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34
Net Operating Income
We refer herein to net operating income (“NOI”) of our self-storage facilities, which is a non-GAAP
(generally accepted accounting principles) financial measure that excludes the impact of depreciation and
amortization expense. Although depreciation and amortization are a component of GAAP net income, we believe
that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with
respect to capital allocations, property performance, and comparing period-to-period and market-to-market property
operating results. In addition, we believe the investment community utilizes NOI in determining operating
performance and real estate values, and does not consider depreciation expense as it is based upon historical cost.
NOI is not a substitute for net operating income after depreciation and amortization or net income in evaluating our
operating results. The following reconciles NOI generated by our self-storage and Shurgard Europe segments to our
consolidated net income in our December 31, 2009 consolidated financial statements.
Year Ended December 31,
2009
2008
2007
(Amounts in thousands)
Net operating income:
Same-store facilities .............................
$ 934,902
$ 972,834
$ 937,190
Other facilities ......................................
68,462
57,025
43,103
Shurgard Europe facilities ....................
-
30,068
100,818
Total net operating income .............
1,003,364
1,059,927
1,081,111
Ancillary operating revenue .....................
107,597
108,421
115,481
Interest and other income .........................
29,813
36,155
11,417
Ancillary cost of operations ......................
(36,011)
(36,528)
(51,961)
Depreciation and amortization..................
(340,233)
(411,981)
(619,598)
General and administrative expense .........
(35,735)
(62,809)
(59,749)
Interest expense ........................................
(29,916)
(43,944)
(63,671)
Equity in earnings of real estate entities ...
53,244
20,391
12,738
Gains on disposition of real estate
investments and casualty losses, net..
33,426
336,020
5,212
Gain on early debt retirement ...................
4,114
-
-
Foreign currency exchange gain (loss) .....
9,662
(25,362)
58,444
Discontinued operations ...........................
(8,869)
(6,418)
(2,346)
Net income of the Company .....................
$ 790,456
$ 973,872
$ 487,078