UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITES EXCHANGE ACT OF
1934
For the transition period from to
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Commission File Number: 1-8389
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A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
PS 401(K)/PROFIT SHARING PLAN
701 Western Avenue
Glendale, CA 91201-2349
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
PUBLIC STORAGE, INC.
701 Western Avenue
Glendale, CA 91201-2349
PS 401(k)/PROFIT SHARING PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets available for Plan Benefits 3
Notes to Financial Statements 4
Supplemental Schedules: Schedules
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Assets Held for Investment Purposes I 11
Party-In-Interest Transactions II 12
Reportable Transactions III 13
Independent Auditors' Report
----------------------------
To the Administrative Committee
PS 401(k)/Profit Sharing Plan
Glendale, California
We have audited the accompanying statements of net assets available for plan
benefits of PS 401(k)/Profit Sharing Plan (the "Plan") as of December 31, 2002
and 2001, and the related statements of changes in net assets available for plan
benefits for each of the years in the three year period ended December 31, 2002.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 net assets available for plan benefits of the Plan as
of December 31, 2002 and 2001, and the changes in net assets available each of
the years in the three year period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes, party-in-interest transactions and reportable
transactions are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 and are not a required part of the basic
financial statements. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Irvine, California
May 6, 2003
1
PS 401(k)/PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
December 31, 2002 and 2001
2002 2001
-------------- --------------
Assets:
Investments at fair value $ 41,595,533 $ 42,529,269
Receivables:
Participant contributions 120,707 91,504
Employer contributions 113,874 86,973
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Total Receivables 234,581 178,477
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Total Assets 41,830,114 42,707,746
Liabilities:
Accrued expenses 238,019 89,449
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Total Liabilities 238,019 89,449
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Net Assets Available for Plan Benefits $ 41,592,095 $ 42,618,297
============== ==============
See accompanying notes.
2
PS 401(k)/PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
For the Years Ended December 31, 2002 , 2001 and 2000
2002 2001 2000
-------------- -------------- --------------
Additions to Net Assets Attributed to:
Investment income:
Net appreciation (depreciation in fair
value of investments $ (4,438,271) $ 2,659,232 $ 1,528,858
Interest income 8,395 31,049 3,517
Dividend income 1,493,190 1,447,968 840,665
-------------- -------------- --------------
(2,936,686) 4,138,249 2,373,040
Contributions:
Participant 2,935,842 2,872,453 -
Employer 2,457,646 2,149,187 3,000,000
-------------- -------------- --------------
5,393,488 5,021,640 3,000,000
Total Additions 2,45,802 9,159,889 5,373,040
-------------- -------------- --------------
Deductions from Net Assets Attributed to:
Benefits paid to participants 3,328,933 3,130,273 6,241,920
Administrative expenses 154,071 68,401 289,554
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Total Deductions 3,483,004 3,198,674 6,531,474
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Net Increases (Decreases) in Net Assets Available for
Benefits (1,026,202) 5,961,215 (1,158,434)
Net Assets Available for Benefits:
Beginning of year 42,618,297 36,657,082 37,815,516
-------------- -------------- --------------
End of year $ 41,592,095 $ 42,618,297 $ 36,657,082
============== ============== ==============
See accompanying notes.
3
PS 401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
PS 401(k)/PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. Summary of Significant Accounting Principles
Basis of Presentation
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PS 401(k)/Profit Sharing Plan (the "Plan") encompasses Public Storage,
Inc., PS Business Parks, Inc. and their majority owned subsidiaries
(the "Company"). Prior to January 1, 2001, the Plan name was Public
Storage, Inc. Profit Sharing Plan.
Basis of Accounting
-------------------
The financial statements of the Plan are prepared using the accrual
method of accounting.
Estimates
---------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Plan administrator to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results
may differ from those estimates.
Income Tax Status
-----------------
The Plan is patterned after a prototype plan which was determined to
qualify under Section 401(a) of the Internal Revenue Code (the Code)
and, therefore, is exempt from federal income taxes under Section
501(a) of the Code. The Plan is exempt from state taxes under similar
statutes. The Plan was amended on December 29, 1994 to comply with the
1986 Tax Reform Act. A determination letter was received on January 10,
1996 from the Internal Revenue Service to inform the Company that the
amended Plan is qualified and the trust established under the Plan is
tax-exempt under the appropriate sections of the Code. On April 1,
1996, the Plan was amended to provide a hardship distribution
provision. On December 29, 1997, the Plan was amended to include
employees on leave of absence as eligible participants. On January 1,
2001, the plan effected a 401(k) Safe Harbor Plan amendment which is
determined to qualify under Section 401(k) of the Code. A determination
letter was received on March 14, 2003.
The Plan administrator and the Plan's tax counsel believe that the Plan
is currently designed and being operated in compliance with the
applicable requirements of the Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
4
1. Summary of Significant Accounting Principles (continued)
Investment Valuation
--------------------
On January 1, 2001, the Plan's administrative committee (the Committee)
transferred the Plan's assets from Wells Fargo Bank to Salomon Smith
Barney.
Investments in cash equivalents (liquid funds, money market funds and
time deposits) are valued at cost, which approximates fair value.
Investments in mutual funds are stated at fair value. All other
securities are valued at the last reported sale price on the last
business day of the Plan year or at quoted market price. Interest and
dividend income is recognized when earned.
Unrealized gains and losses result from the change in the fair value of
investments held at both the beginning and end of the year, the
difference between cost and year-end fair value for investments
acquired during the year, and adjustments for unrealized gains and
losses previously recognized on investments sold during the year.
2. Description of the Plan
The following description of the plan provides only general
information. Participants should refer to the Summary Plan Description
for a more complete description of the Plan's provisions.
The PS 401(k)/Profit Sharing Plan is a defined contribution plan for
the benefit of all permanent employees of the Company who have
completed at least one year of service and attained 21 years of age.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). Although it has not expressed the
intention to do so, the Company has the right to terminate the Plan
subject to ERISA provisions. The Plan allows interim allocations of
Company contributions and earnings or losses of trust fund assets among
participants. Major provisions of the Plan, as amended effective April
1, 1996, December 29, 1997 and January 1, 2001 are as follows:
5
2. Description of the Plan (continued)
Contributions
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Employee contributions to the Plan (voluntary contributions) are
deferrals of the employee's compensation made through a direct
reduction of compensation in each payroll period. The maximum annual
tax deferred contribution amount is limited to $11,000. The Company
contributes 3% of the employee's compensation for all participants in
the Plan. In 2000, the Company made profit sharing contributions to the
Plan which were allocated to each participant's account based on the
proportion of the participant's compensation to total compensation as
defined.
Participant Accounts
--------------------
Each participant's account is credited with the participant's and the
Company's contribution.
Forfeitures are allocated on the same basis as Company profit sharing
contributions.
Vesting
-------
Employee deferrals and the 3% Company contribution are 100% vested and
non-forfeitable. Pre-January 2001 profit sharing Company contribution
balances vest as follows:
Generally, each participant's account becomes 10 percent vested
(non-forfeitable) after two years of service (as defined), 20 percent
after three years of service and an additional 20 percent for each
additional year of service thereafter.
Upon death, severance by reason of disability, or the attainment of the
participant's sixty-fifth birthday, a participant automatically becomes
fully vested to the extent of the balance in their account. In the
event the Plan is terminated or contributions are completely
discontinued, each participant becomes fully vested.
Allocation of Earnings or Losses of pre-January 1, 2001 Trust Fund
------------------------------------------------------------------
Assets
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For the year ended December 31, 2000, earnings or losses of Trust Fund
assets were allocated to each participant's account in the ratio that
the account balance had to the aggregate of all account balances as of
the valuation date.
6
2. Description of the Plan (continued)
Investment Options
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For the year ended December 31, 2002, upon enrollment in the Plan, a
participant may direct contributions in any of the following fourteen
investment options.
AIM International Equity Fund
Alliance Premier Growth Fund
Oppenheimer Discovery Fund
PS Business Parks, Inc. Common Stock
Public Storage, Inc. Common Stock
Public Storage, Inc. Depository Shares Equity A Stock
Smith Barney Fundamental Value Fund
Smith Barney S&P 500 Index
Smith Barney Small Cap Growth Opportunity Fund
Van Kampen Growth and Income Fund
Smith Barney U.S. Government Securities Fund
Alliance Technology Fund
Smith Barney Retirement Portfolio
Van Kampen Emerging Growth Fund
Participants may change their investment options at any time.
Distributions from the Trust Fund
---------------------------------
Distributions of each participant's vested account balance upon
severance or death are made in a single lump sum payment; or if the
participant's vested account balance exceeds $5,000, payment may be
deferred up until April 1st of the calendar year in which the
participant reaches 70 1/2 years of age.
Additionally, the Plan provides for hardship distributions (as defined)
at the discretion of the Committee.
Generally, distributions are made no later than 60 days after the close
of the Plan year in which the participant becomes eligible for such
distributions. Under certain circumstances, participants of the Plan as
of December 31, 1983 may elect alternative distribution methods.
7
2. Description of the Plan (continued)
Forfeitures
-----------
The non-vested portion of a participant's account is forfeited as of
the date of distribution of his/her vested interest. Employees resuming
participation in the Plan prior to incurring the greater of five
consecutive one-year breaks in service, or their prior service if
greater than five years, may have the non-vested portion of their
account balance restored upon repayment to the Plan of the full amount
of such previously distributed vested interest. Restoration of the
non-vested portion of a participant's account is to be made first from
available forfeitures and then from Company contributions.
3. Investments
All of the investments are under the custody of Salomon Smith Barney
under a non-discretionary trust agreement with the Plan. Discretionary
authority for the purchase and sale of plan assets is vested in the
Committee. The following table presents the fair value of investments.
Investments that represent 5 percent or more of the Plan's net assets
are separately identified. The fair value of investments is determined
by quoted market price.
The fair value of investments held by the Plan at December 31, 2002 and
2001 are summarized below:
2002 2001
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Money Market Funds $ 5,429,428 $ 3,124,526
Mutual Funds 17,732,618 19,973,662
Equity Securities:
Public Storage, Inc. Common 15,324,125 17,820,840
Public Storage, Inc. Preferred 2,789,321 1,447,518
PS Business Parks, Inc. Common 320,041 162,723
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Total Equity Securities 18,433,487 19,431,081
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Total Investments $ 41,595,533 $ 42,529,269
=============== ===============
8
3. Investments (continued)
The following presents the fair value of investments at December 31,
2002 and 2001 that represent 5% or more of the Plan's net assets:
2002 2001
-------------- --------------
Money Market Funds $ 5,429,428 $ 3,124,526
Mutual Funds:
Smith Barney S&P 500 Index $ 8,634,589 $ 12,170,926
Smith Barney US Government
Securities Fund $ 4,584,549 $ 4,186,664
Public Storage, Inc. Common $ 15,324,125 $ 17,820,840
Public Storage, Inc. Preferred $ 2,789,321 -
4. Plan Administration
The Committee appointed by the Company's Board of Directors administers
the Plan. The Committee is now comprised of six officers and managers
of the Company.
Prior to 1988, the Company paid for all expenses (excluding investment
advisory expenses) incurred for the administration of the Plan,
although it was not obligated to do so under the terms of the Plan.
Beginning in 1988, the Company's policy is to reimburse the Plan, at
the Committee's discretion, for certain legal and administrative fees
incurred for the administration of the Plan. None of these expenses
were reimbursed during the plan years ended December 31, 2002, 2001,
and 2000.
5. Party-in-Interest Transactions
There were no party-in-interest transactions that are prohibited by
ERISA Section 406 and for which no statutory or administrative
exemption exists.
9
6. Benefits Owed To Terminated Participants
For financial reporting purposes disbursements to terminated
participants are reported when the check is written. Approximately
$6,300,000 and $3,200,000 were owed to terminated participants at
December 31, 2002 and 2001, respectively.
At December 31, 2002 and 2001, forfeited nonvested amounts totaled
$980,000 and $505,000, respectively. These accounts are allocated to
individual participant's accounts in the ratio that each such eligible
participant's compensation for the plan year bears to the total
compensation of all such eligible participants for the plan year.
10
SCHEDULE I
PS 401(k)/PROFIT SHARING PLAN
Schedule H, Line 4i -
Assets held for investment purposes
December 31, 2002
Employer Identification Number: 95-2782164
Plan Number: 001
Cost Fair Value
---- --------------
Money Market Account
Smith Barney Retirement Portfolio * $5,429,428
Mutual Funds
AIM International Equity Fund * 319,881
Alliance Premier Growth Fund * 648,292
Oppenheimer Discovery Fund * 227,714
Smith Barney Fundamental Value Fund * 1,278,872
Smith Barney S&P 500 Index * 8,634,589
Smith Barney Small Cap Growth Opportunity Fund * 419,114
Van Kampen Growth and Income Fund * 642,662
Smith Barney U.S. Government Securities Fund * 4,584,549
Alliance Technology Fund * 371,350
Van Kampen Emerging Growth Fund * 605,595
--------------
Total Mutual Funds 17,732,618
Equity Securities
Public Storage, Inc. Common Stock * 15,324,125
Public Storage, Inc. Depository Shares Equity A Stock * 2,789,321
PS Business Parks, Inc. Common Stock * 320,041
--------------
Total Equity Securities 18,433,487
--------------
Total Investments $41,595,533
==============
* Pursuant to paragraph 2520.103-11, specifically, the special rule for certain
participant directed transactions, cost information is omitted as the Plan's
investments are participant directed.
11
SCHEDULE II
PS 401(k)/PROFIT SHARING PLAN
schedule of party-in-interest transactions
December 31, 2002
Employer Identification Number: 95-2782164
Plan Number: 001
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions that are prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
12
SCHEDULE III
PS 401(k)/PROFIT SHARING PLAN
schedule of REPORTABLE transactions
December 31, 2002
Employer Identification Number: 95-2782164
Plan Number: 001
A schedule of reportable transactions has not been presented because there were
no such transactions noted for the year ended December 31, 2002.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
PS 401(K)/PROFIT SHARING PLAN
Date: June 27, 2003
By: /s/ Harvey Lenkin
-----------------
Harvey Lenkin
Chairman, Administrative Committee