Public Storage 2003 Annual Report Download - page 90

PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
F-11
and basic and diluted earnings per share would have been reduced $0.02 per share in each of 2003 and 2002,
respectively.
Goodwill is net of accumulated amortization of $16,515,000 at December 31, 2003 and 2002. At
December 31, 2003, property management contracts are net of accumulated amortization of $53,711,000
($47,107,000 at December 31, 2002). Included in depreciation and amortization expense for 2003, 2002, and
2001 is $6,604,000 with respect to the amortization of property management contracts. We expect amortization
expense with respect to property management contracts will be $6,604,000 per year in each of the five years
ended through December, 2008. Included in depreciation and amortization expense for 2001 is $2,705,000
relating to the amortization of goodwill (none for 2002 and 2003).
Revenue and expense recognition
Rental income, which is generally earned pursuant to month-to-month leases for storage space, is
recognized as earned. Promotional discounts are recognized as a reduction to rental income over the
promotional period, which is generally during the first month of occupancy. Late charges and administrative
fees are recognized as rental income when collected. Tenant reinsurance premiums are recognized as premiums
are collected. Interest income is recognized as earned. Equity in earnings of real estate entities is recognized
based on our ownership interest in the earnings of each of the unconsolidated real estate entities.
We accrue for property tax expense based upon estimates and historical trends. If these estimates are
incorrect, the timing of expense recognition could be affected.
Cost of operations, general and administrative expense, interest expense, as well as television, yellow
page, and other advertising expenditures are expensed as incurred. Television, yellow page, and other
advertising expense totaled $25,231,000, $25,610,000, and $21,897,000 for the years ended December 31,
2003, 2002, and 2001, respectively.
Environmental costs
Our policy is to accrue environmental assessments and/or remediation cost when it is probable that
such efforts will be required and the related costs can be reasonably estimated. Our current practice is to
conduct environmental investigations in connection with property acquisitions. Although there can be no
assurance, we are not aware of any environmental contamination of any of our facilities, which individually or
in the aggregate would be material to our overall business, financial condition, or results of operations.
Net income per common share
Cumulative Preferred Stock dividends totaling $146,196,000, $148,926,000, and $117,979,000 for the
years ended December 31, 2003, 2002 and 2001, respectively, have been deducted from net income to arrive at
net income allocable to our common shareholders.
In addition, during 2003, we implemented the Security and Exchange Commissions (the SEC)
clarification of Emerging Issues Task Force (EITF) Topic D-42.. EITF Topic D-42, "The Effect on the
Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock" provides,
among other things, that any excess of (1) the fair value of the consideration transferred to the holders of
preferred stock redeemed over (2) the carrying amount of the preferred stock should be subtracted from net
earnings to determine net earnings available to common stockholders in the calculation of earnings per share.
During 2001, 2002, and 2003, we called for redemption various series of our cumulative perpetual
preferred stock. Our interpretation of EITF Topic D-42, prior to the clarification, was that the carrying amount