PUBLIC STORAGE, INC.
701 Western Avenue, Glendale, California 91201
August 21, 2002
Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Re: File No. S7-22-02
Dear Mr. Katz:
Public Storage, Inc. ("PSI") appreciates the opportunity to comment on the proposals in Release Nos. 33-8106 and 34-46084. PSI is a real estate investment trust that primarily acquires, develops owns and operates storage facilities with locations in 37 states. PSI has interests in approximately 1,400 facilities.
PSI supports the Commission's efforts to provide investors with enhanced and "real-time" disclosure of important corporate events. We agree with most of the Commission's proposals relating to Form 8-K. However, PSI is concerned that one aspect of the proposals could be counterproductive to the interests of investors. PSI believes that requiring companies to disclose terms of material non-binding agreements could severely hinder the negotiating positions and competitiveness of companies.
While PSI generally supports the Commission's position to require a company to disclose when it enters into a material agreement that is not made during the ordinary course of its business, we believe that letters of intent, non-binding agreements and other similar documents should not be required to be disclosed. We do not feel that such agreements can be deemed to be material until they become binding contracts. In addition, contracts to purchase real estate typically contain many due diligence conditions that allow the purchaser to walk away from the contract if its due diligence is not completed to its satisfaction. Until such due diligence is satisfactorily concluded, these contracts are not binding and therefore should not have to be disclosed.
In addition, PSI is concerned that disclosure of non-binding agreements would cause companies to disclose competitive terms and would otherwise disrupt the ability of companies to negotiate agreements on their own behalf and for the benefit of their investors. Companies would be disclosing negotiating terms that their competitors could review, allowing the competitors to interfere with the companies negotiations with prospective property sellers.
Public companies would be at a particular competitive disadvantage relative to privately held companies that are not required to disclose the terms of their agreements. Furthermore, PSI believes that the confidentiality provisions that normally apply to such non-binding agreements would be rendered ineffective.
In order to promote uniform standards, we believe that Item 1.01 should be kept consistent with the current requirements of Exhibit 10 under Regulation S-K, Item 6.01(b)(10) which does not require the filing of non-binding agreements. Additionally, PSI supports the position that registrants should not be required to file the material agreements that are subject to the Form 8-K disclosure requirements as exhibits, because such agreements are required to be filed in Form 10-Q and/or Form 10-K. We would suggest that if Item 1.01 becomes a part of Form 8-K, the Form should include a box on the cover page that would allow a registrant to satisfy obligations under Rule 165, Rule 14d-2(b) and/or Rule 14a-12, as suggested by the Commission in its proposed rule.
Please contact me at extension 529 or by fax at (818) 548-9288 if you have any questions.
Very truly yours,
/s/ David Goldberg
Vice President and Senior Counsel