Public Storage 2013 Annual Report Download - page 83

PUBLIC STORAGE
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
F-12
At December 31, 2013, due primarily to our investment in and loan receivable from Shurgard Europe,
our operating results and financial position are affected by fluctuations in currency exchange rates between the
Euro, and to a lesser extent, other European currencies, against the U.S. Dollar.
Goodwill and Other Intangible Assets
Intangible assets are comprised of goodwill, the “Shurgard” trade name, acquired customers in place,
and leasehold interests in land.
Goodwill totaled $174.6 million at December 31, 2013 and 2012. The “Shurgard” trade name, which
is used by Shurgard Europe pursuant to a fee-based licensing agreement, has a book value of $18.8 million at
December 31, 2013 and 2012. Goodwill and the “Shurgard” trade name have indefinite lives and are not
amortized.
Acquired customers in place and leasehold interests in land are finite-lived and are amortized relative
to the benefit of the customers in place or the land lease expense to each period. At December 31, 2013, these
intangibles have a net book value of $53.4 million ($15.9 million at December 31, 2012). Accumulated
amortization totaled $35.1 million at December 31, 2013 ($24.8 million at December 31, 2012), and
amortization expense of $24.1 million, $10.5 million and $11.9 million was recorded in 2013, 2012 and 2011,
respectively. The estimated future amortization expense for our finite-lived intangible assets at December 31,
2013 is $36.6 million in 2014, $8.2 million in 2015 and $8.6 million thereafter. During 2013, 2012 and 2011,
intangibles were increased $61.5 million, $9.1 million and $1.0 million, respectively, in connection with the
acquisition of self-storage facilities and leasehold interests (Note 3), and in 2012 and 2011, $0.9 million and
$4.0 million, respectively, in connection with the consolidation of facilities previously accounted for under the
equity method (Note 4).
Evaluation of Asset Impairment
We evaluate our real estate, finite-lived intangible assets, investments in unconsolidated real estate
entities, and loan receivable from Shurgard Europe for impairment on a quarterly basis. We evaluate indefinite-
lived assets (including goodwill) for impairment on an annual basis, or more often if there are indicators of
impairment.
In evaluating our real estate assets and finite-lived intangible assets for impairment, if there are
indicators of impairment, and we determine that the asset is not recoverable from future undiscounted cash
flows, an impairment charge is recorded for any excess of the carrying amount over the asset’s estimated fair
value. For long-lived assets that we expect to dispose of prior to the end of their estimated useful lives, we
record an impairment charge for any excess of the carrying value of the asset over the expected net proceeds
from disposal.
Prior to January 1, 2013, we evaluated the “Shurgard” trade name for impairment through a
quantitative analysis, and we would record impairment charges to the extent quantitatively estimated fair value
was less than the carrying amount. Beginning January 1, 2013, if we determine, based upon the relevant events
and circumstances and other such qualitative factors, that it is more likely than not that the asset is unimpaired,
we do not record an impairment charge and no further analysis is performed. Otherwise, we record an
impairment charge for any excess of carrying amount over quantitatively assessed fair value.
In evaluating goodwill for impairment, we first evaluate, based upon the relevant events and
circumstances and other such qualitative factors, whether the fair value of the reporting unit that the goodwill
pertains to is greater than its aggregate carrying amount. If based upon this evaluation it is more likely than not