Public Storage 1999 Annual Report Download - page 22

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20
U B LI C T O RAG E,N C . 1999 N N UAL RE P O RT
Net income per common share
Diluted net income per common share is computed using the weighted average common shares outstanding (adjusted for stock options). The
Class B Common Stock is not included in the determination of net income per common share because all contingencies required for the
conversion to common stock have not been satisfied as of December 31, 1999. In addition, the inclusion of the convertible preferred stock
(for periods prior to conversion) in the determination of net income per common share has been determined to be anti-dilutive.
In computing earnings per common share, preferred stock dividends totaling $94,793,000, $78,375,000 and $88,393,000 for the years ended
December 31, 1999, 1998 and 1997, respectively, reduced income available to common stockholders in the determination of net income
allocable to common stockholders.
Stock-based compensation
In October 1995, the Financial Accounting Standards Board issued Statement No. 123 “Accounting for Stock-Based Compensation” which
provides companies an alternative to accounting for stock-based compensation as prescribed under APB O pinion No. 25 (APB 25). Statement
123 encourages, but does not require companies to recognize expense for stock-based awards based on their fair value at date of grant. Statement
No. 123 allows companies to continue to follow existing accounting rules (intrinsic value method under APB 25) provided that pro-forma
disclosures are made of what net income and earnings per share would have been had the new fair value method been used.We have elected
to adopt the disclosure requirements of Statement No. 123 but will continue to account for stock-based compensation under APB 25.
Reclassifications
Certain reclassifications have been made to the consolidated financial statements for 1998 and 1997 in order to conform to the 1999
presentation.
OTE 3. Business Combinations
On March 12, 1999, we completed a merger with Storage Trust Realty, Inc. (“Storage Trust”). All the outstanding stock of Storage Trust
was exchanged for 13,009,485 shares of the Company’s common stock and an additional 1,011,963 shares were reserved for issuance
upon conversion of limited partnership units in Storage Trust’s operating partnership. The aggregate acquisition cost of the merger was
approximately $575,676,000, consisting of the issuance of the Company’s common stock of approximately $347,223,000, cash of
approximately $105,239,000, the assumption of debt in the amount of $100,000,000, and the Company’s pre-existing investment in Storage
Trust of approximately $23,214,000.
During 1998, we completed mergers with two affiliated public R EITs.We acquired all the outstanding stock of the R EITs for an aggregate
cost of $37,132,000, consisting of the issuance of 433,526 shares of the Company’s common stock ($13,817,000), a $18,571,000 reduction of
the Company’s pre-existing investment and $4,744,000 in cash.
Partnership acquisitions:
During 1999, we acquired all of the limited partner interest in 14 partnerships, which owned an aggregate of 40 storage facilities. Prior to the
acquisitions, we accounted for our investment in each of these partnerships using the equity method. As a result of increasing our ownership
interest and obtaining control of the partnerships, we began to consolidate the accounts of the partnerships in the consolidated financial
statements. The aggregate amount of the interests acquired totaled $118,453,000 consisting of a $43,476,000 reduction of the Company’s
pre-existing investment and cash of $74,977,000.
During 1998, we increased our ownership interest in three limited partnerships in which the Company is the general partner. Prior to the
acquisitions, we accounted for our investment in each of the three partnerships using the equity method. As a result, we began to consolidate
the accounts of these partnerships for financial statement purposes. The aggregate amount of the interests acquired totaled $149,534,000
consisting of a $68,395,000 reduction of the Company’s pre-existing investment and cash of $81,139,000.