Public Storage 2003 Annual Report Download

Download and view the complete annual report

Please find the complete 2003 Public Storage annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 169

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169

The
BEHIND OUR DOORS
PUBLIC STORAGE, INC. 2003 ANNUAL REPORT

Table of contents

  • Page 1
    T h e B E H I N D O U R D O O R S PUBLIC STORAGE, INC. 2003 ANNUAL REPORT

  • Page 2
    ...000 2,172,000 Location Nebraska Nevada New Hampshire New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Utah Virginia Washington Wisconsin Totals (1) Storage and properties combining self-storage and commercial space. Number of Properties...

  • Page 3
    ...ome2Â-nd2tenÂ-nt2reinsurÂ-n™e2premiums snterest2Â-nd2other2in™ome Expenses: gost2of2operÂ-tions hepre™iÂ-tion2Â-nd2Â-mortizÂ-...operÂ-tions2Â-nd2gÂ-in2on2disposition2 of2reÂ-l2estÂ-te his™ontinued2operÂ-tions2@PA qÂ-inG@lossA2on2disposition2of2reÂ-l2estÂ-te2investments xet2in™ome Per Common Share...

  • Page 4
    ...™ed2leverÂ-geF22yur2gonsistent2qroup of2selfEstorÂ-ge2properties2experien™ed2Â-2de™line2of2IFV72in2net2operÂ-ting2in™ome2@˜efore2depre™iÂ-tionAF Self-Storage Operating Results vÂ-st2yeÂ-r2we2™hroni™led2our2lÂ-™k2of2su™™ess2in2operÂ-ting2our2selfEstorÂ-ge2˜usinessF2huring2PHHQD2weX IF ve...

  • Page 5
    yur2key2fo™us2wÂ-s2improving2our2gonsistent2qroup2of2selfEstorÂ-ge2fÂ-™ilities2whi™hD2in2turnD2would2˜enefit2our newly2developed2Â-nd2Â-™quired2properties2Â-nd2our2Â-n™illÂ-ry2˜usiness2operÂ-tionsF „he2operÂ-tions2of2our2gonsistent2qroup2of2selfEstorÂ-ge2fÂ-™ilities2for2the2pÂ-st2three2yeÂ-...

  • Page 6
    ...e2experimented2with2vÂ-rious2pri™ing2progrÂ-ms2Â-nd2moved2dire™t2™ontrol2of2produ™t2pri™ing2to2lo™Â-l operÂ-ting2 mÂ-nÂ-gementF2 2 ƒin™e2 our2 pri™ing2...qui™kly2 repli™Â-ted2 ˜y2 mÂ-ny2 of2 our2 lo™Â-l ™ompetitorsD2we2need2to2˜e™ome2more2nim˜le2Â-nd2™reÂ-tive2in2pri™ing2our2spÂ-™eF...

  • Page 7
    histori™Â-l2 trendsF2 2 ... Ancillary Business Operations yur2Â-n™...yur2 Â-n™illÂ-ry2 operÂ-tions2 Â-lso2 in™lude2 tenÂ-nt2 insurÂ-n™eD2 tru™k2 rentÂ-l2 @˜oth2 our2 ...own2 Â-nd2 Â-s2 Â-n2 Â-gent2 of €enskeA2 Â-nd2 retÂ-il2 sÂ-les2 @lo™ks2 Â-nd2...

  • Page 8
    ... generÂ-te2 operÂ-ting2 losses during2their2first2yeÂ-r2of2operÂ-tionF22xet2operÂ-ting2in™ome2from2these2fÂ-™ilities2wÂ-s2only26PIWDHHHF2 À edding2 IDUHH2 rentÂ-˜le2 units2 ...IVFQ2 million2 rentÂ-˜le2 squÂ-re2 feetF2 2 e™™ordinglyD2 through2 our2 RR72 equity stÂ-keD2we2indire™...

  • Page 9
    ... of2 selfEstorÂ-ge2 operÂ-tionsF2 2 tohn ™omes2 to2 us2 Â-fter2 Â-2 PPEyeÂ-r2 ™Â-reer2 with2 w™honÂ-ldÀsD2 hÂ-ving2 stÂ-rted2 Â-s2 Â-2... well mÂ-intÂ-ined2Â-nd2™onvey2Â-2sense2of2se™urityF Ä €ri™ingX22Â...se2pri™ingD2promotionÂ-l2dis™ounts2Â-nd2Â-dvertising2Â-s2™ompetitive2tools2to2Â-...

  • Page 10
    Computation of Funds from Operations @unÂ-uditedA „he2following2tÂ-˜le2sets2forth2our2funds2from2operÂ-tions2@ÁppyÃ,A2per2™ommon2shÂ-...por2the2yeÂ-r2ended2he™em˜er2QID (Dollar amounts in thousands, except per share amounts) PHHQ PHHP PHHI xet2in™ome 62QQTDTSQ2 hepre™iÂ-tion2Â-nd2Â-...

  • Page 11
    ...or organization) 701 Western Avenue, Glendale, California (Address of principal executive offices) Registrant's telephone number, including area code: (818) 244-8080. Securities registered pursuant to Section 12(b) of the Act: Title of each class 9.500% Cumulative Preferred Stock, Series D, $.01 par...

  • Page 12
    ...,897,000 (computed on the basis of $33.87 per share which was the reported closing sale price of the Company's Common Stock on the New York Stock Exchange on June 30, 2003). Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A, $.01 Par Value - $211,681,000 (computed on...

  • Page 13
    ...44% ownership interest in PS Business Parks, Inc., which, as of December 31, 2003, owned and operated commercial properties containing approximately 18.3 million net rentable square feet of space. PS Business Parks, Inc. is a public REIT whose common stock trades on the American Stock Exchange under...

  • Page 14
    .... Mr. Hughes established the Public Storage Organization in 1972 and has managed the Company through several market cycles. Our executive management team and their years of experience with the Company are as follows: Harvey Lenkin (67), President and Chief Operating Officer, 26 years; John Reyes (43...

  • Page 15
    ... the toll-free telephone referral system, (800) 44-STORE, or a storage facility, are directed to the national reservation system. A representative discusses with the customer space requirements, price and location preferences and also informs the customer of other products and services provided by...

  • Page 16
    ... developing properties in selected markets, (v) improving the operating performance of the containerized storage operations and repurpose real estate previously used for the containerized storage operations, and (vi) participating in the growth of commercial facilities owned primarily by PS Business...

  • Page 17
    ... corporation was changed to PS Business Parks, Inc. (the REIT and the related Operating Partnership are hereinafter referred to collectively as Â"PSBÂ"). The Company has a 44% common equity interest in PSB as of December 31, 2003, comprised of 5,418,273 shares of common stock and 7,305,355 limited...

  • Page 18
    ... on their respective call dates, will be dependent upon the spread between market rates and the coupon rates of these securities. • • Financing of the CompanyÂ's Growth Strategies Overview of Financing Strategy: Over the past three years we have funded substantially all of our acquisitions...

  • Page 19
    ...his preferred non-voting interest (representing an investment of approximately $64.1 million at December 31, 2003). In addition, Mr. Hughes can receive up to 1% of cash flow of the Partnership (estimated to be less than $50,000 per year) if PSAC Storage Investors, LLC elects an early termination. If...

  • Page 20
    ... in Item 2, Â"PropertiesÂ"), containing commercial and industrial rental space, primarily through our investment in PS Business Parks. The Company has a pipeline of 38 development projects, including 25 expansions of real estate facilities, for a total cost of $156.3 million. See Â"Management...

  • Page 21
    ... Fund Downey Storage Partners, Ltd. Huntington Beach Storage Partners, Ltd. Monterey Park Properties, Ltd. PS Co-Investment Partners PS Insurance Company, Ltd. PS Orangeco Holdings, Inc. PS Orangeco, Inc. PS Partners, Ltd. PS Partners VIII, Ltd. Public Storage Properties IV, Ltd. (8) Public Storage...

  • Page 22
    (10) B. Wayne Hughes is a general partner of this entity, and has no economic interest. (11) B. Wayne Hughes is a general partner in this entity and owns a 0.02% equity interest. 12

  • Page 23
    ... in the future, both short-term and long-term indebtedness to increase our funds available for investment in real estate, capital expenditures and distributions. Limitations on Debt The Bylaws provide that the Board of Directors shall not authorize or permit the incurrence of any obligation by the...

  • Page 24
    ... all of whom are employed by a clearing company that provides certain administrative and cost-sharing services to the Company and other owners of properties operated by the Company. Federal Income Tax We believe that we have operated, and intend to continue to operate, in such a manner as...

  • Page 25
    ... income to our shareholders. Other restrictions apply to our income and assets. Our REIT status is also dependent upon the ongoing qualification of PS Business Parks, Inc. as a REIT, as a result of our substantial ownership interest in that company. For any taxable year that we fail to qualify as...

  • Page 26
    ..., rental rates and operating expenses of some of our properties. Any increase in availability of funds for investment in real estate may accelerate competition. Further development of self-storage facilities may intensify competition among operators of self-storage facilities in the market areas...

  • Page 27
    ... marketability of our real estate facilities. We have no interest in Canadian self-storage facilities owned by the Hughes family B. Wayne Hughes, Chairman of the Board, and his family (the Â"Hughes FamilyÂ") have ownership interests in, and operate, approximately 38 self-storage facilities in Canada...

  • Page 28
    .... The sharing of Company personnel with the Canadian entities was substantially eliminated by December 31, 2003. Our containerized storage business has incurred operating losses. Public Storage Pickup & Delivery (Â"PSPUDÂ") was organized in 1996 to operate a portable self-storage business. We...

  • Page 29
    ... indirect ownership interests in 1,410 storage facilities located in 37 states: At December 31, 2003 Number of Storage Net Rentable Square Feet Facilities (a) (in thousands) California: Northern ...Southern ...Texas ...Florida ...Illinois ...Georgia ...Colorado ...Washington...Maryland ...New Jersey...

  • Page 30
    ...storage facilities, we have an interest in PSB, which, as of December 31, 2003, owns and operates 18.3 million net rentable square feet in eight states. At December 31, 2003, our investment in PS Business Parks represents less than 6% of our total assets based upon cost of $282.4 million. The market...

  • Page 31
    ..., et al v. Public Storage, Inc. (filed February 2000) (Superior Court Â- Los Angeles County) The plaintiffs in this case are suing the Company on behalf of a putative class of California resident property managers who claim that they were not compensated for all the hours they worked. The named...

  • Page 32
    ... of the Superior Court, Malcolm Lucas, a former chief justice of the California Supreme Court, was appointed to try the case. Discovery is proceeding and it is expected that in mid-2004, Mr. Lucas will set a trial date for the matter. The Company believes that the lawsuit by the Hughes family will...

  • Page 33
    ... of the National Association of Real Estate Investment Trusts (NAREIT) and the Urban Land Institute (ULI) and a director of Business Machine Security, Inc. and Mobile Storage Group, Inc. Mr. Havner earned a Bachelor of Arts degree in Economics from the University of California, Los Angeles. Harvey...

  • Page 34
    ... 1981, our first full year of operations. Overall distributions on Common Stock for 2003 amounted to $225.9 million or $1.80 per share. Holders of Common Stock are entitled to receive distributions when and if declared by the CompanyÂ's Board of Directors out of any funds legally available for that...

  • Page 35
    ...to its shareholders. Public Storage, Inc, as a real estate investment trust (Â"REITÂ"), is generally not taxed on dividends it distributes annually to its shareholders, and therefore the dividends shareholders receive are not qualified dividend income subject to the new lower rates. During 2002, the...

  • Page 36
    ... registered under the Securities Act at the time of issuance. At December 31, 2003, we had 8,776,102 depositary shares outstanding, each representing 1/1,000 of a share of Equity Stock A. The Equity Stock A ranks on a parity with common stock and junior to the Senior Preferred Stock with respect to...

  • Page 37
    ...years ended December 31, 2002 and 2003, the Company adopted a business plan that included the closure of certain non-strategic containerized storage facilities. Also, during 2002 we sold one of our commercial facilities and during 2003 we sold five miniwarehouse facilities. The historical operations...

  • Page 38
    ... expressed or implied in the forward looking statements. Such factors are described in Item 1A, Â"Risk FactorsÂ" 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...

  • Page 39
    ... owner and operator of self-storage facilities in the United States with direct and indirect ownership interests as of December 31, 2003 in 1,410 self-storage facilities containing approximately 85.2 million net rentable square feet. All of our facilities are operated under the Â"Public Storage...

  • Page 40
    ...We will continue to develop new self-storage locations, though at a lower level than occurred in previous years. During the five years ending December 31, 2003, the Company and the Consolidated Development Joint Venture developed and opened a total of 80 storage facilities at a cost of approximately...

  • Page 41
    ...), increased depreciation expense resulting primarily from new property additions, and a decrease in equity in earnings of real estate entities. The decrease in equity in earnings of real estate entities is primarily due to a reduction in our pro-rata share of the earnings of PS Business Parks, Inc...

  • Page 42
    ... the necessary funds to redeem additional high rate preferred stock during the first quarter of 2005. These issuances similarly will have a negative impact on earnings per share until the proceeds are utilized. Real Estate Operations Self-Storage Operations: Our self-storage operations are by...

  • Page 43
    ... ...Depreciation...Operating income...Number of self-storage facilities (at end of period)...Net rentable square feet (in thousands, at end of period):... (a) Rental income includes late charges, administrative fees and lien fees and is net of promotional discounts given. Rental income does...

  • Page 44
    ... rental income ...Late charges and administrative fees collected...Total rental income ...Cost of operations: Property taxes...Direct property payroll...Cost of managing facilities...Advertising and promotion...Utilities...Repairs and maintenance...Telephone reservation center ...Property insurance...

  • Page 45
    ... first half of 2003 we reduced rental rates charged to new incoming tenants in many of our markets to stimulate move-in activity. These actions had a positive impact as our average occupancy level for the Consistent Group was 89.1% for 2003 as compared to 85.2% for 2002, representing an increase of...

  • Page 46
    ... 2003 as compared to 2002 due to costs to remedy mold issues in several facilities in Southern states, increased snow removal expenses, as well as a general increase in costs to address deferred maintenance at our facilities. Property insurance increased due to an increase in the CompanyÂ's self...

  • Page 47
    ... expense experienced in 2003 will continue in 2004, as we continue to address maintenance at our facilities and improve their Â"rent readyÂ" condition and curb appeal. Payroll and property management costs will also continue to increase in 2004, though not at the same growth rate experienced in 2003...

  • Page 48
    ....91 6.91 8.73 9.90 6.97 8.78 $ 9.53 $ $ $ $ Realized annual rent per occupied square foot: Southern California ...$ 16.05 Northern California ...14.50 Texas...7.75 Florida...9.64 Illinois ...11.24 Georgia...7.74 All other states ...9.92 Total realized rent per square foot: ...$ 10.70 $ $ $ 38

  • Page 49
    ...13.0% 87 5,077 $360,543 Number of self-storage facilities (at end of period)...Net rentable square feet (in thousands, at end of period)...Cumulative acquisition cost (at end of period)... $ $ Rental income and cost of operations for the Acquired Facilities have increased significantly in 2002 as...

  • Page 50
    ...,000 square feet of industrial space developed for containerized storage activities Â- see Â"Containerized StorageÂ" and Â"Discontinued OperationsÂ"). The aggregate construction costs to complete these expansions totaled approximately $129,543,000 during the four years ended December 31, 2003. Self...

  • Page 51
    ... forth the operations of the Developed Facilities: Year ended December 31, 2003 Rental income: Self-storage facilities ...Combination facilities...Total rental income ...Cost of operations: Self-storage facilities ...Combination facilities...Total cost of operations ...Net operating income before...

  • Page 52
    ...: DEVELOPED SELF-STORAGE FACILITIES Year Ended December 31, 2003 Rental income (a): Self-storage facilities opened in 2003...Self-storage facilities opened in 2002...Self-storage facilities opened in 2001...Self-storage facilities opened in 2000 and 1999 ...Total rental income...Cost of operations...

  • Page 53
    ...204,000 net rentable square feet. The following table sets forth the historical commercial property amounts included in the financial statements: Commercial Property Operations (excluding discontinued operations): Year Ended December 31, 2003 2002 Rental income ...Cost of operations ...$11,442 4,688...

  • Page 54
    ..., Public Storage Pickup & Delivery (Â"PSPUDÂ"), a subsidiary of the Company, made its initial entry into the containerized storage business through its acquisition of a single facility operator located in Irvine, California. At December 31, 2001, PSPUD had 55 facilities that had been opened between...

  • Page 55
    ... storage businessÂ's expansion, level of gross rentals, level of move-outs or profitability. See Â"Discontinued OperationsÂ" below for a discussion of operating results of the Closed Facilities. Tenant Reinsurance Operations: On December 31, 2001, we acquired PS Insurance Company, Ltd. (Â"PS...

  • Page 56
    ... 2002) of the earnings of PS Business Parks, Inc., a publicly traded real estate investment trust (American Stock Exchange symbol Â"PSBÂ") organized by the Company on January 2, 1997. As of December 31, 2003, we owned 5,418,273 common shares and 7,305,355 operating partnership units (units which are...

  • Page 57
    ... facilities as discussed above with respect to Self-Storage Operations. See Note 6 to the consolidated financial statements for the operating results of these entities for the years ended December 31, 2003 and 2002. Other Income and Expense Items Interest and other income: Interest in other income...

  • Page 58
    ...-based compensation expense. The future level of payroll taxes and other costs associated with employeesÂ' exercise of stock options will depend upon the timing of employeesÂ' exercise of approximately 3,088,618 remaining stock options outstanding at December 31, 2003, the CompanyÂ's stock price at...

  • Page 59
    ... a joint venture partner whose partners include an institutional investor and the CompanyÂ's Chairman and former CEO, B. Wayne Hughes (Â"Mr. HughesÂ"). The Consolidated Development Joint Venture is funded solely with equity capital consisting of 51% from the Company and 49% from the joint venture...

  • Page 60
    ... for nine Closed Facilities of $2,479,000 and a $750,000 impairment charge on a real estate facility previously used by the containerized storage business, as well as an additional $355,000 loss upon sale of this real estate facility. During 2002, lease termination costs, representing the expected...

  • Page 61
    ... on sale with respect to a real estate facility previously used by one of the Closed Facilities, which was sold in December 2003. Amounts for 2002 also include lease termination accruals. (d) The net discontinued operations have resulted in an increase in our earnings per share of $0.01 per diluted...

  • Page 62
    ..., increasing cash flow from operations, and a conservative dividend payout ratio with respect to the common stock. We expect to fund our growth strategies with cash on hand at December 31, 2003, internally generated retained cash flows, and proceeds from issuing equity securities. In general, our...

  • Page 63
    ... to provide for, among other items, an extension of the maturity date and enhancement to certain covenants. Over the past three years we have funded substantially all of our acquisitions with permanent capital (both common and preferred securities). We have elected to use preferred securities as...

  • Page 64
    ... preferred securities, as follows: Date Redeemed or Repurchased August 31, 2001 September 28, 2001 October 5, 2001 October 15, 2001 November 13, 2001 September 30, 2002 October 7, 2002 October 7, 2002 March 31, 2003 January 19, 2004 March 10, 2004 Preferred Cumulative Partnership Preferred Stock...

  • Page 65
    ... owned by the Company in PS Partners IV, Ltd., a partnership which is consolidated with the Company. The acquisition cost was approximately $23,377,000, consisting of the issuance of 426,859 shares of our common stock ($13,510,000) valued at the closing trading price of the shares at the date of the...

  • Page 66
    ... total costs of approximately $12,236,000 at December 31, 2003. These parcels will either be developed or sold. Stock Repurchase Program: The CompanyÂ's Board of Directors has authorized the repurchase from time to time of up to 25,000,000 shares of the CompanyÂ's common stock on the open market or...

  • Page 67
    ... end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, of the effectiveness of the design and...

  • Page 68
    ...CompanyÂ's definitive proxy statement filed in connection with the annual shareholdersÂ' meeting to be held on May 6, 2004 (the Â"Proxy StatementÂ") under the caption Â"Election of Directors.Â" Information required by this item with respect to executive officers is provided in Item 4A of this report...

  • Page 69
    ...Principal Accountant Fees and Services Fees billed to the Company by Ernst & Young LLP for 2002 and 2003 as are follows: Audit Fees: Audit fees billed (or expected to be billed) to the Company by Ernst & Young LLP for the audit of the CompanyÂ's annual financial statements, reviews of the quarterly...

  • Page 70
    ...2003. The Company filed a Current Report on Form 8-K, dated November 6, 2003 (filed November 7, 2003), pursuant to Item 5, in connection with the CompanyÂ's public offering in November 2003 of depositary shares, each representing 1/1,000 of a share of the CompanyÂ's 6.450% Cumulative Preferred Stock...

  • Page 71
    .... Certificate of Determination for the 8-7/8% Cumulative Preferred Stock, Series G. Filed with RegistrantÂ's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred Stock, Series G and incorporated herein by reference...

  • Page 72
    ... 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock, Series Q and incorporated herein by reference. Amendment to Certificate of Determination for Equity Stock, Series A. Filed with RegistrantÂ's Quarterly Report on...

  • Page 73
    ... Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series U and incorporated herein by reference. Amendment to Certificate of Determination for 7.625% Cumulative Preferred Stock, Series T. Filed with RegistrantÂ's Quarterly Report...

  • Page 74
    ... National Bank of Boston, and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred Stock, Series G. Filed with RegistrantÂ's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing...

  • Page 75
    ... Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative Preferred Stock, Series J and incorporated herein by reference. Agreement of Limited Partnership of PS Business Parks, L.P. dated as of March 17, 1998. Filed with PS Business Parks, Inc.Â's Quarterly...

  • Page 76
    ... Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A and incorporated herein by reference. Amended and Restated Agreement of Limited Partnership of PSA Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the Limited Partners dated...

  • Page 77
    ... Each Representing 1/1,000 of a Share of 6.250% Cumulative Preferred Stock, Series Z and incorporated herein by reference. Limited Partnership Agreement of PSAF Acquisition Partners, L.P. between PS Texas Holdings, Ltd. and the Limited Partner dated as of December 18, 2003. Filed herewith. Statement...

  • Page 78
    ... Board, Chief Executive Officer and Director (principal executive officer) President and Director Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) Chairman of the Board Director Director Director Director Director Director Director Date...

  • Page 79
    PUBLIC STORAGE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES (Item 15 (a)) Page References Report of Independent Auditors ...Consolidated balance sheets as of December 31, 2003 and 2002...For each of the three years in the period ended December 31, 2003: Consolidated statements of ...

  • Page 80
    ... of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and financial statement schedule are the responsibility of the CompanyÂ's management. Our responsibility is to express an...

  • Page 81
    PUBLIC STORAGE, INC. CONSOLIDATED BALANCE SHEETS December 31, 2003 and 2002 (amounts in thousands, except share data) December 31, 2003 ASSETS Cash and cash equivalents ...Real estate facilities, at cost: Land ...Buildings...Accumulated depreciation...Construction in process...Land held for ...

  • Page 82
    ... years in the period ended December 31, 2003 (amounts in thousands, except per share data) 2003 Revenues: Rental income: Self-storage facilities...Commercial properties ...Containerized storage facilities ...Tenant reinsurance premiums...Interest and other income ...Expenses: Cost of operations...

  • Page 83
    PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For each of the three years in the period ended December 31, 2003 (Amounts in thousands, except share and per share amounts) Cumulative Preferred Stock $ 1,155,150 826,250 (441,250) 1,540,150 472,500 (195,625) 1,817,025 252,500 (...

  • Page 84
    PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three years in the period ended December 31, 2003 (amounts in thousands) 2003 Cash flows from operating activities: Net income...Adjustments to reconcile net income to net cash provided by operating activities: Gain, loss ...

  • Page 85
    PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three years in the period ended December 31, 2003 (amounts in thousands) (Continued) 2003 Supplemental schedule of non cash investing and financing activities: Business combinations (Note 3): Real estate facilities ......

  • Page 86
    .... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 1. Description of the business Public Storage, Inc. (the Â"CompanyÂ") is a California corporation, which was organized in 1980. We are a fully integrated, self-administered and self-managed real estate investment trust (Â"REITÂ") whose...

  • Page 87
    ... paper, are only invested in entities with an investment grade rating. Notes receivable consist primarily of $100.0 million due from Public Storage Business Parks (Â"PSBÂ") that was repaid entirely by March 11, 2004. Accounts receivable from customers are a component of other assets, and are not...

  • Page 88
    ... to employee stock options and restricted stock units. Other assets Other assets primarily consist of containers and equipment associated with the containerized storage operations, assets associated with the truck rental business, accounts receivable, and prepaid expenses. Accounts receivable due...

  • Page 89
    ... liabilities for losses and loss adjustment expense, which at December 31, 2003 totaled $28,741,000 ($22,911,000 at December 31, 2002). PS Insurance Company, Ltd. reinsures policies against claims for losses to goods stored by tenants in our self-storage facilities (see Note 3). This entity accrues...

  • Page 90
    ... earned pursuant to month-to-month leases for storage space, is recognized as earned. Promotional discounts are recognized as a reduction to rental income over the promotional period, which is generally during the first month of occupancy. Late charges and administrative fees are recognized as...

  • Page 91
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 of our preferred stock was equivalent to the liquidation preference as recorded on our balance sheet. Each of the series of preferred stock that was called for redemption was redeemed at the liquidation preference. ...

  • Page 92
    ... of accounting. The aggregate cost of this business combination was $268,209,000, consisting of our pre-existing investment in the Development Joint Venture of $115,131,000 and cash of $153,078,000 paid to the institutional investor to acquire its interest. STOR-Re Mutual Insurance Company, Inc...

  • Page 93
    ... chief executive officer, B. Wayne Hughes, and members of his family (collectively, Â"HughesÂ"). 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...

  • Page 94
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 The historical operating results of the above acquisitions prior to each respective acquisition date have not been included in the CompanyÂ's historical operating results. Pro-forma data (unaudited) for the year ended ...

  • Page 95
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 The historical operations of the Closed Facilities (including the asset impairment and lease termination costs) are classified as discontinued operations, with the rental income, cost of operations, and depreciation ...

  • Page 96
    ...the years ended December 31, 2003, 2002, and 2001, respectively, is $767,000, $635,000, and $902,000 in real estate depreciation expense with respect to discontinued operations. See Note 4. Operating Facilities During 2003, we opened 14 newly developed self-storage facilities with an aggregate cost...

  • Page 97
    ... held for development with total costs of approximately $12,236,000. 6. Investments in real estate entities At December 31, 2003, our investments in real estate entities consist of ownership interests in seven partnerships, which principally own self-storage facilities, and our ownership interest in...

  • Page 98
    ... our commercial property operations into an entity now known as PS Business Parks, Inc., a REIT traded on the American Stock Exchange, and an operating partnership controlled by PS Business Parks, Inc. (collectively, the REIT and the operating partnership are referred to as Â"PSBÂ"). The Company and...

  • Page 99
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 For the Year Ended December 31, 2002 2003 (Amount in thousands) For the year ended December 31, Total revenue (a) ...Cost of operations and other expenses ...Depreciation and amortization ...Discontinued operations ...

  • Page 100
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 7. Revolving line of credit We have a $200 million revolving line of credit (the Â"Credit AgreementÂ") that has a maturity date of October 31, 2004 and bears an annual interest rate ranging from the London Interbank ...

  • Page 101
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 At December 31, 2003, approximate principal maturities of notes payable are as follows: Unsecured Mortgage debt Senior Notes (dollar amounts in thousands) $ 25,800 $ 15,010 11,200 156 11,200 170 11,200 185 202 907 $ 59...

  • Page 102
    ... partners include a third party institutional investor and Mr. Hughes, to develop approximately $100 million of self-storage facilities and to purchase $100 million of the CompanyÂ's Equity Stock, Series AAA (see Note 10). At December 31, 2003, the Consolidated Development Joint Venture was fully...

  • Page 103
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 The Consolidated Development Joint Venture is funded solely with equity capital consisting of 51% from the Company and 49% from PSAC Storage Investors. The accounts of the Consolidated Development Joint Venture are ...

  • Page 104
    ... an aggregate of 123 self-storage facilities. During 2003, we acquired through a merger all of the remaining limited partnership interest not currently owned by the Company in PS Partners IV, Ltd., a partnership which is consolidated with the Company. The acquisition cost was approximately $23,377...

  • Page 105
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 10. ShareholdersÂ' equity Cumulative Preferred Stock At December 31, 2003 and 2002, we had the following series of Cumulative Preferred Stock outstanding: At December 31, 2003 Earliest Redemption Date 3/31/03 (a) 6/...

  • Page 106
    ..., Series Z Â- March 5, 2009. On or after the respective dates, each of the series of Cumulative Senior Preferred Stock will be redeemable, at the option of the Company, in whole or in part, at $25 per share (or depositary share in the case of the Series L through Series X and Series Z), plus accrued...

  • Page 107
    ...Board of Directors increased the authorized number of shares the Company could repurchase to 25,000,000. Cumulatively through December 31, 2003, we repurchased a total of 21,672,020 shares of common stock at an aggregate cost of approximately $541,863,000. During 2001, we entered into an arrangement...

  • Page 108
    ...Series A As of December 31, 2003, there were 8,776,102 depositary shares, each representing 1/1,000 of a share, of Equity Stock, Series A outstanding. The following table summarizes the activity: 2003 Depositary Shares Amount at beginning of year ...Public offerings ...Direct placements ...Amount at...

  • Page 109
    ... to 120% of the market price of our common stock. In addition, if the Company determines that it is necessary to maintain its status as a Real Estate Investment Trust, subject to certain limitations it may cause the redemption of shares of Equity Stock, Series AAA at a per share amount equal to 120...

  • Page 110
    ...-Term Capital Gain Distribution 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 19.27% 20.00% 0.00% 11.47% IRC §291 Recapture The following table summarizes dividends for the years ended December 31, 2003, 2002 and 2001: 2003 Per share Cumulative Preferred Stock Series A Series B Series C Series...

  • Page 111
    ..., Mr. Havner was also the Chief Executive Officer of PSB. For 2003 services, Mr. Havner was compensated by PSB, as well as by the Company. In January 2001, the Company repurchased 10,000 shares of common stock from a corporation wholly-owned by a director of the Company for an aggregate of $251,875...

  • Page 112
    ... directors, officers and key employees to purchase shares of the CompanyÂ's common stock at a price equal to the fair market value of the common stock at the date of grant. Generally, options under the Plans vest over a three-year period from the date of grant at the rate of one-third per year...

  • Page 113
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 Accounting principles generally accepted in the United States permit, but do not require, companies to recognize compensation expense for stock-based awards based on their fair value at date of grant, which is then ...

  • Page 114
    ... stock units to employees of the Company. The fair market value of the grant was approximately $10,804,000 based upon a closing price of $43.39 per common share on December 31, 2003. A total of $970,000 in restricted stock expense was recorded in the year ended December 31, 2003, representing...

  • Page 115
    PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 Measurement of segment assets No segment data relative to assets or liabilities is presented, because management does not consider the historical cost of the CompanyÂ's real estate facilities and investments in real ...

  • Page 116
    ... FINANCIAL STATEMENTS December 31, 2003 The following table sets forth a reconciliation of each segmentÂ's net income to the CompanyÂ's consolidated net income: Year Ended December 31, 2002 2003 Reconciliation of Net Income by Segment: Self-storage Self-storage net operating income ...Self-storage...

  • Page 117
    ...000 depositary shares, with each representing 1/1,000 of a share of our 6.250% Cumulative Preferred Stock, Series Z (par value ($112,500,000). On January 1, 2004, we entered into a joint venture with an institutional investor for the purpose of acquiring up to $125.0 million of existing self-storage...

  • Page 118
    ..., et al v. Public Storage, Inc. (filed February 2000) (Superior Court Â- Los Angeles County) The plaintiffs in this case are suing the Company on behalf of a putative class of California resident property managers who claim that they were not compensated for all the hours they worked. The named...

  • Page 119
    ... TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 to them 1,439,765 shares of common stock (or a net of 1,138,733 shares, after taking into account 301,032 shares held by PSIC). The shareholder has threatened litigation against the Hughes family and the directors of the Company arising out of...

  • Page 120
    ... Company reinsures policies against claims for losses to goods stored by tenants at our self-storage facilities (see Note 3). PSIC reinsures its risks with third-party insurers from any individual event that exceeds a loss of $500,000 up to the policy limit of $10,000,000. Development of Real Estate...

  • Page 121
    ... in this table differ from the revenue and cost of operations as presented in the CompanyÂ's quarterly reports due primarily to the impact of discontinued operations accounting with respect to certain containerized storage facilities that were closed in 2003, as described in Note 4 and from the...

  • Page 122
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 123
    ...Nasa Augusta Charlotte Columbia Greensboro/Electra Greensboro/Market Richmond Tacoma Belton Fremont/Albrae Gladstone Hickman/112 Holmes Independence Merriam Olathe Shawnee Topeka Manassas Marrietta/Cobb PicoRivera Milwaukie/Oregon Providence Garland Philadelphia/Grant Raleigh/Departure VirginiaBeach...

  • Page 124
    ... Hurst SimiValley Houston/Westheimer Chattanooga Fairfield FernPark Portland Austin/S.First Cincinnati/Colerain Cincinnati/E.Kemper Florence/TannerLane LagunaHills Arlington Columbus/BuschBlvd. Columbus/KinnearRd. Longwood Manchester/S.Willow Milwaukie/Mcloughlin Tacoma/PhillipsRd. Worthington...

  • Page 125
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 126
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 127
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 128
    ... CostaMesa Dallas/WalnutSt. CampCreek Jacksonville/Arlington Orlando/W.Colonial Stockton/Mariners VirginiaBeach/GeneralBoothBlvd BaldwinPark/GarveyAve CityOfIndustry RedwoodCity/Storage SanJose/Felipe Westminister/W.80th CostaMesa/Newport Austin/N.Lamar Jacksonville/PhillipsHwy. Tampa/NebraskaAvenue...

  • Page 129
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 130
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 131
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 132
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 133
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 134
    ...STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...800,...

  • Page 135
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 136
    ...,FL/OldUS41 NewPortRichey/StateRd54 SanfordFL/SOrlandoDr Atlanta/Roswell Baltimore Carrollton Dallas Houston Houston Irvine Jacksonville Milwaukee NewHaven Oakland Plano Randallstown Saratoga Torrance Chicago/Pulaski Houston/Westheimer LasVegas/DesertInn Rockville/Randolph SimiValley/EastStreet St...

  • Page 137
    .../SPascackrd CanogaPark/ShermanWay ColoradoSprings/TomahDrive Dallas/RoyalLane Denver/W.Hampden Fairfield/DixieHighway FortWorth/Brentwood Glendale/SanFernandoRoad Greenbrook/Route22 Houston/GulfFreeway Houston/Harwin Houston/W.MontgomeryRd. Irvine/CowanStreet Jacksonville/SouthLaneAve. LasVegas...

  • Page 138
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 139
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 140
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 141
    ... AllenPark Atlanta Aurora Austin Bellevue Bensalem Berlin Birmingham Carrollton Carrollton Chicago Chicoppe CitrusHeights Dallas Dallas Dallas/VilbigRd. Davie Davis Decatur Denver EastHazelCrest EastL.A./BoyleHeights Edmonds ElkGrove Evansville Fairfield FosterCity Garland Gretna HarborCity Houston...

  • Page 142
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 143
    ... CarolStream/St.Charles DalyCity/Mission Denver/Leetsdale Denver/Sheridan Denver/TamaracPark DesPlaines/GolfRd Dublin/SanRamonRd Emeryville/BaySt Enfield/ElmStreet Forrestville/Penn. Fremont/WarmSprings Geneva/Roosevelt Gresham/Powell HydePark/RiverSt Justice/Industrial Kent/Central LakeOswego...

  • Page 144
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 145
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 146
    ... St.Louis/Benham Atlanta/MemorialDr. Brooklyn/RockawayAve Chicago/111th Chicago/N.Broadway Chicago/W.79thSt CoonRapids/Hwy10 Dallas/Greenville EastLa/Figueroa&4th ElSegundo/Sepulveda Farmington/9Mile Ft.Lauderdale/S.W. Griffith/Cline LasVegas/E.Charles Laurel/BaltimoreAve LosGatos/University Miami...

  • Page 147
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 148
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 149
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 150
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 151
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 152
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 153
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 154
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 155
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 156
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 157
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 158
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 159
    ... STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Resulting from Initial Cost Date Acquired Description Encumbrances Land Buildings & Improvements Costs Subsequent to Acquisition the Acquisition of Minority Interest Land Gross Carrying Amount At December 31, 2003...

  • Page 160
    PUBLIC STORAGE, INC. EXHIBIT 11 - EARNINGS PER SHARE For the Year Ended December 31, 2002 2001 2003 (amounts in thousands, except per share data) Earnings Per Share: Net income ...Less: Cumulative Preferred Stock Dividends: 10% Cumulative Preferred Stock, Series A...9.20% Cumulative Preferred Stock,...

  • Page 161
    ... included in equity in earnings of real estate entities ...27,753 27,078 Add Â- Depreciation and amortization included in discontinued operations ...2,228 3,670 Add - Minority interest - Preferred ...26,906 26,906 Add - Interest expense ...3,809 1,121 EBITDA available to cover fixed charges...

  • Page 162
    ......Public Storage Institutional Fund...Public Storage Institutional Fund II ...Public Storage Institutional Fund III...Public Storage Institutional Fund IV...Public Storage Pickup & Delivery, L.P...STOR-Re Mutual Insurance Corporation ...Storage Trust Properties, L.P... State of Formation California...

  • Page 163
    ... prospectus of our report dated February 20, 2004 with respect to the consolidated financial statements and schedule of Public Storage, Inc. included in the Annual Report (Form 10-K) for 2003 filed with the Securities and Exchange Commission. ERNST & YOUNG LLP March 12, 2004 Los Angeles, California

  • Page 164
    ...have reviewed this annual report on Form 10-K of Public Storage, Inc.; Based on my knowledge, this annual report does not contain any untrue statement ...board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting...

  • Page 165
    ...have reviewed this annual report on Form 10-K of Public Storage, Inc.; Based on my knowledge, this annual report does not contain any untrue statement ...board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting...

  • Page 166
    ... TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, John Reyes, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Public Storage, Inc.; Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary...

  • Page 167
    ...Public Storage, Inc. (the Â"CompanyÂ") for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the Â"ReportÂ"), Ronald L. Havner, Jr., as Chief Executive Officer of the Company, Harvey Lenkin, as President of the Company, and John Reyes, as Chief...

  • Page 168
    ... Ernst & Young LLP Los Angeles, California Financial Information Shareholders may obtain, without charge, a copy of Form 10-K, as filed with the Securities and Exchange Commissions by addressing a written request to the Investor Services Department at the Corporate Headquarters. Stock Exchange...

  • Page 169
    ... Manager Seema Marketing George Call Center Bea Customer Relations Ed Financial Reporting Peggy Investor Services Dan Trucks Serves all demographics Larry Containerized Storage Lui Retail Store Manager Sean Management Information Systems PUBLIC STORAGE, INC. 701 Western Avenue, Glendale...