<TABLE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(b) of The Securities Exchange Act of 1934
<S> <C>
Date of Report (Date of earliest event reported) February 16, 1998 (January 9, 1998)
--------------------------------------
001-12910
- --------------------------------------------------------------------------------
(Commission File Number)
Storage USA, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1251239
- ------------------------------------- --------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
10440 Little Patuxent Parkway, Columbia, Maryland 21044
- ------------------------------------------------------ ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 730-9500
-------------------
</TABLE>
<PAGE>
Item 2: Acquisition or Disposition of Assets
Storage USA, Inc., (the "Company") consummated during the period January 9, 1998
through January 23, 1998, the acquisition of 6 self-storage facilities (the
"Acquired Facilities") through SUSA Partnership, L.P. (the "Partnership"), a
limited partnership in which the Company is the sole general partner and owns
approximately a 91% interest as of the date of this report. The Acquired
Facilities contain approximately 344,000 square feet, are located in four states
and were purchased for approximately $19,098,500 in aggregate consideration.
The acquisition of the Acquired Facilities was funded by cash generated from
operations and borrowings under the Company's lines of credit with The First
National Bank of Chicago and First Tennessee. Each of the Acquired Facilities
was used by the seller as a self-storage facility prior to its acquisition by
the Company, and the Company intends to continue such use of all the Acquired
Facilities. The Company's management determined the contract price of each
facility through arms-length negotiations, after taking into consideration such
factors as: the age and condition of the facility; the projected amount of
maintenance costs; anticipated capital improvements; the facility's current
revenues; comparable facilities competing in the applicable market; market
rental rates for comparable facilities; the occupancy rate of the facility; and
the estimated amount of taxes, utility costs, personnel costs, and other
anticipated expenses associated with the facility. Other than changes in these
factors, the Company, after reasonable inquiry, is not aware of any material
factors relating to the properties that would cause the historical financial
information provided in Item 7 not to be necessarily indicative of future
operating results for the applicable facilities.
The following provides certain additional information concerning the Acquired
Facilities:
<TABLE>
<CAPTION>
Location Seller Date of Acquisition
- -------- ------ -------------------
<S> <C>
Plano, TX Spring Creek Self Storage, Ltd., a Texas limited partnership 1/9/98
Austin, TX McNeil Drive Self Storage, Ltd., a Texas limited partnership 1/9/98
Ridge, NY Island Self Storage, L.L.C. 1/12/98
Huntingdon Valley, PA Moreland Business Park, Inc. 1/13/98
Carrollton, TX Frankford Road Storage Plus, a Texas limited partnership 1/21/98
North Highlands, CA Kay Family Limited Partnership 1/23/98
The following unaudited data related to the Acquired Facilities is derived from
the Company's internal records as of the last day of the month following
closing, or the most current information available:
<CAPTION>
Square Rent per Economic Physical Total Contract
Location Feet Square Foot Occupancy Occupancy Units Price
-------- ---- -------------- --------- --------- ----- -----
Plano, TX (1) 55,725 $9.51 80% 90% 455 $3,862,000
Austin, TX (1) 57,450 $9.50 38% 45% 497 $3,385,000
Ridge, NY (1) 76,175 $11.43 87% 90% 689 $5,000,000
Huntingdon Valley, PA (1) 44,225 $8.71 94% 98% 366 $2,100,000
Carrollton, TX (1) 52,550 $9.50 39% 60% 431 $2,943,000
North Highlands, CA 57,601 $7.41 76% 89% 557 $1,808,500
----------------------------------------------------------------------------------------------
343,726 $9.48 70% 79% 2,995 $19,098,500
============== ============================
</TABLE>
(1) These facilities were developed properties that opened in 1995, 1996 or
1997.
2
<PAGE>
Item 7: Financial Statements and Exhibits
(a) Financial Statements Applicable to Real Estate Properties Acquired
* Report of Independent Accountants.
* Acquired Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1996 (Audited), and for the nine months ended
September 30, 1997 (Unaudited).
* Notes to Acquired Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses.
(b) Pro Forma Financial Information
* Unaudited Pro Forma Combined Condensed Balance Sheet as of
September 30, 1997.
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the nine months ended September 30, 1997.
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the year ended December 31, 1996.
* Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
(c) Exhibits
Exhibit Description
------- -----------
23.1 Consent of Independent Accountants.
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Storage USA, Inc.
We have audited the accompanying Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses (the "Historical
Summaries") for certain self-storage facilities (the "Acquired Facilities")
described in Note 1 to the Historical Summaries for the year ended December 31,
1996. These Historical Summaries are the responsibility of the management of the
Acquired Facilities. Our responsibility is to express an opinion on these
Historical Summaries 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 Historical Summaries are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summaries. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summaries. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying Historical Summaries were prepared for the
purposes of complying with the Rules and Regulations of the Securities and
Exchange Commission (for inclusion in the Form 8-K/A of Storage USA, Inc.) as
described in Note 1 to the Historical Summaries, and are not intended to be a
complete presentation of the Acquired Facilities' revenues and expenses.
In our opinion, based on our audits, the Historical Summaries
referred to above present fairly, in all material respects, the combined gross
revenue and direct operating expenses described in Note 1 of the Acquired
Facilities for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 17, 1998
4
<PAGE>
<TABLE>
<S> <C>
ACQUIRED FACILITIES
HISTORICAL SUMMARIES OF COMBINED GROSS
REVENUE AND DIRECT OPERATING EXPENSES
(amounts in thousands)
<CAPTION>
For the For the
year ended nine months ended
December 31, September 30,
1996 1997
-------------------- ----------------------
(unaudited)
(note 2)
Gross Revenue:
Rental revenue $1,025 $1,284
Other revenue 40 54
-------------------- ----------------------
Total gross revenue 1,065 1,338
-------------------- ----------------------
Direct Operating Expenses:
Property operations and maintenance 375 491
Real estate taxes 44 94
-------------------- ----------------------
Total direct operating expenses 419 585
-------------------- ----------------------
Gross revenue in excess of direct operating expenses $646 $753
==================== ======================
See accompanying notes.
</TABLE>
5
<PAGE>
NOTES TO ACQUIRED FACILITIES
HISTORICAL SUMMARIES OF COMBINED
GROSS REVENUE AND DIRECT OPERATING EXPENSES
(amounts in thousands)
1. Basis of Presentation
The Historical Summaries of Combined Gross Revenue and Direct Operating
Expenses (the "Historical Summaries") relate to the operation of the following
self-storage facilities ("Acquired Facilities") which have been acquired by
Storage USA, Inc. (the "Company").
Acquired Facilities
-------------------
Plano, TX Austin, TX (1) Carrollton, TX (1)
Ridge, NY Huntingdon, PA North Highlands, CA
(1) These properties were developed properties that opened in 1997.
The Historical Summaries for the Acquired Facilities with a total
acquisition cost of $19,384 have been prepared pursuant to the Rules and
Regulations of the Securities and Exchange Commission for real estate operations
acquired. The Historical Summaries are not representative of the actual
operations for the periods presented, as certain expenses which may not be
comparable to the expenses expected to be incurred by the Company in the future
operations of the Acquired Facilities have been excluded. Expenses excluded
consist of management fees, interest, depreciation and amortization,
professional fees and other indirect costs not directly related to the future
operations of the Acquired Facilities. Rental income is recognized when due from
occupants. Expenses are recognized on the accrual basis.
2. Interim Periods
The unaudited interim Historical Summaries for the Acquired Facilities
have been prepared on a basis consistent with the audited Historical Summaries.
In the opinion of management, all adjustments considered necessary for a fair
presentation are of a normal recurring nature and have been included. Operating
results for the nine months ended September 30, 1997 are not necessarily
indicative of future operating results.
6
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited Pro Forma Combined Condensed Balance Sheet was
prepared as if the Acquired Facilities were purchased on September 30, 1997. The
unaudited Pro Forma Combined Condensed Statements of Operations for the nine
months ended September 30, 1997, and for the year ended December 31, 1996, have
been prepared to reflect the acquisition of the Acquired Facilities as if the
Acquired Facilities and other previously reported transactions had been
consummated at the beginning of the respective periods shown. The Pro Forma
Combined Condensed Financial Information is based on the historical financial
statements included in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and the pro forma financial information set
forth in the footnotes to the financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, and should be
read in conjunction with those financial statements and the notes thereto. The
Combined Condensed Pro Forma Financial Information is not necessarily indicative
of the financial position or results of operations which actually would have
occurred if such transactions had been consummated on the dates described, nor
does it purport to represent the Company's future financial position or results
of operations.
7
<PAGE>
<TABLE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
as of September 30, 1997
(Unaudited)
(amounts in thousands)
<CAPTION>
Historical Pro Forma
Storage Acquired Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
----------------- ---------------- ---------------- ----------------
<S> <C>
Assets:
Investment in storage facilities, net $1,026,303 $ 19,384 $ 145,422 (a) $ 1,191,109
Cash and equivalents 4,103 8,604 (b) 12,707
Other assets 41,450 41,450
----------------- ---------------- ---------------- ----------------
Total assets $1,071,856 $ 19,384 $ 154,026 $1,245,266
================= ================ ================ ================
Liabilities and shareholders' equity
Line of credit borrowings $ 34,929 $ 19,384 $ (54,313)(c) $ -
Mortgage notes payable 39,864 39,864
Notes payable 200,000 200,000 (d) 400,000
Accounts payable and accrued expenses 14,471 14,471
Rents received in advance 6,553 6,553
Dividend payable 16,445 16,445
Minority interest 90,989 4,791 (e) 95,780
----------------- ---------------- ---------------- ----------------
Total liabilities
403,251 19,384 150,478 573,113
----------------- ---------------- ---------------- ----------------
Shareholders' equity
Common stock 274 1 (f) 275
Paid-in capital 705,319 3,547 (g) 708,866
Notes receivable - officers (8,817) (8,817)
Accumulated deficit (15,831) (15,831)
Distributions in excess of net income (12,340) (12,340)
----------------- ---------------- ---------------- ----------------
Total shareholders' equity 668,605 - 3,548 672,153
----------------- ---------------- ---------------- ----------------
Total liabilities and shareholders' equity $1,071,856 $ 19,384 $ 154,026 $1,245,266
================= ================ ================ ================
See accompanying notes.
8
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the nine months ended September 30, 1997
(Unaudited)
(thousands, except per share data)
<CAPTION>
Historical Pro Forma
Storage Acquired Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
------------- -------------- ------------- --------------
Property Revenues:
Rental income $113,267 $ 1,284 $ 21,519 (h) $136,070
Management income - -
Other income 2,213 54 321 (i) 2,588
------------- -------------- ------------- --------------
Total revenues 115,480 1,338 21,840 138,658
------------- -------------- ------------- --------------
Property Expenses:
Cost of property operations
and maintenance 28,359 491 4,551 (j) 33,401
Taxes 9,403 122 1,718 (k) 11,243
General & administrative 4,656 935 (l) 5,591
Depreciation & amortization 14,002 3,456 (m) 17,458
------------- -------------- ------------- --------------
Total expenses 56,420 613 10,660 67,693
------------- -------------- ------------- --------------
Income from property operations 59,060 725 11,180 70,965
Other Income (expenses):
Interest expense (11,604) (10,658)(n) (22,262)
Interest income 880 880
------------- -------------- ------------- --------------
Income before minority interest and
gain on sale of assets 48,336 725 522 49,583
Gain on exchange of self-storage
facilities 2,569 (2,569)(o) -
------------- -------------- ------------- --------------
Income before minority interest 50,905 725 (2,047) 49,583
Minority interest (4,115) (550)(p) (4,665)
------------- -------------- ------------- --------------
Net income $ 46,790 $ 725 $ (2,597) $ 44,918
============= ============== ============= ==============
Net income per share $ 1.76 $ 1.63
============= ==============
Weighted average shares outstanding 26,638 27,501
============= ==============
See accompanying notes.
9
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 1996
(Unaudited)
(thousands, except per share data)
<CAPTION>
Initial
Pro Forma Pro Forma
Storage Acquired Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
---------------- ---------------- ---------------- ---------------
Property Revenues:
Rental income $ 130,839 $ 1,025 $ 39,296 (q) $ 171,160
Management income 485 485
Other income 1,715 40 919 (r) 2,674
---------------- ---------------- ---------------- ---------------
Total revenues 133,039 1,065 40,215 174,319
---------------- ---------------- ---------------- ---------------
Property Expenses:
Cost of property operations
and maintenance 33,530 375 9,251 (s) 43,156
Taxes 10,827 44 2,646 (t) 13,517
General & administrative 4,722 1,465 (u) 6,187
Depreciation & amortization 16,097 6,221 (v) 22,318
---------------- ---------------- ---------------- ---------------
Total expenses 65,176 419 19,583 85,178
---------------- ---------------- ---------------- ---------------
Income from property operations 67,863 646 20,632 89,141
Other Income (expenses):
Interest expense (12,885) (16,777)(w) (29,662)
Interest income 687 687
---------------- ---------------- ---------------- ---------------
Income before gain and minority interest 55,665 646 3,855 60,166
Gain on investment 288 (288)(x) 0
---------------- ---------------- ---------------- ---------------
Income before minority interest 55,953 646 3,567 60,166
Minority interest (3,870) (1,790)(y) (5,660)
---------------- ---------------- ---------------- ---------------
Net income $ 52,083 $ 646 $ 1,777 $ 54,506
================ ================ ================ ===============
Net income per share $ 2.11 $ 1.98
================ ===============
Weighted average shares outstanding 24,723 27,501
================ ===============
See accompanying notes.
</TABLE>
10
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except share/unit and per share/unit data)
(Unaudited)
1. Storage USA, Inc.
The historical financial information of Storage USA, Inc. (the
"Company") includes SUSA Partnership, L.P. (the "Partnership"), Storage USA,
Trust (the "Trust") and SUSA Management, Inc. ("SUSA Management").
2. Acquired Facilities- Balance Sheet
Amounts reflect the acquisition of six facilities acquired from January
9, 1998 to January 23, 1998 for a price of $19,384. The total acquisition price
includes the purchase price of the facilities ($19,099) plus the Company's
estimated average cost of $30 per property for capital improvements ($180) and
other closing costs ($105). The total acquisition price was assumed to be funded
with borrowings under the Company's lines of credit.
3. Storage USA, Inc. - Initial Pro Forma Statement of Operations
The Initial Pro Forma Statement of Operations for the year ended
December 31, 1996 is presented as if (a) the acquisition during 1996 of 82
facilities totaling 5,400 square feet for a cost of approximately $304,000, (b)
the issuance of 7,029,000 shares of common stock for net proceeds of
approximately $220,528 and (c) the issuance of $100,000 of 7.125% notes payable
had occurred on January 1, 1996.
4. Acquired Facilities - Statement of Operations
The statements of operations for the Acquired Facilities reflects the
results of operations of the Acquired Facilities for the year ended December 31,
1996, and the results of operations of the Acquired Facilities for the nine
months ended September 30, 1997, which are included in the Acquired Facilities
Historical Summaries of Combined Gross Revenue and Direct Operating Expenses
included in this Form 8-K/A.
11
<PAGE>
<TABLE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
<S> <C>
5. Pro Forma Adjustments - Balance Sheet
As of September 30, 1997
--------------------------
(a) To record the acquisition of the 49 facilities purchased between October
29, 1997 and January 30, 1998 (the "January 8-K/A Facilities"). $ 145,422
(b) To record excess cash resulting from the pro forma adjustments
reflecting the acquisition of the January 8-K/A Facilities, the issuance
of 125 limited partnership units in SUSA Partnership, L.P. ("Units"),
the issuance of 92 shares of common stock and the issuance of $200,000
of notes payable. $ 8,604
(c) To record the pro forma payoff of the line of credit with funds received
from the issuance of the $200,000 of notes payable after covering the
costs of the acquisition of the January 8-K/A Facilities and the
Acquired facilities. $ (54,313)
(d) To record the issuance of the $100,000, 7.0% notes payable and the $100,000,
7.5% notes payable issued December 5, 1997. $ 200,000
(e) To record the issuance of 125 Units in exchange for facilities acquired. $ 4,791
(f) To record the issuance of 92 shares of common stock in exchange for
facilities acquired. $ 1
(g) To record the issuance of 92 shares of common stock in exchange for
facilities acquired. $ 3,547
6. Pro Forma Adjustments - Statement of Operations
Nine Months Ended
September 30, 1997
------------------
(h) To record rental income for the 39 audited facilities acquired during
the first six months of 1997 from January 1, 1997 to the date acquired. $ 6,086
To record rental income for the 14 unaudited facilities acquired during the
first six months of 1997 from January 1, 1997 to the date acquired. $ 1,155
12
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Nine Months Ended
September 30, 1997
------------------
To reduce rental income for six facilities that are included in the Storage USA,
Inc. historical balances (the "Historical Balances") and were exchanged for
eight facilities on May 20, 1997. $ (1,375)
To record rental income for the nine facilities acquired during the third
quarter of 1997 from January 1, 1997 to the date acquired. $ 2,576
To record rental income for the January 8-K/A Facilities. $ 13,077
-------------------------------
Pro forma adjustment $ 21,519
(i) To record other income for the 39 audited facilities acquired during the
first six months of 1997 from January 1, 1997 to the date acquired. $ 101
To record other income for the 14 unaudited facilities acquired during the first
six months of 1997 from January 1, 1997 to the date acquired. $ 43
To reduce other income for six facilities that are included in the
Historical Balances and were exchanged for eight facilities on May 20,
1997. $ (3)
To record other income for the nine facilities acquired during the third quarter
of 1997 from January 1, 1997 to the date acquired. $ 63
To record other income for the January 8-K/A Facilities. $ 127
To reduce management income for the managed property acquired on May 15, 1997,
based on actual management fees earned by the company from January 1, 1997 to
the acquisition date. $ (10)
-------------------------------
Pro forma adjustment $ 321
(j) To record cost of property operations and maintenance for the 39 audited
facilities acquired during the first six months of 1997 from January 1,
1997 to the date acquired. $ 1,362
To record cost of property operations and maintenance for the 14 unaudited
facilities acquired during the first six months of 1997 from January 1, 1997 to
the date acquired. $ 280
To reduce cost of property operations and maintenance for six facilities that
are included in the Historical Balances and were exchanged for eight facilities
on May 20, 1997. $ (383)
13
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Nine Months Ended
September 30, 1997
------------------
To record cost of property operations and maintenance for the nine
facilities acquired during the third quarter of 1997 from January 1,
1997 to the date acquired $ 539
To record cost of property operations for the January 8-K/A Facilities. $ 2,753
-------------------------------
Pro forma adjustment $ 4,551
(k) To record taxes for the 39 audited facilities acquired during the first six
months of 1997 from January 1, 1997 to the date acquired. $ 519
To record taxes for the 14 unaudited facilities acquired during the first six
months of 1997 from January 1, 1997 to the date acquired. $ 129
To reduce taxes for six facilities that are included in the Historical Balances
and were exchanged for eight facilities on May 20, 1997. $ (206)
To record taxes for the nine facilities acquired during the third quarter of
1997 from January 1, 1997 to the date acquired $ 193
To record taxes for the January 8-K/A Facilities. $ 1,083
-------------------------------
Pro forma adjustment $ 1,718
(l) To reflect an estimated increase in general and administrative expense based on
results subsequent to acquisition. $ 935
(m) To record depreciation for the 39 audited facilities acquired during the
first six months of 1997, based on approximately $94,047 of the purchase
price being allocated to depreciable assets, based on a 40 year life. $ 1,763
To record depreciation for the 14 unaudited facilities acquired during
the first six months of 1997, based on approximately $18,888 of the
purchase price being allocated to depreciable assets, based on a 40 year
life. $ 354
To record depreciation for the nine facilities acquired during the third
quarter of 1997 based on approximately $27,664 of the purchase price
being allocated to depreciable assets, based on a 40-year life. $ 519
To record depreciation for the January 8-K/A Facilities based on approximately
$106,158 of the purchase price being allocated to depreciable assets, based on a
40 year life. $ 1,990
14
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Nine Months Ended
September 30, 1997
------------------
To record depreciation for the Acquired Facilities based on $14,151 of
the purchase price being allocated to depreciable assets, based on a 40
year life. $ 265
Less: Depreciation included in the Historical balance relating to the facilities
acquired during the first nine months of 1997. $ (1,295)
To reduce depreciation for six facilities that are included in the Historical
Balances and were exchanged for eight facilities on May 20, 1997. $ (140)
-------------------------------
Pro forma adjustment $ 3,456
(n) To reflect the reduction in interest expense from the pro forma line of
credit reduction of $33,272 at a weighted average interest rate of 7.05%
after assuming all financing transactions to occur on January 1, 1997. $ 1,759
To remove historical line of credit interest expense. $ 2,218
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 8.20% notes
payable assumed to occur on January 1, 1997. $ (3,473)
To reflect the pro forma effect of additional interest expense and amortization
of discount due to the issuance of $100,000 of 7.0% notes payable assumed to
occur on January 1, 1997. $ (5,334)
To reflect the pro forma effect of additional interest expense and amortization
of discount due to the issuance of $100,000 of 7.5% notes payable assumed to
occur on January 1, 1997. $ (5,738)
To reflect interest expense on mortgage notes payable from January 1, 1997 to
the date of acquisition for the $6,048 mortgages assumed during the period
January 1, 1997 to December 19, 1997. $ (275)
To reflect the pro forma effect on interest of assuming the payoff of all
mortgages that were paid off during the first nine months of 1997 occurred on
January 1, 1997. $ 185
-------------------------------
Pro forma adjustment $ (10,658)
(o) To remove gain on exchange of self-storage facilities $ (2,569)
15
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Nine Months Ended
September 30, 1997
------------------
(p) To reflect the pro forma effect on minority interest expense from the
income contributed from facilities acquired from January 1, 1997 to
September 3, 1997, the January 8-K/A Facilities and the Acquired
Facilities assuming those acquisitions and all equity offerings and Unit
transactions occurred on January 1, 1997. $ (550)
Year ended
December 31, 1996
-----------------
(q) To record rental income for the 39 audited facilities acquired during
the first six months of 1997. $ 16,664
To record rental income for the 14 unaudited facilities acquired during the
first six months of 1997 . $ 3,306
To record rental income for the nine facilities acquired during the third
quarter of 1997. $ 5,215
To record rental income for the January 8-K/A Facilities. $ 17,328
To reduce rental income for six facilities that are included in the Initial Pro
Forma balances and were exchanged for eight facilities on May 20, 1997. $ (3,217)
-------------------------------
Pro forma adjustment $ 39,296
(r) To record other income for the 39 audited facilities acquired during the
first six months of 1997. $ 313
To record other income for the 14 unaudited facilities acquired during the first
six months of 1997. $ 95
To record other income for the nine facilities acquired during the third quarter
of 1997. $ 210
To record other income for the January 8-K/A Facilities. $ 338
To reduce other income for six facilities that are included in the Initial Pro
Forma balances and were exchanged for eight facilities on May 20, 1997. $ (10)
To reduce management income for the managed property acquired on May 15,
1997, based on actual management fees earned by the company during the
year ended December 31, 1996. $ (27)
-------------------------------
Pro forma adjustment $ 919
16
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Year ended
December 31, 1996
-----------------
(s) To record cost of property operations and maintenance for the 39 audited
facilities acquired during the first six months of 1997. $ 3,863
To record cost of property operations and maintenance for the 14 unaudited
facilities acquired during the first six months of 1997. $ 1,061
To record cost of property operations and maintenance for the nine facilities
acquired during the third quarter of 1997. $ 1,146
To record cost of property operations and maintenance for the January 8-K/A
Facilities. $ 3,911
To reduce cost of property operations and maintenance for six facilities that
are included in the Initial Pro Forma balances and were exchanged for eight
facilities on May 20, 1997. $ (730)
-------------------------------
Pro forma adjustment $ 9,251
(t) To record taxes for the 39 audited facilities acquired during the first six
months of 1997. $ 1,082
To record taxes for the 14 unaudited facilities acquired during the first six
months of 1997. $ 291
To record taxes for the nine facilities acquired during the third quarter of
1997. $ 460
To record taxes for the January 8-K/A Facilities. $ 1,390
To reduce taxes for six facilities that are included in the Initial Pro Forma
balances and were exchanged for eight facilities on May 20, 1997. $ (577)
-------------------------------
Pro forma adjustment $ 2,646
(u) To reflect an estimated increase in general and administrative expense based on
results subsequent to acquisition. $ 1,465
(v) To record depreciation for the 39 audited facilities acquired during
the first six months of 1997, based on approximately $94,047 of the
purchase price being allocated to depreciable assets, based on a 40
year life. $ 2,351
To record depreciation for the 14 unaudited facilities acquired during
the first six months of 1997, based on approximately $18,888 of the
purchase price being allocated to depreciable assets, based on a 40
year life. $ 472
17
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Year ended
December 31, 1996
-----------------
To record depreciation for the nine facilities acquired during the
third quarter of 1997 based on approximately $27,664 of the purchase
price being allocated to depreciable assets, based on a 40-year life. $ 692
To record depreciation for the January 8-K/A Facilities based on approximately
$106,158 of the purchase price being allocated to depreciable assets, based on
a 40 year life. $ 2,654
To record depreciation for the Acquired Facilities based on $14,151 of the
purchase price being allocated to depreciable assets, based on a 40 year life. $ 354
To reduce depreciation for six facilities that are included in the
Initial Pro Forma balances and were exchanged for eight facilities on
May 20, 1997. $ (302)
-------------------------------
Pro forma adjustment $ 6,221
(w) To reflect the interest expense on the pro forma line of credit balance
decrease of $86,002 at a weighted average interest rate of 6.99% after
effect of assuming all financing transactions to occur on January 1,
1996. $ 6,012
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 8.20% notes
payable assumed to occur on January 1, 1996. $ (8,336)
To reflect the pro forma effect of additional interest expense and amortization
of discount due to the issuance of $100,000 of 7.0% notes payable assumed to
occur on January 1, 1996. $ (7,112)
To reflect the pro forma effect of additional interest expense and amortization
of discount due to the issuance of $100,000 of 7.5% notes payable assumed to
occur on January 1, 1996. $ (7,651)
To reflect interest expense on mortgage notes payable from the $6,048 of
mortgages assumed during the period January 1, 1997 to December 19, 1997. $ (526)
To reflect the pro forma effect on interest of assuming the payoff of
all mortgages that were paid off during the first nine months of 1997
occurred on January 1, 1996. $ 836
-------------------------------
Pro forma adjustment $ (16,777)
(x) To remove gain on exchange of self-storage facilities $ (288)
18
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
6. Pro Forma Adjustments - Statement of Operations - continued
Year ended
December 31, 1996
-----------------
(y) To reflect the pro forma effect on minority interest expense from the
income contributed from facilities acquired from January 1, 1997 to
September 3, 1997, the January 8-K/A Facilities and the Acquired
Facilities assuming those acquisitions and all equity offerings and
Unit transactions occurred on January 1, 1997. $ (1,790)
</TABLE>
19
<PAGE>
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: February 17, 1998
STORAGE USA, INC.
By: /s/ Dennis A. Reeve
------------------------------
Dennis A. Reeve
Chief Financial Officer
(Principal Financial and Accounting Officer)
20
CONSENT OF INDEFENDENT ACCOUNTANTS
We consent to the incorporation by reference into (A) the Registration
Statements on Forms S-8 (Commission File Nos. 33-80967, 33-93884, 33-93882,
33-86362, 333-29753 and 333-29773) of Storage USA, Inc.; (B) the Registration
Statements on Forms S-3 (Commission File Nos. 333-10903, 333-4556, 33-80965,
33-98142, 33-93886, 33-91302, 333-25821, 333-21991 and 333- 31145) of Storage
USA, Inc.; and (C) the Registration Statements on Forms S-3 (Commission File
Nos. 333-3344 and 333-2199l) of SUSA Partnership, L. P. of our report dated
February 17, 1998, on our audit of the Historical Summaries of Combined Cross
Revenue and Direct Operating Expenses of the Acquired Facilities for the year
ended December 31,1996, which report is included in this Form 8-K/A.
COOPERS & LYBRAND L.L.P.
Baltimore, Mary1and
February 17, 1998
