Public Storage 2010 Annual Report Download - page 116

PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
F-34
12. Recent Accounting Pronouncements and Guidance
In June 2009, the FASB issued accounting pronouncements which became effective January 1, 2010
and require restatement of previously reported financial statements on the new accounting basis. One
pronouncement affects accounting for Variable Interest Entities, by (i) eliminating the concept of a qualifying
special purpose entity, (ii) replacing the quantitative-based risks and rewards calculation for determining which
enterprise has a controlling financial interest in a variable interest entity and the obligation to absorb losses of
the entity or the right to receive benefits from the entity, and (iii) providing for additional disclosures about an
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of financial assets, by (i) eliminating the concept of a qualifying special purpose entity, (ii) amending the
derecognition criteria for a transfer to be accounted for as a sale, and (iii) requiring additional disclosure over
transfers accounted for as a sale. These pronouncements did not have any effect on our financial statements.
13. Commitments and Contingencies
Legal Matters
We are a party to various claims, complaints, and other legal actions that have arisen in the normal
course of business from time to time. We believe that it is unlikely that the outcome of these pending legal
proceedings including employment and tenant claims, in the aggregate, will have a material adverse impact
upon the results of our operations or financial position.
Insurance and Loss Exposure
We have historically carried customary property, earthquake, general liability and workers
compensation coverage through internationally recognized insurance carriers, subject to customary levels of
deductibles. The aggregate limits on these policies of $75 million for property coverage and $102 million for
general liability are higher than estimates of maximum probable loss that could occur from individual
catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple
catastrophic events, these limits could be exhausted.
Our tenant insurance program reinsures a program that provides insurance to certificate holders against
claims for property losses due to specific named perils (earthquakes and floods are not covered by these
policies) to goods stored by tenants at our self-storage facilities for individual limits up to a maximum of
$5,000. We have third-party insurance coverage for claims paid exceeding $1,000,000 resulting from any one
individual event, to a limit of $25,000,000. At December 31, 2010, there were approximately 621,000
certificate holders held by our tenants participating in this program, representing aggregate coverage of
approximately $1.4 billion. Because each certificate represents insurance of goods held by a tenant at our self-
storage facilities, the geographic concentration of this $1.4 billion in coverage is dispersed throughout all of our
U.S. facilities. We rely on a third-party insurance company to provide the insurance and are subject to licensing
requirements and regulations in several states.
Operating Lease Obligations
We lease land, equipment and office space under various operating leases. At December 31, 2010, the
approximate future minimum rental payments required under our operating leases for each calendar year is as
follows: $4 million per year in 2011 through 2014, $5 million in 2015 and an aggregate of $50 million in
payments thereafter.
Expenses under operating leases were approximately $4.7 million, $4.6 million and $4.1 million for
each of the three years ended December 31, 2010, respectively.