Public Storage 2002 Annual Report Download - page 36

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial
statements and notes thereto.
Forward Looking Statements: When used within this document, the words “expects,” “believes,”
“anticipates,” “should,” “estimates,” and similar expressions are intended to identify “forward-looking statements”
within the meaning of that term in Section 27A of the Securities Exchange Act of 1933, as amended, and in Section
21F of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company
to be materially different from those expressed or implied in the forward looking statements. Such factors are
described in Item 1A, “Risk Factors” and include changes in general economic conditions and in the markets in
which the Company operates and the impact of competition from new and existing storage and commercial facilities
and other storage alternatives, which could impact rents and occupancy levels at the Company’s facilities;
difficulties in the Company’s ability to evaluate, finance and integrate acquired and developed properties into the
Company’s existing operations and to fill up those properties, which could adversely affect the Company’s
profitability; the impact of the regulatory environment as well as national, state, and local laws and regulations
including, without limitation, those governing Real Estate Investment Trusts, which could increase the Company’s
expense and reduce the Company’s cash available for distribution; consumers’ failure to accept the containerized
storage concept which would reduce the Company’s profitability; difficulties in raising capital at reasonable rates,
which would impede the Company’s ability to grow; delays in the development process, which could adversely
affect the Company’s profitability; and economic uncertainty due to the impact of war or terrorism could adversely
affect our business plan. We disclaim any obligation to publicly release the results of any revisions to these
forward-looking statements reflecting new estimates, events or circumstances after the date of this report.
Critical Accounting Policies
Qualification as a REIT – Income Tax Expense: We believe that we have been organized and operated,
and we intend to continue to operate, as a qualifying REIT under the Internal Revenue Code and applicable state
laws. A qualifying REIT generally does not pay corporate level income taxes on its taxable income that is
distributed to its shareholders, and accordingly, we do not pay or record as an expense income tax on the share of
our taxable income that is distributed to shareholders.
Given the complex nature of the REIT qualification requirements, the ongoing importance of factual
determinations and the possibility of future changes in our circumstances, we cannot provide any assurance that we
actually have satisfied or will satisfy the requirements for taxation as a REIT for any particular taxable year. For
any taxable year that we fail or have failed to qualify as a REIT and applicable relief provisions did not apply, we
would be taxed at the regular corporate rates on all of our taxable income, whether or not we made or make any
distributions to our shareholders. Any resulting requirement to pay corporate income tax, including any applicable
penalties or interest, could have a material adverse impact on our financial condition or results of operations. Unless
entitled to relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the
four taxable years following the year during which qualification was lost. There can be no assurance that we would
be entitled to any statutory relief.