Public Storage 1999 Annual Report Download - page 20

OTES TO ONSOLIDATED INANCIAL TATEMENTS
December 31, 1999
U B LI C T O RAG E,N C . 1999 N N U AL REP O RT
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OTE 1. Description of the Business
Public Storage, Inc. (the “Company”) is a California corporation, which was organized in 1980.We are a fully integrated, self-administered and
self-managed real estate investment trust (“R EIT”) whose principal business activities include the acquisition, development, ownership and
operation of storage facilities which offer storage spaces and containers for lease, usually on a month-to-month basis, for personal and business
use. In addition, to a much lesser extent, we have interests in commercial properties.
In 1996 and 1997, we organized Public Storage Pickup and Delivery, Inc., as a separate corporation and partnership (the corporation and
partnership are collectively referred to as “PSPUD”) to operate storage facilities that rent portable storage containers to customers for storage
in central warehouses. At December 31, 1999, PSPUD had 36 facilities in operation.
We invest in real estate facilities by acquiring wholly owned facilities or by acquiring interests in real estate entities which also own real
estate facilities. At December 31, 1999, we had direct and indirect equity interests in 1,459 properties located in 38 states, including 1,330
self-storage facilities and 129 commercial properties. The Company under the “Public Storage” name operates all of the self-storage facilities.
OTE 2. Summary of Significant Accounting Policies
Basis of presentation
The consolidated financial statements include the accounts of the Company and 35 controlled entities (the “Consolidated Entities”).
Collectively, the Company and these entities own a total of 1,210 real estate facilities, consisting of 1,206 storage facilities and four
commercial properties.
At December 31, 1999, we had equity investments in 12 limited partnerships in which we do not have a controlling interest. These limited
partnerships collectively own 124 self-storage facilities, which are managed by the Company. In addition, we own approximately 41% of the
common interest in PS Business Parks, Inc. (“PSB”), which owns and operates 125 commercial properties.We do not control these entities,
accordingly, our investments in these limited partnerships and PSB are accounted for using the equity method.
From the time of PSB’s formation through March 31, 1998, we consolidated the accounts of PSB in our financial statements. During
the second quarter of 1998, our ownership interest in PSB was reduced below 50% and, accordingly, we ceased to have a controlling interest
in PSB. Accordingly, effective April 1, 1998, we no longer included the accounts of PSB in our consolidated financial statements and have
accounted for our investment using the equity method. For all periods after March 31, 1998, the income statement includes the Company’s
equity in income of PSB. Further, commercial property operations for the periods after March 31, 1998 reflect only the commercial property
operations of facilities owned by the Company which have both storage and commercial use combined at the same property location.
Use of estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Income taxes
For all taxable years subsequent to 1980, the Company qualified and intends to continue to qualify as a R EIT, as defined in Section 856 of the
Internal Revenue Code. As a R EIT, we are not taxed on that portion of our taxable income which is distributed to our shareholders provided
that we meet certain tests.We believe we have met these tests during 1999, 1998 and 1997; accordingly, no provision for income taxes has been
made in the accompanying financial statements.
Financial instruments
The methods and assumptions used to estimate the fair value of financial instruments is described below.We have estimated the fair value of
our financial instruments using available market information and appropriate valuation methodologies. Considerable judgment is required in
interpreting market data to develop estimates of market value. Accordingly, estimated fair values are not necessarily indicative of the amounts
that could be realized in current market exchanges.
For purposes of financial statement presentation, we consider all highly liquid debt instruments purchased with a maturity of three months
or less to be cash equivalents.