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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission File Number: 001-12910
STORAGE USA, INC.
(Exact name of registrant as specified in its charter)
Tennessee
(State or other jurisdiction of
incorporation or organization)
62-1251239
(I.R.S. Employer
Identification Number)
10440 Little Patuxent Parkway, #1100, Columbia, MD
(Address of principal executive offices)
21044
(Zip Codes)
Registrant's telephone number, including area code: (410) 730-9500
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. ( X) Yes ( ) NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.01 par value, 19,552,704 shares outstanding at May 15, 1996
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The purpose of this Form 10 Q/A is to amend Item 1 of the Form 10 Q filed May
15, 1996, to revise the form of the statement of operations.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
STORAGE USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Three months ended
March 31, 1996 March 31, 1995
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(amounts in thousands, except per share data)
REVENUES:
Rental income $20,819 $11,921
Management income 240 244
Other income 274 147
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Total revenues 21,333 12,312
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EXPENSES:
Cost of property operations &
maintenance 5,733 3,290
Real estate taxes 1,693 806
General & administrative 780 512
Depreciation & amortization 2,670 1,569
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Total expenses 10,876 6,177
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INCOME FROM OPERATIONS 10,457 6,135
OTHER INCOME (EXPENSE)
Interest expense (1,665) (157)
Interest income 155 15
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INCOME BEFORE MINORITY INTEREST 8,947 5,993
Minority interest (555) (232)
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NET INCOME $8,392 $5,761
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NET INCOME PER SHARE $0.47 $0.43
WEIGHTED AVERAGE SHARES OUTSTANDING 17,827 13,299
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See notes to consolidated financial statements.
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STORAGE USA, INC.
CONSOLIDATED BALANCE SHEETS
as of as of
March 31, 1996 December 31, 1995
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(amounts in thousands, except share data)
ASSETS (unaudited)
Investment in storage facilities,
at cost:
Land $147,113 $139,603
Buildings and equipment 391,050 369,694
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538,163 509,297
Accumulated depreciation (17,031) (14,561)
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521,132 494,736
Cash & cash equivalents 3,011 3,006
Other assets 11,165 11,783
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TOTAL ASSETS $535,308 $509,525
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LIABILITIES & SHAREHOLDERS' EQUITY
Line of credit borrowings $64,165 $107,605
Mortgage notes payable 6,612 6,670
Accounts payable & accrued expenses 3,389 5,945
Dividends payable 10,149 --
Rents received in advance 4,184 3,680
Minority interest 29,461 27,438
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TOTAL LIABILITIES 117,960 151,338
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Commitments and contingencies
Shareholders' equity:
Common stock $.01 par value,
150,000,000 shares authorized,
19,552,645 and 17,562,363 shares
issued and outstanding 195 176
Paid in capital 448,142 385,989
Notes receivable -- officers (7,980) (6,727)
Accumulated deficit (15,831) (15,831)
Distributions in excess of net income (7,178) (5,420)
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TOTAL SHAREHOLDERS' EQUITY 417,348 358,187
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TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $535,308 $509,525
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See notes to consolidated financial statements.
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STORAGE USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Three months ended
March 31, 1996 March 31, 1995
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(amounts in thousands)
OPERATING ACTIVITIES:
Net income $8,392 $5,761
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,670 1,569
Minority interest 555 232
Changes in assets and liabilities:
Other assets 1,348 (696)
Other liabilities (2,052) (989)
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Net cash provided by operating
activities 10,913 5,877
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INVESTING ACTIVITIES:
Acquisition and improvements of
storage facilities (27,329) (12,065)
Development of storage facilities (930) --
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Net cash used in investing
activities (28,259) (12,065)
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FINANCING ACTIVITIES:
Net borrowings (repayments)
under line of credit (43,440) 5,850
Mortgage principal payments (58) (11)
Proceeds from issuance of stock 60,919 --
Distributions to minority interests (70) (60)
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Net cash provided by financing
activities 17,351 5,779
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Net increase (decrease) in cash
and equivalents 5 (409)
Cash and equivalents,
beginning of period 3,006 3,325
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Cash and equivalents, end of period $3,011 $2,916
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Supplemental schedules of non-cash
activities:
Storage facilities acquired in
exchange for Operating
Partnership Units $1,538 --
Common Stock issued in exchange
for notes receivable $1,253 --
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See notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
Interim consolidated financial statements of Storage USA, Inc. (the "Company")
are prepared pursuant to the requirements for reporting on Form 10-Q.
Accordingly, certain disclosures accompanying annual financial statements
prepared in accordance with generally accepted accounting principles are
omitted. In the opinion of management, all adjustments, consisting solely of
normal recurring adjustments, necessary for the fair presentation of
consolidated financial statements for the interim periods have been included.
The current period's results of operations are not necessarily indicative of
results which ultimately may be achieved for the year. The interim consolidated
financial statements and notes thereto should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-K, as
filed with the Securities and Exchange Commission.
2. ORGANIZATION
Storage USA, Inc. (the "Company"), a Tennessee corporation, was formed in 1985
to own, develop, construct and operate self-storage facilities throughout the
United States. On March 23, 1994, the Company completed an initial public
offering (the "IPO") of 6,325,000 shares of common stock at $21.75 per share.
Upon completion of the IPO, the Company contributed substantially all of its net
assets to SUSA Partnership, L.P. (the "Operating Partnership") in exchange for
an approximately 98.9% general partnership interest in the Operating
Partnership. In addition, the Operating Partnership formed SUSA Management,
Inc., ("SUSA Management") to provide self-storage management to third parties
and certain ancillary services. The Operating Partnership owns 99% of the
economic interest of SUSA Management.
3. CAPITAL STOCK
FORMATION OF STRATEGIC ALLIANCE
On March 1, 1996, the Company entered into a Stock Purchase Agreement with
Security Capital U.S.Realty (US Realty), an affiliate of Security Capital Group.
Under the Stock Purchase Agreement, subject to the terms and conditions thereof,
US Realty will invest a total of $220,000 in the Company, initially place two of
its nominees on the Company's Board of Directors, one of whom the Company has
been informed will be William D. Sanders, Chairman of the Board and Chief
Executive Officer of Security Capital Group, and make available to the Company
certain strategic advice, research and related information and expertise (the
"Strategic Alliance"). As part of the transaction, on March 19, 1996, the
Company issued to US Realty 1,948,882 shares of Common Stock, approximately
10.0% of the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 1996
(THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
outstanding Common Stock, at a price of $31.30 per share, plus a purchase price
adjustment for accrued dividends, less issuance costs. At the same time, the
Company executed a Strategic Alliance Agreement and a Registration Rights
Agreement with US Realty.
After the Strategic Alliance has been approved by the shareholders of the
Company, and prior to December 31, 1996, the Company will issue to US Realty an
additional 5,079,872 shares of the Company's common stock at the same price for
an aggregate of $159,000. After acquiring the additional shares (and assuming
no other change in the number of outstanding shares) US Realty will own
approximately 28.6% of the outstanding Common Stock. The proceeds of both
fundings will be contributed to the Operating Partnership in exchange for
additional Operating Partnership Units and used to support the acquisition and
development of self-storage facilities.
The Company has agreed to submit to the shareholders a proposal to amend the
ownership limitations of the Company's Charter to permit US Realty to acquire up
to 37.5% of the Company's capital stock. The Strategic Alliance, the amendment
and certain related transactions have been submitted to shareholders for
approval at the Company's 1995 annual meeting to be held June 5, 1996.
EMPLOYEE STOCK PURCHASE AND LOAN PLAN
In March of 1996, the Company issued 40,000 shares of its common stock under
the 1995 Employee Stock Purchase and Loan Plan. Pursuant to the terms of the
plan, the Company and certain officers entered into stock purchase agreements
whereby the officers purchased common stock at the then current stock price.
The Company provides 100% financing for the purchase of the shares with
interest at 7% per anum payable quarterly. The underlying notes are secured
by the shares and mature in November 2002. At March 31, 1996, there are
270,000 shares outstanding under the plan.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 1996
(THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
4. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the
period:
COST:
Balance on January 1, 1996 $509,297
Property acquisitions 24,578
Land acquisitions 2,200
Improvements 2,088
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Balance at March 31, 1996 $538,163
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ACCUMULATED DEPRECIATION:
Balance at January 1, 1996 $14,561
Additions during the period 2,470
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Balance at March 31, 1996 $17,031
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Unaudited pro forma combined results of operations of the Company for
three months ended March 31, 1996 are presented below. Such pro forma
presentation has been prepared assuming that the acquisition of the 6
properties acquired during the quarter had been completed as of January
1, 1996.
Pro Forma for
quarter ended
March 31, 1996
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Revenues $ 22,224
Net income $ 9,271
Earnings per share $ 0.49
The unaudited pro forma information is not necessarily indicative of
what actual results of operations of the Company would have been
assuming such transactions had been completed as of January 1, 1996, nor
does it purport to represent the results of operations for future
periods.
3
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 1996
(THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
5. LINE OF CREDIT BORROWINGS
Line of credit borrowings at March 31, 1996 consists of $64,165 of
borrowings under a $75,000 line of credit with a group of commercial
banks. This line bears interest at various spreads over a base rate
based on the Company's debt service coverage. During the first quarter
of 1996, the weighted average borrowing was $105,540, and the weighted
average interest rate was 6.1%. The Company also has a line of credit
with a commercial bank which bears interest at Prime or LIBOR plus
2.25%. During the quarter, the commercial bank agreed to release the
mortgages collateralizing the line and increase the amount available
under the line from $23 million to $30 million, with an initial maturity
of July 1, 1996.
6. INTEREST RATE SWAP AGREEMENT
In anticipation of a debt offering in 1996, the Company entered into an
interest rate swap agreement in October 1995, with the objective of
reducing its exposure to future interest rate fluctuations. The
agreement involved the exchange of a variable rate for a fixed rate
interest payment obligation. On March 8, 1996, the Company closed the
interest rate swap agreement and received proceeds of approximately $50.
The Company and its operating partnership, SUSA Partnership L.P., filed
a $250,000 debt shelf registration statement on Form S-3 with the
Securities and Exchange Commission on April 10, 1996. Upon successful
completion of an offering of unsecured debt securities under the shelf,
the Company will recognize the gain as a yield adjustment over the life
of the debt.
7. COMMITMENTS AND CONTINGENCIES
PROPERTY DEVELOPMENT
The Company has entered into an agreement to develop a self-storage
facility in Northern Virginia. The facility will be owned by the
Company and an unaffiliated third party. Under the terms of the
agreement the Company is required to fund the cost of construction,
which is currently estimated to be approximately $6,500. As of March
31, 1996, the Company has incurred costs of approximately $4,183. The
facility is expected to be complete by the second quarter of 1996.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
8. SUBSEQUENT EVENTS
Subsequent to March 31, 1996, the Company has completed the acquisition
of five self-storage facilities for approximately $16,000. These
acquisitions were financed through operating cash flows and borrowings
under the available line of credit. The Company has entered into
various property acquisition contracts with an aggregate cost of
approximately $55,800. These acquisitions are subject to customary
conditions to closing including satisfactory due diligence and should
close during the second quarter. Should these contracts be disapproved,
the costs incurred by the Company would be immaterial.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: June 27, 1996
Storage USA, Inc.
By: /s/ John R. Erickson
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John R. Erickson
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER, SECRETARY AND
TREASURER (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
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