Public Storage 2001 Annual Report Download - page 17

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P
UBLIC S TORAGE ,I NC . 2001 A NNUAL R EPORT
Note 3 — Business Combinations
On December 31, 2001, we acquired all of the capital stock of PS Insurance Company, Ltd. (“PS Insurance Company”), which
reinsures policies against losses to goods stored by tenants in our self-storage facilities and which owned, and continues to own,
301,032 shares of the Company’s common stock. This acquisition was completed in order to provide an additional source of
operating income for the Company. Prior to December 31, 2001, PS Insurance was owned by our chairman and chief executive
officer, B. Wayne Hughes, and members of his family (collectively, “Hughes”).
The acquisition cost was $24,538,000, which was composed of $30,814,000 in common stock (1,439,765 shares issued to
Hughes less the 301,032 shares held by PS Insurance Company) valued at the market price of the common stock at the time
the acquisition agreement was entered into and announced publicly) less $6,276,000 cash held by PS Insurance Company.
The purchase price was allocated first to the tangible assets and liabilities of PS Insurance Company. The difference between the
purchase price and the net tangible assets was determined to be related to the value of the ongoing operations of the enterprise as
a whole (and not to any specific intangible asset) and was therefore allocated to goodwill. The goodwill will not be amortized but
instead will be evaluated for recoverability on an annual basis in accordance with Statement of Financial Accounting Standards
No. 142, “Goodwill and Other Intangible Assets.”
During 2000, we acquired the remaining ownership interests in a partnership, of which we are the general partner, for an aggregate
acquisition cost of $81,169,000, consisting of cash of $66,776,000 and the reduction of our pre-existing investment in the amount of
$14,393,000. Prior to the acquisition, we accounted for our investment in the partnership using the equity method of accounting.
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 1999, we acquired all of the limited partner interests in fourteen 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.