Public Storage 2003 Annual Report Download - page 35

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25
For Federal income tax purposes, distributions to shareholders are treated as ordinary income,
capital gains, return of capital or a combination thereof. For 2003, the dividends paid to the common
shareholders ($1.80 per share), on all the various classes of preferred stock, and on our Equity Stock, Series
A were classified as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Ordinary Income ................ 99.72% 99.26% 99.98% 100.00%
Pre-May 6th Long-term
Capital Gain .......................
0.28%
0.74%
0.02%
0.00%
Total................................... 100.00% 100.00% 100.00% 100.00%
A percentage of the long-term capital gain is unrecaptured Section 1250 gain for the first, second
and third quarters of 2003 as follows:
For the corporate shareholders a portion of the long-term capital gain is required to be recaptured
as ordinary income. For the first, second and third quarters for 2003 the percentages are as follows:
The Jobs and Growth Tax Relief Reconciliation Act of 2003 introduced a new rule that reduces
the tax rate for qualified dividend income. Generally, qualified dividend income is dividend income
received from a corporation that has been taxed on the dividends distributed to its shareholders. Public
Storage, Inc, as a real estate investment trust (REIT), is generally not taxed on dividends it distributes
annually to its shareholders, and therefore the dividends shareholders receive are not qualified dividend
income subject to the new lower rates.
During 2002, the dividends paid to the common shareholders ($1.80 per share), on all the various
classes of preferred stock, and on our Equity Stock, Series A were characterized as 100% ordinary income.
For 2001, the dividends paid to the common shareholders ($1.69 per share), on all the various
classes of preferred stock and on Equity Stock, Series A were characterized as ordinary income and long-
term capital gain. The quarterly breakdown is as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Ordinary Income ................ 96.60% 99.67% 100.00% 100.00%
Long-term Capital Gain ..... 3.40% 0.33% 0.00% 0.00%
Total................................... 100.00% 100.00% 100.00% 100.00%
c. Equity Stock
The Company is authorized to issue 200,000,000 shares of Equity Stock. The Articles of
Incorporation provide that the Equity Stock may be issued from time to time in one or more series and
gives the Board of Directors broad authority to fix the dividend and distribution rights, conversion and
voting rights, redemption provisions and liquidation rights of each series of Equity Stock.
In April 2001, the Company completed a public offering of 2,210,500 depositary shares each
representing 1/1,000 of a share of Equity Stock, Series A, (Equity Stock A) raising net proceeds of
approximately $51,836,000. In May 2001, the Company completed a direct placement of 830,000
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Unrecaptured §1250 Gain .. 57.33% 96.36% 100.00% 0.00%
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
IRC §291 Recapture........... 11.47% 19.27% 20.00% 0.00%