company is not aware of any environmental
contamination of any of its property sites which individually or in the
aggregate would be material to the Company's overall business,
financial condition, or results of operations.
3. RELATED PARTY TRANSACTIONS
The Company has a Management Agreement with Public Storage, Inc.
("PSI"). Under the terms of the agreement, PSI operates the
mini-warehouse facilities for a fee equal to 6% of the facilities'
monthly gross revenue (as defined).
F-7
<PAGE>
3. RELATED PARTY TRANSACTIONS (CONTINUED)
The Management Agreement, as amended in February 1995, provides
that the agreement will expire in February 2002 provided that in
February of each year it shall be automatically extended for one year
(thereby maintaining a seven-year term) unless either party notifies
the other that the Management Agreement is not being extended, in which
case it expires, on the first anniversary of its then scheduled
expiration date. The Management Agreement may also be terminated by
either party for cause, but if terminated for cause by the Company, the
Company retains the rights to use the service marks and related designs
until the then scheduled expiration date, if applicable, or otherwise a
date seven years after such termination.
In August 1995, the Management Agreement for the mini-warehouse
facilities was amended to provide that upon demand from PSI made prior
to December 15, 1995, the Company agreed to prepay (within 15 days
after such demand) up to 12 months of management fees (based on the
management fees for the comparable period during the calendar year
immediately preceding such prepayment) discounted at the rate of 14%
per year to compensate for early payment. In November 1995, the Company
prepaid, to PSI, 8 months of 1996 management fees at a cost of
$102,000. The amount has been expensed as management fees paid to
affiliate during 1996.
4. SHAREHOLDERS' EQUITY
Series A shares are entitled to all distributions of cash from
sale or refinancing and participate ratably with the Convertible Series
B shares in distributions of cash flow from operations. The Convertible
Series C shares (prior to conversion into Series A shares) will not
participate in any distributions.
The Convertible Series B shares and Convertible Series C shares
will convert automatically into Series A shares on a share-for-share
basis (the "Conversion") when (A) the sum of (1) all cumulative
dividends and other distributions from all sources paid with respect to
the Series A shares (including liquidating distributions, but not
including payments made to redeem such stock other than in liquidation)
and (2) the cumulative Partnership distributions from all sources with
respect to all units equals (B) the product of $20 multiplied by the
number of the then outstanding "Original Series A shares". The term
"Original Series A shares" means the Series A shares issued in the
Reorganization. Through December 31, 1996, the Company has made and
declared cumulative cash distributions of approximately $5,863,000 with
respect to the Series A shares. Accordingly, assuming no repurchases or
redemptions of Series A shares after December 31, 1996, Conversion will
occur when $11,352,000 in additional distributions with respect to the
Series A shares have been made.
Assuming liquidation of the Company at its net book value at
December 31, 1996 and 1995, each Series of common shares would receive
the following as a liquidating distribution:
1996 1995
------------ ------------
Series A $13,626,000 $14,190,000
Convertible Series B 241,000 132,000
Convertible Series C 681,000 375,000
------------ ------------
Total $14,548,000 $14,697,000
============ ============
The Series A shares, Convertible Series B shares and Convertible
Series C shares have equal voting rights. The holders of the
Convertible Series B and Convertible Series C shares have agreed to
vote along with the majority of the unaffiliated Series A shareholders
on matters other than control of the Company and its business.
F-8
<PAGE>
4. SHAREHOLDERS' EQUITY (CONTINUED)
The Company's Board of Directors has authorized the Company to
purchase up to 300,000 shares of the Company's Series A common stock.
As of December 31, 1996, the Company had purchased and retired 184,140
shares of Series A common stock, of which 10,000 and 74,800 were
purchased and retired in 1996 and 1995, respectively.
For Federal income tax purposes, all distributions declared by the
Board of Directors in 1996, 1995 and 1994 were ordinary income.
5. NOTE PAYABLE TO BANK
The Company has an unsecured revolving credit facility with a bank
for borrowings up to $750,000 for working capital purposes and to
repurchase the Company's stock. Outstanding borrowings on the credit
facility, at the Company's option, bear interest at either the bank's
prime rate plus .25% or the bank's LIBOR rate plus 2.25%. Interest is
payable monthly until maturity. On December 31, 1999, all unpaid
principal and accrued interest is due and payable.
During the first quarter of 1996, the Company borrowed and repaid
$150,000 on its line of credit facility. At December 31, 1996, there
was no outstanding balance on the credit facility.
Under covenants of the credit facility, the Company is (1)
required to maintain a ratio of liabilities to assets (as defined) for
each fiscal quarter of not more than .3 to 1.0, (2) required to
maintain a debt coverage ratio (as defined) for each fiscal quarter of
not less than 8 times the debt service, (3) required to maintain a
fixed charge coverage ratio (as defined) for each fiscal quarter of not
less than 1.0 to 1.0 and (4) required to maintain a minimum
shareholder's equity (as defined) for each fiscal quarter of $10
million.
6. QUARTERLY RESULTS (UNAUDITED)
The following is a summary of unaudited quarterly results of
operations:
<TABLE>
<CAPTION>
Three months ended
----------------------------------------------------------
March 1996 June 1996 Sept. 1996 Dec. 1996
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues $755,000 $793,000 $836,000 $842,000
------------ ---------- ------------ ----------
Expenses 464,000 423,000 423,000 477,000
------------ ---------- ------------ ----------
Net income $291,000 $370,000 $413,000 $365,000
============ ========== ============ ==========
Primary earnings per share- Series A $0.31 $0.39 $0.45 $0.34
============ ========== ============ ==========
Fully diluted earnings per share- Series A $0.24 $0.30 $0.34 $0.30
============ ========== ============ ==========
Three months ended
----------------------------------------------------------
March 1995 June 1995 Sept. 1995 Dec. 1995
------------ ---------- ------------ ----------
Revenues $701,000 $728,000 $764,000 $763,000
------------ ---------- ------------ ----------
Expenses 405,000 411,000 423,000 632,000
------------ ---------- ------------ ----------
Net income $296,000 $317,000 $341,000 $131,000
============ ========== ============ ==========
Primary earnings per share- Series A $0.29 $0.33 $0.35 $0.09
============ ========== ============ ==========
Fully diluted earnings per share- Series A $0.23 $0.26 $0.27 $0.09
============ ========== ============ ==========
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Initial Cost
------------------------- Costs
Bldg., Land subsequent to
Date Imp & construction
Completed Description Encumbrances Land Equipment (Improvements)
- -------------------------------------------------------------------------------------------------------
Mini-warehouses:
<S> <C> <C> <C> <C> <C>
4/89 Cleveland / W 117th - $1,010,000 $1,467,000 $104,000
9/89 Los Angeles / Airdrome St - 361,000 1,506,000 12,000
7/89 Aurora / Farnsworth - 2,811,000 2,013,000 100,000
11/89 Santa Rosa / Hopper - 714,000 1,614,000 40,000
12/89 Golden Valley / Winnetka - 165,000 1,247,000 14,000
11/90 St Louis / Benham - 534,000 1,672,000 266,000
7/91 Chicago/S Chicago Ave. - 222,000 1,563,000 184,000
-------------------------------------------------------------
- $5,817,000 $11,082,000 $720,000
=============================================================
</TABLE>
<TABLE>
<CAPTION>
Gross Carrying Amount At December 31, 1996 Life on Which
------------------------------------------- Depreciation in
Bldg., Land Latest Income
Date Imp & Accumulated Statements is
Completed Description Land Equipment Total Depreciation Computed
- ---------------------------------------------------------------------------------------------------------------------------
Mini-warehouses:
<S> <C> <C> <C> <C> <C>
4/89 Cleveland / W 117th $1,010,000 $1,571,000 $2,581,000 ($474,000) 5-25 Years
9/89 Los Angeles / Airdrome St 361,000 1,518,000 1,879,000 (449,000) 5-25 Years
7/89 Aurora / Farnsworth 2,811,000 2,113,000 4,924,000 (608,000) 5-25 Years
11/89 Santa Rosa / Hopper 714,000 1,654,000 2,368,000 (485,000) 5-25 Years
12/89 Golden Valley / Winnetka 165,000 1,261,000 1,426,000 (361,000) 5-25 Years
11/90 St Louis / Benham 534,000 1,938,000 2,472,000 (403,000) 5-25 Years
7/91 Chicago/S Chicago Ave. 229,000 1,740,000 1,969,000 (390,000) 5-25 Years
-----------------------------------------------------------------
$5,824,000 $11,795,000 $17,619,000 ($3,170,000)
=================================================================
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE PROPERTIES XX, INC.
REAL ESTATE RECONCILIATION
SCHEDULE III (CONTINUED)
(a) The following is a reconciliation of costs and related accumulated depreciation.
COSTS RECONCILIATION
Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994
----------------------------------------------------------------
<S> <C> <C> <C>
Balance at the beginning of the period $17,555,000 $17,514,000 $17,490,000
Additions during the period:
Improvements 64,000 41,000 24,000
Deductions during the period - - -
----------------------------------------------------------------
Balance at the close of the period $17,619,000 $17,555,000 $17,514,000
================================================================
ACCUMULATED DEPRECIATION RECONCILIATION
Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994
----------------------------------------------------------------
Balance at the beginning of the period $2,701,000 $2,230,000 $1,747,000
Additions during the period:
Depreciation 469,000 471,000 483,000
Deductions during the period - - -
----------------------------------------------------------------
Balance at the close of the period $3,170,000 $2,701,000 $2,230,000
================================================================
</TABLE>
(b) The aggregate depreciable cost of real estate (excluding land) for Federal
income tax purposes is $11,193,000.
F-11
<PAGE>
PUBLIC STORAGE PROPERTIES XX, INC.
EXHIBIT INDEX
(Item 14(c))
3.1 Articles of Incorporation. Previously filed with the Securities and
Exchange Commission as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991 and incorporated herein
by reference.
3.2 Certificate of Amendment of Articles of Incorporation. Previously
filed with the Securities and Exchange Commission as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference.
3.3 Amended and Restated Bylaws. Previously filed with the Securities and
Exchange Commission as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991 and incorporated herein
by reference.
3.4 Amendments to Bylaws Adopted on July 30, 1992. Previously filed with
the Securities and Exchange Commission as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference.
10.1 Amended Management Agreement dated February 21, 1995 between the
Company and Public Storage Management, Inc. Previously filed with the
Securities and Exchange Commission as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
10.2 Amendment to Amended Management Agreement dated August 8, 1995 between
the Company, Public Storage Management, Inc. and Storage Equities,
Inc. Previously filed with the Securities and Exchange Commission as
an exhibit to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1995 and incorporated herein by reference.
10.3 Revolving Note and Loan Agreement between the Company and The First
National Bank of Boston dated as of December 29, 1995. Previously
filed with the Securities and Exchange Commission as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference.
27 Financial Data Schedule. Filed herewith.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000870541
<NAME> PUBLIC STORAGE PROPERTIES XX, INC.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<CASH> 881,000
<SECURITIES> 310,000
<RECEIVABLES> 86,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,277,000
<PP&E> 17,619,000
<DEPRECIATION> (3,170,000)
<TOTAL-ASSETS> 15,726,000
<CURRENT-LIABILITIES> 1,178,000
<BONDS> 0
0
0
<COMMON> 12,000
<OTHER-SE> 14,536,000
<TOTAL-LIABILITY-AND-EQUITY> 15,726,000
<SALES> 0
<TOTAL-REVENUES> 3,226,000
<CGS> 0
<TOTAL-COSTS> 1,683,000
<OTHER-EXPENSES> 102,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 1,439,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,439,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,439,000
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.18
</TABLE>
