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, 2003
-----------------
OR
[ ] Transition Report Pursuant to Section 15(D) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________.
Commission File Number: 1-8389
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
Financial Statements:
Statements of Net Assets Available
for Plan Benefits 1
Statements of Changes in Net Assets
Available for Plan Benefits 2
Notes to Financial Statements 3
Supplemental Information:
Schedule I - Assets Held for Investment Purposes 8
Schedule II - Party-In-Interest Transactions 9
Schedule III - Reportable Transactions 10
PS 401(k)/PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
December 31, 2003 and 2002
(Unaudited, see Footnote 1)
2003 2002
--------------- ---------------
ASSETS :
Investments at fair value.......................................... $ 52,811,901 $ 41,595,533
Cash............................................................... 1,972 -
Receivables
Participant contributions....................................... 96,547 120,707
Employer contributions.......................................... 109,212 113,874
Dividends....................................................... 279,785 -
--------------- ---------------
Total Receivables........................................ 485,544 234,581
--------------- ---------------
Total Assets............................................. $ 53,299,417 $ 41,830,114
=============== ===============
LIABILITIES :
Accrued expenses................................................. $ 33,369 $ 238,019
--------------- ---------------
Total Liabilities........................................ 33,369 238,019
--------------- ---------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 53,266,048 $ 41,592,095
=============== ===============
See accompanying notes.
1
PS 401(k)/PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
For the Years Ended December 31, 2003, 2002 and 2001
(Unaudited, see Footnote 1)
2003 2002 2001
-------------- -------------- -------------
Additions to Net Assets Attributed to:
Investment income:
Net appreciation (depreciation) in fair value
of investments $ 9,869,662 $ (4,438,271) $ 2,659,232
Interest income 25,244 8,395 31,049
Dividend income 1,253,965 1,493,190 1,447,968
-------------- -------------- -------------
11,148,871 (2,936,686) 4,138,249
Contributions:
Participant 2,822,413 2,935,842 2,872,453
Employer 2,607,288 2,457,646 2,149,187
-------------- -------------- -------------
5,429,701 5,393,488 5,021,640
-------------- -------------- -------------
Total Additions 16,578,572 2,456,802 9,159,889
Deductions from Net Assets Attributed to:
Benefits paid to participants 4,787,947 3,328,933 3,130,273
Administrative expenses 116,672 154,071 68,401
-------------- -------------- -------------
Total Deductions 4,904,619 3,483,004 3,198,674
-------------- -------------- -------------
Net Increase (Decrease) in Net Assets Available
for Benefits 11,673,953 (1,026,202) 5,961,215
-------------- -------------- -------------
Net Assets Available for Benefits:
Beginning of year 41,592,095 42,618,297 36,657,082
-------------- -------------- -------------
End of Year $ 53,266,048 $ 41,592,095 $ 42,618,297
============== ============== =============
See accompanying notes.
2
PS 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
(Unaudited, see Footnote 1)
1. Status of Financial Statements and Footnotes
--------------------------------------------
The accompanying financial statements and related footnotes of the PS
401(k)/Profit Sharing Plan (the "Plan") are unaudited. The
Sarbanes-Oxley Act of 2002 requires public accountants who express
opinions on the financial statements of companies that regularly file
reports with the Securities and Exchange commission to be registered
with the Public Company Accounting Oversight Board (the "PCAOB"). The
Plan engaged a firm to perform an audit of the accompanying financial
statements and footnotes. This firm has not yet completed its
registration with the PCAOB. In its current status, the firm is not
permitted to express an opinion on the accompanying financial
statements for submission to the Securities and Exchange Commission.
The firm engaged to perform the audits has informed us that it has
submitted its application and related fees to the PCAOB. Consequently,
the firm's audit opinion as to the fairness of the accompanying
financial statements and related footnotes is excluded from this
report, and amounts presented herein are considered unaudited.
The Plan is awaiting the PCAOB's authorization for the firm to issue an
opinion and will file an amended report with the firm's audit opinion.
If the firm does not receive authorization from the PCAOB, another firm
will be engaged to perform audits and express an opinion on the
fairness of the accompanying financial statements and related
footnotes.
2. Summary of Significant Accounting Principles
--------------------------------------------
Basis of Presentation
---------------------
PS 401(k) Profit Sharing Plan (the "Plan") encompasses Public Storage,
Inc., PS Business Parks, Inc. and their majority owned subsidiaries
(the "Company").
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
-----------------
On November 30, 2000, the Company did an amendment and complete
restatement of the Amendment and Restatement of the Public Storage
Profit Sharing Plan adopted December 29, 1994. Effective January 1,
2001, the plan is amended and restated as the PS 401(k) Profit Sharing
Plan (the "Plan").
The Plan is intended to qualify under Section 401 of the Code, and was
amended and restated principally to introduce a qualified cash or
deferred arrangement under Section 401(k) of the Code, and to comply
with the requirements of GUST. GUST amendments include the
qualification requirements under (1) the Uruguay Round Agreements Act,
(2) the Uniformed Services Employment and Reemployment Rights Act of
1994, (3) the Taxpayer Relief Act of 1997, (4) the Small Business Job
Protection Act of 1996, and (5) the Internal Revenue Service
Restructuring and Reform Act of 1998. 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.
3
PS 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
December 31, 2003
(Unaudited, see Footnote 1)
2. Summary of Significant Accounting Principles (continued)
--------------------------------------------------------
Investment Valuation
--------------------
On August 1, 2003, the Plan's administrative committee (the Committee)
transferred the Plan's assets from Salomon Smith Barney to Union Bank.
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.
3. 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, are as follows:
Contributions
-------------
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 $12,000 for 2003 and
$11,000 for 2002. The Company contributes 3% of the employee's
compensation for all participants in the Plan.
Participant Accounts
--------------------
Each participant's account is credited with the participant's and the
Company's contribution.
Vesting
-------
Employee deferrals and the 3% Company contribution are 100% vested and
non-forfeitable. Pre-January 2001 profit sharing Company contribution
balances vested over a seven year period. 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.
4
PS 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
December 31, 2003
(Unaudited, see Footnote 1)
3. Description of the Plan (continued)
-----------------------------------
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.
Investment Options
------------------
For the year ended December 31, 2003, upon enrollment in the Plan, a
participant may direct contributions in any of the following nineteen
investment options.
Highmark Div. Money Market
Strong Government Securities
BGI Lifepath Income Fund R
BGI Lifepath 2010 Class R
BGI Lifepath 2020 Class R
BGI Lifepath 2030 Class R
BGI Lifepath 2040 Class R
MFS Value A
Federated Capital Appreciation
Dreyfus S&P 500 Index
Janus Adv CAP Appreciation
American Funds Growth Fund R3
AIM Opportunities A
AIM Small CAP Growth A
Oakmark International II
Ivy Science & Technology Y
Public Storage Common Stock
Public Storage Preferred Stock
P.S. Business Parks Stock
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.
5
PS 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
December 31, 2003
(Unaudited, see Footnote 1)
3. Description of the Plan (continued)
-----------------------------------
Forfeitures
-----------
For profit sharing contributions made by the Company prior to January
1, 2001, if a participant terminates his/her employment before he/she
is 100% vested, he/she forfeits any non-vested amounts. 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.
4. Investments
-----------
All of the investments are under the custody of Union Bank under a
non-discretionary trust agreement with the Plan. 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, 2003 and
2002 are summarized below:
2003 2002
------------ -----------
Money Market Funds $6,235,936 $5,429,428
Mutual Funds 22,968,239 17,732,618
Equity Securities:
Public Storage, Inc. Common 19,655,222 15,324,125
Public Storage, Inc. Preferred 3,451,686 2,789,321
PS Business Parks, Inc. Common 500,818 320,041
------------ -----------
Total Equity Securities 23,607,726 18,433,487
------------ -----------
Total Investments $52,811,901 $41,595,533
============ ===========
6
PS 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
December 31, 2003
(Unaudited, see Footnote 1)
4. Investments (continued)
-----------------------
The following presents the fair value of investments at December 31,
2003 and 2002 that represent 5% or more of the Plan's net assets:
2003 2002
------------- -------------
Money Market Funds $6,235,936 $5,429,428
Mutual Funds:
Dreyfus S&P 500 Index $10,230,371 -
Strong Government Securities $4,191,198 -
Smith Barney S&P 500 Index - $8,634,589
Smith Barney US Government
Securities Fund - $4,584,549
Public Storage, Inc. Common $19,655,222 $15,324,125
Public Storage, Inc. Preferred $3,451,686 $2,789,321
5. 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.
For the plan years ended December 31, 2003, 2002 and 2001, the Plan
paid certain trustee and administrative expenses incurred for the
administration of the Plan, and the Company directly paid for all other
expenses related to the Plan.
6. Benefits Owed to Terminated Participants
----------------------------------------
For financial reporting purposes disbursements to terminated
participants are reported when the check is written. Approximately
$16,200,000 and $6,300,000 were owed to terminated participants at
December 31, 2003 and 2002, respectively.
At December 31, 2003 and 2002, forfeited non-vested amounts were
approximately $729,000 and $980,000, respectively. These amounts 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.
7
SCHEDULE I
PS 401(k) PROFIT SHARING PLAN
Schedule H, Line 4i -
Assets held for investment purposes
December 31, 2003
(Unaudited, see Footnote 1)
Employer Identification Number: 95-2782164
Plan Number: 001
Cost Fair Value
----------- -----------
Money Market Account
Highmark Div. Money Market $6,235,936 $6,235,936
Mutual Funds
Aim Investment - Opportunities * 161,588
Aim Investment - Small Cap Growth A * 1,252,538
American Funds Group - Growth Fund of America R3 * 137,770
Barclays Global Investors - LifePath Income * 12,571
Barclays Global Investors - LifePath 2010 Class R * 215
Barclays Global Investors - LifePath 2020 Class R * 18
Barclays Global Investors - LifePath 2030 Class R * 16,893
Barclays Global Investors - LifePath 2040 Class R * 938
Dreyfus Investment - S&P 500 Index * 10,230,371
Federated Investment - Capital Appreciation A * 2,171,566
Ivy - Science & Technology Y * 816,285
Janus Advisor Funds - Capital Appreciation A * 2,149,772
MFS Investment - Value A * 1,256,361
Oakmark Funds - International II * 570,155
Strong Funds - Government Securities Inv. * 4,191,198
-----------
Total Mutual Funds 22,968,239
Equity Securities
Public Storage, Inc. Common Stock * 19,655,222
Public Storage, Inc. Preferred Stock * 3,451,686
PS Business Parks, Inc. Common Stock * 500,818
-----------
Total Equity Securities 23,607,726
-----------
Total Investments $52,811,901
===========
* 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.
8
SCHEDULE II
PS 401(k) PROFIT SHARING PLAN
PARTY-IN-INTEREST TRANSACTIONS
December 31, 2003
(Unaudited, see Footnote 1)
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.
9
SCHEDULE III
PS 401(k) PROFIT SHARING PLAN
REPORTABLE TRANSACTIONS
December 31, 2003
(Unaudited, see Footnote 1)
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, 2003.
10
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: July 14, 2004
By: /s/ Harvey Lenkin
------------------
Harvey Lenkin
Chairman, Administrative Committee