Public Storage 1997 Annual Report Download - page 32

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Public Storage, Inc. 1997 Annual Report
Results of Operations
Net income and earnings per common share: Net income for 1997, 1996 and 1995 was $178,649,000, $153,549,000 and $70,386,000,
respectively, representing increases over the prior year of 16.4% for 1997 and 118.2% for 1996. Net income allocable to common
shareholders (net income less preferred stock dividends) for 1997, 1996 and 1995 was $90,256,000, $84,950,000 and $39,262,000,
respectively, representing increases over the prior year of 6.3% for 1997 and 116.4% for 1996. On a diluted basis, net income per common
share was $0.91 (based on weighted average shares outstanding of 98,961,000) for 1997, $1.10 per common share (based on weighted
average shares outstanding of 77,358,000) for 1996 and $0.95 per common share (based on weighted average shares outstanding of
41,171,000) for 1995.
The decrease in net income per share for 1997 compared to 1996 was principally the result of losses generated from PSPUD’s portable
self-storage business which generated operating losses totaling $31,665,000 or $0.32 per common share and the effect of the special
dividend, discussed below. The increase in net income per share for 1996 compared to 1995 was principally the result of improved real
estate operations, partially offset by the operating losses generated by PSPUD’s portable self-storage business totaling $826,000 or $0.01 per
common share.
Net income allocable to common shareholders and net income per common share for the year ended December 31, 1997 was negatively
impacted by a special dividend totaling $13,412,000, paid on the Company’s Series CC Convertible Preferred Stock (“Series CC”) during the
first quarter of 1997. As a result of this special dividend, the Company would not have been required to pay another dividend with respect to
this stock until the quarter ended March 31, 1999. During the second quarter of 1997, the Series CC stock converted into common stock of
the Company. Accordingly during 1997, all of the $13,412,000 ($0.14 per common share, on a diluted basis) of dividends were treated as an
allocation of net income to the preferred shareholders in determining the allocation of net income to the common shareholders. The special
dividend eliminated the quarterly dividend of $1.9 million (annual fixed charges of $7.6 million).
Net income includes depreciation and amortization expense (including depreciation included in equity in earnings of real estate entities)
of approximately $93,585,000 ($0.95 per common share) for 1997, $70,927,000 ($0.92 per common share) for 1996 and $31,562,000
($0.77 per common share) for 1995. The fiscal 1995 earnings per common share also includes a reduction of approximately $0.08 per
common share relating to the accrual of estimated environmental remediation costs (discussed below).
Real Estate Operations
At December 31, 1997, the Company’s investment portfolio consisted of (i) its wholly-owned properties, (ii) properties owned by real estate
entities consolidated with the Company (the “Consolidated Entities”) and (iii) properties owned by real estate entities in which the Company’s
ownership interest and control are not sufficient to warrant the consolidation of such entities (the “Unconsolidated Entities”). The following
table summarizes the Company’s investment in real estate facilities as of December 31, 1997:
Number of Facilities in which the Net Rentable Square Footage
Company has an ownership interest (In thousands)
Self-storage Commercial Self-storage Commercial
facilities properties Total facilities properties Total
Wholly-owned facilities 533 12 545 32,635 652 33,287
Facilities owned by Consolidated Entities 361 49 410 20,936 6,035 26,971
Total consolidated facilities 894 61 955 53,571 6,687 60,258
Facilities owned by Unconsolidated Entities 179 2 181 10,453 191 10,644
Total facilities in which the Company
has an ownership interest 1,073 63 1,136 64,024 6,878 70,902