Public Storage 2003 Annual Report Download - page 24

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total assets before a reduction for accumulated depreciation and amortization that should, in accordance with
generally accepted accounting principles, be reflected on the consolidated balance sheet at the time of determination.
Our bank and senior unsecured debt agreements contain various financial covenants, including limitations
on the level of indebtedness of 30% of total capitalization (as defined) and the prohibition of the payment of
dividends upon the occurrence of an event of default (as defined).
Employees
We have approximately 4,500 employees at December 31, 2003 who render services on behalf of the
Company, primarily personnel engaged in property operation, substantially all of whom are employed by a clearing
company that provides certain administrative and cost-sharing services to the Company and other owners of
properties operated by the Company.
Federal Income Tax
We believe that we have operated, and intend to continue to operate, in such a manner as to qualify as a
REIT under the Internal Revenue Code of 1986, but no assurance can be given that we will at all times so qualify.
To the extent that we continue to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the
taxable income (including gains from the sale of securities and properties) that we distribute to our shareholders.
Our taxable REIT subsidiaries will be taxed on their taxable income.
For Federal tax purposes, our distributions to our shareholders are treated by the shareholders as ordinary
income, capital gains, return of capital or a combination thereof. Distributions in excess of taxable income (as
defined) may be treated as nontaxable returns of capital or as capital gain to the extent the distributions exceed a
shareholders adjusted basis in the shares.
Insurance
We believe that our properties are adequately insured. Our facilities have historically carried
comprehensive insurance, including fire, earthquake, liability and extended coverage through STOR-Re Mutual
Insurance Company, Inc. (STOR-Re), one of the Consolidated Entities. The Company also insures portions of
these risks through nationally recognized insurance carriers. STOR-Re also insures affiliates of the Company.
The Company, STOR-Re, and its affiliates maximum aggregate annual exposure for losses that are below
the deductibles set forth in the third-party insurance contracts, assuming multiple significant insurable events occur,
is approximately $30 million. In addition, if losses exhaust the third-party insurers limit of coverage of $125
million for property coverage and $101 million for general liability, our exposure could be greater. These limits are
higher than estimates of maximum probable losses that could occur from individual catastrophic events (i.e.,
earthquake and wind damage) determined in recent engineering and actuarial studies.
ITEM 1A. Risk Factors
In addition to the other information in our Form 10-K, you should consider the following factors in
evaluating the Company:
The Hughes family could control us.
At March 11, 2004, the Hughes family owned approximately 36% of our outstanding shares of common
stock. Consequently, the Hughes family could control matters submitted to a vote of our shareholders, including
electing directors, amending our organizational documents, dissolving and approving other extraordinary
transactions, such as a takeover attempt, even though such actions may be favorable to the other common
shareholders.