Public Storage 2003 Annual Report Download - page 103

PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
F-24
The Consolidated Development Joint Venture is funded solely with equity capital consisting of 51%
from the Company and 49% from PSAC Storage Investors. The accounts of the Consolidated Development
Joint Venture are included in the Companys consolidated financial statements. The accounts of PSAC Storage
Investors are not included in the Companys consolidated financial statements, as the Company has no
ownership interest in this entity. Minority interests primarily represent the total contributions received from
PSAC Storage Investors combined with the accumulated net income allocated to PSAC Storage Investors, net
of cumulative distributions. The amounts included in our financial statements with respect to the minority
interest in the Consolidated Development Joint Venture are denoted in the tables above.
The term of the Consolidated Development Joint Venture is 15 years; however, during the sixth year
PSAC Storage Investors has the right to cause an early termination of the partnership. If PSAC Storage
Investors exercises this right, we then have the option, but not the obligation, to acquire their interest for an
amount that will allow them to receive an annual return of 10.75%. If the Company does not exercise its option
to acquire PSAC Storage Investors interest, the partnerships assets will be sold to third parties and the
proceeds distributed to the Company and PSAC Storage Investors in accordance with the partnership
agreement. If PSAC Storage Investors does not exercise its right to early termination during the sixth year, the
partnership will be liquidated 15 years after its formation with the assets sold to third parties and the proceeds
distributed to the Company and PSAC Storage Investors in accordance with the partnership agreement.
PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield of approximately 8.0% per
annum on his preferred non-voting interest (representing an investment of approximately $64.1 million at
December 31, 2003 and 2002). In addition, Mr. Hughes receives 1% of the remaining cash flow of PSAC
Storage Investors, LLC (estimated to be less than $50,000 per year). If PSAC Storage Investors, LLC does not
elect to cause an early termination, Mr. Hughes 1% interest in residual cash flow can increase to 10%.
In consolidation, the Equity Stock, Series AAA owned by the joint venture and the related dividend
income has been eliminated. Minority interests primarily represent the total contributions received from PSAC
Storage Investors combined with the accumulated net income allocated to PSAC Storage Investors, net of
cumulative distributions.
Convertible Partnership Units
As of December 31, 2003, one of our Consolidated Entities had approximately 237,935 operating
partnership units (Convertible Units) outstanding, representing a limited partnership interest in the
partnership. The Convertible Units are convertible on a one-for-one basis (subject to certain limitations) into
common shares of the Company at the option of the unitholder. Minority interest in income with respect to
Convertible Units reflects the Convertible Units share of the net income of the Company, with net income
allocated to minority interests with respect to weighted average outstanding Convertible Units on a per unit
basis equal to diluted earnings per common share. During the years ended December 31, 2003, ,2002, and
2001, no units were converted.
Newly Consolidated Partnerships
As described in Note 3, effective January 1, 2002, we began consolidating the results of two
partnerships owning 31 properties, and as a result, minority interest increased by $14,806,000 in 2002.