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44
Shurgard Europe is currently considering refinancing its debt during 2013, including amounts owed to us.
Depending on if, and when, any such refinancing is consummated it would result in reduced interest income due to
the repayment of our loan.
During 2011 and 2010, Shurgard Europe repaid €62.7 million ($85.8 million) and €18.2 million
($24.5 million), respectively, on our loan.
The remainder of our interest and other income is comprised primarily of interest earned on cash balances
as well as sundry other income items that are received from time to time in varying amounts. Interest income on
cash balances has been minimal, because rates have been at historic lows of 0.1% or less, and we expect this trend to
continue in the foreseeable future. Future earnings from sundry other income items are not predictable.
Depreciation and amortization: Depreciation and amortization expense was approximately stable at
$357.8 million, $358.0 million and $353.2 million for the years ended December 31, 2012, 2011 and 2010,
respectively. The level of future depreciation and amortization will primarily depend upon the level of acquisitions
of facilities and the level of capital expenditures we incur on our facilities.
General and administrative expense: General and administrative expense for 2012, 2011, and 2010 is set
forth in the following table:
Year Ended December 31, Year Ended December 31,
2012 2011 Change 2011 2010 Change
(Amounts in thousands)
Share-based compensation expense .............. $ 24,312 $ 23,709 $ 603 $ 23,709 $ 11,444 $ 12,265
Costs of senior executives............................. 4,736 3,332 1,404 3,332 3,332 -
Development and acquisition overhead ....... 6,355 4,129 2,226 4,129 5,860 (1,731)
Tax compliance costs and taxes paid ........... 4,775 5,546 (771) 5,546 3,684 1,862
Legal costs .................................................... 3,653 3,601 52 3,601 2,678 923
Public company costs ................................... 2,937 2,919 18 2,919 3,133 (214)
Other costs .................................................... 10,069 9,174 895 9,174 8,356 818
Total ......................................................
$ 56,837 $ 52,410 $ 4,427 $ 52,410 $ 38,487 $ 13,923
Share-based compensation expense includes the amortization of restricted share units (“RSUs”) and stock
options granted to employees, as well as employer taxes incurred upon vesting of RSUs and upon exercise of
employee stock options. The level of share-based compensation expense varies based upon the level of grants and
forfeitures. Share-based compensation cost increased in 2011 as compared to 2010 due primarily to an increase of
$11.3 million related to a performance-based plan established in 2011 (the “2011 Plan”), with expense recognized
on an accelerated basis over five years. Share-based compensation costs increased $0.6 million in 2012 as compared
to 2011, due to additional share-based grants, offset partially by a reduction of $5.5 million with respect to the 2011
Plan. We expect share-based compensation expense to remain flat in 2013 as compared to 2012. See Note 10 to our
December 31, 2012 financial statements for further information on our share-based compensation.
Costs of senior executives represents the cash compensation paid to our chief executive officer and chief
financial officer, and has increased due to an increase in incentive compensation paid in 2012 as compared to 2011.
Development and acquisition overhead represents the internal and external expenses of identifying,
evaluating, and implementing our acquisition and development activities and varies primarily based upon the level
of development and acquisition activities undertaken. Approximately $1.8 million, $0.8 million, and $2.6 million in
incremental legal, transfer tax, and other related costs were incurred in connection with the acquisition of real estate
facilities in 2012, 2011 and 2010, respectively. The level of such costs to be incurred in 2013 will depend upon the
level of acquisition activities, which is not determinable. We have hired additional personnel in late 2012 in
connection with an expansion in our development activity, as a result we expect an increase in costs associated with
development personnel.