Public Storage 2003 Annual Report Download - page 62

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Gain (loss) in disposition of real estate: In the year ended December 31, 2003, we recorded a net gain on
disposition of real estate assets of $1,007,000, as compared to a loss of $2,541,000 in 2002 and a gain of $4,091,000
in 2001. The gain in 2003 is composed of a gain on sale of investments of $316,000, and a gain on sale of seven
parcels of land and two self-storage facilities aggregating $691,000. The net loss in 2002 is composed of a loss on
disposition of land and a commercial facility totaling $702,000 as described in Note 6, combined with a loss on
disposition of partnership interests in the amount of $1,839,000 as described in Note 9. The gain in 2001 is related
to the disposition of two real estate facilities and a parcel of land.
Liquidity and Capital Resources
We believe that our internally generated net cash provided by operating activities will continue to be
sufficient to enable us to meet our operating expenses, capital improvements, debt service requirements and
distributions to shareholders for the foreseeable future.
Operating as a real estate investment trust (REIT), our ability to retain cash flow for reinvestment is
restricted. In order for us to maintain our REIT status, a substantial portion of our operating cash flow must be used
to make distributions to our shareholders (see Requirement to Pay Distributions below). However, despite the
significant distribution requirements, we have been able to retain a significant amount of our operating cash flow.
The following table summarizes our ability to fund distributions to the minority interest, capital improvements to
maintain our facilities, and distributions to our shareholders through the use of cash provided by operating activities.
The remaining cash flow generated is available to make both scheduled and optional principal payments on debt and
for reinvestment.
For the Year Ended December 31,
(Amount in thousands)
2003 2002 2001
Net cash provided by operating activities........................................................... $594,430 $588,961 $538,534
Allocable to minority interests (Preferred Units)................................................ (26,906) (26,906) (31,737)
Allocable to minority interests (common equity) ............................................... (23,125) (25,268) (22,125)
Cash from operations allocable to our shareholders ........................................... 544,399 536,787 484,672
Capital improvements to maintain our facilities:
Self-storage facilities....................................................................................... (29,287) (25,952) (34,436)
Commercial properties.................................................................................... (888) (1,041) (1,042)
Add back: minority interest share of capital improvements to maintain
facilities .......................................................................................................
505
926 1,267
Remaining operating cash flow available for distributions to our shareholders.. 514,729 510,720 450,461
Distributions paid:
Preferred stock dividends............................................................................... (146,196) (148,926) (117,979)
Equity Stock, Series A dividends................................................................... (21,501) (21,501) (19,455)
Regular distributions to Common and Class B shareholders ......................... (225,864) (221,299) (162,481)
Special distributions to Common and Class B shareholders (a)..................... - - (42,115)
Cash available for principal payments on debt and reinvestment ....................... $121,168 $118,994 $108,431
(a) The special distribution in 2001 enabled the Company to maintain its REIT status with respect to the distribution
requirements.
Our financial profile is characterized by a low level of debt to total capitalization, increasing net income,
increasing cash flow from operations, and a conservative dividend payout ratio with respect to the common stock.
We expect to fund our growth strategies with cash on hand at December 31, 2003, internally generated retained cash
flows, and proceeds from issuing equity securities. In general, our current strategy is to continue to finance our
growth with permanent capital, either common or preferred equity. We have in the past used our $200 million line
of credit as temporary bridge financing, and repaid those amounts with internally generated cash flows and