Public Storage 2014 Annual Report Download - page 30

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16
legal fees as a result of these actions. Resolution of these claims and actions may divert time and attention
by our management and could involve payment of damages or expenses by us, all of which may be
significant. In addition, any such resolution could involve our agreement to terms that restrict the operation
of our business. The results of legal proceedings cannot be predicted with certainty. We cannot guarantee
losses incurred in connection with any current or future legal or regulatory proceedings or actions will not
exceed any provisions we may have set aside in respect of such proceedings or actions or will not exceed
any available insurance coverage. The occurrence of any of these events could have a material adverse
effect on us.
We are heavily dependent on computer systems, telecommunications and the Internet to process
transactions, summarize results and manage our business and security breaches or a failure of such
networks, systems or technology could adversely impact our business, customer, and employee
relationships.
We are heavily dependent upon automated information technology and Internet commerce, with
more than half of our new customers coming from the telephone or over the Internet, and the nature of our
business involves the receipt and retention of personal information about our customers. We also maintain
personally identifiable information about our employees. We centrally manage significant components of
our operations with our computer systems, including our financial information, and we also rely
extensively on third-party vendors to retain data, process transactions and provide other systems services.
These systems are subject to damage or interruption from power outages, computer and
telecommunications failures, computer worms, viruses and other destructive or disruptive security breaches
and catastrophic events.
As a result, our operations could be severely impacted by a natural disaster, terrorist attack or
other circumstance that resulted in a significant outage at our systems or those of our third party providers,
despite our use of back up and redundancy measures. Further, viruses and other related risks could
negatively impact our information technology processes. Our or our customers’ or employees’ confidential
information could be compromised or misappropriated, due to a breach of our network security. Such
cybersecurity and data security breaches as well as system disruptions and shutdowns could result in
additional costs to repair or replace such networks or information systems and possible legal liability,
including government enforcement actions and private litigation. In addition, our customers could lose
confidence in our ability to protect their personal information, which could cause them to discontinue
leasing our self-storage facilities. Such events could lead to lost future revenues and adversely affect our
results of operations and could result in remedial and other costs, fines or lawsuits, which could be in
excess of any available insurance that we have procured.
We have no ownership interest in Canadian self-storage facilities owned or operated by the Hughes
Family.
At December 31, 2014, the Hughes Family had ownership interests in, and operated, 54 self-
storage facilities in Canada (the “Canadian Self-Storage Facilities”). These facilities are operated under the
“Public Storage” tradename, which we license to the Hughes Family for use in Canada on a royalty-free,
non-exclusive basis. We have a right of first refusal, subject to limitations, to acquire the stock or assets of
the corporation engaged in the operation of the Canadian Self-Storage Facilities if the Hughes Family or
the corporation agrees to sell them. However, we do not benefit from profits or potential appreciation in
value of the Canadian Self-Storage Facilities because we have no ownership interest in these facilities. We
do not currently operate in the Canadian self-storage market. If we choose to do so without acquiring the
Hughes Family interests in the Canadian Self-Storage Facilities, we may have to share the use of the
“Public Storage” name in Canada with the Hughes Family, unless we are able to terminate the license
agreement.
Through our subsidiaries, we reinsure risks relating to loss of goods stored by customers in the
Canadian Self-Storage Facilities. During the years ended December 31, 2014, 2013 and 2012, we received
$0.5 million, $0.5 million and $0.6 million, respectively, in reinsurance premiums attributable to the