Public Storage 2009 Annual Report Download - page 18

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Reconciliation of Net Income to FFO
For the year ended December 31,
(Amounts in thousands, except per share amounts) 2009 2008 2007
Net income: $ 790,456 $ 973,872 $ 487,078
Depreciation and amortization 340,233 411,981 619,598
Depreciation and amortization included in
discontinued operations 1,894 2,220 3,296
Less - depreciation with respect to non-real estate assets (160) (253) (406)
Less - our equity share of PSB’s gain on sale of
real estate (675) — —
Depreciation from unconsolidated real estate investments 62,471 74,918 45,307
Gain on disposition of real estate investments (33,426) (336,545) (2,547)
Gain on sale of real estate included in discontinued
operations (6,018) — (4,336)
Net cash provided by operating activities 1,154,775 1,126,193 1,147,990
Preferred unitholders, based upon distributions paid (9,455) (21,612) (21,612)
Preferred unitholders, based upon repurchases 72,000 — —
Other noncontrolling equity interests in subsidiaries (20,231) (21,904) (21,989)
Funds from operations 1,197,089 1,082,677 1,104,389
Less - allocations (to) from:
Preferred shareholders, based upon distributions paid (232,431) (239,721) (236,757)
Preferred shareholders, based upon redemptions 6,218 33,851 —
Restricted share unitholders (3,285) (3,263) (3,270)
Equity Shares, Series A (20,524) (21,199) (21,424)
FFO allocable to our common shareholders $ 947,067 $ 852,345 $ 842,938
Weighted average shares outstanding:
Common shares 168,358 168,250 169,342
Stock-based compensation dilution 410 425 508
Weighted average common shares for purposes of
computing fully-diluted FFO per common share 168,768 168,675 169,850
FFO per common share $ 5.61 $ 5.05 $ 4.96
Supplemental Non-GAAP Disclosures (unaudited)
Funds from operations (“FFO”) is a term defined by the National Association of Real Estate Investment Trusts, generally
defined as net income before depreciation expense and gains and losses on sale of real estate. Operating earnings represents
FFO earned at our consolidated real estate locations, combined with FFO before EITF D-42 benefits from our equity
investments (primarily PSB and Shurgard Europe). We believe that FFO is helpful to investors, because net income includes
the impact of depreciation, which assumes that real estate declines in value predictably over time, while we believe that real
estate values change due to market conditions and inflation. We believe that operating earnings provides investors a better
understanding of the underlying cash flows generated by our real estate investments. These non-GAAP measures are not a
substitute for net income or net cash flow provided from operating activities as a measure of our liquidity, our operating
performance or our ability to pay dividends.
Reconciliation of Operating Earnings to Net Income
For the year ended December 31,
(Amounts in thousands) 2009 2008
Operating earnings $ 1,198,537 $ 1,243,705
Interest and other income 29,813 36,155
Less - amounts for Shurgard Europe included in operating earnings (24,831) (18,499)
Depreciation and amortization (340,233) (411,981)
General and administrative expense (35,735) (62,809)
Interest expense (29,916) (43,944)
Depreciation in equity in earnings (62,471) (74,918)
Equity share of EITF D-42 and real estate disposition gain for PS Business Parks 16,959 1,923
Real estate disposition and early debt retirement gain, and casualty loss 37,540 336,020
Foreign currency exchange gain (loss) 9,662 (25,362)
Discontinued operations (8,869) (6,418)
Net income $ 790,456 $ 973,872