Public Storage 2003 Annual Report Download - page 94

PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
F-15
The historical operating results of the above acquisitions prior to each respective acquisition date have
not been included in the Companys historical operating results. Pro-forma data (unaudited) for the year ended
December 31, 2002 (there were no pro-forma adjustments required for the year ended December 31, 2003 as all
the transactions denoted above had occurred by December 31, 2002) as though the business combinations above
had been effective at the beginning of fiscal 2002 are as follows:
For the Year
Ended December 31, 2002
(in thousands except
per share data)
Revenues ........................................................... $832,905
Net income ........................................................ $318,503
Net income per common share (Basic).............. $1.15
Net income per common share (Diluted)........... $1.13
The pro-forma data does not purport to be indicative either of results of operations that would have
occurred had the transactions occurred at the beginning of fiscal 2001 or future results of operations of the
Company. Certain pro-forma adjustments were made to the combined historical amounts to reflect (i) expected
reductions in general and administrative expenses, (ii) estimated increased interest expense from bank
borrowings to finance the cash portion of the acquisition cost and (iii) estimated increase in depreciation
expense.
4. Discontinued Operations
Statement of Financial Accounting Standards No. 144 (SFAS No. 144) addresses accounting for
discontinued operations. The Statement requires the segregation of all disposed components of an entity with
operations that (i) can be distinguished from the rest of the entity and (ii) will be eliminated from the ongoing
operations of the entity in a disposal transaction.
During 2002, we adopted a business plan that included the closure of 22 non-strategic containerized
storage facilities. During 2003, we identified an additional 9 facilities for closure. Each of these 31
containerized storage facilities (collectively, the Closed Facilities) represented components of our
Containerized Storage business segment. The related assets of the Closed Facilities (consisting primarily of
storage containers) were deemed not recoverable from future operations, and as a result asset impairment
charges for the excess of these assets net book value over their fair value, determined based upon the values of
similar assets, was recorded during 2002 and 2003 totaling $6,504,000 and $2,479,000, respectively.
In 2003, we decided to sell an industrial facility that was previously used by one of the closed
facilities. We determined in the quarter ended June 30, 2003 that the net proceeds from this sale would be
$750,000 less than the book value and, accordingly, we recorded an impairment charge of $750,000. The sale
of the facility was completed in December 2003, and a loss on sale, representing the difference between the net
proceeds received and the book value (net of the $750,000 impairment charge) of $355,000 was recorded. The
impairment charge and loss on sale is included in discontinued operations.
During 2002, lease termination costs, representing the expected remaining lease liability following
closure of the facilities, were accrued in the amount of $2,447,000 for 2002. In accordance with the provisions
of Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or
Disposal Activities which we adopted on January 1, 2003, we no longer accrue for such lease termination or
other liabilities and instead recognize such expenses as they are incurred. If recorded, such lease termination
accruals would have decreased net income by $610,000 for the year ended December 31, 2003.