Public Storage 2003 Annual Report Download - page 114

PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
F-35
Restricted Stock Units
Restricted stock units vest over a five-year period from the date of grant at the rate of one-fifth per
year. The employee is entitled to receive per-unit dividends on the outstanding restricted stock units equal to
the per-share dividends received by the common shares. Upon vesting, the employee receives either regular
common shares equal to the number of vested restricted stock units in exchange for the units or, at the
employees option, the equivalent in cash. The total value of each restricted stock unit grant, based upon the
market price of the Companys common stock at the date of grant, combined with the estimated payroll taxes
and other payroll burden costs to be incurred upon vesting, is amortized over the vesting period as
compensation expense and accrued as a liability. Any changes in the market price of the Companys common
stock price are reflected prospectively as adjustments to compensation expense with respect to unvested
restricted stock units over the applicable remaining service period. Dividends paid on restricted stock units are
accounted for as dividends on common stock. Outstanding restricted stock units are included on a one-for-one
basis in the Companys diluted weighted average shares, less a reduction for the treasury stock method applied
to the average cumulative measured but unrecognized compensation expense during the period.
Throughout 2003, the Company granted a total of 249,000 restricted stock units to employees of the
Company. The fair market value of the grant was approximately $10,804,000 based upon a closing price of
$43.39 per common share on December 31, 2003. A total of $970,000 in restricted stock expense was recorded
in the year ended December 31, 2003, representing the applicable amortization of the 249,000 unit grant.
13. Disclosures regarding segment reporting
Description of each reportable segment
Our reportable segments reflect significant operating activities that are evaluated separately by
management. We have four reportable segments: self-storage operations, containerized storage operations,
commercial property operations, and tenant reinsurance operations.
The self-storage segment comprises the direct ownership, development, and operation of traditional
storage facilities, and the ownership of equity interests in entities that own storage properties. The
containerized storage operations represent another segment. The commercial property segment reflects our
interest in the ownership, operation, and management of commercial properties. The vast majority of the
commercial property operations are conducted through PSB, and to a much lesser extent the Company and
certain of its unconsolidated subsidiaries own commercial space, managed by PSB, within facilities that
combines storage and commercial space for rent. The tenant reinsurance segment reflects the operations of PS
Insurance Company, which reinsures policies against losses to goods stored by tenants in our self-storage
facilities
Measurement of segment profit or loss
We evaluate performance and allocate resources based upon the net segment income of each segment.
Net segment income represents net income in conformity with accounting principles generally accepted in the
United States and our significant accounting policies as denoted in Note 2, before interest and other income,
interest expense, corporate general and administrative expense, and minority interest in income. The
accounting policies of the reportable segments are the same as those described in the Summary of Significant
Accounting Policies.
Interest and other income, interest expense, corporate general and administrative expense, minority
interest in income and gain s and losses are not allocated to segments because management does not utilize
them to evaluate the results of operations of each segment.