Public Storage 2003 Annual Report Download - page 28

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for other services during 2003). There have been conflicts of interest in allocating time of our personnel between
Company properties, the Canadian properties, and certain other Hughes Family interests. The sharing of Company
personnel with the Canadian entities was substantially eliminated by December 31, 2003.
Our containerized storage business has incurred operating losses.
Public Storage Pickup & Delivery (PSPUD) was organized in 1996 to operate a portable self-storage
business. We own all of the economic interest of PSPUD. We cannot provide any assurance as to its ultimate
profitability, because this is a relatively new business segment. PSPUD incurred operating losses amounting to
$5,135,000 in 2000, $2,218,000 in 2001, $10,058,000 in 2002 and operating income of $2,543,000 in 2003. PSPUD
closed 31 facilities that were deemed not strategic to the Companys business plan during 2002 and 2003.
The operating loss for 2002 includes a write-down for impaired assets totaling $6,924,000 and lease
termination charges of $2,447,000. The operating income for 2003 was reduced by impairment charges and losses
on sale of $3,584,000 related to the fixed assets used in operations.
Terrorist attacks and the possibility of wider armed conflict may have an adverse impact on our business and
operating results and could decrease the value of our assets.
Terrorist attacks and other acts of violence or war, such as those that took place on September 11, 2001,
could have a material adverse impact on our business and operating results. There can be no assurance that there
will not be further terrorist attacks against the United States or its businesses or interests. Attacks or armed conflicts
that directly impact one or more of our properties could significantly affect our ability to operate those properties
and thereby impair our operating results. Further, we may not have insurance coverage for losses caused by a
terrorist attack. Such insurance may not be available, or if it is available and we decide to obtain such terrorist
coverage, the cost for the insurance may be significant in relationship to the risk overall. In addition, the adverse
effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a
material adverse effect on our business and results of operations. Finally, further terrorist acts could cause the
United States to enter into a wider armed conflict which could further impact our business and operating results.
Recently enacted tax legislation could adversely affect the price of our stock.
Tax legislation enacted in 2003 generally reduces the maximum tax rate for dividends payable to
individuals to 15% through 2008. Dividends payable by REITs, however, generally continue to be taxed at the
normal rate applicable to the individual recipient, rather than the preferential rates applicable to other dividends.
Although this legislation does not adversely affect the taxation of REITs or dividends paid by REITs, the more
favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive
investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that
pay dividends, which could adversely affect the value of the stock of REITs, including our common stock.
Developments in California may have an adverse impact on our business.
We are headquartered in, and approximately one-quarter of our properties are located in, California.
California is facing serious budgetary problems. Action that may be taken in response to these problems, such as an
increase in property taxes on commercial properties, could adversely impact our business and results of operations.
In addition, we could be adversely impacted by the recently enacted legislation mandating, beginning in 2006,
medical insurance for employees of California businesses and members of their families.