Public Storage 1998 Annual Report Download - page 32

Public Storage, Inc. 1998 Annual Report
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Note 14. Recent Accounting Pronouncements and Guidance
Reporting Comprehensive Income
In June 1997, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
Income” (“FAS 130”), which establishes standards for reporting and display of comprehensive income and its components. This statement requires a
separate statement to report the components of comprehensive income for each period reported. The provisions of this statement are effective for fiscal
years beginning after December 15, 1997. The Company has implemented FAS 130 for the fiscal year ended December 31, 1998, but the implementation
has no impact because the Company has no items of comprehensive income (as defined by FAS 130).
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”
(“FAS 133”). This statement provides a comprehensive and consistent standard for the recognition and measurement of derivatives and hedging
activities. The provisions of this statement are effective for years beginning after June 15, 1999, but companies can early adopt as of the beginning
of any fiscal quarter that begins after June 1998. The Company expects that FAS 133 will have no impact upon the Company’s financial statements
because the Company has no financial instruments or hedging activities that are addressed by FAS 133.
Emerging Issues Task Force Discussion of Capitalization of Acquisition Costs
In March 1998, The Emerging Issues Task Force (“EITF”) of the FASB issued guidance (the “97-11 Guidance”) with respect to Issue No. 97-11,
“Accounting for Internal Costs Relating to Real Estate Property Acquisitions.” The 97-11 Guidance provides that a Company shall expense internal
preacquisition costs (such as costs of an internal acquisitions department) related to the purchase of an operating property. The Company does not
capitalize such internal preacquisition costs with respect to the acquisition of operating real estate facilities. Accordingly, the 97-11 Guidance had no
impact upon the Company’s financial statements and would have had no impact upon the Company’s financial statements for periods prior to the
issuance of the 97-11 Guidance.
Note 15. Commitments and Contingencies
Lease obligations
Thirty-eight of the forty-three facilities operated by PSPUD as of December 31, 1998 are located in buildings leased from third parties. The lease terms
range from four to nine years with renewal options at varying terms. Future minimum lease payments at December 31, 1998 under non-cancelable
operating leases are as follows:
1999 $10,480
2000 10,069
2001 9,221
2002 6,263
2003 1,531
Thereafter 1,867
$39,431
Legal proceedings
During 1997, three cases were filed against the Company. Each of the plaintiffs in these cases is suing the Company on behalf of a purported class of
California tenants who rented storage spaces from the Company and contends that the Company’s fees for late payments under its rental agreements
for storage space constitutes unlawful “penalties” under California law. None of the plaintiffs has assigned any dollar amount to the claims.
The lower court has dismissed one of the cases and the plaintiff in that case has appealed that dismissal. The Company is continuing to vigorously
contest the claims in all three cases.
There are no other material proceedings pending against the Company or any of its subsidiaries, other than ordinary routine litigation incidental
to their business.