SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2002 ------------------ [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . ----------------- ----------------- Commission File Number: 1-8389 ------ PUBLIC STORAGE, INC. -------------------- (Exact name of registrant as specified in its charter) California 95-3551121 - ---------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue, Glendale, California 91201-2349 - ---------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 244-8080. -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered - -------------------------------------------------------------------------------- ----------------------- 9.20% Cumulative Preferred Stock, Series B, $.01 par value...................... New York Stock Exchange Adjustable Rate Cumulative Preferred Stock, Series C, $.01 par value............ New York Stock Exchange 9.50% Cumulative Preferred Stock, Series D, $.01 par value...................... New York Stock Exchange 10% Cumulative Preferred Stock, Series E, $.01 par value........................ New York Stock Exchange 9.75% Cumulative Preferred Stock, Series F, $.01 par value...................... New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series K, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series L, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock, Series M, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock, Series Q, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock, Series R, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock, Series S, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series T, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series U, $.01 par value.................................. New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock, Series V $.01 par value................................... New York Stock Exchange Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A, $.01 par value............................................................. New York Stock Exchange Common Stock, $.10 par value.................................................... New York Stock Exchange, Pacific Exchange Securities registered pursuant to Section 12(g) of the Act: None ---- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes [ X ] No [ ] The aggregate market value of the voting stock held by non - affiliates of the registrant as of June 30, 2002: Common Stock, $0.10 Par Value - $2,835,113,000 (computed on the basis of $37.10 per share which was the reported closing sale price of the Company's Common Stock on the New York Stock Exchange on June 30, 2002). Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A, $.01 Par Value - $208,710,000 (computed on the basis of $27.90 per share which was the reported closing sale price of the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A on the New York Stock Exchange on June 30, 2002). The number of shares outstanding of the registrant's classes of common stock as of March 14, 2003: Common Stock, $.10 Par Value - 124,681,522 shares - ------------------------------------------------- Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series - ------------------------------------------------------------------------------ A, $.01 Par Value - 8,776,102 depositary shares (representing 8,776,102 shares - ------------------------------------------------------------------------------ of Equity Stock, Series A) - -------------------------- Equity Stock, Series AA, $.01 Par Value - 225,000 shares - -------------------------------------------------------- Equity Stock, Series AAA, $.01 Par Value - 4,289,544 shares - ----------------------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement to be filed in connection with the annual shareholders' meeting to be held in 2003 are incorporated by reference into Part III. 2 PART I ITEM 1. Business Forward Looking Statements - -------------------------- When used within this document, the words "expects," "believes," "anticipates," "should," "estimates," and similar expressions are intended to identify "forward-looking statements" within the meaning of that term in Section 27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward looking statements. Such factors are described in Item 1A, "Risk Factors" and include changes in general economic conditions and in the markets in which the Company operates and the impact of competition from new and existing storage and commercial facilities and other storage alternatives, which could impact rents and occupancy levels at the Company's facilities; difficulties in the Company's ability to evaluate, finance and integrate acquired and developed properties into the Company's existing operations and to fill up those properties, which could adversely affect the Company's profitability; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate Investment Trusts, which could increase the Company's expense and reduce the Company's cash available for distribution; consumers' failure to accept the containerized storage concept which would reduce the Company's profitability; difficulties in raising capital at reasonable rates, which would impede the Company's ability to grow; delays in the development process, which could adversely affect the Company's profitability; and economic uncertainty due to the impact of war or terrorism could adversely affect our business plan. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this report. General - ------- Public Storage, Inc. (the "Company") is an equity real estate investment trust ("REIT") organized as a corporation under the laws of California on July 10, 1980. We are a fully integrated, self-administered and self-managed real estate investment trust ("REIT") that acquires, develops, owns and operates storage facilities. We are the largest owner and operator of storage space in the United States with direct and indirect equity investments in 1,403 storage facilities containing approximately 84.5 million square feet of net rentable space at December 31, 2002. Our common stock is traded on the New York Stock Exchange under the symbol "PSA". We also have a 44% ownership interest in PS Business Parks, Inc., which, as of December 31, 2002, owned and operated commercial properties containing approximately 14.4 million net rentable square feet of space. PS Business Parks, Inc. is a public REIT whose common stock trades on the American Stock Exchange under the symbol "PSB." We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To the extent that the Company continues to qualify as a REIT, it will not be subject to tax, with certain limited exceptions, on the taxable income that is distributed to our shareholders. The Company has reported annually to the Securities and Exchange Commission on Form 10-K, which includes financial statements certified by independent public accountants. The Company has also reported quarterly to the Securities and Exchange Commission on Form 10-Q, and includes unaudited financial statements with such filings. The Company expects to continue such reporting. The Company's website is www.publicstorage.com, and the company makes available free of charge on its website its reports on Forms 10-K, 10-Q, and 8-K, and all amendments to those reports as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. 3 Management - ---------- Ronald L. Havner, Jr. (45) was appointed as a director, vice chairman, and chief executive officer of the Company on November 7, 2002. Mr. Havner has been employed by Public Storage or its affiliates in various financial and operational capacities since 1986 and served as senior vice president and chief financial officer of the Company from November 1991 until December 1996 when he became chairman, president, and chief executive officer of PS Business Parks, Inc., ("PSB") an affiliate of the Company. Mr. Havner continues as chairman and chief executive officer of PSB. B. Wayne Hughes (69) is chairman of the board of directors, a position he has held since 1991. Mr. Hughes plans to remain active in the Company's business, focusing primarily on strategic and marketing initiatives. Mr. Hughes established the Public Storage Organization in 1972 and has managed the Company through several market cycles. Our executive management team and their years of experience with the Company are as follows: Harvey Lenkin (66), President and Chief Operating Officer; 25 years; John Reyes (42), Chief Financial Officer, 12 years; and Marvin M. Lotz (60), Senior Vice President - Real Estate Division, 20 years. Our senior management has a significant ownership position in the Company with executive officers, directors and their families owning approximately 46.7 million shares or 37% of the common stock as of March 14, 2003. Investment Objective - -------------------- Our primary objective is to increase the value of each share through internal growth (by increasing funds from operations and cash available for distribution) and acquisitions of additional real estate investments. We believe that our access to capital, geographic diversification and operating efficiencies resulting from our size will enhance our ability to achieve this objective. Competition - ----------- Competition in the market areas in which we operate is significant and affects the occupancy levels, rental rates and operating expenses of certain of our facilities. The continued development of new storage facilities has intensified the competition among storage operators in many market areas in which we operate. In seeking investments, we compete with a wide variety of institutions and other investors. An increase in the amount of funds available for real estate investments may increase competition for ownership of interests in facilities and may reduce yields. We believe that the significant operating and financial experience of our executive officers and directors, combined with the Company's capital structure, national investment scope, geographic diversity, economies of scale and the "Public Storage" name, should enable us to compete effectively with other entities. In recent years consolidation has occurred in the fragmented storage industry. In addition to the Company, there are two other publicly traded REITs and numerous private regional and local operators operating in the storage industry. We believe that we are well positioned to capitalize on this consolidation trend due to our demonstrated access to capital and national presence. Business Attributes - ------------------- We believe that the Company possesses several primary business attributes that permit us to compete effectively: Comprehensive distribution system and national telephone reservation system: Our facilities are part of a comprehensive distribution system encompassing standardized procedures, integrated reporting and information networks and centralized marketing. This distribution system is designed to maximize revenue through pricing and occupancy. 4 A significant component of our distribution system is our national telephone reservation center, which was implemented in 1996 and 1997 in order to provide added customer service and maximize utilization of available self - storage space. Customers calling either the toll-free telephone referral system, (800) 44-STORE, or a storage facility, are directed to the national reservation system. A representative discusses with the customer space requirements, price and location preferences and also informs the customer of other products and services provided by the Company and its subsidiaries. We believe that the national telephone reservation system has enhanced our ability to market storage space. Containerized storage option: Historically, we offered storage spaces for rent through our traditional self-storage facilities whereby customers would transport their goods to the facility and rent a space to store their goods. In late 1996, we organized Public Storage Pickup and Delivery, Inc. as a separate corporation and a related partnership (the corporation and partnership are collectively referred to as "PSPUD") to operate storage facilities that rent portable storage containers to customers for storage in central facilities. The concept of PSPUD is to provide an alternative to a traditional self-storage facility. PSPUD delivers a storage container(s) to the customer's location where the customer, at his convenience, packs his goods into the storage container. PSPUD will subsequently return to the customer's location to retrieve the storage container(s) for storage in a central facility. At December 31, 2002, PSPUD had 33 facilities (excluding certain facilities that are in the process of being closed) in operation in 11 states. Retail operations: The Company has historically sold retail items associated with the storage business and rented trucks at its storage facilities. In order to further supplement and strengthen the existing self-storage business by further meeting the needs of storage customers, the Company has expanded its retail activities over the last few years. In addition, full-service retail stores have been retrofitted to some existing storage facility rental offices or "built-in" as part of the development of new storage facilities, both in high traffic, high visibility locations. The strategic objective of these retail stores is to provide a retail environment to (i) rent spaces for the attached storage facility, (ii) rent spaces for the other Public Storage facilities in adjacent neighborhoods, (iii) sell locks, boxes and packing materials and (iv) rent trucks and other moving equipment. Tenant insurance program: On December 31, 2001, the Company purchased all of the capital stock of PS Insurance Company, Ltd., from Mr. Hughes and members of his family. This insurance company reinsures policies issued to our customers against loss or damage goods stored by tenants in the Company's storage facilities. This subsidiary receives the premiums and bears the risks associated with the re-insurance. The Company believes that this insurance operation will continue to further supplement and strengthen the existing self-storage business and provide an additional source of earnings for the Company. Economies of scale: We are the largest provider of storage space in the industry. As of December 31, 2002, we operated 1,403 storage facilities in which we had an interest and managed 30 storage facilities for third parties in 37 states. At December 31, 2002, we had over 661,000 spaces rented. The size and scope of the operations have enabled us to achieve a high level of profit margins and low level of administrative costs relative to revenues. Brand name recognition: Our operations are conducted under the "Public Storage" brand name, which we believe is the most recognized and established name in the self-storage industry. Our storage operations are conducted in 37 states, giving us national recognition and prominence. We focus our operations within those states in the major metropolitan markets. This concentration establishes us as one of the largest providers of storage space in each market that we operate in and enables us to use a variety of promotional activities, such as television advertising as well as targeted discounting and referrals which are generally not economically viable for most of our competitors. 5 Growth and Investment Strategies - -------------------------------- Our growth strategies consist of: (i) improving the operating performance of our stabilized existing traditional self-storage properties, (ii) acquiring additional interests in entities that own properties operated by the Company, (iii) acquiring interests in properties that are owned or operated by others, (iv) developing properties in selected markets, (v) improving the operating performance of the containerized storage operations, and (vi) participating in the growth of commercial facilities owned primarily by PS Business Parks, Inc. These strategies are described as follows: Improve the operating performance of existing properties: We seek to increase the net cash flow generated by our existing stabilized traditional self-storage properties by a) regularly evaluating our call volume, reservation activity, and move-in/move-out rates for each of our markets relative to our marketing activities, b) evaluating market supply and demand factors and, based upon these analyses, adjusting our marketing activities and rental rates, c) attempting to maximize revenues through evaluating the appropriate balance between occupancy and rental rates, and d) controlling expense levels. We believe that our property management personnel and systems, combined with the national telephone reservation system, will continue to enhance our ability to meet these goals. Acquire properties operated and partially owned by the Company: In addition to our wholly owned storage facilities, we operate storage facilities on behalf of other entities in which we have partial equity interests. From time to time, interests in these storage facilities are available for purchase, providing us with a source of additional acquisition opportunities. We believe these properties include some of the better-located and better-constructed storage facilities in the industry. Because we manage these properties, we have reliable operating information prior to acquisition, and these properties are easily integrated into our portfolio. The amount of such potential acquisition opportunities has decreased over the last several years as we have continued to acquire such interests. Such potential remaining acquisition opportunities include the remaining equity interests that we do not own in the entities described as "Other Investments" in Note 6 to the Company's financial statements, as well as the "Other Partnership Interests" in Note 9 to the Company's financial statements for the year ended December 31, 2002. Acquire properties owned or operated by others: We believe our presence in and knowledge of substantially all of the major markets in the United States enhances our ability to identify attractive acquisition opportunities and capitalize on the overall fragmentation in the storage industry. We maintain local market information on rates, occupancy and competition in each of the markets in which we operate. With the exception of the March 1999 merger with Storage Trust, our investments in additional facilities have primarily been through development, rather than acquisitions of real estate facilities. We believe the development of real estate facilities described below is more attractive under current market conditions, which are characterized by relatively high prices obtained in sales of existing self-storage facilities, which exceed replacement cost. Develop properties in selected markets: Since 1995, the Company and its joint venture partnerships (described below in Financing) have opened a total of 119 facilities, including 19 facilities in 1998, 24 facilities in 1999, 27 facilities in 2000, 22 facilities in 2001, and 16 facilities in 2002. As of December 31, 2002, the Company has a development "pipeline" of 38 self-storage facilities and expansions to existing storage facilities with an aggregate estimated cost of approximately $199.8 million. Development of these facilities is subject to significant contingencies such as obtaining appropriate governmental agency approvals. The Company continues to seek attractive sites for development of additional storage facilities. Improve the operating performance of containerized storage operations: At December 31, 2002, PSPUD operated 33 facilities. Nine of the facilities are leased from third parties, while 24 of the facilities are owned by the Company or PSPUD. 19 of the owned facilities are facilities combine containerized storage and traditional self-storage space in the same location ("Combination Facilities"), and five facilities are industrial facilities owned by the Company or PSPUD. 6 During the year ended December 31, 2002, management adopted a business plan that included the closure of certain non-strategic containerized storage facilities (the "Closed Facilities"). The number of containerized facilities operated decreased from 55 facilities in 14 states at December 31, 2001, to 33 facilities in 11 states (excluding the Closed Facilities) at December 31, 2002. The rate of fill-up varies from facility to facility. As with the traditional self-storage facilities, PSPUD believes that the containerized storage business experiences seasonal fluctuations in occupancy levels with occupancies generally higher in the summer months than in winter months. There can be no assurance as to the level of PSPUD's expansion, level of gross rentals, level of move-outs or profitability. Management continues to evaluate the optimum level of containerized facility operations in each market in which it operates. The Company is in the process of converting 701,000 net rentable square feet of industrial space previously used by the discontinued containerized storage operations, into self-storage space. Participate in the growth of commercial facilities owned primarily by PS Business Parks, Inc.: On January 2, 1997, we reorganized our commercial property operations into a separate private REIT. The private REIT contributed its assets to a newly created operating partnership (the "Operating Partnership") in exchange for a general partnership interest and limited partnership interests. During 1997, the Company and certain partnerships in which the Company has a controlling interest contributed substantially all of their commercial properties to the Operating Partnership in exchange for limited partnership interests or to the private REIT in exchange for common stock. On March 17, 1998, the private REIT merged into Public Storage Properties XI, Inc., a publicly traded REIT and an affiliate of the Company and the name of the surviving corporation was changed to PS Business Parks, Inc. (the REIT and the related Operating Partnership are hereinafter referred to collectively as "PSB"). The Company and certain partnerships that the Company controls have a 44% common equity interest in PSB as of December 31, 2002, comprised of its ownership of 5,418,273 shares of common stock and 7,305,355 limited partnership units in the Operating Partnership. The limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB common stock. At December 31, 2002, PSB owned and operated 14.4 million net rentable square feet of commercial space located in eight states. In addition to our investment in PSB, we have direct interests in four commercial facilities with an aggregate of 262,000 net rentable square feet. In addition, certain of the Company's self-storage facilities rent a total of 992,000 net rentable square feet of commercial space at the same location. This commercial space is managed by PSB pursuant to management agreements. Policies with respect to investing activities: Following are the Company's policies with respect to certain other investing strategies, each of which may be entered into without a vote of shareholders: * Making loans to other entities: The Company has made loans in connection with the sale of properties, has made short-term loans to PS Business Parks, Inc. in the last three years and may make loans to third parties as part of its investment objectives. However, the Company doesn't expect such items to be a significant part of its investing activities. * Investing in the securities of other issuers for the purpose of exercising control: There have been two instances in the past three years where the Company has invested in the securities of another publicly-held REIT, one which resulted in control of that REIT (the merger with Storage Trust in 1999), and one that did not. The Company may engage in these activities in the future as a component of its real estate acquisition strategy. The Company also owns partnership interests in various consolidated and unconsolidated partnerships. See "Investments in Real Estate and Real Estate Facilities." * To underwrite securities of other issuers: The Company has not engaged in this activity in the last three years, and does not intend to in the future. 7 * Short-term investing: The Company has not engaged in investments in real estate or real estate entities on a short-term basis in the last three years with the exception of the aforementioned investments in the securities of other REIT's. Instead, historically, the Company has acquired real estate assets and held them for an extended period of time. The Company does not anticipate any such short-term investments. * Repurchasing or reacquiring the Company's shares or other securities: The Board of Directors has authorized the repurchase from time to time of up to 25,000,000 shares of the Company's common stock on the open market or in privately negotiated transactions. Cumulatively through December 31, 2002, we repurchased a total of 21,497,020 shares of common stock at an aggregate cost of approximately $535,862,000. In addition, in 2001 and 2002, we redeemed or repurchased $636.9 million of our senior preferred stock and $80,000,000 of our preferred partnership units for cash, representing a refinancing of these securities into lower-coupon preferred securities. Any future repurchases of the Company's common stock will depend primarily upon the attractiveness of repurchases compared to our other investment alternatives. Future redemptions or repurchases of the Company's preferred securities, which will become available for redemption or repurchase on their respective call dates, will be dependent upon the spread between market rates and the coupon rates of these securities. Financing of the Company's Growth Strategies - -------------------------------------------- Overview of Financing Strategy: Over the past three years we have funded substantially all of our acquisitions with permanent capital (retained cash flow as well as common and preferred securities). We have elected to use preferred securities as a form of leverage despite the fact that the dividend rates of our preferred securities exceed the prevailing market interest rates on conventional debt, because of certain benefits described in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources." Our present intent is to continue to finance our growth with substantially permanent capital. Borrowings: We have in the past used our $200 million line of credit described below under "Borrowings" as temporary "bridge" financing, and repaid those amounts with permanent capital. In the last four years, the only additional long-term debt we have incurred has been assumed in connection with property acquisitions, most notably the merger with Storage Trust in 1999 wherein we assumed $100 million in senior unsecured notes. While it is not our present intention to issue debt as a long-term financing strategy, we have broad powers to borrow in furtherance of our objectives without a vote of our shareholders. These powers are subject to a limitation on unsecured borrowings in the Company's Bylaws described in "Limitations on Borrowings" below. Issuance of Senior Securities: The Company has in the last three years, and expects to continue, to issue additional series of preferred stock that are senior to the Company's Common Stock and Equity Stock. At December 31, 2002, we had approximately $1.8 billion of preferred stock outstanding. The preferred stock, which was issued in series, has general preference rights with respect to liquidation and quarterly distributions. We intend to continue to issue preferred securities without a vote of our common shareholders. Issuance of securities in exchange for property: The Company has issued common equity in exchange for real estate and other investments in the last three years. Future issuances will be dependent upon market conditions at the time, including the market prices of our equity securities. Development Joint Venture Financing: The Company has entered into two separate development joint venture partnerships since 1997 in order to provide development financing. As of December 31, 2002, these joint ventures have completed their development activities. In November 1999, we formed PSAC Development Partners, L.P., (the "Consolidated Development Joint Venture") with a joint venture partner (PSAC Storage Investors, LLC) whose partners include a third party institutional investor, owning approximately 35%, and Mr. Hughes, owning approximately 65%, to develop approximately $100 million of storage facilities. At December 31, 2002, PSAC Development Partners, L.P had completed construction on 24 storage facilities with a total cost of approximately $120.2 million. We expect that this second joint venture partnership will receive no additional capital funding to develop any additional facilities. 8 PSAC Development Partners, L.P is funded solely with equity capital consisting of 51% from the Company and 49% from PSAC Storage Investors, LLC. The term of the Consolidated Development Joint Venture is 15 years; however, during the sixth year PSAC Storage Investors, LLC has the right to cause an early termination of PSAC Development Partners, L.P. If PSAC Storage Investors, LLC exercises this right, we then have the option, but not the obligation, to acquire their interest for an amount that will allow them to receive an annual return of 10.75%. If the Company does not exercise its option to acquire PSAC Storage Investors, LLC's interest, PSAC Development Partners, L.P's assets will be sold to third parties and the proceeds distributed to the Company and PSAC Storage Investors, LLC in accordance with the partnership agreement. If PSAC Storage Investors, LLC does not exercise its right to early termination during the sixth year, the partnership will be liquidated 15 years after its formation with the assets sold to third parties and the proceeds distributed to the Company and PSAC Storage Investors, LLC in accordance with the partnership agreement. PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield of approximately 8.0% per annum on his preferred non-voting interest (representing an investment of approximately $64.1 million at December 31, 2002). In addition, Mr. Hughes can receive up to 1% of cash flow of the Partnership (estimated to be less than $50,000 per year) if PSAC Storage Investors, LLC elects an early termination. If PSAC Storage Investors, LLC does not elect to cause an early termination, Mr. Hughes' 1% interest can increase to up to 10%. Disposition of properties: The Company is presently evaluating the sale of certain facilities, which are located in non-strategic markets and locations, which are estimated to be valued at approximately $23 million. The Company intends to use the proceeds from these sales as a source of funding for developments and third-party acquisitions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources." Investments in Real Estate and Real Estate Entities - --------------------------------------------------- Investment Policies and Practices with respect to our investments: Following are our investment practices and policies which, though we do not anticipate any significant alteration, can be changed by the Board of Directors without a shareholder vote: * Our investments primarily consist of direct ownership of self-storage properties (the nature of our self-storage properties is described in Item 2, "Properties"), as well as partial interests in entities that own self-storage properties, which are located in the United States. * Our investments are acquired both for income and for capital gain. * Our partial ownership interests primarily reflect general and limited partnership interests in entities that own self-storage facilities that are operated by the Company. * Additional acquired interests in real estate (other than the acquisition properties from third parties) will include common equity interests in entities in which we already have an interest. * To a lesser extent, we have interests in existing commercial properties (described in Item 2, "Properties"), containing commercial and industrial rental space, primarily through our investment in PS Business Parks. 9 * The Company is developing 38 storage facilities, including 16 expansions of real estate facilities, for a total cost of $199.8 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." The following table outlines our ownership interest in self-storage facilities at December 31, 2002: Net Rentable Square Number of Footage of Storage Storage Space (a) Facilities (in thousands) ---------- -------------- Consolidated storage facilities: Wholly-owned by the Company............. 847 52,385 Owned by Consolidated Entities.......... 520 29,951 ---------- -------------- 1,367 82,336 Facilities owned by Unconsolidated Entities 36 2,186 ---------- -------------- Total storage facilities in which the Company has an ownership interest....... 1,403 84,522 ========== ============== (a) Square footages for the consolidated facilities includes 1,695,000 net rentable square feet of industrial space for use in containerized storage activities. In addition to the Company's interest in self-storage facilities noted above, the Company owns four stand-alone commercial facilities with an aggregate of 262,000 net rentable square feet, owns five industrial facilities with an aggregate of 420,000 net rentable square feet used by the continuing containerized storage operations, and has 992,000 net rentable square feet of commercial space at certain of the self-storage facilities. The Company and the entities it controls also have a 44% common interest in PSB, which at December 31, 2002 owned and operated 14.4 million net rentable square feet of commercial space. Facilities Owned by Controlled Entities - --------------------------------------- In addition to our direct ownership of 847 storage facilities, at December 31, 2002, we had controlling ownership interests in 36 entities owning in aggregate 520 storage facilities. Because of our controlling interest in each of these entities, we consolidate the assets, liabilities, and results of operations of these entities on the Company's financial statements. Facilities Owned by Unconsolidated Entities - ------------------------------------------- At December 31, 2002, we had ownership interests in PSB and seven limited partnerships (collectively the "Unconsolidated Entities"). Our ownership interest in these entities is less than 50%. Due to the Company's limited ownership interest and limited control of these entities, we do not consolidate the accounts of these entities for financial reporting purposes and account for such investments using the equity method. PSB, which files financial statements with the Securities and Exchange Commission, has debt and other obligations that are not included on the Company's financial statements. The seven limited partnerships do not have any significant amounts of debt or other obligations. See Note 6 to the Company's financial statements for the year ended December 31, 2002 for further disclosure regarding the assets and liabilities of the Unconsolidated Entities. The following chart sets forth, as of December 31, 2002, the entities in which the Company has a controlling interest and the entities in which the Company has a minority interest: 10 - --------------------------------------------------------------------------------------------------------------- Subsidiaries (Controlled Entities) Entities in which the Company of the Company has a Minority Interest (Unconsolidated Entities) - --------------------------------------------------------------------------------------------------------------- Carson Storage Ventures Public Storage Alameda, Ltd. (2) Connecticut Storage Fund Public Storage Glendale Freeway, Ltd. (11) Del Amo Storage Partners, Ltd. Metropublic Storage Fund (10) Diversified Storage Venture Fund PS Business Parks, Inc. (3) Downey Storage Partners, Ltd. Public Storage Crescent Fund, Ltd. (4) Huntington Beach Storage Partners, Ltd. Public Storage Partners, Ltd. (5) Monterey Park Properties, Ltd. Public Storage Partners II, Ltd. (6) PS Co-Investment Partners Public Storage Properties, Ltd. (7) PS Insurance Company, Ltd. PS Orangeco Holdings, Inc. PS Orangeco, Inc. PS Partners, Ltd. PS Partners IV, Ltd. (10) PS Partners V, Ltd. PS Partners VI, Ltd. PS Partners VIII, Ltd. Public Storage Properties IV, Ltd. (8) Public Storage Properties V, Ltd. (9) PSA Institutional Partners, L.P. PSAC Development Partners, L.P. (1) Public Storage Euro Fund III, Ltd. (2) Public Storage Euro Fund IV, Ltd. (2) Public Storage Euro Fund V, Ltd. (2) Public Storage Euro Fund VI, Ltd. (2) Public Storage Euro Fund VII, Ltd. (2) Public Storage Euro Fund VIII, Ltd. (2) Public Storage Euro Fund IX, Ltd. (2) Public Storage Euro Fund X, Ltd. (2) Public Storage Euro Fund XI, Ltd. (2) Public Storage Euro Fund XII, Ltd. (2) Public Storage Euro Fund XIII, Ltd. (2) Public Storage German Fund II, Ltd. (2) Public Storage Institutional Fund Public Storage Institutional Fund II (10) Public Storage Institutional Fund III Public Storage Institutional Fund IV (10) Public Storage Pickup & Delivery, L.P. STOR-Re Mutual Insurance Company, Inc. Storage Trust Properties, L.P. Van Nuys Storage Partners, Ltd. Whittier Storage Partners, Ltd. (1) PSAC Storage Investors, LLC owns a direct 49% ownership interest in this entity. The partners of PSAC Storage Investors, LLC are Mr. Hughes, having an approximately 65% ownership interest, and a third party institutional investor having an approximately 35% ownership interest. (2) B. Wayne Hughes owns approximately 20% of the general partner interest of these entities. (3) B. Wayne Hughes owns approximately 0.5% of the common shares of PS Business Parks, Inc. (4) B. Wayne Hughes owns approximately 17.9% of the general partnership interest of this entity. (5) The Hughes Family owns approximately 24.3% of the limited partnership interests of this entity. (6) The Hughes Family owns approximately 11.9% of the limited partnership interests of this entity. (7) The Hughes Family owns 20% of the general partner interests and 30.5% of the limited partnership interests of this entity. (8) The Hughes Family owns 20% of the general partner interests and 15.5% of the limited partnership interests of this entity. (9) The Hughes Family owns 20% of the general partner interests and 11.4% of the limited partnership interests of this entity. (10) B. Wayne Hughes is a general partner of this entity, and has no economic interest. (11) B. Wayne Hughes is a general partner in this entity and owns a 0.02% equity interest. 11 Prohibited Investments and Activities - ------------------------------------- The Company's Bylaws prohibit the Company from purchasing properties in which the Company's officers or directors have an interest, or from selling properties to such persons, unless the transactions are approved by a majority of the independent directors and are fair to the Company based on an independent appraisal. This Bylaw provision may be changed with shareholder approval. See "Limitations on Debt" below for other restrictions in the Bylaws. Borrowings - ---------- We have a $200 million revolving line of credit (the "Credit Agreement") that has a maturity date of October 31, 2004 and bears an annual interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus 0.45% to LIBOR plus 1.50% depending on our credit ratings (currently 0.45%). In addition, we are required to pay a quarterly commitment fee ranging from 0.20% per annum to 0.30% per annum depending on our credit ratings (currently the fee is 0.20% per annum). At December 31, 2002, we had no borrowings on our line of credit. At March 23, 2003, there were no borrowings on our line of credit. The Credit Agreement includes various covenants, the more significant of which require us to (i) maintain a balance sheet leverage ratio of less than 0.50 to 1.00, (ii) maintain certain quarterly interest and fixed-charge coverage ratios (as defined) of not less than 2.50 to 1.0 and 1.75 to 1.0, respectively, and (iii) maintain a minimum total shareholders' equity (as defined). In addition, we are limited in our ability to incur additional borrowings (we are required to maintain unencumbered assets with an aggregate book value equal to or greater than two times our unsecured recourse debt). We were in compliance with all the covenants of the Credit Agreement at December 31, 2002. As of December 31, 2002, we had notes payable of approximately $115.9 million. See Notes 7 and 8 to the consolidated financial statements for a summary of the Company's borrowings at December 31, 2002. Subject to a limitation on unsecured borrowings in the Company's Bylaws (described below), we have broad powers to borrow in furtherance of the Company's objectives. We have incurred in the past, and may incur in the future, both short-term and long-term indebtedness to increase our funds available for investment in real estate, capital expenditures and distributions. Limitations on Debt - ------------------- The Bylaws provide that the Board of Directors shall not authorize or permit the incurrence of any obligation by the Company which would cause our "Asset Coverage" of our unsecured indebtedness to become less than 300%. Asset Coverage is defined in the Bylaws as the ratio (expressed as a percentage) by which the value of the total assets (as defined in the Bylaws) of the Company less the Company's liabilities (except liabilities for unsecured borrowings) bears to the aggregate amount of all unsecured borrowings of the Company. This Bylaw provision may be changed only upon a shareholder vote. The Company's Bylaws prohibit us from issuing debt securities in a public offering unless the Company's "cash flow" (which for this purpose means net income, exclusive of extraordinary items, plus depreciation) for the most recent 12 months for which financial statements are available, adjusted to give effect to the anticipated use of the proceeds from the proposed sale of debt securities, would be sufficient to pay the interest on such securities. This Bylaw provision may be changed only upon a shareholder vote. 12 Without the consent of holders of the various series of Senior Preferred Stock, we may not take any action that would result in a ratio of "Debt" to "Assets" (the "Debt Ratio") in excess of 50%. As of December 31, 2002, the Debt Ratio was approximately 2.0%. "Debt" means the liabilities (other than "accrued and other liabilities" and "minority interest") that should, in accordance with accounting principles generally accepted in the United States, be reflected on the Company's consolidated balance sheet at the time of determination. "Assets" means the Company's total assets before a reduction for accumulated depreciation and amortization that should, in accordance with generally accepted accounting principles, be reflected on the consolidated balance sheet at the time of determination. Our bank and senior unsecured debt agreements contain various financial covenants, including limitations on the level of indebtedness of 30% of total capitalization (as defined) and the prohibition of the payment of dividends upon the occurrence of an event of default (as defined). Employees - --------- We have 4,500 employees at December 31, 2002 who render services on behalf of the Company, primarily personnel engaged in property operation, substantially all of whom are employed by a clearing company that provides certain administrative and cost-sharing services to the Company and other owners of properties operated by the Company. Federal Income Tax - ------------------ We believe that we have operated, and intend to continue to operate, in such a manner as to qualify as a REIT under the Internal Revenue Code of 1986, but no assurance can be given that it will at all times so qualify. To the extent that we continue to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the taxable income (including gains from the sale of securities and properties) that is distributed to our shareholders. For Federal tax purposes, distributions to shareholders are treated by the shareholders as ordinary income, capital gains, return of capital or a combination thereof. Distributions in excess of taxable income (as defined) are treated as nontaxable returns of capital. On December 17, 1999, the Work Incentives Improvement Act of 1999 (the "Act"), which included certain provisions affecting REITs, was enacted. The REIT provisions of the Act generally are effective for taxable years beginning after December 31, 2000. The Act was intended to ease the restrictions on a REIT's ability to own the stock of taxable companies. The Act allows REITs to own up to 100% of the stock of companies that have made a joint election with the REIT to be treated as "taxable REIT subsidiaries" ("TRS"). A TRS will be subject to federal income tax on income as a regular corporation. Under prior law, a REIT generally could not own more than 10% of the voting securities of other issuers. Under the Act, the prior law 10% voting securities test was expanded so that REITs also are prohibited from owing more than 10% of the value of outstanding securities of any one corporate issuer, except for companies that elect to be treated as TRSs or companies that qualify for certain grandfather provisions in the Act. An important effect of the Act is that TRSs are permitted to offer noncustomary services to the tenants of the REIT (such services could be provided under prior law only by "independent contractors" from which the REIT could not earn any income). TRSs also are able to engage in other income producing activities that typically had been undertaken by REITs only through entities in which a REIT could have a substantial economic interest, but was limited to a 10% or less voting interest. The Act includes certain limitations that prevent income shifting between a REIT and its TRS, in an effort to ensure that TRSs in fact are taxable on the income that they earn. In addition, under prior law, a REIT could not own securities of any single issuer with a value in excess of 5% of the value of all the assets of the REIT. The Act also relaxed this limitation, so that a REIT may own a TRS (or TRSs), so long as the aggregate value of the TRSs, when combined with all other non-REIT assets, does not exceed 25% of the value of all assets of the REIT. The Company and certain affiliates have jointly made the TRS election. 13 Insurance - --------- We believe that our properties are adequately insured. Our facilities have historically carried comprehensive insurance, including fire, earthquake, liability and extended coverage through STOR-Re Mutual Insurance Company, Inc. ("STOR-Re"), one of the Consolidated Entities, and insures portions of these risks through nationally recognized insurance carriers. STOR-Re also insures affiliates of the Company. The Company, Stor-RE, and its affiliates' maximum aggregate annual exposure for losses that are below the deductibles set forth in the third-party insurance contracts, assuming multiple significant events occur, is approximately $30 million. In addition, if losses exhaust the third-party insurers' limit of coverage of $125,000,000 for property coverage and $101,000,000 for general liability, our exposure could be greater. These limits are higher than estimates of maximum probable losses that could occur from individual catastrophic events (i.e., earthquake and wind damage) determined in recent engineering and actuarial studies. ITEM 1A. Risk Factors In addition to the other information in our Form 10-K, you should consider the following factors in evaluating the Company: THE HUGHES FAMILY COULD CONTROL US. At March 14, 2003, the Hughes family owned approximately 37% of our outstanding shares of common stock. Consequently, the Hughes family could control matters submitted to a vote of our shareholders, including electing directors, amending our organizational documents, dissolving and approving other extraordinary transactions, such as a takeover attempt, even though such actions may be favorable to the other common shareholders. PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS MAY PREVENT CHANGES IN CONTROL. Restrictions in our organizational documents may further limit changes in control. Unless our board of directors waives these limitations, no shareholder may own more than (1) 2.0% of our outstanding shares of our common stock or (2) 9.9% of the outstanding shares of each class or series of our preferred or equity stock. Our organizational documents in effect provide, however, that the Hughes family may continue to own the shares of our common stock held by them at the time of the 1995 reorganization. These limitations are designed, to the extent possible, to avoid a concentration of ownership that might jeopardize our ability to qualify as a real estate investment trust or REIT. These limitations, however, also may make a change of control significantly more difficult (if not impossible) even if it would be favorable to the interests of our public shareholders. These provisions will prevent future takeover attempts not approved by our board of directors even if a majority of our public shareholders deem it to be in their best interests because they would receive a premium for their shares over the shares' then market value or for other reasons. WE WOULD INCUR ADVERSE TAX CONSEQUENCES IF WE FAIL TO QUALIFY AS A REIT. You will be subject to the risk that we may not qualify as a REIT. As a REIT, we must distribute at least 90% of our REIT taxable income to our shareholders, which include not only holders of our common stock and equity stock but also holders of our preferred stock. Failure to pay full dividends on the preferred stock would prevent us from paying dividends on our common stock and could jeopardize our qualification as a REIT. For any taxable year that we fail to qualify as a REIT and the relief provisions do not apply, we would be taxed at the regular corporate rates on all of our taxable income, whether or not we make any distributions to our shareholders. Those taxes would reduce the amount of cash available for distribution to our shareholders or for reinvestment. As a result, our failure to qualify as a REIT during any taxable year could have a material adverse effect upon us and our shareholders. Furthermore, unless certain relief provisions apply, we would not be eligible to elect REIT status again until the fifth taxable year that begins after the first year for which we fail to qualify. 14 WE MAY PAY SOME TAXES. Even if we qualify as a REIT for Federal income tax purposes, we are required to pay some federal, state and local taxes on our income and property. Several corporate subsidiaries of the Company have elected to be treated as "taxable REIT subsidiaries" of the Company for federal income tax purposes since January 1, 2001. A taxable REIT subsidiary is a fully taxable corporation and is limited in its ability to deduct interest payments made to us. In addition, we will be subject to a 100% penalty tax on some payments that we receive if the economic arrangements among our tenants, our taxable REIT subsidiaries and us are not comparable to similar arrangements among unrelated parties. To the extent that the Company or any taxable REIT subsidiary is required to pay federal, state or local taxes, we will have less cash available for distribution to shareholders. WE WOULD INCUR A CORPORATE LEVEL TAX IF WE SELL CERTAIN ASSETS. We will generally be subject to a corporate level tax on any net built-in gain if before November 2005 we sell any of the assets we acquired in the November 1995 reorganization. WE AND OUR SHAREHOLDERS ARE SUBJECT TO FINANCING RISKS. Debt increases the risk of loss. In making real estate investments, we may borrow money, which increases the risk of loss. At December 31, 2002, our debt of $115.9 million was approximately 2.4% of our total assets. Certain securities have a liquidation preference over our common stock and Equity Stock, Series A. If we liquidated, holders of our preferred securities would be entitled to receive liquidating distributions, plus any accrued and unpaid distributions, before any distribution of assets to the holders of our common stock and Equity Stock, Series A. Holders of preferred securities are entitled to receive, when declared by our board of directors, cash distributions in preference to holders of our common stock and Equity Stock, Series A. SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE ARE SUBJECT TO REAL ESTATE OPERATING RISKS. The value of our investments may be reduced by general risks of real estate ownership. Since we derive substantially all of our income from real estate operations, we are subject to the general risks of owning real estate-related assets, including: * lack of demand for rental spaces or units in a locale; * changes in general economic or local conditions; * potential terrorist attacks; * changes in supply of or demand for similar or competing facilities in an area; * the impact of environmental protection laws; * changes in interest rates and availability of permanent mortgage funds which may render the sale or financing of a property difficult or unattractive; and * changes in tax, real estate and zoning laws. There is significant competition among self-storage facilities and from other storage alternatives. Most of our properties are self-storage facilities, which generated 94% of our rental revenue during 2002. Local market conditions will play a significant part in how competition will affect us. Competition in the market areas in which many of our properties are located from other self-storage facilities and other storage alternatives is significant and has affected the occupancy levels, rental rates and operating expenses of some of our properties. Any increase in availability of funds for investment in real estate may accelerate competition. Further development of self-storage facilities may intensify competition among operators of self-storage facilities in the market areas in which we operate. As discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations - Self-Storage Operations, the revenues of the Consistent Group of facilities declined 3.3% in the year ended December 31, 2002 as compared to 2001. Such competition could have been a factor in this decline. 15 We may incur significant environmental costs and liabilities. As an owner and operator of real properties, under various federal, state and local environmental laws, we are required to clean up spills or other releases of hazardous or toxic substances on or from our properties. Certain environmental laws impose liability whether or not the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. In some cases, liability may not be limited to the value of the property. The presence of these substances, or the failure to properly remediate any resulting contamination, also may adversely affect the owner's or operator's ability to sell, lease or operate its property or to borrow using its property as collateral. We have conducted preliminary environmental assessments of most of our properties (and intend to conduct these assessments in connection with property acquisitions) to evaluate the environmental condition of, and potential environmental liabilities associated with, our properties. These assessments generally consist of an investigation of environmental conditions at the property (not including soil or groundwater sampling or analysis), as well as a review of available information regarding the site and publicly available data regarding conditions at other sites in the vicinity. In connection with these property assessments, our operations and recent property acquisitions, we have become aware that prior operations or activities at some facilities or from nearby locations have or may have resulted in contamination to the soil or groundwater at these facilities. In this regard, some of our facilities are or may be the subject of federal or state environment investigations or remedial actions. We have obtained, with respect to recent acquisitions, and intend to obtain with respect to pending or future acquisitions, appropriate purchase price adjustments or indemnifications that we believe are sufficient to cover any related potential liability. Although we cannot provide any assurance, based on the preliminary environmental assessments, we believe we have funds available to cover any liability from environmental contamination or potential contamination and we are not aware of any environmental contamination of our facilities material to our overall business, financial condition or results of operation. Delays in development and fill-up of our properties would reduce our profitability: During 2002, the Company opened a total of 14 newly developed self-storage facilities at a total cost of approximately $92,109,000, and at December 31, 2002 the Company had 38 projects in development that were expected to begin construction by June 30, 2003. These 38 projects have total estimated costs of $199,760,000. Construction delays due to weather, unforeseen site conditions, personnel problems, and other factors, as well as cost overruns, would adversely affect the Company's profitability. Delays in the rent-up of newly developed facilities as a result of competition or other factors would also adversely impact the Company's profitability. Property taxes can increase and cause a decline in yields on investments. Each of our properties is subject to real property taxes. These real property taxes may increase in the future as property tax rates change and as our properties are assessed or reassessed by tax authorities. Such increases could adversely impact the Company's profitability. We must comply with the Americans with Disabilities Act and fire and safety regulations, which can require significant expenditures: ....All our properties must comply with the Americans with Disabilities Act and with related regulations (the "ADA"). The ADA has separate compliance requirements for "public accomodations" and "commercial facilities," but generally requires that buildings be made accessible to persons with disabilities. Various state laws impose similar requirements. A failure to comply with the ADA or similar state laws could result in government imposed fines on us and the award of damages to individuals affected by the failure. In addition, we must operate our properties in compliance with numerous local fire and safety regulations, building codes, and other land use regulations. Compliance with these requirements can require us to spend substantial amounts of money, which would reduce cash otherwise available for distribution to shareholders. Failure to comply with these requirements could also affect the marketability of our real estate facilities. 16 WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES FAMILY. The Hughes Family has ownership interests in, and operates, approximately 38 self-storage facilities in Canada under the name "Public Storage." Our personnel are engaged in the supervision and the operation of these properties and in providing certain administrative services, and the Canadian owners reimburse us at cost for these services. We have a right of first refusal to acquire the stock or assets of the corporation engaged in these operations if the Hughes family or the corporation agrees to sell them. However, we have no interest in the operations of this corporation, have no right to acquire this stock or assets unless the Hughes family decides to sell, and receive no benefit from the profits and increases in value of the Canadian mini-warehouses. There may be conflicts of interest in allocating the time of our personnel between our properties and the Canadian properties. The Board of Directors is currently evaluating these arrangements. OUR PORTABLE SELF-STORAGE BUSINESS HAS INCURRED OPERATING LOSSES. Public Storage Pickup & Delivery ("PSPUD") was organized in 1996 to operate a portable self-storage business. We own all of the economic interest of PSPUD. Since PSPUD will operate profitably only if it can succeed in the relatively new field of portable self-storage, we cannot provide any assurance as to its profitability. PSPUD incurred operating losses of $5,135,000 in 2000, $2,218,000 in 2001 and $10,058,000 in 2002. PSPUD closed 22 facilities that were deemed not strategic to the Company's business plan during 2002. The operating loss for 2002 includes a write-down for impaired assets totaling $6,937,000 ($750,000 of which relates to continuing operations) and lease termination charges of $2,447,000 (see Note 4 to the financial statements for more information). TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE VALUE OF OUR ASSETS. Terrorist attacks and other acts of violence or war, such as those that took place on September 11, 2001, could have a material adverse impact on our business and operating results. There can be no assurance that there will not be further terrorist attacks against the United States or its businesses or interests. Attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate those properties and thereby impair our operating results. Further, we may not have insurance coverage for losses caused by a terrorist attack. Such insurance may not be available, or if it is available and we decide to obtain such terrorist coverage, the cost for the insurance may be significant in relationship to the risk overall. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse effect on our business and results of operations. Finally, further terrorist acts could cause the United States to enter into a wider armed conflict which could further impact our business and operating results. PRESIDENT BUSH'S PROPOSED TAX CUT COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK. President Bush has proposed a tax reduction package that would, among other things, substantially reduce or eliminate the taxation of dividends paid by corporations other than REITs. If the double taxation of corporate dividends were to be eliminated or reduced, certain of the relative tax advantage of being a REIT would be eliminated or reduced, which may have an adverse effect on the price of our stock. This adverse effect may take place prior to the adoption of any tax cut based upon the market's perception of the likelihood of implementation of such a provision. 17 ITEM 2. Properties At December 31, 2002, we had direct and indirect ownership interests in 1,403 storage facilities located in 37 states: At December 31, 2002 ------------------------------------------- Number of Storage Net Rentable Square Facilities (a) Feet (in Thousands) ----------------- -------------------- California: Northern 140 7,916 Southern 165 10,646 Texas 165 11,124 Florida 138 8,133 Illinois 95 5,829 Georgia 62 3,626 Colorado 50 3,145 New Jersey 42 2,449 Washington 42 2,657 Maryland 41 2,323 Missouri 38 2,172 Virginia 38 2,294 New York 36 2,127 Ohio 31 1,925 Oregon 25 1,171 Tennessee 27 1,566 North Carolina 24 1,266 South Carolina 24 1,082 Kansas 22 1,316 Nevada 22 1,409 Alabama 22 895 Other states (17 states) 154 9,451 ----------------- -------------------- Totals 1,403 84,522 ================= ==================== (a) Includes 1,367 self-storage facilities owned by the Company and entities controlled by the Company. The remaining 36 facilities are self-storage facilities owned by entities in which the Company has an interest; however, the Company does not have a controlling interest in such entities. See Schedule III: Real Estate and Accumulated Depreciation in the Company's 2002 financials, for a complete list of properties consolidated by the Company. Our facilities are generally operated to maximize cash flow through the regular review and, when warranted by market conditions, adjustment of scheduled rents. For the year ended December 31, 2002, the weighted average occupancy level and the weighted average annual realized rent per rentable square foot for our storage facilities were approximately 82.9% and $9.64, respectively. Included in the 1,403 storage facilities are 66 newly developed facilities opened since January 1, 1999, substantially all of which were in the fill-up stage in the year ended December 31, 2002. At December 31, 2002, 24 of our facilities were encumbered by an aggregate of $20.6 million in mortgage debt. The Company has no specific policy as to the maximum size of any one particular self-storage facility. However, none of our facilities involves, or is expected to involve, 1% or more of the Company's total assets, gross revenues or net income. Description of Storage facilities: Storage facilities, which comprise the majority of our investments (approximately 94% based on rental revenue), are designed to offer accessible storage space for personal and business use at a relatively low cost. A user rents a fully enclosed space which is for the user's exclusive use and to which only the user has access on an unrestricted basis during business hours. On-site operation is the responsibility of property managers who are supervised by district managers. Some storage facilities also include rentable uncovered parking areas for vehicle storage, as well as space for portable storage containers. Leases for storage facilities space may be on a long-term or short-term basis, although typically spaces are rented on a month-to-month basis. Rental rates vary according to the location of the property and the size of the storage space. All of our storage facilities are operated under the "Public Storage" name. 18 Users of space in storage facilities include both individuals and large and small businesses. Individuals usually employ this space for storage of furniture, household appliances, personal belongings, motor vehicles, boats, campers, motorcycles and other household goods. Businesses normally employ this space for storage of excess inventory, business records, seasonal goods, equipment and fixtures. Storage facilities in which we have invested generally consist of three to seven buildings containing an aggregate of between 350 to 750 storage spaces, most of which have between 25 and 400 square feet and an interior height of approximately 8 to 12 feet. We experience minor seasonal fluctuations in the occupancy levels of storage facilities with occupancies generally higher in the summer months than in the winter months. We believe that these fluctuations result in part from increased moving activity during the summer. Our storage facilities are geographically diversified and are located primarily in or near major metropolitan markets in 37 states in the United States. Generally our storage facilities are located in heavily populated areas and close to concentrations of apartment complexes, single family residences and commercial developments. However, there may be circumstances in which it may be appropriate to own a property in a less populated area, for example, in an area that is highly visible from a major thoroughfare and close to, although not in, a heavily populated area. Moreover, in certain population centers, land costs and zoning restrictions may create a demand for space in nearby less populated areas. Competition from other self-storage facilities in the market areas in which many of our properties are located is significant and has affected the occupancy levels, rental rates, and operating expenses of some of our properties. Since our investments are primarily storage facilities, our ability to preserve our investments and achieve our objectives is dependent in large part upon success in this field. Historically, upon stabilization after an initial fill-up period, our storage facility interests have generally shown a high degree of consistency in generating cash flows, despite changing economic conditions. We believe that our storage facilities, upon stabilization, have attractive characteristics consisting of high profit margins, a broad tenant base and low levels of capital expenditures to maintain their condition and appearance. Commercial Properties: In addition to our interest in 1,403 storage facilities, we have an interest in PSB, which, as of December 31, 2002, owns and operates 14.4 million net rentable square feet in eight states. At December 31, 2002, our investment in PS Business Parks represents less than 6% of our total assets based upon cost. The market value of our investment in PSB at December 31, 2002 of $404.6 million represents 8% of the book value of our total assets at December 31, 2002 of $4.8 billion. We also directly own four commercial properties with 262,000 net rentable square feet, have 992,000 net rentable square feet of commercial space that is located at certain of the self-storage facilities, and own five industrial facilities with an aggregate of 420,000 net rentable square feet that are being used by the continuing containerized storage operations. The commercial properties owned by PSB consist of flex space, office space and industrial space. PSB owns approximately 10.9 million square feet of flex space, which is defined as buildings that are configured with a combination of part warehouse space and part office space and can be designed to fit a wide variety of uses. The warehouse component of the flex space has a variety of uses including light manufacturing and assembly, storage and warehousing, showroom, laboratory, distribution and research and development activities. The office component of flex space is complementary to the warehouse component by enabling businesses to accommodate management and production staff in the same facility. PSB also owns approximately 2.2 million square feet of low-rise suburban office space, generally either in business parks that combine office and flex space or in desirable submarkets where the economics of the market demand an office build-out, and approximately 1.3 million square feet of industrial space that have characteristics similar to the warehouse component of the flex space. 19 Environmental Matters: Our practice is to conduct environmental investigations in connection with property acquisitions. As a result of environmental investigations of our properties, which commenced in 1995, we recorded an amount, which in management's best estimate, will be sufficient to satisfy anticipated costs of known investigation and remediation requirements. Although there can be no assurance, we are not aware of any environmental contamination of any of our facilities which individually or in the aggregate would be material to the Company's overall business, financial condition, or results of operations. ITEM 3. Legal Proceedings Salaam, et. al v. Public Storage, Inc. (filed February 2000) ------------------------------------------------------------ (Superior Court- Sacramento County) ----------------------------------- The plaintiffs in this case are suing the Company on behalf of a purported class of California resident property managers who claim that they were not compensated for all the hours they worked. The named plaintiffs have indicated that their claims total less than $20,000 in aggregate. This maximum potential liability can only be increased if a class is certified or if claims are permitted to be brought on behalf of the others under the California Unfair Business Practices Act. The plaintiffs' motion for class certification was denied in August 2002; the plaintiffs have appealed this denial. This denial does not deal with the claim under the California Unfair Business Practices Act. The Company is continuing to vigorously contest the claims in this case and intends to resist any expansion beyond the named plaintiffs on the grounds of lack of commonality of claims. The Company's resistance will include opposing the plaintiffs' appeal of the court's denial of class certification and opposing the claim on behalf of others under the California Unfair Business Practices Act. Henriquez v. Public Storage, Inc. (Filed June 2002; Dismissed ------------------------------------------------------------- January, 2003)(Superior Court - Los Angeles County) --------------------------------------------------- The plaintiff in this case filed a suit against the Company on behalf of a purported class of renters who rented self-storage units from the Company. Plaintiff alleged that the Company misrepresents the size of its units and sought damages and injunctive and declaratory relief under California statutory and common law relating to consumer protection, unfair competition, fraud and deceit and negligent misrepresentation. In January 2003, the plaintiff caused this suit to be dismissed. The plaintiff's attorney has advised that he anticipates filing a similar suit against the Company on behalf of a new plaintiff. However, the Company cannot presently determine the potential total damages, if any, or the ultimate outcome of any such litigation. If a new suit is filed, the Company intends to vigorously contest any claims on which it is based. Equity Resource Fund XV v. Public Storage Inc. (Filed August 1997) ------------------------------------------------------------------ (Massachusetts Superior Court - Middlesex County) ------------------------------------------------- In February 2000, the Company entered into a settlement of litigation arising out of a 1997 tender offer for limited partnership units in two affiliated partnerships. Under the settlement agreement, the Company agreed to sell to the plaintiff units representing a 4% interest in each of the partnerships for a total payment of approximately $1,523,000. The plaintiff failed to tender the full purchase price at the scheduled closing and the settlement collapsed. In September 2000, the plaintiff amended its complaint to add a claim for breach of the settlement agreement seeking specific enforcement and a claim seeking damages for unfair and deceptive trade practices in connection with the alleged breach. By amending the complaint the Company believes the plaintiff elected to abandon its underlying claims in the litigation. The Company asserted affirmative defenses including the material breach by the plaintiff. Cross motions for summary judgment were filed by the parties. In July 2002, the court granted plaintiff's motion for summary judgment as to its claim for breach of the settlement agreement and granted the Company's motion for summary judgment to dismiss plaintiff's claim for unfair and deceptive trade practices. In March 2003, the court granted plaintiff's motion to compel the sale of the units to the plaintiff. The Company is considering whether to appeal. If the Company is compelled to sell the units to plaintiff, the Company would incur a loss of approximately $1,839,000, which has been accrued as a loss on sale of real estate investments in the Company's income statement during 2002. 20 PS Insurance Company -------------------- In November 2002, a shareholder of the Company made a demand on the Board of Directors that challenged the fairness of the Company's acquisition of PS Insurance Company, Ltd. ("PSIC") and demanded that the Board recover the profits earned by PSIC from November 1995 through December 2001. The transaction, which had an acquisition cost of approximately $24.5 million, was approved by the independent directors of Board in March 2001 and closed in December 2001. PSIC was formerly owned by B. Wayne Hughes, the Chairman of the Board (and previously also the Chief Executive Officer) of the Company, and members of his family. In December 2002, the Board held a special meeting to authorize an inquiry by its independent directors to review the fairness to the Company's shareholders of its acquisition of PSIC and whether the Company should be entitled to be paid by Mr. Hughes and his family an amount equal to PSIC's profits since November 1995. The inquiry is currently ongoing. The Company is a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time. The Company believes that the outcome of these other pending legal proceedings, in the aggregate, will not have a material adverse effect upon the operations or financial portion of the Company. ITEM 4. Submission of Matters to a Vote of Security Holders The Company did not submit any matter to a vote of security holders in the fourth quarter of the fiscal year ended December 31, 2002. ITEM 4A. Executive Officers of the Company The following is a biographical summary of the current executive officers of the Company: Ronald L. Havner, Jr., age 45, was appointed Vice Chairman and Chief Executive Officer of the Company on November 7, 2002. Mr. Havner has been employed by the Company in various accounting and operational capacities since 1986 and served as Senior Vice President and Chief Financial Officer of the Company from November 1991 until December 1996 when be became Chairman, President and Chief Executive Officer of PS Business Parks, Inc. (AMEX: symbol PSB) an affiliate of the Company. He is a member of the National Association of Real Estate Investment Trusts (NAREIT) and the Urban Land Institute (ULI) and a Director of Business Machine Security, Inc. and Mobile Storage Group, Inc. Mr. Havner earned a Bachelor of Arts degree in Economics from the University of California, Los Angeles. Harvey Lenkin, age 66, became President and a director of the Company in November 1991. Mr. Lenkin has been employed by the Company for 25 years. He has been a director of PSB since March 1998 and was President of PSB from 1990 until March 1998. He is a member of the Board of Governors of the National Association of Real Estate Investment Trusts, Inc. (NAREIT). Marvin M. Lotz, age 60, became a director of the Company in May 1999. Mr. Lotz has been a Senior Vice President of the Company since November 1995. He served as president of the property management division from 1988 until July 2002 with overall responsibility for the Company's mini-warehouse operations. In July 2002, Mr. Lotz became president of the real estate division with overall responsibility for the Company's acquisition and development activity. John Reyes, age 42, a certified public accountant, joined the Company in 1990 and was Controller of the Company from 1992 until December 1996 when he became Chief Financial Officer. He became a Vice President of the Company in November 1995 and a Senior Vice President of the Company in December 1996. From 1983 to 1990, Mr. Reyes was employed by Ernst & Young. 21 PART II ITEM 5. Market for the Registrant's Common Equity and Related Stockholder Matters a. Market Price of the Registrant's Common Equity: The Common Stock (NYSE:PSA) has been listed on the New York Stock Exchange since October 19, 1984 and on the Pacific Exchange since December 26, 1996. The Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A (NYSE:PSAA) (see section d. below) have been listed on the New York Stock Exchange since February 14, 2000. The following table sets forth the high and low sales prices of the Common Stock on the New York Stock Exchange composite tapes for the applicable periods. Range ----------------------------------- Year Quarter High Low ------------- ------------- ------------- ------------- 2001 1st $ 26.750 $ 24.125 2nd 30.200 26.060 3rd 34.850 29.150 4th 35.150 32.480 2002 1st $ 38.400 $ 33.190 2nd 39.290 34.950 3rd 37.900 29.000 4th 32.530 27.980 The following table sets forth the high and low sales prices of the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A on the New York Stock Exchange composite tapes for the applicable periods. Range ----------------------------------- Year Quarter High Low ------------- ------------- ------------- ------------- - 2001 1st $ 25.250 $ 22.563 2nd 25.050 23.250 3rd 26.550 24.360 4th 27.480 25.900 2002 1st $ 28.250 $ 26.650 2nd 28.400 27.160 3rd 28.180 25.700 4th 27.700 26.050 As of March 19, 2003, there were approximately 20,887 holders of record of the Common Stock and approximately 14,267 holders of the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A. b. Dividends We have paid quarterly distributions to our shareholders since 1981, our first full year of operations. Overall distributions on Common Stock for 2002 amounted to $209.1 million or $1.80 per share. 22 Holders of Common Stock are entitled to receive distributions when and if declared by the Company's Board of Directors out of any funds legally available for that purpose. We are required to distribute at least 90% of our net taxable ordinary income prior to the filing of the Company's tax return and 85%, subject to certain adjustments, during the calendar year, to maintain our REIT status for federal income tax purposes. It is our intention to pay distributions of not less than this required amount. For Federal tax purposes, distributions to shareholders are treated as ordinary income, capital gains, return of capital or a combination thereof. For 2002, the dividends paid to the common shareholders ($1.80 per share), on all the various classes of preferred stock, and on our Equity Stock, Series A were characterized as 100% ordinary income. For 2001, the dividends paid to the common shareholders ($1.69 per share), on all the various classes of preferred stock and on Equity Stock, Series A were characterized as ordinary income and long-term capital gain. The quarterly breakdown is as follows: TREATMENT OF DIVIDENDS PAID FOR 2001 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ----------- ----------- ----------- ----------- Ordinary Income 96.60% 99.67% 100.00% 100.00% Long-term Capital Gain 3.40% 0.33% 0.00% 0.00% ----------- ----------- ----------- ----------- Total 100.00% 100.00% 100.00% 100.00% =========== =========== =========== =========== In 2000, distributions to common shareholders were $1.48 per share and were 98.3% ordinary income and 1.7% long-term capital gain. c. Equity Stock The Company is authorized to issue 200,000,000 shares of Equity Stock. The Articles of Incorporation provide that the Equity Stock may be issued from time to time in one or more series and gives the Board of Directors broad authority to fix the dividend and distribution rights, conversion and voting rights, redemption provisions and liquidation rights of each series of Equity Stock. In April 2001, the Company completed a public offering of 2,210,500 depositary shares each representing 1/1,000 of a share of Equity Stock, Series A, ("Equity Stock A") raising net proceeds of approximately $51,836,000. In May 2001, the Company completed a direct placement of 830,000 depositary shares, raising net proceeds of approximately $20,294,000. In November 2001, the Company completed a direct placement of 100,000 depositary shares, raising net proceeds of approximately $2,690,000. In January 2000, we issued 4,300,555 depositary shares (2,200,555 shares as part of a special distribution declared on November 15, 1999 and 2,100,000 shares in a separate public offering). In addition, in the second quarter of 2000, we issued 52,547 depositary shares to a related party in connection with the acquisition of real estate facilities. In December 2000, we issued 1,282,500 depositary shares in a public offering. All of the issuances of the depositary shares described in this paragraph were registered under the Securities Act at the time of issuance. At December 31, 2002, we had 8,776,102 depositary shares outstanding, each representing 1/1,000 of a share of Equity Stock A. The Equity Stock A ranks on a parity with common stock and junior to the Senior Preferred Stock with respect to distributions and liquidation and has a liquidation amount which cannot exceed $24.50 per share. Distributions with respect to each depositary share shall be the lesser of: a) five times the per share dividend on the Common Stock or b) $2.45 per annum. Except in order to preserve the Company's federal income tax status as a REIT, we may not redeem the depositary shares before March 31, 2010. On or after March 31, 2010, we may, at our option, redeem the depositary shares at $24.50 per depositary share. If the Company fails to preserve its federal income tax status as a REIT, each depositary share will be convertible into .956 shares of our common stock. The depositary shares are otherwise not convertible into common stock. Holders of depositary shares vote as a single class with our holders of common stock on shareholder matters, but the depositary shares have the equivalent of one-tenth of a vote per depositary share. We have no obligation to pay distributions on the depositary shares if no distributions are paid to common shareholders. 23 In June 1997, we contributed $22,500,000 (225,000 shares) of equity stock, now designated as Equity Stock, Series AA ("Equity Stock AA") to a partnership in which we are the general partner. As a result of this contribution, we obtained a controlling interest in the partnership and began to consolidate the accounts of the partnership and therefore the equity stock is eliminated in consolidation. The Equity Stock AA ranks on a parity with Common Stock and junior to the Senior Preferred Stock with respect to general preference rights and has a liquidation amount of ten times the amount paid to each Common Share up to a maximum of $100 per share. Quarterly distributions per share on the Equity Stock AA are equal to the lesser of (i) 10 times the amount paid per Common Stock or (ii) $2.20. We have no obligation to pay distributions if no distributions are paid to common shareholders. In November 1999, we sold $100,000,000 (4,289,544 shares) of Equity Stock, Series AAA ("Equity Stock AAA") to a newly formed joint venture. We control the joint venture and consolidate the accounts of the joint venture, and accordingly the Equity Stock AAA is eliminated in consolidation. The Equity Stock AAA ranks on a parity with common stock and junior to the Senior Preferred Stock (as defined below) with respect to general preference rights, and has a liquidation amount equal to 120% of the amount distributed to each common share. Annual distributions per share are equal to the lesser of (i) five times the amount paid per common share or (ii) $2.1564. We have no obligation to pay distributions if no distributions are paid to common shareholders. 24 ITEM 6. Selected Financial Data For the year ended December 31, -------------------------------------------------------------------------- 2002(1) 2001(1) 2000(1) 1999 (1) 1998 (1) ----------- ----------- ----------- ----------- ----------- (Amounts in thousands, except per share data) Revenues: Rental income and tenant reinsurance premiums $832,791 $767,944 $696,050 $626,086 $535,139 Interest and other income 8,661 14,225 18,836 16,700 18,614 ----------- ----------- ----------- ----------- ----------- 841,452 782,169 714,886 642,786 553,753 ----------- ----------- ----------- ----------- ----------- Expenses: Cost of operations 295,517 262,988 245,265 214,973 204,106 Depreciation and amortization 179,634 166,178 148,195 137,469 111,691 General and administrative 15,619 21,038 21,306 12,491 11,635 Interest expense 3,809 3,227 3,293 7,971 4,507 ----------- ----------- ----------- ----------- ----------- 494,579 453,431 418,059 372,904 331,939 ----------- ----------- ----------- ----------- ----------- Income before equity in earnings of real estate entities, minority interest, discontinued operations and gain (loss) on disposition of real estate investments 346,873 328,738 296,827 269,882 221,814 Equity in earnings of real estate entities 29,888 38,542 39,319 32,183 26,602 Minority interest in income (44,087) (46,015) (38,356) (16,006) (20,290) ----------- ----------- ----------- ----------- ----------- Net income before discontinued operations and gain on disposition of real estate 332,674 321,265 297,790 286,059 228,126 Discontinued operations (2) (11,395) (1,148) (1,278) (328) (1,107) Gain/(loss) on disposition of real estate investments (2,541) 4,091 576 2,154 - ----------- ----------- ----------- ----------- ----------- Net income $318,738 $324,208 $297,088 $287,885 $227,019 =========== =========== =========== =========== =========== - --------------------------------------------------- --------------- -------------- --------------- --------------- -------------- Per Common Share: - ----------------- Distributions $1.80 $1.69 $1.48 $1.52 $0.88 Net income - Basic $1.21 $1.53 $1.41 $1.53 $1.30 Net income - Diluted $1.19 $1.51 $1.41 $1.52 $1.30 Weighted average common shares - Basic 123,005 122,310 131,566 126,308 113,929 Weighted average common shares - Diluted 124,571 123,577 131,657 126,669 114,357 - --------------------------------------------------- --------------- -------------- --------------- --------------- -------------- Balance Sheet Data: - ------------------- Total assets $4,843,662 $4,625,879 $4,513,941 $4,214,385 $3,403,904 Total debt $115,867 $168,552 $156,003 $167,338 $81,426 Minority interest (other partnership interests) $154,499 $169,601 $167,918 $186,600 $139,325 Minority interest (preferred partnership $285,000 $285,000 $365,000 - - interests) Shareholders' equity $4,158,969 $3,909,583 $3,724,117 $3,689,100 $3,119,340 - --------------------------------------------------- --------------- -------------- --------------- --------------- -------------- Other Data: - ----------- Net cash provided by operating activities $588,961 $538,534 $525,775 $463,292 $388,407 Net cash used in investing activities $(323,464) $(306,058) $(465,464) $(452,209) $(365,506) Net cash provided by (used in) financing activities $(211,720) $(272,596) $(25,969) $(7,183) $(13,131) (1) During 2002, 2001, 2000, 1999 and 1998, we completed several significant business combinations and equity transactions. See Notes 3, 9, and 10 to the Company's consolidated financial statements. (2) During the year ended December 31, 2002, the Company adopted a business plan that included the closure of certain non-strategic containerized storage facilities (the "Closed Facilities."). The historical operations of the Closed Facilities are classified as discontinued operations, with the rental income, cost of operations, and depreciation expense with respect to these facilities for current and prior periods included in the line-item "Discontinued Operations - Containerized Storage" on the income statement. Also, during 2002, we sold one of our commercial facilities and classified its historical operations as discontinued operations, with the rental income, cost of operations, and depreciation expense with respect to this facility for current and prior periods included in the line-item "Discontinued Operations" on the income statement. 25 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto. FORWARD LOOKING STATEMENTS: When used within this document, the words "expects," "believes," "anticipates," "should," "estimates," and similar expressions are intended to identify "forward-looking statements" within the meaning of that term in Section 27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward looking statements. Such factors are described in Item 1A, "Risk Factors" and include changes in general economic conditions and in the markets in which the Company operates and the impact of competition from new and existing storage and commercial facilities and other storage alternatives, which could impact rents and occupancy levels at the Company's facilities; difficulties in the Company's ability to evaluate, finance and integrate acquired and developed properties into the Company's existing operations and to fill up those properties, which could adversely affect the Company's profitability; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate Investment Trusts, which could increase the Company's expense and reduce the Company's cash available for distribution; consumers' failure to accept the containerized storage concept which would reduce the Company's profitability; difficulties in raising capital at reasonable rates, which would impede the Company's ability to grow; delays in the development process, which could adversely affect the Company's profitability; and economic uncertainty due to the impact of war or terrorism could adversely affect our business plan. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this report. Critical Accounting Policies ---------------------------- QUALIFICATION AS A REIT - INCOME TAX EXPENSE: We believe that we have been organized and operated, and we intend to continue to operate, as a qualifying REIT under the Internal Revenue Code and applicable state laws. A qualifying REIT generally does not pay corporate level income taxes on its taxable income that is distributed to its shareholders, and accordingly, we do not pay or record as an expense income tax on the share of our taxable income that is distributed to shareholders. Given the complex nature of the REIT qualification requirements, the ongoing importance of factual determinations and the possibility of future changes in our circumstances, we cannot provide any assurance that we actually have satisfied or will satisfy the requirements for taxation as a REIT for any particular taxable year. For any taxable year that we fail or have failed to qualify as a REIT and applicable relief provisions did not apply, we would be taxed at the regular corporate rates on all of our taxable income, whether or not we made or make any distributions to our shareholders. Any resulting requirement to pay corporate income tax, including any applicable penalties or interest, could have a material adverse impact on our financial condition or results of operations. Unless entitled to relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost. There can be no assurance that we would be entitled to any statutory relief. IMPAIRMENT OF LONG LIVED ASSETS: Substantially all of our assets consist of long-lived assets, including real estate, assets associated with the containerized storage business, goodwill, and other intangible assets. We quarterly evaluate our long-lived assets for impairment. As described in Note 2 to the consolidated financial statements, the evaluation of goodwill for impairment entails valuation of the reporting unit to which goodwill is allocated, which involves significant judgment in the area of projecting earnings, determining appropriate price-earnings multiples, and discount rates. In addition, the evaluation of other long-lived assets for impairment requires determining whether indicators of impairment exist, which is a subjective process. When any indicators of impairment are found, the evaluation of such long-lived assets then entails projections of future operating cashflows, which also involves significant judgment. We have identified no such impairments at December 31, 2002, other than those denoted with respect to the containerized storage activities. However, future events, or facts and circumstances that currently exist that we have not yet identified, could cause us to conclude in the future that our long lived assets are impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations. 26 ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS: Substantially all of our assets consist of depreciable, long-lived assets. We record depreciation expense with respect to these assets based upon their estimated useful lives. Any change in the estimated useful lives of those assets, caused by functional or economic obsolescence or other factors, could have a material adverse impact on our financial condition or results of operations. ESTIMATED LEVEL OF RETAINED RISK LIABILITIES: As described in Note 2 to the consolidated financial statements, we retain certain risks with respect to property perils, legal liability, and other such risks. In connection with our retention of these risks, we accrue losses based upon our estimated level of losses incurred using certain actuarial assumptions followed in the insurance industry and based upon our experience. While we believe that the amounts of the accrued losses are adequate, the ultimate liability may be in excess of or less than the amounts provided. ACCRUALS FOR CONTINGENCIES: We are exposed to business and legal liability risks with respect to events that have occurred, but in accordance with accounting principles generally accepted in the United States, we have not accrued for such potential liabilities because the loss is either not probable or not estimable or because we are not aware of the event. Future events and the result of pending litigation could result in such potential losses becoming probable and estimable, which could have a material adverse impact on our financial condition or results of operations. Some of these potential losses, which we are aware of, are described in Note 16 to the consolidated financial statements. ACCRUALS FOR OPERATING EXPENSES: We accrue for property tax expense and other operating expenses based upon estimates and historical trends and current and anticipated local and state government rules and regulations. If these estimates and assumptions are incorrect, our expenses could be misstated. OVERVIEW: The self-storage industry is highly fragmented and is composed predominantly of numerous local and regional operators. Competition in the markets in which we operate is significant and has increased over the past several years due to additional development of self-storage facilities. We believe that the increase in competition has had a negative impact to our occupancy levels and rental rates in many markets. However, we believe that we possess several distinguishing characteristics that enable us to compete effectively with other owners and operators. We are the largest owner and operator of self-storage facilities in the United States with ownership interests as of December 31, 2002 in 1,403 self-storage facilities containing approximately 84.5 million net rentable square feet. All of our facilities are operated under the "Public Storage" brand name, which we believe is the most recognized and established name in the self-storage industry. Located in the major metropolitan markets of 37 states, our self-storage facilities are geographically diverse, giving us national recognition and prominence. This concentration establishes us as one of the dominant providers of storage space in most markets in which we operate and enables us to use a variety of promotional activities, such as television advertising as well as targeted discounting and referrals, which are generally not economically viable to most of our competitors. In addition, we believe that the geographic diversity of the portfolio reduces the impact from regional economic downturns and provides a greater degree of revenue stability. We will continue to focus our growth strategies on: (i) improving the operating performance of our existing self-storage properties, (ii) increasing our ownership of self-storage facilities, (iii) improving the operating performance of our containerized storage business, and (iv) participating in the growth of PS Business Parks, Inc. ("PSB"). Major elements of these strategies are as follows: 27 * We will focus on enhancing the operating performance of our self-storage properties, primarily through increases in revenues achieved through the telephone reservation center and associated marketing efforts. However, during 2002, the Consistent Group of facilities (defined below) exhibited reductions in rental income and net operating income before depreciation of 3.3% and 5.7%, respectively, over the prior year. We believe that these reductions were attributable to the impact of changes in our marketing strategy as well as to general economic conditions. See "Self-Storage Operations - Consistent Group of Facilities" for further discussion. We expect future increases in rental income to come from increases in occupancy and increases in realized rent, although there can be no assurance. * We expect to continue our development program, though at a level of development that is lower than that experienced in the last three years. Over the past four years, the Company and the Consolidated Development Joint Venture has developed and opened a total of 66 storage facilities at a cost of approximately $421.2 million, containing approximately 4,905,000 net rentable square feet. We have a total of 38 projects identified for openings after December 31, 2002 at an estimated total cost of $199.8 million. These 38 projects are comprised of 22 self-storage facilities and expansions of 16 existing self-storage facilities. * We will acquire facilities from third parties. This activity has not contributed significantly to our growth over the past three years, as we have acquired only 17 self-storage facilities from third parties. We believe that our national telephone reservation system and marketing organization present an opportunity for increased revenues through higher occupancies of the properties acquired from third parties, as well as cost efficiencies through greater critical mass. * We will attempt to continue to acquire self-storage facilities from affiliates or interests in affiliated entities that own self-storage facilities which we manage, as they become available from time to time. The pool of such available acquisitions has continued to decrease as we have acquired such remaining interests over the last several years. * We will continue to focus on improving the operations of the containerized storage operations. Over the last three years, we have developed facilities that combine containerized storage and traditional self-storage. These facilities have replaced facilities previously leased from third parties, thereby reducing third-party lease expense. During 2002, we identified 22 containerized storage facilities that no longer fit into our business plan going forward. These 22 facilities have been or will be closed thereby reducing the number of containerized facilities from 55 to 33 facilities. We continue to evaluate the optimum level of containerized facility operations in each market in which we operate and may close additional facilities during 2003. In addition, we continue to refine the operating model of the containerized storage business. * Through our investment in PSB, we will continue to participate in the growth of this company's investment in approximately 14.4 million net rentable square feet of commercial space at December 31, 2002. Results of Operations - -------------------------------------------------------------------------------- NET INCOME: Net income was $318,738,000 for 2002 compared to $324,208,000 for 2001, representing a decrease of 1.7%. The decrease in net income was caused primarily by a decrease in the operating results of our Consistent Group of self-storage properties, increased depreciation expense resulting primarily from new property additions, and charges relating to the planned closure of several containerized storage facilities. The impact of these items was partially offset by increased earnings generated by the acquisition of additional real estate investments during 2001 and 2002, the earnings generated by the tenant reinsurance business that was acquired at the end of 2001, reduced general and administrative expense, and a decrease in income allocated to minority interests. Net income was $324,208,000 for 2001 compared to $297,088,000 for 2000, representing an increase of 9.1%. The increase was primarily the result of improved operating results of our Consistent Group self-storage properties, reduced operating losses from the containerized storage business and increased earnings generated by the acquisition of additional real estate investments during 2000 and 2001. The impact of these items was offset partially by an increased allocation of income to minority combined with an increase in depreciation expense during 2001 resulting from new property additions during 2000 and 2001. 28 NET INCOME PER SHARE: Net income was $1.19 per common share, on a diluted basis, for 2002 compared to $1.51 per common share for 2001. In addition to those factors denoted above with respect to the reduction in net income in 2002, net income per share, on a diluted basis, decreased due to (i) an increase in net income allocated to both our preferred and Equity Stock, Series A shareholders and (ii) an increase in weighted average diluted common shares outstanding. Diluted weighted average common equivalent shares outstanding totaled 124,571,000 for 2002 compared to 123,577,000 for 2001. Net income was $1.51 per common share, on a diluted basis, for 2001 compared to $1.41 per common share in 2000. This increase was due to the same factors denoted above with respect to the increase in net income in 2001 combined with a decrease in weighted average shares outstanding due to our common share repurchase activities, offset partially by an increase in net income allocated to both our preferred and Equity Stock, A shareholders. Diluted weighted average shares outstanding decreased from 131,657,000 in 2000 to 123,577,000 in 2001, as a result of the impact of common share repurchases in 2001. In computing net income allocable to common shareholders for each period, aggregate dividends paid to the holders of the Equity Stock, Series A and preferred equity securities have been deducted in determining net income allocable to the common shareholders. Distributions paid to the holders of the Equity Stock, Series A totaled $21,501,000 in 2002, $19,455,000 in 2001 and $11,042,000 in 2000. Distributions paid to our preferred shareholders totaled $148,926,000 in 2002, $117,979,000 in 2001 and $100,138,000 in 2000. Real Estate Operations - -------------------------------------------------------------------------------- SELF - STORAGE OPERATIONS: Our self-storage operations are by far the largest component of our operating activities, representing approximately 91% of our revenues generated during 2002. Rental income, with respect to our self-storage operations, has grown from $653,110,000 in 2000 to $721,662,000 in 2001, representing an increase of 10.5%. In 2002, rental income grew to $763,287,000, representing an increase of 5.8% as compared to 2001. The year over year improvements in rental income include changes in the performance of those properties that we owned throughout the three year period and the increase in the number of properties in our portfolio either through our acquisition or development activities. At the end of 1999, we had a total of 1,202 self-storage facilities included in our consolidated financial statements. Since that time we have increased the number of self-storage facilities by 165 (2000 - 40 facilities, 2001 - 22 facilities and 2002 - 103 facilities). To enhance year over year comparisons, the following table summarizes, and the ensuing discussion describes, the self-storage operating results based upon the following categories: (i) 1,152 self-storage facilities that are reflected in the financial statements on a stabilized basis for the entire three years ended December 31, 2002 (the "Consistent Group"), (ii) 66 development facilities that were opened since January 1, 1999 (the "Developed Facilities"), (iii) 113 facilities that were acquired in the three years ended December 31, 2002 (the "Acquired Facilities"), (iv) 36 facilities that were owned throughout the three years ended December 31, 2002 but were not stabilized, (the "Expansion Facilities"), and (v) one facility that was disposed of during the three years ended December 31, 2002 (the "Disposed Facility"): 29 Self - storage operations summary: Year Ended December 31, Year Ended December 31, - ---------------------------------- ----------------------------------- ----------------------------------- Percentage Percentage 2002 2001 Change 2001 2000 Change ---------- ---------- ---------- ---------- ---------- ---------- (Dollar amounts in thousands) Rental income (a): Consistent Group (b)........................ $644,778 $666,964 (3.3)% $666,964 $623,663 6.9% Acquired Facilities (c)..................... 73,538 19,516 276.8% 19,516 5,657 245.0% Expansion Facilities (d).................... 19,848 19,962 (0.6)% 19,962 19,417 2.8% Developed Facilities (e).................... 25,123 14,870 69.0% 14,870 3,715 300.3% Disposed Facility (f)....................... - 350 (100.0)% 350 658 (46.8)% ---------- ---------- ---------- ---------- ---------- ---------- Total rental income....................... 763,287 721,662 5.8% 721,662 653,110 10.5% ---------- ---------- ---------- ---------- ---------- ---------- Cost of operations: Consistent Group............................ 206,810 202,482 2.1% 202,482 198,857 1.8% Acquired Facilities......................... 22,306 7,258 207.3% 7,258 1,605 352.2% Expansion Facilities........................ 7,884 9,608 (17.9)% 9,608 6,788 41.5% Developed Facilities........................ 13,957 9,652 44.6% 9,652 2,908 231.9% Disposed Facility........................... - 211 (100.0)% 211 304 (30.6)% ---------- ---------- ---------- ---------- ---------- ---------- Total cost of operations.................... 250,957 229,211 9.5% 229,211 210,462 8.9% ---------- ---------- ---------- ---------- ---------- ---------- Net operating income before depreciation: Consistent Group............................ 437,968 464,482 (5.7)% 464,482 424,806 9.3% Acquired Facilities......................... 51,232 12,258 317.9% 12,258 4,052 202.5% Expansion Facilities........................ 11,964 10,354 15.5% 10,354 12,629 (18.0)% Developed Facilities........................ 11,166 5,218 114.0% 5,218 807 546.6% Disposed Facility........................... - 139 (100.0)% 139 354 (60.7)% ---------- ---------- ---------- ---------- ---------- ---------- Total net operating income before depreciation 512,330 492,451 4.0% 492,451 442,648 11.3% Depreciation.................................. 171,415 158,476 8.2% 158,476 141,425 12.1% ---------- ---------- ---------- ---------- ---------- ---------- Operating income............................ $340,915 $333,975 2.1% $333,975 $301,223 10.9% ========== ========== ========== ========== ========== ========== Number of self-storage facilities (at end of 1,367 1,264 8.1% 1,264 1,242 1.8% period): Net rentable square feet (in thousands, at end of period):....................................... 82,336 76,432 7.7% 76,432 74,091 3.2% (a) Rental income includes late charges and administrative fees and is net of promotional discounts given. Rental income does not include retail sales or truck rental income generated at the facilities. (b) The Consistent Group includes 1,152 facilities containing 67,009,000 net rentable square feet that were owned throughout the three years ended December 31, 2002, and operated at a mature, stabilized occupancy level throughout the periods presented. (c) The Acquired Facilities includes 113 facilities containing 6,652,000 net rentable square feet that were acquired in the three year period ending December 31, 2002. Substantially all of these facilities were mature, stabilized facilities at the time of their acquisition. (d) The Expansion Facilities includes 36 facilities containing 3,770,000 net rentable square feet (of which 817,000 square feet is industrial space developed for containerized storage activities). These facilities were owned for the entire three year period ending December 31, 2002, however, year over year operating results are not comparable throughout the periods presented due primarily to expansions in their net rentable square or their conversion into Combination Facilities. Such construction activities can cause a drop in revenue levels, as existing capacity is made unavailable in order to accommodate construction activities. During the three years ended December 31, 2002, we completed construction on expansion projects with a total cost of $121.5 million. (e) The Developed Facilities includes 66 facilities containing 4,905,000 net rentable square feet (of which 878,000 square feet is industrial space for use in containerized storage activities, see "Containerized Storage" and "Discontinued Operations"). These facilities were developed and opened since January 1, 1999 at a total cost of $421.2 million. (f) The Disposed Facility includes one facility that was disposed of during 2001 as a result of being condemned by a government agency. 30 Self Storage Operations - Consistent Group of Facilities At December 31, 2002, we owned 1,152 self-storage facilities that have operated at a stabilized level of operations throughout the three-year period. The Consistent Group of facilities contains approximately 67,009,000 net rentable square feet, representing approximately 81% of the aggregate net rentable square feet of our self-storage portfolio. Revenues and operating expenses with respect to this group of properties are set forth in the above Self-Storage Operations table under the caption, "Consistent Group." The following table sets forth additional operating data with respect to the Consistent Group of facilities: CONSISTENT GROUP - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, Year Ended December 31, ----------------------------------- ----------------------------------- Percentage Percentage 2002 2001 Change 2001 2000 Change ---------- ---------- ---------- ---------- ---------- ---------- (Dollar amounts in thousands, except rents per square foot) Base rental income............................ $639,528 $649,135 (1.5)% $649,135 $618,002 5.0% Promotional discounts......................... (16,267) (4,910) 231.3% (4,910) (17,365) (71.7)% ---------- ---------- ---------- ---------- ---------- ---------- Adjusted base rental income................ 623,261 644,225 (3.3)% 644,225 600,637 7.3% Late charges and administrative fees collected. 21,517 22,739 (5.4)% 22,739 23,026 (1.2)% ---------- ---------- ---------- ---------- ---------- ---------- Total rental income........................ 644,778 666,964 (3.3)% 666,964 623,663 6.9% ---------- ---------- ---------- ---------- ---------- ---------- Cost of operations: Property taxes........................... 59,168 57,078 3.7% 57,078 56,863 0.4% Direct property payroll.................. 50,419 47,152 6.9% 47,152 47,834 (1.4)% Cost of managing facilities.............. 19,323 17,856 8.2% 17,856 16,178 10.4% Advertising and promotion................ 17,892 18,850 (5.1)% 18,850 10,089 86.8% Utilities................................ 15,185 15,475 (1.9)% 15,475 14,626 5.8% Repairs and maintenance.................. 15,068 16,908 (10.9)% 16,908 20,692 (18.3)% Telephone reservation center............. 9,051 9,782 (7.5)% 9,782 11,478 (14.8)% Property insurance....................... 5,552 5,444 2.0% 5,444 5,474 (0.5)% Other.................................... 15,152 13,937 8.7% 13,937 15,623 (10.8)% ---------- ---------- ---------- ---------- ---------- ---------- Total cost of operations................... 206,810 202,482 2.1% 202,482 198,857 1.8% ---------- ---------- ---------- ---------- ---------- ---------- Net operating income before depreciation...... 437,968 464,482 (5.7)% 464,482 424,806 9.3% Depreciation.................................. 139,393 143,296 (2.7)% 143,296 136,897 4.7% ---------- ---------- ---------- ---------- ---------- ---------- Operating income.............................. $298,575 $321,186 (7.0)% $321,186 $287,909 11.6% ========== ========== ========== ========== ========== ========== Gross margin (before depreciation)............ 67.9% 69.6% (2.4)% 69.6% 68.1% 2.2% Weighted average for the fiscal year: Square foot occupancy (a).................. 85.2% 88.9% (4.2)% 88.9% 91.0% (2.3)% Realized annual rent per occupied square foot (b)............................... $10.92 $10.81 1.0% $10.81 $9.85 9.7% Realized annual rent per available square foot (c)............................... $9.30 $9.61 (3.2)% $9.61 $8.96 7.3% Weighted average at December 31: Square foot occupancy...................... 84.3% 85.3% (1.2)% 85.3% 88.9% (4.0)% In place annual rent per occupied square $11.51 $11.62 (0.9)% $11.62 $10.49 10.8% foor (d)............................... Posted annual rent per square foot (e)..... $11.51 $13.18 (12.7)% $13.18 $11.41 15.5% Total net rentable square feet (in thousands). 67,009 67,009 - 67,009 67,009 - (a) Square foot occupancies represent weighted average occupancy levels over the entire fiscal year. (b) Realized annual rent per occupied square foot is computed by dividing adjusted base rental income by the weighted average occupied square footage for the year. Realized rents per square foot take into consideration promotional discounts, bad debt costs, credit card fees and other costs which reduce rental income from the contractual amounts due. 31 (c) Annualized revenue per available square foot represents adjusted base rental income divided by total available net rentable square feet. (d) In place annual rent per occupied square foot represents contractual rents per occupied square foot without reductions for promotional discounts. (e) Posted annual rent per square foot represents the rents charged to new tenants prior to any promotional discounts. The Consistent Group's operating income increased 12.7% in 2001 as compared to 2000. The Consistent Group's net operating income before depreciation increased 9.3% in 2001 as compared to 2000, with rental income increasing 6.9% and cost of operations increasing 1.8%. The 6.9% increase in rental income was primarily the result of higher realized annual rent per occupied square foot ($10.81 for 2001 as compared to $9.85 for 2000, representing an increase of 9.6%), offset partially by a reduction in weighted average occupancy levels from 91.0% in 2000 to 88.9% in 2001, representing a 2.3% reduction in average occupancy. The 1.8% increase in cost of operations was due to increases in promotional and advertising expenses. The Consistent group's operating income decreased 7.0% in 2002 as compared to 2001. The Consistent Group's net operating income before depreciation decreased 5.7% in 2002 as compared to 2001, with rental income decreasing 3.3% and cost of operations increasing 2.1%. The 3.3% decrease in rental income was primarily the result of lower average occupancy levels which decreased from 88.9% in 2001 to 85.2% in 2002, representing a 4.2% decrease, offset partially by higher realized annual rent per occupied square foot ($10.92 for fiscal 2002 compared to $10.81 for fiscal 2001, representing an increase of 1.0%). The 2.1% increase in cost of operations was due primarily to increases in payroll, cost of managing facilities, and property taxes. We attribute the decrease in operating income in 2002 primarily to a change in our operating strategy during 2001 and secondarily to increased competition and economic factors, though we are not able to quantify the relative impact of each of these factors. Historically, our marketing strategy was to offer a variety of promotional discounts and to conservatively price our space to attract new tenants. During 2000, the Consistent Group's occupancy levels averaged 91.0%. This relatively high occupancy level was attained and sustained through a variety of promotional activities offering new tenants move-in promotional discounts aggregating $17.4 million in 2000. This annual level of discounts was consistent with those given in years prior to 2000. In 2001, we changed our marketing strategy and began to aggressively increase rental rates and reduce the amount of promotional discounts offered to new tenants. We believed that this strategy had the benefit of significantly increasing our rental income, with the potential risk of lowering occupancy levels. During the first nine months of 2001, this strategy significantly enhanced the growth in our rental income, which for the first nine months of 2001 was approximately 7.0% higher than for the same period in 2000. The downside to our more aggressive strategy was that our average occupancy levels during the first nine months of 2001 were approximately 2.1% below the level experienced during the same period in 2000. We believed that the decrease in occupancy levels was a manageable reduction and was more than offset by the increase in rental income attained through higher rental rates and less promotional discounting. During the fourth quarter of 2001, there was a rapid decline in our occupancy levels. This reduction coincided with a reduction in call volume into our national telephone reservation center which we believe was attributable to the absence of any significant promotional discounts offered to tenants as well as to general economic conditions. In addition, during this time frame we also experienced unusually high levels of move-out activity. At September 30, 2001, the average occupancy level of the Consistent Group of facilities was 89.9% compared to 91.4% one year earlier, representing a reduction of 1.6%. Three months later, at December 31, 2001, the average occupancy level of the Consistent Group of facilities was 85.3% compared to 88.8% one year earlier, representing a reduction of 3.9%. Accordingly, the year over year negative spread in occupancy levels widened significantly from September 30, 2001 through December 31, 2001. 32 Although we were very pleased with the rental growth experienced in fiscal 2001, we were very concerned about the sudden and rapid decline in our occupancy levels experienced in the fourth quarter of 2001. This decline in occupancy levels continued into fiscal 2002 as our average occupancy levels decreased to 83.1% at the end of February 2002 compared to 87.9% one year earlier, representing a reduction of 5.5%. In the second half of March 2002, in order to enhance move-in activity, we significantly reduced rental rates charged to new incoming tenants and began a national television advertising campaign that offered a significant promotional discount to new move-ins. The advertising campaign was run from the second half of March 2002 through the first half of May 2002. The campaign resulted in increased move-in activity during April and May 2002 compared to the same period in the prior year and helped us improve occupancy levels. The months of May through July are seasonally high rental activity months, accordingly, in the middle of May we terminated the advertising campaign and discontinued promotional discounts. Unfortunately, we underestimated the weakness in demand and in the absence of significant promotional discounts, rental activity during June and July 2002 decreased as compared to the same periods in 2001. Consequently, our average occupancy levels for the Consistent Group of facilities continued to decline relative to the occupancies experienced in 2001. At the end of July 2002, our occupancy levels were 85.8% as compared to 91.3% at the end of July 2001, representing a reduction of 6.0%. Beginning in mid-August 2002 and through the remainder of the year, we reinstated a promotional discount program and advertised on television in selected markets in an effort to enhance move-in activity and improve occupancy levels. This program had a positive impact upon move-in activity throughout the third and fourth quarters and helped stabilize our occupancy levels. By December 31, 2002, the reduction in the year-over-year occupancy levels was reduced to 1.2% (84.3% at December 31, 2002 compared to 85.3% at December 31, 2001) from the 6.0% year-over-year reduction that was experienced at July 31, 2002. Stabilizing our occupancy levels during 2002 came with a significant price. Promotional discounts increased from approximately $4,910,000 in 2001 to $16,267,000 in 2002, resulting in a negative impact to our rental income. In hindsight, the aggressive rental rates and lack of promotional discounts that produced a 9.3% increase in our net operating income in 2001 as compared to 2000, put significant pressure on our occupancy levels during 2002. In order to reestablish our occupancy levels, we had to revert back to a marketing program that has worked in the past, namely reasonable rental rates combined with a promotional discount program. In the process of reestablishing our occupancy levels during 2002, we incurred significant cost relative to 2001. These costs came in the form of higher discounts given and increased costs associated with advertising on television, resulting in a significant adverse impact to our comparative operating results. During 2003, we expect to continue promotional discounting and television advertising, though the level of such activities cannot be estimated at this time. The up front costs of these marketing activities, and the increases in discounts, are expected to continue to adversely impact our operating income during 2003. The following table sets forth our rental income, cost of television advertising, promotional discounts given, and average occupancies for each of the quarters in 2002, 2001 and 2000: 33 For the Quarter Ended ---------------------------------------------------------------------- March 31 June 30 September 30 December 31 Entire Year ------------- ------------- ------------- ------------- ------------- (amounts in thousands) Total rental income: 2002 $ 162,082 $ 159,999 $ 164,753 $ 157,944 $ 644,778 2001 $ 160,071 $ 166,215 $ 171,805 $ 168,873 $ 666,964 2000 $ 149,297 $ 155,633 $ 160,520 $ 158,213 $ 623,663 Television advertising: 2002 $ 546 $ 1,379 $ 1,883 $ 3,842 $ 7,650 2001 $ - $ 902 $ 4,272 $ 2,614 $ 7,788 2000 $ - $ - $ - $ 76 $ 76 Promotional discounts given: 2002 $ 998 $ 5,216 $ 4,181 $ 5,872 $ 16,267 2001 $ 2,629 $ 1,831 $ 318 $ 132 $ 4,910 2000 $ 5,485 $ 5,086 $ 3,795 $ 2,999 $ 17,365 Weighted average occupancy: 2002 83.6% 86.3% 85.8% 85.0% 85.2% 2001 88.1% 89.9% 90.7% 86.9% 88.9% 2000 90.4% 92.1% 91.9% 89.7% 91.0% During the first two months of 2003, our occupancy levels, continued to improve. The weighted average occupancy level for our Consistent Group of facilities was 84.6% at February 28, 2003 as compared to 83.1% at February 28, 2002, representing an increase of 1.8%. This increase, however, has come at a significant cost. Television advertising for the two months ended February 28, 2003 was $785,000 as compared to $366,000 for the same period in 2002. Promotional discounts for the two months ended February 28, 2003 were $6,821,000 as compared to only $102,000 for the same period in 2002. Therefore, despite the increase in average physical occupancy, net operating income for our Consistent Group facilities was lower in the two months ended February 28, 2003 as compared to the same period in 2002. We are continuously evaluating our call volume, reservation activity, and move-in/move-out rates for each of our markets relative to our marketing activities and rental rates. In addition, we are evaluating market supply and demand factors and based upon these analyses we are continuing to adjust our marketing activities in an effort to increase our occupancy levels and ultimately our rental income. Cost of Operations - ------------------ Cost of operations increased approximately 2.1% in 2002 as compared to 2001. Cost of managing facilities principally includes payroll related to supervisory personnel combined with associated overhead costs. Cost of managing facilities and direct property payroll have increased 8.2% and 6.9%, respectively, in 2002 compared to 2001. These increases are principally due to adjustments to incentive compensation programs that will continue to have an impact in 2003. Repairs and maintenance cost has consistently been reduced since 2000, however, we do not anticipate this trend to continue into 2003. We anticipate increased repair and maintenance costs as a result of heavy snow in the Northeastern states and costs to remedy mold issues at several facilities in Southern states. We also expect that property taxes will continue to increase into fiscal 2003. Cost of operations for 2001 increased approximately 1.8% as compared to 2000. Advertising and promotion costs, which principally includes television and yellow page advertising cost, increased 86.8% in 2001. Television advertising cost was approximately $7,788,000 in 2001 compared to only $76,000 in 2000. Yellow page advertising cost was $7,380,000 in 2001 compared to $6,871,000 in 2000. Promotional advertising is an important part of our operational strategy. Our advertising activities have increased customer call volume into our national reservation system, where one of our representatives discusses with the customer space requirements, price and location preferences and also informs the customer of other products and services provided by the Company and its subsidiaries. During 2001, we closed our telephone reservation center in Texas and aggregated all the call volume into a single center in California. As a result of the closure, telephone reservation costs decreased from $11.5 million in 2000 to $9.8 million in 2001. 34 The following table sets forth regional trends in our consistent group of facilities with respect to rental income, cost of operations, net operating income, weighted average occupancy levels, and realized rent per net rentable square foot. CONSISTENT GROUP OPERATING TRENDS BY REGION - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, Year Ended December 31, -------------------------------------- -------------------------------------- Percentage Percentage 2002 2001 Change 2001 2000 Change ------------ ------------ ------------ ------------ ------------ ------------ (Dollar amounts in thousands, except rents per square foot) Rental income: Southern California (114 facilities) $ 101,549 $ 102,106 (0.5)% $ 102,106 $ 92,664 10.2% Northern California (106 facilities) 75,388 79,782 (5.5)% 79,782 73,568 8.4% Texas (140 facilities)............. 61,996 64,771 (4.3)% 64,771 60,949 6.3% Florida (108 facilities)........... 54,423 56,347 (3.4)% 56,347 52,775 6.8% Illinois (80 facilities)........... 51,121 53,786 (5.0)% 53,786 50,282 7.0% Georgia (56 facilities)............ 23,177 24,317 (4.7)% 24,317 23,341 4.2% All other states (548 facilities).. 277,124 285,855 (3.1)% 285,855 270,084 5.8% ------------ ------------ ------------ ------------ ------------ ------------ Total rental income.................... 644,778 666,964 (3.3)% 666,964 623,663 6.9% Cost of operations: Southern California................. 24,159 21,507 12.3% 21,507 21,289 1.0% Northern California................. 18,961 18,403 3.0% 18,403 17,373 5.9% Texas............................... 26,083 25,812 1.0% 25,812 24,304 6.2% Florida............................. 19,493 20,313 (4.0)% 20,313 19,305 5.2% Illinois............................ 19,998 19,001 5.2% 19,001 19,348 (1.8)% Georgia............................. 7,556 8,210 (8.0)% 8,210 8,260 (0.6)% All other states.................... 90,560 89,236 1.5% 89,236 88,978 0.3% ------------ ------------ ------------ ------------ ------------ ------------ Total cost of operations............... 206,810 202,482 2.1% 202,482 198,857 1.8% Net operating income before depreciation: Southern California................. 77,390 80,599 (4.0)% 80,599 71,375 12.9% Northern California................. 56,427 61,378 (8.1)% 61,378 56,195 9.2% Texas............................... 35,914 38,959 (7.8)% 38,959 36,645 6.3% Florida............................. 34,930 36,034 (3.1)% 36,034 33,470 7.7% Illinois............................ 31,123 34,784 (10.5)% 34,784 30,934 12.4% Georgia............................. 15,621 16,107 (3.0)% 16,107 15,081 6.8% All other states.................... 186,564 196,620 (5.1)% 196,620 181,106 8.6% ------------ ------------ ------------ ------------ ------------ ------------ Total net operating income............. $ 437,968 $ 464,482 (5.7)% $ 464,482 $ 424,806 9.3% Weighted average occupancy: Southern California................. 86.9% 90.7% (4.2)% 90.7% 95.7% (5.2)% Northern California................. 84.5% 89.7% (5.8)% 89.7% 93.5% (4.1)% Texas............................... 84.5% 89.3% (5.4)% 89.3% 90.0% (0.8)% Florida............................. 85.1% 88.2% (3.5)% 88.2% 88.4% (0.2)% Illinois............................ 84.4% 89.5% (5.7)% 89.5% 91.5% (2.2)% Georgia............................. 84.3% 86.4% (2.4)% 86.4% 86.9% (0.6)% All other states.................... 85.3% 88.5% (3.6)% 88.5% 90.5% (2.2)% ------------ ------------ ------------ ------------ ------------ ------------ Total weighted average occupancy....... 85.2% 88.9% (4.2)% 88.9% 91.0% (2.3)% Realized annual rent per occupied square foot: Southern California................. $ 15.69 $ 15.16 3.5% $ 15.16 $ 12.96 17.0% Northern California................. 12.73 12.17 0.2% 12.71 11.20 13.5% Texas............................... 8.19 8.08 1.4% 8.08 7.60 6.3% Florida............................. 9.88 9.86 0.2% 9.86 9.19 7.3% Illinois............................ 12.26 12.11 1.2% 12.11 11.05 9.6% Georgia............................. 8.25 8.48 (2.7)% 8.48 8.04 5.5% All other states.................... 10.41 10.34 0.7% 10.34 9.51 8.7% ------------ ------------ ------------ ------------ ------------ ------------ Total realized annual rent per square foot:.................................. $ 10.92 $ 10.81 1.0% $ 10.81 $ 9.85 9.7% 35 Self-Storage Operations - Acquired Facilities Over the past three years, we acquired 113 self-storage facilities containing 6,652,000 net rentable square feet. Substantially all of these facilities were mature, stabilized facilities at the time of their acquisition. The following table summarizes operating data with respect to these facilities. ACQUIRED FACILITIES - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, Year Ended December 31, -------------------------------------- -------------------------------------- 2002 2001 Change 2001 2000 Change ------------ ------------ ------------ ------------ ------------ ------------ (Dollar amounts in thousands) Rental income (a): Self-storage facilities acquired in 2002.... $53,497 $ - $53,497 $ - $ - $ - Self-storage facilities acquired in 2001.... 445 143 302 143 - 143 Self-storage facilities acquired in 2000.... 19,596 19,373 223 19,373 5,657 13,716 ------------ ------------ ------------ ------------ ------------ ------------ Total rental income....................... 73,538 19,516 54,022 19,516 5,657 13,859 ------------ ------------ ------------ ------------ ------------ ------------ Cost of operations: Self-storage facilities acquired in 2002.... $15,822 $ - $15,822 $ - $ - $ - Self-storage facilities acquired in 2001.... 191 55 136 55 - 55 Self-storage facilities acquired in 2000.... 6,293 7,203 (910) 7,203 1,605 5,598 ------------ ------------ ------------ ------------ ------------ ------------ Total cost of operations.................. 22,306 7,258 15,048 7,258 1,605 5,653 ------------ ------------ ------------ ------------ ------------ ------------ Net operating income before depreciation: - ---------------------------------------- Self-storage facilities acquired in 2002.... $37,675 $ - $37,675 $ - $ - $ - Self-storage facilities acquired in 2001.... 254 88 166 88 - 88 Self-storage facilities acquired in 2000.... 13,303 12,170 1,133 12,170 4,052 8,118 ------------ ------------ ------------ ------------ ------------ ------------ Net operating income...................... 51,232 12,258 38,974 12,258 4,052 8,206 Depreciation.................................. 15,211 2,948 12,263 2,948 65 2,883 ------------ ------------ ------------ ------------ ------------ ------------ Operating Income............................ $36,021 $ 9,310 $26,711 $ 9,310 $ 3,987 $ 5,323 ============ ============ ============ ============ ============ ============ Weighted average square foot occupancy during the period: Self-storage facilities acquired in 2002.... 85.2% - - - - - Self-storage facilities acquired in 2001.... 67.4% 55.8% 20.8% 55.8% - - Self-storage facilities acquired in 2000.... 79.1% 77.1% 2.6% 77.1% 77.2% (0.1)% ------------ ------------ ------------ ------------ ------------ ------------ 83.6% 76.3% 9.6% 76.3% 77.2% (1.2)% ============ ============ ============ ============ ============ ============ Number of self-storage facilities (at end of period)........................................ 113 26 87 26 25 1 Net rentable square feet (in thousands, at end of period)..................................... 6,652 1,576 5,076 1,576 1,516 60 Cumulative acquisition cost (at end of period). $507,386 $146,843 $360,543 $146,843 $143,340 $3,503 Rental income and cost of operations for the Acquired Facilities have increased significantly in 2002 and 2001, due to the acquisition of new facilities. The 2002 acquisitions include 78 properties acquired from affiliated entities, including 47 properties acquired on January 16, 2002 from an affiliated development joint venture and 31 properties acquired on January 1, 2002 in connection with business combinations with two affiliated partnerships (see Note 3 to the consolidated financial statements). The 2001 acquisition includes one facility acquired from a third party. The 2000 acquisitions include 13 facilities acquired in business combinations, 5 facilities acquired from entities in which we had an interest, and 7 facilities acquired from third parties. Similar to our Consistent Group of facilities, the Acquired Facilities have experienced operating difficulties over the past year. Marketing and promotional strategies, as described above with respect to our Consistent Group, were employed in 2002, and will continued to be employed in 2003 to enhance occupancy levels and rental income in 2003 of the Acquired Facilities. 36 Self-Storage Operations - Expansion Facilities Throughout the three-year period ended December 31, 2002, we expanded 36 self-storage facilities or converted them to Combination Facilities. These activities caused a drop in revenue levels, as existing capacity was made unavailable in order to accommodate construction activities. Accordingly, the operating results are not comparable in each of the three years ended December 31, 2002. At December 31, 2002, the weighted average occupancy level were approximately 69.4% as compared to 78.6% one year earlier. The operating results for these facilities are presented in the Self-Storage Operations table above under the caption, "Expansion Facilities." Depreciation expense with respect to the expansion facilities was $6,188,000 in 2002, $4,986,000 in 2001 and $3,594,000 in 2000. The increases in depreciation expense are due to the opening of the expanded facilities. These 36 facilities contain approximately 3,770,000 net rentable square feet at December 31, 2002 (which includes the expanded space, and 817,000 square feet of industrial space developed for containerized storage activities - see "Containerized Storage" and "Discontinued Operations"). The aggregate construction costs to complete these expansions totaled approximately $121,510,000 during the three years ended December 31, 2002. 37 Self-Storage Operations -Developed Facilities During the past three years, we have opened 49 newly developed self-storage facilities and 17 facilities that contain both self-storage and portable self-storage at the same location ("Combination Facilities"). These newly developed facilities have an aggregate of 4,905,000 net rentable square feet (of which 878,000 net square feet is industrial space developed for containerized storage activities - see "Containerized Storage" and "Discontinued Operations"). Aggregate development cost for these 66 facilities was approximately $421.2 million. The operating results of the self-storage facilities and Combination facilities are reflected in the Self-Storage Operations table under the caption, "Developed Facilities." Year ended December 31, Year ended December 31, --------------------------------------- --------------------------------------- 2002 2001 Change 2001 2000 Change ------------ ------------ ------------ ------------ ------------ ------------ (Amounts in thousands, except No. of facilities) Rental income: Self-storage facilities............ $ 18,360 $ 11,580 $ 6,780 $ 11,580 $ 3,063 $ 8,517 Combination facilities............. 6,763 3,290 3,473 3,290 652 2,638 ------------ ------------ ------------ ------------ ------------ ------------ Total rental income.............. 25,123 14,870 10,253 14,870 3,715 11,155 ------------ ------------ ------------ ------------ ------------ ------------ Cost of operations: Self-storage facilities............ 8,921 6,590 2,331 6,590 2,325 4,265 Combination facilities............. 5,036 3,062 1,974 3,062 583 2,479 ------------ ------------ ------------ ------------ ------------ ------------ Total cost of operations......... 13,957 9,652 4,305 9,652 2,908 6,744 ------------ ------------ ------------ ------------ ------------ ------------ Net operating income before depreciation: - ---------------------------------------- Self-storage facilities............ 9,439 4,990 4,449 4,990 738 4,252 Combination facilities............. 1,727 228 1,499 228 69 159 ------------ ------------ ------------ ------------ ------------ ------------ Net operating income............. 11,166 5,218 5,948 5,218 807 4,411 Depreciation......................... 10,623 7,246 3,377 7,246 869 6,377 ------------ ------------ ------------ ------------ ------------ ------------ Operating income (loss)............ $ 543 $ (2,028) $ 2,571 $ (2,028) $ (62) $ (1,966) ============ ============ ============ ============ ============ ============ SELF-STORAGE FACILITIES, AT END OF period: Number of facilities............... 49 35 14 35 23 12 Net rentable square feet........... 3,061 2,154 907 2,154 1,356 798 Total development cost............. $ 267,004 $ 174,895 $ 92,109 $ 174,895 $107,990 $ 66,905 COMBINATION FACILITIES, AT END OF PERIOD: Number of facilities............... 17 15 2 15 5 10 Net rentable square feet........... 1,844 1,605 239 1,605 605 1,000 Total development cost............. $ 154,177 $ 139,325 $ 14,852 $ 139,325 $ 33,321 $106,004 38 The following table summarizes operating data for the 49 newly developed self-storage facilities that opened over the last four years: DEVELOPED SELF-STORAGE FACILITIES - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, Year Ended December 31, ----------------------------------- -------------------------------------- 2002 2001 Change 2001 2000 Change -------- ----------- --------- ----------- ----------- ---------- (Dollar amounts in thousands) Rental income (a): Self-storage facilities developed in 2002... $1,435 $ $ 1,435 $ $ $ - - - - Self-storage facilities developed in 2001... 4,474 1,608 2,866 1,608 - 1,608 Self-storage facilities developed in 2000... 9,332 7,074 2,258 7,074 1,750 5,324 Self-storage facilities developed in 1999... 3,119 2,898 221 2,898 1,313 1,585 -------- ----------- --------- ----------- ----------- ---------- Total rental income....................... 18,360 11,580 6,780 11,580 5,657 8,517 -------- ----------- --------- ----------- ----------- ---------- Cost of operations: Self-storage facilities developed in 2002... $1,399 $ - $ 1,399 $ - $ - $ - Self-storage facilities developed in 2001... 2,667 1,368 1,299 1,368 - 1,368 Self-storage facilities developed in 2000... 3,782 4,186 (404) 4,186 1,453 2,733 Self-storage facilities developed in 1999... 1,073 1,036 37 1,036 872 164 -------- ----------- --------- ----------- ----------- ---------- Total cost of operations.................. 8,921 6,590 2,331 6,590 2,325 4,265 -------- ----------- --------- ----------- ----------- ---------- Net operating income before depreciation: Self-storage facilities developed in 2002... $ 36 $ - $ 36 $ - $ - $ - Self-storage facilities developed in 2001... 1,807 240 1,567 240 - 240 Self-storage facilities developed in 2000... 5,550 2,888 2,662 2,888 297 2,591 Self-storage facilities developed in 1999... 2,046 1,862 184 1,862 441 1,421 -------- ----------- --------- ----------- ----------- ---------- Net operating income........................ 9,439 4,990 4,449 4,990 738 4,252 Depreciation.................................. 7,032 4,522 2,510 4,522 798 3,724 -------- ----------- --------- ----------- ----------- ---------- Operating income (loss)..................... $2,407 $468 $ 1,939 $ 468 $ (60) $ 528 ======== =========== ========= =========== =========== ========== Weighted average square foot occupancy during the period: Self-storage facilities opened in 2002...... 20.6% - - - - - Self-storage facilities opened in 2001...... 41.7% 20.3% 105.4% 20.3% - - Self-storage facilities opened in 2000...... 76.1% 56.7% 34.2% 56.7% 24.8% 128.6% Self-storage facilities opened in 1999...... 87.9% 78.7% 11.7% 78.7% 46.2% 70.3% -------- ----------- --------- ----------- ----------- ---------- 51.6% 45.2% 14.2% 45.2% 29.1% 55.3% ======== =========== ========= =========== =========== ========== Unlike many other forms of real estate, we are unable to pre-lease our newly developed facilities due to the nature of our tenants. Accordingly, at the time a newly developed facility first opens for operation the facility is entirely vacant generating no rental income. Historically, we estimated that on average it took approximately 24 months for a newly developed facility to fill up and reach a targeted occupancy level of approximately 90%. We believe that the current economic environment has extended the fill-up period beyond 24 months notwithstanding our marketing efforts to enhance the fill-up process. Similar to our Consistent Group of facilities, the newly developed self-storage facilities participated in promotional discounting and advertising activities to enhance occupancy levels. During 2002, the Newly-Developed Facilities had a weighted average occupancy level of approximately 51.6%. Property operating expenses are substantially fixed, consisting primarily of payroll, property taxes, utilities, and marketing costs. The rental revenue of a newly developed facility will generally not cover its property operating expenses (excluding depreciation) until the facility has reach an occupancy level of approximately 30% to 34%. However, at that occupancy level, the rental revenues from the facility are still not sufficient to cover related depreciation expense and cost of capital with respect to the facility's development cost. During construction of the self-storage facility, we capitalize interest costs and include such cost as part of the overall development cost of the facility. Once the facility is opened for operations interest is no longer capitalized. 39 Due to the relationship between the generation of rental income and immediate recognition of expenses upon opening of a facility, our development activities have had a negative impact on our net income. We estimate that our net income has been negatively impacted by approximately $29,016,000, $21,416,000, and $8,352,000 in the years ended December 31, 2002, 2001, and 2000, respectively, as a result of the difference between the revenues generated by the Developed Facilities and the related operating costs denoted above. These amounts include approximately $10,623,000, $7,246,000, and $869,000 for the years ended December 31, 2002, 2001 and 2000, respectively, in depreciation expense. We continue to develop facilities, despite the short-term earnings dilution experienced during the fill-up period, because we believe that the ultimate returns on developed facilities are favorable. In addition, we believe that it is advantageous for us to continue to expand our asset base and benefit from the resultant increased critical mass, with facilities that will improve our portfolio's overall average construction and location quality. We expect that over at least the next 24 months, the Developed Facilities will continue to have a negative impact to our earnings, however, to a much lesser degree than experienced in 2002. Furthermore, the 38 expansion and newly developed facilities in our development pipeline described in "Liquidity and Capital Resources - Acquisition and Development of Facilities" that will be opened for operation over the next 12 - 24 months will also negatively impact our earnings until they reach a stabilized occupancy level. Commercial Property Operations: Commercial property operations included in our consolidated financial statements include commercial space owned by the Company and entities consolidated by the Company. We have a much larger interest in commercial properties through our ownership interest in PSB. Our investment in PSB is accounted for on the equity method of accounting, and accordingly our share of PSB's earnings is reflected as "Equity in earnings of real estate entities", see below. Our commercial operations are comprised of 992,000 net rentable commercial space operated at certain of the self-storage facilities and three stand-alone commercial facilities having a total of 195,000 net rentable square feet. In addition, we own an industrial building with 67,000 net rentable square feet that was opened in 2001 at a total cost of $9,993,000. This facility was previously used by our containerized storage operations and is currently being evaluated for repurposing or disposition. The following table sets forth the historical commercial property amounts included in the financial statements: 40 Commercial Property Operations (excluding discontinued operations): Year Ended December 31, Year Ended December 31, --------------------------------- --------------------------------- 2002 2001 Change 2001 2000 Change --------- ---------- ------- --------- ---------- ------- (Amounts in thousands) Rental income ............... $11,781 $12,070 $(289) $12,070 $10,849 $1,221 Cost of operations............ 4,462 3,861 601 3,861 3,701 160 --------- ---------- ------- --------- ---------- ------- Net operating income....... 7,319 8,209 (890) 8,209 7,148 1,061 Depreciation expense.......... 2,544 2,569 (25) 2,569 2,176 393 --------- ---------- ------- --------- ---------- ------- Operating income........... $4,775 $5,640 $(865) $5,640 $4,972 $668 ========= ========== ======= ========= ========== ======= The decrease in rental income in 2002 as compared to 2001 is due primarily to a vacancy in one of the three stand-alone commercial facilities, which cause a reduction in rental income of approximately $1.2 million during 2002. During 2002, we sold one of our commercial facilities to a third party for an aggregate $3.9 million in cash. The historical operations with respect to this facility are classified as "Discontinued Operations" in our income statement and are not included in the above table. Containerized Storage Operations: In August 1996, Public Storage Pickup & Delivery ("PSPUD"), a subsidiary of the Company, made its initial entry into the containerized storage business through its acquisition of a single facility operator located in Irvine, California. At December 31, 2001, PSPUD had 55 facilities that had been opened between 1996 and 2001 either through development or leasing of facilities. During 2002, we reevaluated our operational strategy and closed, or are in the process of closing, 22 facilities (the "Closed Facilities"). At December 31, 2002, PSPUD operated 33 facilities in 11 states, which are located in major markets in which we have significant market presence with respect to our traditional self-storage facilities. The operations with respect to the Closed Facilities, including historical operating results for previous periods, are not included in the table below and instead are included in Discontinued Operations. PSPUD's operations, which exclude the Closed Facilities, are reflected on the table below: Containerized storage (excluding discontinued operations): Year Ended December 31, Year Ended December 31, --------------------------------- --------------------------------- 2002 2001 Change 2001 2000 Change --------- ---------- ------- --------- ---------- ------- (Dollar amounts in thousand) Rental and other income ............ $37,776 $34,212 $3,564 $34,212 $32,091 $2,121 --------- ---------- ------- --------- ---------- ------- Cost of operations: Direct operating costs (a)...... 28,153 24,899 3,254 24,899 23,336 1,563 Facility lease expense.......... 2,534 5,017 (2,483) 5,017 7,766 (2,749) --------- ---------- ------- --------- ---------- ------- Total cost of operations..... 30,687 29,916 771 29,916 31,102 (1,186) --------- ---------- ------- --------- ---------- ------- Operating income prior to depreciation.................. 7,089 4,296 2,793 4,296 989 3,307 Depreciation expense (b)............ (5,675) (5,133) (542) (5,133) (4,594) (539) --------- ---------- ------- --------- ---------- ------- Operating income (loss)............. $1,414 $(837) $2,251 $(837) $(3,605) $2,768 ========= ========== ======= ========= ========== ======= (a) Includes an asset impairment charge recorded in the amount of $750,000 in 2002, with respect to machinery and equipment of the containerized storage facilities that remain open, because such equipment is no longer required based upon our current operating plan. The amounts for 2001 and 2000, include container obsolescence charges in the amount of $555,000 and $1,226,000, respectively. (b) Depreciation expense principally relates to the depreciation related to the containers, however, depreciation expense for 2002, 2001 and 2000 includes $1,098,000, $711,000, and $337,000, respectively, with respect to real estate facilities. 41 Rental and other income includes monthly rental charges to customers for storage of the containers and service fees charged for pickup and delivery of containers to customers' homes. Rental income increased to $37,776,000 in 2002 as compared to $34,212,000 in 2000 as a result of higher per container rents and an increase in the number of occupied containers. At December 31, 2002, there were approximately 63,582 occupied containers in the 33 facilities that are reflected in "ongoing" operations. We continue to evaluate the business operations and additional facilities may be closed. Direct operating costs principally includes payroll, equipment lease expense, utilities and vehicle expenses (fuel and insurance). During 2002, an asset impairment charge was recorded in the amount of $750,000 with respect to machinery and equipment of the containerized storage facilities that remain open because such equipment is no longer required based upon our current operating plan. Over the past three years, facility lease expense has continued to decrease ($ 2,534,000 in 2002, $5,017,000 in 2001 and $7,766,000 in 2000). The reduction over the past three years is principally the result of moving the operations from leased facilities to wholly-owned facilities, and thus eliminating the lease expense paid to third parties. At December 31, 2002, nine of the 33 containerized storage facilities are leased from third parties. The remaining 24 facilities were operated in facilities owned by the Company, comprised of 19 combination facilities with an aggregate of 994,000 square feet of industrial space (this square footage is a component of the total net rentable square footage of the Expansion Facilities and the Developed Facilities in the table above) and five industrial facilities having an aggregate of 420,000 net rentable square feet. The containerized storage operations may continue to adversely impact our future earnings and cash flows. There can be no assurance as to the level of the containerized storage business's expansion, level of gross rentals, level of move-outs or profitability. See "Discontinued Operations" below for a discussion of operating results of the Closed Facilities. TENANT REINSURANCE OPERATIONS: On December 31, 2001, we acquired PS Insurance Company, Ltd. ("PS Insurance") from a related party. PS Insurance reinsures policies against losses to goods stored by tenants in our self-storage facilities. Effective January 1, 2002, the operations of PS Insurance are included in the income statement under "Revenues - tenant reinsurance premiums" and "Cost of operations - tenant reinsurance." The tenant reinsurance business earned $19,947,000 in revenues for the year ended December 31, 2002 and incurred $9,411,000 in operating expenses, generating a net operating profit of $10,536,000. The level of tenant reinsurance revenues is largely dependent upon our occupancy level and move-in activity. As of December 31, 2002, approximately 37% of our self-storage tenant base have such policies. New insurance business comes from tenants who sign up for insurance as they move into our self-storage facilities. We have outside third-party insurance coverage for losses from any individual event that exceeds a loss of $500,000, to a limit of $10,000,000. Losses below these amounts are recorded as cost of operations for the tenant reinsurance operations. Equity in earnings of real estate entities: In addition to our ownership of equity interests in PSB, we had general and limited partnership interests in seven limited partnerships at December 31, 2002 (PSB and the limited partnerships are collectively referred to as the "Unconsolidated Entities"). Due to our limited ownership interest and limited control of these entities, we do not consolidate the accounts of these entities for financial reporting purposes, and account for such investments using the equity method. Equity in earnings of real estate entities for the year ended December 31, 2002 consists of our pro rata share of the Unconsolidated Entities based upon our ownership interest for the period. The following table sets forth the significant components of equity in earnings of real estate entities: 42 Historical summary: Year Ended December 31, Year Ended December - ------------------- ----------------------- Dollar ------------------------- Dollar 2002 2001 Change 2001 2000 Change ---------- ---------- ---------- ----------- ----------- --------- (Amounts in thousands) Property operations: PSB $63,233 $51,335 $11,898 $51,335 $42,562 $8,773 Development Joint Venture (1).......... 288 6,146 (5,858) 6,146 4,541 1,605 Acquired partnerships (2).............. - 10,097 (10,097) 10,097 11,071 (974) Other investments (3).................. 6,759 6,669 90 6,669 5,653 1,016 ---------- ---------- ---------- ----------- ----------- --------- 70,280 74,247 (3,967) 74,247 63,827 10,420 ---------- ---------- ---------- ----------- ----------- --------- Depreciation: PSB.................................... (25,459) (17,534) (7,925) (17,534) (14,672) (2,862) Development Joint Venture (1).......... (65) (2,064) 1,999 (2,064) (1,887) (177) Acquired partnerships (2).............. - (3,779) 3,779 (3,779) (3,056) (723) Other investments (3).................. (1,554) (1,719) 165 (1,719) (2,210) 491 ---------- ---------- ---------- ----------- ----------- --------- (27,078) (25,096) (1,982) (25,096) (21,825) (3,271) ---------- ---------- ---------- ----------- ----------- --------- Other: (4) PSB (5)................................ (14,368) (11,440) (2,928) (11,440) (3,940) (7,500) Development Joint Venture (1).......... - 145 (145) 145 40 105 Acquired partnerships (2).............. - (441) 441 (441) (934) 493 Other investments (3).................. 1,054 1,127 (73) 1,127 2,151 (1,024) ---------- ---------- ---------- ----------- ----------- --------- (13,314) (10,609) (2,705) (10,609) (2,683) (7,926) ---------- ---------- ---------- ----------- ----------- --------- Total equity in earnings of real estate entities.................................. $29,888 $38,542 $(8,654) $38,542 $39,319 $(777) ========== ========== ========== =========== =========== ========= (1) Amounts include our pro rata share of the earnings for the Development Joint Venture. In 2002, we acquired a controlling interest in this partnership and began to consolidate the operations of this partnership, and no longer account for our interest in these partnerships using the equity method (see Note 3 to the consolidated financial statements). (2) Amounts include our pro rata share of the earnings for two partnerships. In 2002, we acquired a controlling interest in and began to consolidate the operating results of these partnerships. Accordingly, we no longer account for our interest in these partnerships using the equity method (see Note 3 to the consolidated financial statements) effective January 1, 2002. In addition, for 2000, these amounts include our pro rata share of earnings with respect to an investment prior to its disposal in 2000 and a partnership prior to its consolidation in 2000. (3) Amounts include equity in earnings recorded for investments that have been held consistently throughout the three years ended December 31, 2002. (4) "Other" reflects our share of general and administrative expense, interest expense, interest income, and other non-property, non-depreciation related operating results of these entities. (5) These amounts include our pro-rata share of gain on disposition of real estate investments totaling $3,737,000 and $3,210,000, respectively, during 2002 and 2000. These gains are included in the line item "Gain on disposition of real estate and real estate investments" on our consolidated statements of income. The decrease in equity in earnings of real estate entities when comparing 2002 to 2001, is caused by the consolidation of the Development Joint Venture and two additional partnerships (as discussed in Note 3 to the consolidated financial statements), partially offset by our pro-rata share of PSB's gain on sale of real estate investments totaling $3,737,000 for 2002. Equity in earnings of PSB represents our pro rata share (approximately 44% at December 31, 2002) of the earnings of PS Business Parks, Inc., a publicly traded real estate investment trust (American Stock Exchange symbol "PSB") organized by the Company on January 2, 1997. As of December 31, 2002, we owned 5,418,273 common shares and 7,305,355 operating partnership units (units which are convertible into common shares on a one-for-one basis) in PSB. At December 31, 2002, PSB owned and operated 14.4 million net rentable square feet of commercial space located in nine states. PSB also manages approximately 992,000 net rentable square feet of commercial space owned by the Company and affiliated entities at December 31, 2002 pursuant to property management agreements. 43 Accordingly, our future equity income from PSB will be dependent entirely upon PSB's operating results. PSB's filings and selected financial information can be accessed through the Securities and Exchange Commission, and on its website, www.psbusinessparks.com. ------------------------ Equity in earnings of entities that we either no longer hold at December 31, 2002, or which were consolidated in the three years ended December 31, 2002, are included in the line-item "Newly Consolidated and Disposed Investments." On January 16, 2002, we acquired the remaining 70% ownership interest in the Development Joint Venture for cash totaling approximately $153,078,000. As a result, we began consolidating the operating results of the Development Joint Venture and no further equity in earnings will be recorded with respect to this entity for periods after January 16, 2002. Effective January 1, 2002 (see Note 3 to the financial statements), we began consolidating the operating results of two other partnerships and no longer record equity in these entity's earnings with respect to our investments in these partnerships. Effective September 15, 2001, we acquired the interest we didn't own in a partnership owning 13 real estate facilities for an aggregate of $81,169,000, and began consolidating the operating results of this entity. During 2000, we disposed of an investment in a publicly-held real estate investment trust for an aggregate of $47,875,000. Our earnings with respect our interests in these entities are included in the table above in the line "Acquired Partnerships." No further equity in earnings will be recorded with respect to these entities for periods after their respective dates of consolidation or disposal. The "Other Investments" includes our equity in earnings with respect to our pro-rata share of earnings with respect to seven limited partnerships, for which we held an approximately consistent level of equity interest during the three years ended December 31, 2002. These limited partnerships were formed by the Company during the 1980's. The Company is the general partner in each limited partnership, and manages each of these facilities for a management fee that is included in "interest and other income." The limited partners consist of numerous individual investors, including the Company, which throughout the 1990's acquired units of limited partnership interests in these limited partnerships in various transactions. Our future earnings with respect to the "Other investments" will be dependent upon the operating results of the 36 self-storage facilities that these entities own. The operating characteristics of these facilities are similar to those of the Company's self-storage facilities, and are subject to the same operational issues as the Consistent Group of self-storage facilities as discussed above with respect to Self-Storage Operations. See Note 6 to the consolidated financial statements for the operating results of these entities for the years ended December 31, 2002 and 2001.. Other Income and Expense Items - -------------------------------------------------------------------------------- INTEREST AND OTHER INCOME: Interest in other income includes (i) the net operating results from our third party property management operations, (ii) the net operating results from our merchandise sales and consumer truck rentals and (iii) interest income. Interest and other income has decreased in 2002 as compared to 2001 principally as a result of lower cash balances invested in interest bearing accounts, lower interest rates, and the reduction in income generated from affiliated entities that were acquired by the Company. Interest and other income has increased in 2001 as compared to 2000 principally as a result of higher average cash balances invested in interest bearing accounts and the aforementioned nonrecurring other income recorded in 2001. The changes in average cash balances are primarily due to the timing of investing proceeds from the issuance of equity securities into real estate assets. DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense was $179,634,000 in 2002, $166,178,000 in 2001 and $148,195,000 in 2000. Included in depreciation expense with respect to our real estate facilities was $167,485,000 in 2002, 152,447,000 in 2001 and $134,629,000 in 2000; the increases are due to the acquisition and development of additional real estate facilities in 1999 through 2001. Depreciation expense with respect to other assets, primarily depreciation of equipment and containers associated with the containerized storage operations, was $5,545,000 in 2002, $4,422,000 in 2001 and $4,257,000 in 2000. Amortization expense with respect to intangible assets totaled $6,604,000 for the year ended December 31, 2002 and $9,309,000 for the years ended December 31, 2001 and 2000, respectively. 44 Depreciation and amortization during 2002 with respect to real estate facilities acquired or developed during 2002 amounted to $11,540,000 which was for a partial period for the time they were acquired until December 31, 2002, and we expect the annual depreciation expense with respect to these facilities for 2003 and forward will approximate $14,398,000. GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense was $15,619,000 in 2002, $21,038,000 in 2001 and $21,306,000 in 2000. General and administrative costs for each year principally consist of state income taxes, investor relation expenses, and corporate and executive salaries. In addition, general and administrative expense includes expenses that vary depending upon the Company's activity levels in certain areas, such as overhead associated with the acquisition and development of real estate facilities, employee severance, and product research and development expenditures. During 2001 and 2000, we incurred higher levels of expenditures for product research, development overhead, consulting fees, lease termination costs relating to our PSPUD business and employee severance costs. Such costs totaled approximately $5,630,000 in 2001 and $5,963,000 in 2000. The reduction in general and administrative expense during 2002 was largely due to the reduction in these types of expenditures. We expect that the level of general and administrative expense in 2003 will approximate that experienced in 2002. INTEREST EXPENSE: Interest expense was $3,809,000 in 2002, $3,227,000 in 2001 and $3,293,000 in 2000. Debt and related interest expense remain relatively low compared to our overall asset base. The increase in interest expense in 2002 compared to 2001 and 2000 is principally the result of decreased capitalized interest. Capitalized interest expense totaled $6,513,000 in 2002, $8,992,000 in 2001 and $9,778,000 in 2000 in connection with our development activities. The combined interest expense and capitalized interest was $10,322,000 in 2002, $12,219,000 in 2001 and $13,071,000 in 2000. We expect that our aggregate interest cost (interest expensed and capitalized interest combined) during fiscal 2003 will continue to decline as a result of principal amortization. During fiscal 2003, scheduled principal amortization approximates $39.8 million. The amount of interest which will be capitalized during fiscal 2003 will be dependent on our development activities which we believe will be lower than what was incurred during 2002. MINORITY INTEREST IN INCOME: Minority interest in income represents the income allocable to equity interests in Consolidated Entities, which are not owned by the Company. The following table summarizes minority interest in income for each of the three years ended December 31, 2002: Minority interest in income for the year ended ----------------------------------------------- December 31, December 31, December 31, Description 2002 2001 2000 - ---------------------------------------------- ------------- ------------- -------------- (in thousands) Preferred partnership interests............... $ 26,906 $ 31,737 $ 24,859 Consolidated Development Joint Venture (a).... 2,399 1,074 325 Newly Consolidated Partnerships (b)........... 3,357 - - Convertible Partnership Units (c)............. 283 359 577 Acquired minority interests (d)............... 1,591 3,250 4,154 Other minority interests (e).................. 9,551 9,595 8,441 ------------- ------------- -------------- Total minority interests in income............ $ 44,087 $ 46,015 $ 38,356 ============= ============= ============== 45 (a) These amounts reflect income allocated to the minority interests in the Consolidated Development Joint Venture. Included in minority interest in income is $3,227,000, $2,386,000 and $25,000 in depreciation expense for the years ended December 31, 2002, 2001, and 2000, respectively. (b) These amounts reflect the minority interests in two partnerships that we began consolidating effective January 1, 2002, as described in Note 3 to the Company's consolidated financial statements. Included in minority interest in income for the year ended December 31, 2002 is $721,000 in depreciation expense. (c) These amounts reflect the minority interests represented by the Convertible Partnership Units (see Note 9 to the consolidated financial statements). Included in minority interest is $354,000, $308,000 and $377,000 in depreciation expense for the years ended December 31, 2002, 2001, and 2000, respectively. (d) These amounts reflect income allocated to minority interests that the Company acquired during the three years ended December 31, 2002, and are therefore no longer outstanding at December 31, 2002. Included in minority interest in income is $1,246,000, $2,272,000 and $3,273,000 in depreciation expense for the years ended December 31, 2002, 2001, and 2000, respectively. (e) These amounts reflect income allocated to minority interests that were outstanding consistently throughout the three years ended December 31, 2002. Included in minority interest in income is $2,539,000, $2,881,000 and $3,463,000 in depreciation expense for the year ended December 31, 2002, 2001, and 2000, respectively. On March 17, 2000, one of our consolidated operating partnerships issued $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred Units. On March 29, 2000 the partnership issued $75.0 million of 9.125% Series O Cumulative Redeemable Perpetual Preferred Units and on August 11, 2000, issued $50.0 million of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units. In August 2001, we repurchased, at par, $30 million of 9.125% Series O Cumulative Redeemable Perpetual Preferred Units. In October 2001, we repurchased, at par, $50 million of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units. For the years ended December 31, 2000, 2001, and 2002, the holders of our preferred partnership units were paid in aggregate approximately $24,859,000, $31,737,000 and $26,906,000, respectively, in distributions and received a corresponding allocation of minority interest in earnings for the respective period. We estimate that during 2003 we will pay aggregate distributions totaling $26.9 million to these units with a corresponding allocation of income to minority interest in earnings. In November 1999, we formed a development joint venture (the "Consolidated Development Joint Venture") with a joint venture partner whose partners include an institutional investor and the Company's Chairman and former CEO, B. Wayne Hughes ("Mr. Hughes"). The Consolidated Development Joint Venture is funded solely with equity capital consisting of 51% from the Company and 49% from the joint venture partner. Included in minority interest in income for the years ended December 31, 2000, 2001, and 2002 is $325,000, $1,074,000, and $2,399,000, respectively, representing our joint venture partner's pro rata interest in the operations of the Consolidated Development Joint Venture. The facilities in the entity are newly developed facilities that are all in the fill-up phase. The increase in minority interest in income in 2002 and 2001 as compared to the preceding years with respect to the Consolidated Development Joint Venture is due to the opening and fill-up of the facilities owned by this entity. We expect that such minority interest in income will continue to increase during 2003 as the facilities continue to fill-up and increase the earnings of this entity. Newly Consolidated Partnerships reflect the minority interests in two partnerships that we began consolidating effective January 1, 2002, as described in Note 3 to the consolidated financial statements. In addition, as described in Note 8, during 2002 we recorded the pending sale of a partnership interest in the Newly Consolidated Partnerships, and for all periods following the sale of this interest, income will be allocated to these interests. The acquired minority interests reflect interests in the consolidated entities that the Company acquired in the three years ended December 31, 2002 and are therefore no longer outstanding. There will be no further income allocated to these interests in 2003 and beyond. 46 Other minority interests reflect income allocated to minority interests that have maintained a consistent level of interest throughout the three years ended December 31, 2002, comprised of investments in the Consolidated Entities and the Operating Partnership Units described in Note 9 to the Company's financial statements. The level of income allocated to these interests in the future is dependent upon the operating results of the storage facilities that these entities own, as well as any acquisitions of minority interests that the Company does in the future. We recently mailed an information statement relating to the April 28, 2003 acquisition by the Company of all of the remaining limited partnership interest not currently owned by the Company in PS Partners IV, Ltd., a partnership which is consolidated with the Company, for an aggregate of $23,360,000. Included in minority interest in income for the year ended December 31, 2002, with respect to these interests was approximately $1,412,000 including $685,000 in depreciation expense. If completed, the transaction would have the effect of reducing minority interest in income on a go forward basis. See Acquisition and Development of Facilities below. DISCONTINUED OPERATIONS: As described more fully in the Note 4 to the consolidated financial statements, we implemented a business plan which included the closure of certain non-strategic containerized storage facilities (the "Closed Facilities"). Also, we sold one of our commercial facilities to a third party for an aggregate $3.9 million in cash. During 2002, in connection with the closure or planned closure of these facilities, we recorded asset impairment losses with respect to the furniture, fixtures, and equipment totaling $6,187,000. In addition, lease termination costs for the expected remaining lease liability following closure of the facilities were recorded in the amount of $2,447,000. The historical operations of the Closed Facilities (including the asset impairment losses and lease termination costs) are classified as discontinued operations, with the rental income, cost of operations, and depreciation expense with respect to these facilities for current and prior periods included in the line-item "Discontinued Operations" on the income statement. Following are the amounts with respect to the Closed Facilities and the commercial facility sold that are included in Discontinued Operations. Discontinued Operations: - ------------------------ Year Ended December 31, Year Ended December 31, ------------------------ ------------------------ 2002 2001 Change 2001 2000 Change ---------- ----------- ---------- ---------- ----------- ---------- (Dollar amounts in thousand) Rental income (a): Containerized storage facilities $14,343 $13,474 $869 $13,474 $5,823 $7,651 Commercial properties........... 268 460 (192) 460 492 (32) ---------- ----------- ---------- ---------- ----------- ---------- Total rental income ........ 14,611 13,934 677 13,934 6,315 7,619 Cost of operations (a): Containerized storage facilities 15,274 13,088 2,186 13,088 6,696 6,392 Commercial properties........... 84 111 (27) 111 125 (14) Depreciation and amortization (a): Containerized storage facilities 1,907 1,767 140 1,767 657 1,110 Commercial properties........... 107 116 (9) 116 115 1 ---------- ----------- ---------- ---------- ----------- ---------- Total expenses .............. 17,372 15,082 2,290 15,082 7,593 7,489 ---------- ----------- ---------- ---------- ----------- ---------- Loss before charges................. (2,761) (1,148) (1,613) (1,148) (1,278) (130) Discontinued operation charges (b).. 8,634 - 8,634 - - - ---------- ----------- ---------- ---------- ----------- ---------- Net discontinued operations (c)..... $(11,395) $(1,148) $(10,247) $(1,148) $(1,278) $(130) ========== =========== ========== ========== =========== ========== (a) These amounts represent the historical operations of the Closed Facilities and the commercial property sold. Amounts with respect to these facilities for periods prior to 2002 were previously classified as containerized storage rental income, containerized storage - cost of operations, and depreciation expense in the financial statements. (b) Amount includes asset impairment charges totaling $6,187,000 and lease termination costs totaling $2,447,000. (c) The net discontinued operations have resulted in reductions to our earnings per share of $0.09, $0.01 and $0.01 per diluted common share for each of the three years ended December 31, 2002, 2001 and 2000, respectively. 47 Many of the Closed Facilities are in the process of closing which may take up to several months to complete. We expect that these facilities will continue to generate operating losses until final closure. GAIN (LOSS) IN DISPOSITION OF REAL ESTATE: In the year ended December 31, 2002, we recorded a net loss on disposition of real estate of $2,541,000, as compared to a gain of $4,091,000 and $576,000, respectively, in 2001 and 2000. The net loss in 2002 is composed of a loss on disposition of land and a commercial facility totaling $702,000 as described in Note 6, combined with a loss on disposition of partnership interests in the amount of $1,839,000 as described in Note 9. The gain in 2001 is related to the disposition of two real estate facilities and a parcel of land. The gain in 2000 is composed a $296,000 gain on the sale of eight storage facilities and two parcels of land, and a $280,000 gain on the sale of investments. Liquidity and Capital Resources - -------------------------------------------------------------------------------- We believe that our internally generated net cash provided by operating activities will continue to be sufficient to enable us to meet our operating expenses, capital improvements, debt service requirements and distributions to shareholders for the foreseeable future. Operating as a real estate investment trust ("REIT"), our ability to retain cash flow for reinvestment is restricted. In order for us to maintain our REIT status, a substantial portion of our operating cash flow must be used to make distributions to our shareholders (see "Requirement to Pay Distributions" below). However, despite the significant distribution requirements, we have been able to retain a significant amount of our operating cash flow. The following table summarizes our ability to fund distributions to the minority interest, capital improvements to maintain our facilities, and distributions to our shareholders through the use of cash provided by operating activities. The remaining cash flow generated is available to make both scheduled and optional principal payments on debt and for reinvestment. For the Year Ended December 31, -------------------------------------------- (Amount in thousands) 2002 2001 2000 ------------ ------------ ------------- Net cash provided by operating activities............................. $588,961 $538,534 $525,775 Allocable to minority interests (Preferred Units)..................... (26,906) (31,737) (24,859) Allocable to minority interests (common equity)....................... (25,268) (22,125) (20,635) ------------ ------------ ------------- Cash from operations allocable to our shareholders.................... 536,787 484,672 480,281 Capital improvements to maintain our facilities: Storage facilities.................................................. (25,952) (34,436) (32,410) Commercial properties............................................... (1,041) (1,042) (613) Add back: minority interest share of capital improvements to maintain facilities........................................................ 926 1,267 728 ------------ ------------ ------------- Remaining operating cash flow available for distributions to our 510,720 450,461 447,986 shareholders....................................................... Distributions paid: Preferred stock dividends.......................................... (148,926) (117,979) (100,138) Equity Stock, Series A dividends................................... (21,501) (19,455) (11,042) Regular distributions to Common and Class B shareholders........... (221,299) (162,481) (115,460) Special distributions to Common and Class B shareholders (a)....... - (42,115) (78,673) ------------ ------------ ------------- Cash available for principal payments on debt and reinvestment........ $118,994 $108,431 $142,673 ============ ============ ============= (a) The special distribution for 2001 was declared in August 2001 and paid in September 2001. The special distribution for 2000 was declared in August 2000 and paid in September 2000. In each instance, the special distribution enabled the Company to maintain its REIT status with respect to the distribution requirements. 48 Our financial profile is characterized by a low level of debt to total capitalization, increasing net income, increasing cash flow from operations, and a conservative dividend payout ratio with respect to the common stock. We expect to fund our growth strategies with cash on hand at December 31, 2002, internally generated retained cash flows, and proceeds from issuing equity securities. In general, our current strategy is to continue to finance our growth with permanent capital, either common or preferred equity. We have in the past used our $200 million line of credit as temporary "bridge" financing, and repaid those amounts with internally generated cash flows and proceeds from the placement of permanent capital. As of December 31, 2002, we had no outstanding borrowings under our $200 million bank line of credit. Over the past three years we have funded substantially all of our acquisitions with permanent capital (both common and preferred securities). We have elected to use preferred securities as a form of leverage despite the fact that the dividend rates of our preferred securities exceed the prevailing market interest rates on conventional debt. We have chosen this method of financing for the following reasons: (i) under the REIT structure, a significant amount of operating cash flow needs to be distributed to our shareholders making it difficult to repay debt with operating cash flow alone, (ii) our perpetual preferred stock has no sinking fund requirement, or maturity date and does not require redemption, all of which eliminate any future refinancing risks, (iii) after the end of a non-call period, we have the option to redeem the preferred stock at any time, which in 2002 and 2001 enabled us to effectively refinance higher coupon preferred stock with new preferred stock at lower rates, (iv) preferred stock does not contain onerous covenants, thus allowing us to maintain significant financial flexibility, and (v) dividends on the preferred stock can be applied to our REIT distribution requirements. Our credit ratings on each of our series of Cumulative Preferred Stock by each of the three major credit agencies are "Baa2" by Moody's and BBB+ by both Standard & Poor's and Fitch IBCA. Our portfolio of real estate facilities remains substantially unencumbered. At December 31, 2002, we had mortgage debt outstanding of $20.6 million (which encumbers real estate with a book value of $56.4 million) and unsecured debt in the amount of $95.3 million, and real estate facilities with a book value of approximately $4.1 billion. We believe that our size and financial flexibility enables us to access capital when appropriate. During 2002 and 2001, we completed the following capital raising activities (amounts are presented net of issuance costs): Cumulative Equity Preferred Stock, Securities issued Date issued Stock Series A - -------------------------------------------- -------------------- ------------ --------- (in thousands) 8.60% Cumulative Preferred Stock, Series Q January 19, 2001 $ 166,966 $ - Public issuance of Equity Stock, Series A April 11, 2001 - 51,836 Direct placement of Equity Stock, Series A May 31, 2001 - 20,294 8.00% Cumulative Preferred Stock, Series R September 28, 2001 493,085 - 7.875% Cumulative Preferred Stock, Series S October 31, 2001 139,022 - Direct placement of Equity Stock, Series A November 21, 2001 - 2,690 7.625% Cumulative Preferred Stock, Series T January 18, 2002 145,075 - 7.625% Cumulative Preferred Stock, Series U February 19, 2002 145,075 - 7.500% Cumulative Preferred Stock, Series V September 30, 2002 166,866 - ------------ --------- $1,256,089 $74,820 ============ ========= The net proceeds raised through the issuance of our Cumulative Preferred Stock, Series R and Series S in 2001, and Series V in 2002 allowed us to take advantage of favorable rate spreads. Accordingly, at our option, we redeemed for cash our Cumulative Preferred Stock Series G, Series H, Series I in 2001 and Series A and Series J in 2002, each having higher coupon rates than either the Series R, Series S or Series V. In addition, during 2001 we repurchased all of our outstanding Series P Partnership Preferred Units and a portion of our outstanding Series O Partnership Preferred Units. These transactions, summarized below, represented a refinancing of a portion of our permanent capital structure into lower coupon securities. 49 Cumulative Preferred Date Redeemed or Preferred Partnership Security Redeemed or Repurchased Repurchased Stock Units - -------------------------------------------- --------------------- --------------- ------------- (in thousands) 9.125% Cumulative Preferred Units, Series O August 31, 2001 $ - $ 30,000 8 7/8% Cumulative Preferred Stock, Series G September 28, 2001 172,525 - 8.45% Cumulative Preferred Stock, Series H October 5, 2001 168,775 - 8.75% Cumulative Preferred Units, Series P October 15, 2001 - 50,000 8 5/8% Cumulative Preferred Stock, Series I November 13, 2001 100,025 - 10.0% Cumulative Preferred Units, Series A September 30, 2002 45,643 - 8.0% Cumulative Preferred Stock, Series J October 7, 2002 150,018 - --------------- ------------- $ 636,986 $80,000 =============== ============= The Cumulative Preferred Stock amounts listed above include redemption cost of approximately $25,000 per redemption for 2001 and $18,000 per redemption for 2002. We have called for redemption our 9.2% Senior Preferred Stock Series B which will be redeemed on March 31, 2003. The aggregate redemption amount for this security is $25 per share or approximately $57.5 million in the aggregate, plus accrued dividends. REQUIREMENT TO PAY DISTRIBUTIONS: We have operated, and intend to continue to operate, in such a manner as to qualify as a REIT under the Internal Revenue Code of 1986, but no assurance can be given that we will at all times so qualify. To the extent that the Company continues to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the taxable income that is distributed to our shareholders, provided that at least 90% of our taxable income is so distributed to our shareholders prior to filing of the Company's tax return. We have satisfied the REIT distribution requirement since 1980. Aggregate dividends paid during 2002, totaled $148.9 million to the holders of our Cumulative Preferred Stock, $209.1 million to the holders of our Common Stock, $12.2 million to the holders of our Class B Common Stock and $21.5 million to the holders of our Equity Stock, Series A. Although we have not finalized the calculation of our 2002 taxable income, we believe that the aggregate dividends paid in 2002 to our shareholders were designed to enable us to continue to qualify as a REIT. We estimate that the distribution requirements for fiscal 2003 with respect to our Cumulative Preferred Stock outstanding, and assuming the redemption of Cumulative Preferred Stock, Series B, will be approximately $144.2 million. During 2002, we paid distributions totaling $26.9 million with respect to our Preferred Partnership Units. We estimate the annual distributions requirements with respect to the preferred partnership units outstanding at December 31, 2002 to be approximately $26.9 million. For 2003, distributions with respect to the Common Stock and Equity Stock, Series A will be determined based upon our REIT distribution requirements after taking into consideration distributions to the preferred shareholders. We anticipate that, at a minimum, quarterly distributions per common share will remain at $0.45 per common share (increased from $0.22 per common share during 2000 and in the first two quarters of 2001). For the first quarter of 2003, a quarterly distribution of $0.45 per common share has been declared by our Board of Directors. Prior to 2002, in addition to the regular quarterly dividends paid to our common shareholder, we also paid special distributions. These special distributions were necessary to meet our distribution requirements in order to maintain our REIT tax status. While we don't expect to need a special distribution in 2003, the need to make a special distribution is not determinable at this time and will depend in large part on our taxable income relative to the distributions being paid to all of our shareholders. With respect to the depositary shares of Equity Stock, Series A, we have no obligation to pay distributions if no distributions are paid to the common shareholders. To the extent that we do pay common distributions in any year, the holders of the depositary shares receive annual distributions equal to the lesser of (i) five times the per share dividend on the common stock or (ii) $2.45. The depositary shares are noncumulative, and have no preference over our Common Stock either as to dividends or in liquidation. 50 CAPITAL IMPROVEMENT REQUIREMENTS: During 2003, we have budgeted approximately $25.0 million for capital improvements. Capital improvements include major repairs or replacements to the facilities which keep the facilities in good operation condition and maintain their visual appeal. Capital improvements do not include costs relating to the development or expansion of facilities. DEBT SERVICE REQUIREMENTS: We do not believe we have any significant refinancing risks with respect to our mortgage debt, all of which is fixed rate. At December 31, 2002, we had total outstanding notes payable of approximately $115.9 million. See Note 7 to the consolidated financial statements for approximate principal maturities of such borrowings. We anticipate that our retained operating cash flow will continue to be sufficient to enable us to make scheduled principal payments. It is our current intent to fully amortize our debt as opposed to refinance debt maturities with additional debt. ACQUISITION AND DEVELOPMENT OF FACILITIES: During 2002, we acquired nine self-storage facilities for approximately $30.1 million. During 2001, we acquired one self-storage facility for approximately $3.5 million. During 2000, we acquired a commercial facility and 12 storage facilities at an aggregate cost of approximately $67.1 million. Our low level of third party acquisitions over the past three years is not indicative of either the supply of facilities offered for sale or our ability to finance the acquisitions, but is primarily due to prices sought by sellers and our lack of desire to pay such prices. During fiscal 2003, we will continue to seek to acquire additional self-storage facilities from third parties, however, it is difficult to estimate the amount of third party acquisitions we will undertake. On January 16, 2002, we acquired the remaining 70% interest in the Development Joint Venture for approximately $153,078,000 in cash. The Development Joint Venture was formed in April 1997 with equity capital consisting of 30% from the Company and 70% from an institutional investor, which owns 47 storage facilities opened since 1997. This transaction was principally financed with the capital raised through the issuance of our 7.625% Cumulative Preferred Stock, Series T. On April 19, 2002, we acquired through a merger all of the remaining limited partnership interest not currently owned by the Company in PS Partners V, Ltd., a partnership which is consolidated with the Company. The acquisition cost consisted of approximately 533,796 shares ($20,054,000) of our common stock and approximately $12,815,000 in cash. On September 19, 2002, we acquired through a merger all of the remaining limited partnership interest not currently owned by the Company in PS Partners VI, Ltd., a partnership which is consolidated with the Company. The acquisition cost consisted of approximately 557,812 shares ($17,850,000) of our common stock and approximately $12,347,000 in cash. On September 15, 2000, we acquired the remaining ownership interests in an affiliated partnership, of which we were the general partner, for an aggregate acquisition cost of $81.2 million. This partnership owned 13 self-storage facilities. We recently mailed an information statement relating to the April 28, 2003 acquisition by the Company of all of the 52,851 limited partnership units that it did not own in PS Partners IV, Ltd., a partnership which is consolidated with the Company. The acquisition of the 52,851 units will be accomplished through a merger of a subsidiary of the Company into the partnership and the conversion of the 52,851 units into either cash or common stock of the Company. Each unit will be converted into the right to receive a value of $442 in our common stock or, at the election of the unitholder, in cash. We expect that the cash portion of the transaction will be funded by available cash on hand or, if necessary, borrowings on our line of credit. In November 1999, we formed a second joint venture partnership for the development of approximately $100 million of self-storage facilities. The venture is funded solely with equity capital consisting of 51% from us and 49% from the joint venture partner. The term of the joint venture is 15 years. After six years, the joint venture partner has the right to cause the Company to purchase the joint venture partner's interest for an amount necessary to provide them with a maximum return of 10.75% or less in certain circumstances. At December 31, 2002, this development joint venture was fully committed having developed 22 facilities (approximately 1,413,000 net rentable sq. ft.) for $108 million. 51 We currently have a development "pipeline" of 38 self-storage facilities, combination facilities, and expansions to existing self-storage facilities with an aggregate estimated cost of approximately $199.8 million. Approximately $87.5 million of development cost has been incurred as of December 31, 2002. We have acquired the land for 36 of these projects, which have an aggregate estimated cost of approximately $188.6 million, and costs incurred as of December 31, 2002 of approximately $86.7 million. The remaining 2 facilities represent identified sites where we have an agreement in place to acquire the land, generally within one year. We anticipate that the development of these projects will be funded solely by the Company. The development and fill-up of these storage facilities is subject to significant contingencies such as obtaining appropriate governmental approvals. We estimate that the amount remaining to be spent of approximately $112.2 million will be incurred over the next 18 - 24 months. The following table sets forth certain information with respect to our development pipeline. DEVELOPMENT PIPELINE SUMMARY - ------------------------------------------------------------------------------------------------------------------------------------ Total Number Net estimated Costs incurred of rentable development through Costs to projects sq. ft. costs 12/31/02 complete -------- ---------- ------------ --------------- ------------- (Amounts in thousands) Facilities currently under construction: Self-storage facilities 16 1,155 $ 123,739 $ 76,814 $ 46,925 Expansions to existing self-storage facilities 1 69 6,203 2,800 3,403 -------- ---------- ------------ --------------- ------------- 17 1,224 129,942 79,614 50,328 Facilities awaiting construction, where land is acquired: Self-storage facilities 4 272 29,007 6,161 22,846 Expansions of existing self-storage facilities 15 661 29,602 964 28,638 -------- ---------- ------------ --------------- ------------- 19 933 58,609 7,125 51,484 Self-storage facilities awaiting construction, where land has not yet been acquired 2 123 11,209 777 10,432 -------- ---------- ------------ --------------- ------------- Total Development Pipeline 38 2,280 $ 199,760 $ 87,516 $ 112,244 ======== ========== ============ =============== ============= Included in expansions above is approximately $13 million associated with the conversion of 701,000 net rentable square feet of industrial space, previously used by the discontinued containerized facility operations, into self-storage space. In addition to the above projects, we have 9 parcels of land held for development with total costs of approximately $17,807,000 at December 31, 2002. These parcels will either be developed or sold. STOCK REPURCHASE PROGRAM: The Company's Board of Directors has authorized the repurchase from time to time of up to 25,000,000 shares of the Company's common stock on the open market or in privately negotiated transactions. During 2001, we repurchased a total of 10,585,593 common shares, for a total aggregate cost of approximately $276.9 million. From the inception of the repurchase program through December 31, 2002, we have repurchased a total of 21,497,020 shares of common stock at an aggregate cost of approximately $535.9 million. We have not repurchased any significant amounts of our common stock since January 2002. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk To limit our exposure to market risk, we principally finance our operations and growth with permanent equity capital consisting either of common or preferred stock. At December 31, 2002, the Company's debt as a percentage of total shareholders' equity (based on book values) was 2.8%. 52 Our preferred stock is not redeemable at the option of the holders. Except under certain conditions relating to the Company's qualification as a REIT, the Senior Preferred Stock is not redeemable by the Company prior to the following dates: Series B - March 31, 2003, Series C - June 30, 1999, Series D - September 30, 2004, Series E - January 31, 2005, Series F - April 30, 2005, Series K - January 19, 2004, Series L - March 10, 2004, Series M - August 17, 2004, Series Q - January 19, 2006, Series R - September 28, 2006, Series S - October 31, 2006, Series T - January 18, 2007, Series U - February 19, 2007 and Series V - September 30, 2007. On or after the respective dates, each of the series of Senior Preferred Stock will be redeemable at the option of the Company, in whole or in part, at $25 per share (or depositary share in the case of the Series K through Series V), plus accrued and unpaid dividends. Our market risk sensitive instruments include notes payable, which totaled $115,867,000 at December 31, 2002. All of our notes payable bear interest at fixed rates. See Note 7 to the consolidated financial statements for terms, valuations and approximate principal maturities of the notes payable as of December 31, 2002. ITEM 8. Financial Statements and Supplementary Data The financial statements of the Company at December 31, 2002 and December 31, 2001 and for each of the three years in the period ended December 31, 2002 and the report of Ernst & Young LLP, Independent Auditors, thereon and the related financial statement schedule, are included elsewhere herein. Reference is made to the Index to Financial Statements and Schedules in Item 15. ITEM 9. Disagreements on Accounting and Financial Disclosure Not applicable. 53 PART III ITEM 10. Directors and Executive Officers of the Registrant The information required by this item with respect to directors is hereby incorporated by reference to the material appearing in the Company's definitive proxy statement filed in connection with the annual shareholders' meeting to be held on May 8, 2003 (the "Proxy Statement") under the caption " Election of Directors." Information required by this item with respect to executive officers is provided in Item 4A of this report. See "Executive Officers of the Company." ITEM 11. Executive Compensation The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the captions "Compensation" and "Compensation Committee Interlocks and Insider Participation." ITEM 12. Security Ownership of Certain Beneficial Owners and Management The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the captions "Election of Directors - Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management." The following table sets forth information as of December 31, 2002 on the Company's equity compensation plans: Number of securities to be Weighted issued upon average Number of securities exercise of exercise price remaining available outstanding of outstanding for future issuance options, options, under equity warrants and warrants and compensation plans rights rights ------------ ------------ ------------------ Equity compensation plans approved by security holders 5,714,223 $25.77 4,188,523 Equity compensation plans not approved by security holders 225,001 $26.35 164,167 The outstanding options granted under plans not approved by the Company's shareholders were granted under the Company's 2001 Non-Executive/Non-Director Plan, which does not allow participation by the Company's executive officers and directors. The principal terms of this plan are as follows: (1) 500,000 shares of common stock were authorized for grant, (2) this plan is administered by the Equity Awards Committee, except that grants in excess of 100,000 shares to any one person requires approval by the Executive Equity Awards Committee, (3) options are granted at fair market value on the date of grant, (4) options have a ten year term and (5) options vest over three years in equal installments. ITEM 13. Certain Relationships and Related Transactions The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the caption "Compensation Committee Interlocks and Insider Participation - Certain Relationships and Related Transactions." 54 ITEM 14. Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports the Company files and submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rule 13a-14(c) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Also, the Company has investments in certain unconsolidated entities. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are substantially more limited than those it maintains with respect to its consolidated subsidiaries. Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of the Company's evaluation. 55 PART IV ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K a. 1. Financial Statements The financial statements listed in the accompanying Index to Financial Statements and Schedules hereof are filed as part of this report. 2. Financial Statement Schedules The financial statements schedules listed in the accompanying Index to Financial Statements and Schedules are filed as part of this report. 3. Exhibits See Index to Exhibits contained herein. b. Reports on Form 8-K Not applicable. c. Exhibits: See Index to Exhibits contained herein. d. Financial Statement Schedules Not applicable. 56 PUBLIC STORAGE, INC. INDEX TO EXHIBITS (Items 15(a)(3) and 15(c)) 3.1 Restated Articles of Incorporation. Filed with Registrant's Registration Statement No. 33-54557 and incorporated herein by reference. 3.2 Certificate of Determination for the 10% Cumulative Preferred Stock, Series A. Filed with Registrant's Registration Statement No. 33-54557 and incorporated herein by reference. 3.3 Certificate of Determination for the 9.20% Cumulative Preferred Stock, Series B. Filed with Registrant's Registration Statement No. 33-54557 and incorporated herein by reference. 3.4 Amendment to Certificate of Determination for the 9.20% Cumulative Preferred Stock, Series B. Filed with Registrant's Registration Statement No. 33-56925 and incorporated herein by reference. 3.5 Certificate of Determination for the 8.25% Convertible Preferred Stock. Filed with Registrant's Registration Statement No. 33-54557 and incorporated herein by reference. 3.6 Certificate of Determination for the Adjustable Rate Cumulative Preferred Stock, Series C. Filed with Registrant's Registration Statement No. 33-54557 and incorporated herein by reference. 3.7 Certificate of Determination for the 9.50% Cumulative Preferred Stock, Series D. Filed with Registrant's Form 8-A/A Registration Statement relating to the 9.50% Cumulative Preferred Stock, Series D and incorporated herein by reference. 3.8 Certificate of Determination for the 10% Cumulative Preferred Stock, Series E. Filed with Registrant's Form 8-A/A Registration Statement relating to the 10% Cumulative Preferred Stock, Series E and incorporated herein by reference. 3.9 Certificate of Determination for the 9.75% Cumulative Preferred Stock, Series F. Filed with Registrant's Form 8-A/A Registration Statement relating to the 9.75% Cumulative Preferred Stock, Series F and incorporated herein by reference. 3.10 Certificate of Determination for the Convertible Participating Preferred Stock. Filed with Registrant's Registration Statement No. 33-63947 and incorporated herein by reference. 3.11 Certificate of Amendment of Articles of Incorporation. Filed with Registrant's Registration Statement No. 33-63947 and incorporated herein by reference. 3.12 Certificate of Determination for the 8-7/8% Cumulative Preferred Stock, Series G. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred Stock, Series G and incorporated herein by reference. 3.13 Certificate of Determination for the 8.45% Cumulative Preferred Stock, Series H. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.45% Cumulative Preferred Stock, Series H and incorporated herein by reference. 3.14 Certificate of Determination for the Convertible Preferred Stock, Series CC. Filed with Registrant's Registration Statement No. 333-03749 and incorporated herein by reference. 3.15 Certificate of Correction of Certificate of Determination for the Convertible Participating Preferred Stock. Filed with Registrant's Registration Statement No. 333-08791 and incorporated herein by reference. 57 3.16 Certificate of Determination for 8-5/8% Cumulative Preferred Stock, Series I. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-5/8% Cumulative Preferred Stock, Series I and incorporated herein by reference. 3.17 Certificate of Amendment of Articles of Incorporation. Filed with Registrant's Registration Statement No. 333-18395 and incorporated herein by reference. 3.18 Certificate of Determination for Equity Stock, Series A. Filed with Registrant's Form 10-Q for the quarterly period ended June 30, 1997 and incorporated herein by reference. 3.19 Certificate of Determination for Equity Stock, Series AA. Filed with Registrant's Form 10-Q for the quarterly period ended September 30, 1999 and incorporated herein by reference. 3.20 Certificate Decreasing Shares Constituting Equity Stock, Series A. Filed with Registrant's Form 10-Q for the quarterly period ended September 30, 1999 and incorporated herein by reference. 3.21 Certificate of Determination for Equity Stock, Series A. Filed with Registrant's Form 10-Q for the quarterly period ended September 30, 1999 and incorporated herein by reference. 3.22 Certificate of Determination for 8% Cumulative Preferred Stock, Series J. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative Preferred Stock, Series J and incorporated herein by reference. 3.23 Certificate of Correction of Certificate of Determination for the 8.25% Convertible Preferred Stock. Filed with Registrant's Registration Statement No. 333-61045 and incorporated herein by reference. 3.24 Certificate of Determination for 8-1/4% Cumulative Preferred Stock, Series K. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series K and incorporated herein by reference. 3.25 Certificate of Determination for 8-1/4% Cumulative Preferred Stock, Series L. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series L and incorporated herein by reference. 3.26 Certificate of Determination for 8.75% Cumulative Preferred Stock, Series M. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock, Series M and incorporated herein by reference. 3.27 Certificate of Determination for Equity Stock, Series AAA. Filed with Registrant's Current Report on Form 8-K dated November 15, 1999 and incorporated herein by reference. 3.28 Certificate of Determination for 9.5% Cumulative Preferred Stock, Series N. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference. 3.29 Certificate of Determination for 9.125% Cumulative Preferred Stock, Series O. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000 and incorporated herein by reference. 3.30 Certificate of Determination for 8.75% Cumulative Preferred Stock, Series P. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by reference. 3.31 Certificate of Determination for 8.600% Cumulative Preferred Stock, Series, Q. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock, Series Q and incorporated herein by reference. 3.32 Amendment to Certificate of Determination for Equity Stock, Series A. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 and incorporated herein by reference. 58 3.33 Certificate of Determination for 8.000% Cumulative Preferred Stock, Series R. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock, Series R and incorporated herein by reference. 3.34 Certificate of Determination for 7.875% Cumulative Preferred Stock, Series S. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock, Series S and incorporated herein by reference. 3.35 Certificate of Determination for 7.625% Cumulative Preferred Stock, Series T. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series T and incorporated herein by reference. 3.36 Certificate of Determination for 7.625% Cumulative Preferred Stock, Series U. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series U and incorporated herein by reference. 3.37 Amendment to Certificate of Determination for 7.625% Cumulative Preferred Stock, Series T. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002 and incorporated herein by reference. 3.38 Certificate of Determination for 7.500% Cumulative Preferred Stock, Series V. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock, Series V and incorporated herein by reference. 3.39 Bylaws, as amended. Filed with Registrant's Registration Statement No. 33-64971 and incorporated herein by reference. 3.40 Amendment to Bylaws adopted on May 9, 1996. Filed with Registrant's Registration Statement No. 333-03749 and incorporated herein by reference. 3.41 Amendment to Bylaws adopted on June 26, 1997. Filed with Registrant's Registration Statement No. 333-41123 and incorporated herein by reference. 3.42 Amendment to Bylaws adopted on January 6, 1998. Filed with Registrant's Registration Statement No. 333-41123 and incorporated herein by reference. 3.43 Amendment to Bylaws adopted on February 10, 1998. Filed with Registrant's Current Report on Form 8-K dated February 10, 1998 and incorporated herein by reference. 3.44 Amendment to Bylaws adopted on March 4, 1999. Filed with Registrant's Current Report on Form 8-K dated March 4, 1999 and incorporated herein by reference. 3.45 Amendment to Bylaws adopted on May 6, 1999. Filed with Registrants' Form 10-Q for the quarterly period ended March 31, 1999 and incorporated herein by reference. 3.46 Amendment to Bylaws adopted on November 7, 2002. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002 and incorporated herein by reference. 10.1 Second Amended and Restated Management Agreement by and among Registrant and the entities listed therein dated as of November 16, 1995. Filed with PS Partners, Ltd.'s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference. 10.2 Amended Management Agreement between Registrant and Public Storage Commercial Properties Group, Inc. dated as of February 21, 1995. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. 10.3 Loan Agreement between Registrant and Aetna Life Insurance Company dated as of July 11, 1988. Filed with Registrant's Current Report on Form 8-K dated July 14, 1988 and incorporated herein by reference. 59 10.4 Amendment to Loan Agreement between Registrant and Aetna Life Insurance Company dated as of September 1, 1993. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. 10.5 Second Amended and Restated Credit Agreement by and among Registrant, Wells Fargo Bank, National Association, as agent, and the financial institutions party thereto dated as of February 25, 1997. Filed with Registrant's Registration Statement No. 333-22665 and incorporated herein by reference. 10.6 Note Assumption and Exchange Agreement by and among Public Storage Management, Inc., Public Storage, Inc., Registrant and the holders of the notes dated as of November 13, 1995. Filed with Registrant's Registration Statement No. 33-64971 and incorporated herein by reference. 10.7 Registrant's 1990 Stock Option Plan. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. 10.8* Registrant's 1994 Stock Option Plan. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. 10.9* Registrant's 1996 Stock Option and Incentive Plan. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference. 10.10 Deposit Agreement dated as of December 13, 1995, among Registrant, The First National Bank of Boston, and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred Stock, Series G. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred Stock, Series G and incorporated herein by reference. 10.11 Deposit Agreement dated as of January 25, 1996, among Registrant, The First national Bank of Boston, and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8.45% Cumulative Preferred Stock, Series H. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.45% Cumulative Preferred Stock, Series H and incorporated herein by reference. 10.12** Employment Agreement between Registrant and B. Wayne Hughes dated as of November 16, 1995. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31,1995 and incorporated herein by reference. 10.13 Deposit Agreement dated as of November 1, 1996, among Registrant, The First National Bank of Boston, and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8-5/8% Cumulative Preferred Stock, Series I. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-5/8% Cumulative Preferred Stock, Series I and incorporated herein by reference. 10.14 Limited Partnership Agreement of PSAF Development Partners, L.P. between PSAF Development, Inc. and the Limited Partner dated as of April 10, 1997. Filed with Registrant's Form 10-Q for the quarterly period ended March 31, 1997 and incorporated herein by reference. 10.15 Deposit Agreement dated as of August 28, 1997 among Registrant, The First National Bank of Boston, and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative Preferred Stock, Series J. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative Preferred Stock, Series J and incorporated herein by reference. 10.16 Agreement of Limited Partnership of PS Business Parks, L.P. dated as of March 17, 1998. Filed with PS Business Parks, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 and incorporated herein by reference. 60 10.17 Deposit Agreement dated as of January 19, 1999 among Registrant, BankBoston, N.A. and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series K. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series K and incorporated herein by reference. 10.18 Agreement and Plan of Merger among Storage Trust Realty, Registrant and Newco Merger Subsidiary, Inc. dated as of November 12, 1998. Filed with Registrant's Registration Statement No. 333-68543 and incorporated herein by reference. 10.19 Amendment No. 1 to Agreement and Plan of Merger among Storage Trust Realty, Registrant, Newco Merger Subsidiary, Inc. and STR Merger Subsidiary, Inc. dated as of January 19, 1999. Filed with registrant's Registration Statement No. 333-68543 and incorporated herein by reference. 10.20 Amended and Restated Agreement of Limited Partnership of Storage Trust Properties, L.P., dated as of March 12, 1999. Filed with Registrant's Form 10-Q for the quarterly period ended June 30, 1999 and incorporated herein by reference. 10.21* Storage Trust Realty 1994 Share Incentive Plan. Filed with Storage Trust Realty's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. 10.22 Amended and Restated Storage Trust Realty Retention Bonus Plan effective as of November 12, 1998. Filed with Registrant's Registration Statement No. 333-68543 and incorporated herein by reference. 10.23 Deposit Agreement dated as of March 10, 1999 among Registrant, BankBoston, N.A. and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series L. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8-1/4% Cumulative Preferred Stock, Series L and incorporated herein by reference. 10.24 Note Purchase Agreement and Guaranty Agreement with respect to $100,000,000 of Senior Notes of Storage Trust Properties, L.P. Filed with Storage Trust Realty's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference. 10.25 Deposit Agreement dated as of August 17, 1999 among Registrant, BankBoston, N.A. and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock, Series M. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock, Series M and incorporated herein by reference. 10.26 Limited Partnership Agreement of PSAC Development Partners, L.P. among PS Texas Holdings, Ltd., PS Pennsylvania Trust and PSAC Storage Investors, L.L.C. dated as November 15, 1999. Filed with Registrant's Current Report on Form 8-K dated November 15, 1999 and incorporated herein by reference. 10.27 Agreement of Limited Liability Company of PSAC Storage Investors, L.L.C. dated as of November 15, 1999. Filed with Registrant's Current Report on Form 8-K dated November 15, 1999 and incorporated herein by reference. 10.28 Deposit Agreement dated as of January 14, 2000 among Registrant, BankBoston, N.A. and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A and incorporated herein by reference. 10.29 Amended and Restated Agreement of Limited Partnership of PSA Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the Limited Partners dated as of March 29, 2000. Filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference. 61 10.30 Amended and Restated Agreement of Limited Partnership of PSA Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the Limited Partners dated as of August 11, 2000. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by reference. 10.31* Registrant's 2000 Non-Executive/Non-Director Stock Option and Incentive Plan. Filed with Registrant's Registration Statement No, 333-52400 and incorporated herein by reference. 10.32 Deposit Agreement dated as of January 19, 2001 among Registrant, Fleet National Bank and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock, Series Q. Filed with Registrant's Form 8-A/A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.600% Cumulative Preferred Stock, Series Q and incorporated herein by reference. 10.33* Registrant's 2001 Non-Executive/Non-Director Stock Option and Incentive Plan. Filed with Registrant's Registration Statement No. 333-59218 and incorporated herein by reference. 10.34* Registrant's 2001 Stock Option and Incentive Plan. Filed with Registrant's Registration Statement No. 333-59218 and incorporated herein by reference. 10.35 Deposit Agreement dated as of September 28, 2001 among Registrant, Fleet National Bank and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock, Series R. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock, Series R and incorporated herein by reference. 10.36 Deposit Agreement dated as of October 31, 2001 among Registrant, Fleet National Bank and the holder of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock, Series S. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock, Series S and incorporated herein by reference. 10.37 Credit Agreement by and among Registrant, Wells Fargo Bank, National Association, as agent, and the financial institutions party thereto dated as of November 1, 2001. Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 and incorporated herein by reference. 10.38 Deposit Agreement dated as of January 18, 2002 among Registrant, Fleet National Bank and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series T. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series T and incorporated herein by reference. 10.39 Deposit Agreement dated as of February 19, 2002 among Registrant, Fleet National Bank and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series U. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock, Series U and incorporated herein by reference. 10.40 Deposit Agreement dated as of September 30, 2002 among Registrant, Fleet National Bank and the holders of the depositary receipts evidencing the Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock, Series V. Filed with Registrant's Form 8-A Registration Statement relating to the Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock, Series V and incorporated herein by reference. 11 Statement Re: Computation of Ratio of Earnings Per Share. Filed herewith. 12 Statement Re: Computation of Ratio of Earnings to Fixed Charges. Filed herewith. 99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. 62 99.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 99.3 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 99.4 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 99.5 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. - -------------- * Compensatory benefit plan. ** Management contract. 63 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PUBLIC STORAGE, INC. Date: March 28, 2003 By: /s/ Harvey Lenkin ----------------- Harvey Lenkin, President Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date - ------------------------------------ --------------------------------------------------------- --------------------- /s/ Ronald L. Havner, Jr. Vice-Chairman of the Board, Chief March 28, 2003 - ------------------------------- Executive Officer and Director Ronald L. Havner, Jr. (principal executive officer) /s/ Harvey Lenkin President and Director March 28, 2003 - ------------------------------- Harvey Lenkin /s/ Marvin M. Lotz Senior Vice President and Director March 28, 2003 - ------------------------------- Marvin M. Lotz Vice President and Director - ------------------------------- B. Wayne Hughes, Jr. /s/ John Reyes Senior Vice President and March 28, 2003 - ------------------------------- Chief Financial Officer John Reyes (principal financial officer and principal accounting officer) /s/ B. Wayne Hughes Chairman of the Board March 28, 2003 - ------------------------------- B. Wayne Hughes /s/ Robert J. Abernethy Director March 28, 2003 - ------------------------------- Robert J. Abernethy /s/ Dann V. Angeloff Director March 28, 2003 - ------------------------------- Dann V. Angeloff /s/ William C. Baker Director March 28, 2003 - ------------------------------- William C. Baker Director - ------------------------------- Thomas J. Barrack, Jr. /s/ Uri P. Harkham Director March 28, 2003 - ------------------------------- Uri P. Harkham /s/ Daniel C. Staton Director March 28, 2003 - ------------------------------- Daniel C. Staton 64 PUBLIC STORAGE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES (Item 15 (a)) Page References --------------- Report of Independent Auditors.................................... F-1 Consolidated balance sheets as of December 31, 2002 and 2001...... F-2 For each of the three years in the period ended December 31, 2002: Consolidated statements of income................................. F-3 Consolidated statements of shareholders' equity .................. F-4 Consolidated statements of cash flows............................. F-5 - F-6 Notes to consolidated financial statements........................ F-7 - F- 37 Schedule: III - Real estate and accumulated depreciation.................... F-38 - F-74 All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto. 65 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Public Storage, Inc. We have audited the accompanying consolidated balance sheets of Public Storage, Inc. as of December 31, 2002 and 2001, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Public Storage, Inc. at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG L L P Los Angeles, California February 21, 2003 F-1 PUBLIC STORAGE, INC. CONSOLIDATED BALANCE SHEETS December 31, 2002 and 2001 (amounts in thousands, except share data) December 31, December 31, 2002 2001 -------------- -------------- ASSETS Cash and cash equivalents.................................................... $ 103,124 $ 49,347 Real estate facilities, at cost: Land...................................................................... 1,304,881 1,165,111 Buildings................................................................. 3,683,645 3,265,943 -------------- -------------- 4,988,526 4,431,054 Accumulated depreciation.................................................. (987,546) (819,932) -------------- -------------- 4,000,980 3,611,122 Construction in process................................................... 87,516 121,181 Land held for development................................................. 17,807 30,001 -------------- -------------- 4,106,303 3,762,304 Investment in real estate entities........................................... 329,679 479,300 Goodwill..................................................................... 78,204 78,204 Intangible assets, net....................................................... 117,893 124,497 Notes receivable, including amounts due from related parties................. 24,324 59,344 Other assets................................................................. 84,135 72,883 -------------- -------------- Total assets................................................... $ 4,843,662 $ 4,625,879 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Line of credit borrowings.................................................... $ - $ 25,000 Notes payable................................................................ 115,867 143,552 Accrued and other liabilities................................................ 129,327 93,143 -------------- -------------- Total liabilities................................................... 245,194 261,695 Minority interest: Preferred partnership interests........................................... 285,000 285,000 Other partnership interests............................................... 154,499 169,601 Commitments and contingencies Shareholders' equity: Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized, 9,258,486 shares issued (in series) and outstanding, (11,156,500 at December 31, 2001) at liquidation preference............................ 1,817,025 1,540,150 Common Stock, $0.10 par value, 200,000,000 shares authorized, 116,991,455 shares issued and outstanding (114,961,915 at December 31, 2001)........ 11,699 11,496 Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized, 8,776.102 shares issued and outstanding................................. - - Class B Common Stock, $0.10 par value, 7,000,000 shares authorized and issued 700 700 Paid-in capital........................................................... 2,371,194 2,325,898 Cumulative net income..................................................... 2,030,007 1,711,269 Cumulative distributions paid............................................. (2,071,656) (1,679,930) -------------- -------------- Total shareholders' equity.......................................... 4,158,969 3,909,583 -------------- -------------- Total liabilities and shareholders' equity..................... $ 4,843,662 $ 4,625,879 ============== ============== See accompanying notes. F-2 PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF INCOME For each of the three years in the period ended December 31, 2002 (amounts in thousands, except per share data) 2002 2001 2000 ------------- ------------- ------------- Revenues: Rental income: Self-storage facilities................................... $ 763,287 $ 721,662 $ 653,110 Commercial properties..................................... 11,781 12,070 10,849 Containerized storage facilities.......................... 37,776 34,212 32,091 Tenant reinsurance premiums.................................. 19,947 - - Interest and other income.................................... 8,661 14,225 18,836 ------------- ------------- ------------- 841,452 782,169 714,886 ------------- ------------- ------------- Expenses: Cost of operations: Storage facilities........................................ 250,957 229,211 210,462 Commercial properties..................................... 4,462 3,861 3,701 Containerized storage facilities.......................... 30,687 29,916 31,102 Tenant reinsurance........................................ 9,411 - - Depreciation and amortization................................. 179,634 166,178 148,195 General and administrative.................................... 15,619 21,038 21,306 Interest expense.............................................. 3,809 3,227 3,293 ------------- ------------- ------------- 494,579 453,431 418,059 ------------- ------------- ------------- Income before equity in earnings of real estate entities, minority interest, discontinued operations and gain (loss) on disposition of real estate and real estate investments....... 346,873 328,738 296,827 Equity in earnings of real estate entities (including the Company's pro-rata share of gain on sale of real estate investments in the amount of $3,737,000 in 2002 and $3,210,000 in 2000)..................................................... 29,888 38,542 39,319 Minority interest in income: Preferred partnership interests............................... (26,906) (31,737) (24,859) Other partnership interests................................... (17,181) (14,278) (13,497) ------------- ------------- ------------- Net income before discontinued operations and gain (loss) on disposition of real estate................................... 332,674 321,625 297,790 Discontinued operations (Note 4)................................ (11,395) (1,148) (1,278) Gain (loss) on disposition of real estate and real estate investments ................................................. (2,541) 4,091 576 ------------- ------------- ------------- Net income...................................................... $ 318,738 $ 324,208 $ 297,088 ============= ============= ============= Net income allocation: Allocable to preferred shareholders.......................... $ 148,926 $ 117,979 $ 100,138 Allocable to Equity Stock, Series A.......................... 21,501 19,455 11,042 Allocable to common shareholders............................. 148,311 186,774 185,908 ------------- ------------- ------------- $ 318,738 $ 324,208 $ 297,088 ============= ============= ============= Net income per common share: Basic........................................................... $1.21 $1.53 $1.41 ============= ============= ============= Diluted......................................................... $1.19 $1.51 $1.41 ============= ============= ============= Net income per common share, prior to discontinued operations: Basic........................................................... $1.30 $1.54 $1.42 ============= ============= ============= Diluted......................................................... $1.28 $1.52 $1.42 ============= ============= ============= Basic weighted average common shares outstanding................ 123,005 122,310 131,566 ============= ============= ============= Diluted weighted average common shares outstanding.............. 124,571 123,577 131,657 ============= ============= ============= See accompanying notes. F-3 PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For each of the three years in the period ended December 31, 2002 (Amounts in thousands, except share and per share amounts) Cumulative Class B Preferred Common Common Paid-in Stock Stock Stock Capital ------------- ------------ ------------- ------------- Balances at December 31, 1999.................................... $ 1,155,150 $ 12,671 $ 700 $ 2,463,193 Issuance of Equity Stock, Series A (5,635.602 shares)......... - - - 113,354 Issuance of Common Stock (498,451 shares) .................... - 50 - 11,387 Repurchase of Common Stock (3,491,600 shares)................ - (351) - (77,448) Issuance costs: Preferred operating partnership units (Note 8) - - - (3,750) Net income.................................................... - - - - Distributions to shareholders: Cumulative Preferred Stock.................................. - - - - Equity Stock, Series A...................................... - - - - Common Stock ($1.48 per share).............................. - - - - Balances at December 31, 2000.................................... 1,155,150 12,370 700 2,506,736 ------------- ------------ ------------- ------------- Issuance of Cumulative Preferred Stock; Series Q (6,900 shares), Series R (20,400 shares) and Series S (5,750 shares)........ 826,250 - - (27,177) Redemption of Cumulative Preferred Stock; Series G (6,900 shares), Series H (6,750 shares) and Series I (4,000 shares) (441,250) - - (75) Issuance of Equity Stock, Series A (3,140.500 shares)......... - - - 74,820 Issuance of Common Stock (1,843,634 shares) .................. - 184 - 46,487 Repurchase of Common Stock (10,585,593 shares)............... - (1,058) - (275,803) Issuance of Put Option (Note 9).............................. - - - 910 Net income.................................................... - - - - Distributions to shareholders: Cumulative Preferred Stock.................................. - - - - Equity Stock, Series A...................................... - - - - Common Stock ($1.69 per share).............................. - - - - ------------- ------------ ------------- ------------- Balances at December 31, 2001.................................... 1,540,150 11,496 700 2,325,898 Issuance of Cumulative Preferred Stock; Series T (6,000 shares), Series U (6,000 shares) and Series V (6,900 shares)......... 472,500 - - (15,484) Redemption of Cumulative Preferred Stock; Series A (1,825,000 shares) and Series J (6,000 shares)......................... (195,625) - - (36) Issuance of Common Stock (2,040,540 shares)................... - 204 - 61,033 Repurchase of Common Stock (11,000 shares).................... - (1) - (380) Stock Option expense.......................................... - - - 163 Net income.................................................... - - - - Distributions to shareholders: Cumulative Preferred Stock.................................. - - - - Equity Stock, Series A...................................... - - - - Class B Common Stock........................................ - - - - Common Stock ($1.80 per share).............................. - - - - ------------- ------------ ------------- ------------- Balances at December 31, 2002.................................... $ 1,817,025 $ 11,699 $ 700 $ 2,371,194 ============= ============ ============= ============= Total Cumulative Cumulative Shareholders' Net Income Distributions Equity ------------ -------------- -------------- Balances at December 31, 1999.................................... $ 1,089,973 $ (1,032,587) $ 3,689,100 Issuance of Equity Stock, Series A (5,635.602 shares)......... - - 113,354 Issuance of Common Stock (498,451 shares) .................... - - 11,437 Repurchase of Common Stock (3,491,600 shares)................ - - (77,799) Issuance costs: Preferred operating partnership units (Note 8) - - (3,750) Net income.................................................... 297,088 - 297,088 Distributions to shareholders: Cumulative Preferred Stock.................................. - (100,138) (100,138) Equity Stock, Series A...................................... - (11,042) (11,042) Common Stock ($1.48 per share).............................. - (194,133) (194,133) Balances at December 31, 2000.................................... 1,387,061 (1,337,900) 3,724,117 ------------ -------------- -------------- Issuance of Cumulative Preferred Stock; Series Q (6,900 shares), Series R (20,400 shares) and Series S (5,750 shares)........ - - 799,073 Redemption of Cumulative Preferred Stock; Series G (6,900 shares), Series H (6,750 shares) and Series I (4,000 shares) - - (441,325) Issuance of Equity Stock, Series A (3,140.500 shares)......... - - 74,820 Issuance of Common Stock (1,843,634 shares) .................. - - 46,671 Repurchase of Common Stock (10,585,593 shares)............... - - (276,861) Issuance of Put Option (Note 9).............................. - - 910 Net income.................................................... 324,208 - 324,208 Distributions to shareholders: Cumulative Preferred Stock.................................. - (117,979) (117,979) Equity Stock, Series A...................................... - (19,455) (19,455) Common Stock ($1.69 per share).............................. - (204,596) (204,596) ------------ -------------- -------------- Balances at December 31, 2001.................................... 1,711,269 (1,679,930) 3,909,583 Issuance of Cumulative Preferred Stock; Series T (6,000 shares), Series U (6,000 shares) and Series V (6,900 shares)......... - - 457,016 Redemption of Cumulative Preferred Stock; Series A (1,825,000 shares) and Series J (6,000 shares)......................... - - (195,661) Issuance of Common Stock (2,040,540 shares)................... - - 61,237 Repurchase of Common Stock (11,000 shares).................... - - (381) Stock Option expense.......................................... - - 163 Net income.................................................... 318,738 - 318,738 Distributions to shareholders: Cumulative Preferred Stock.................................. - (148,926) (148,926) Equity Stock, Series A...................................... - (21,501) (21,501) Class B Common Stock........................................ - (12,222) (12,222) Common Stock ($1.80 per share).............................. - (209,077) (209,077) ------------ -------------- -------------- Balances at December 31, 2002.................................... $ 2,030,007 $ (2,071,656) $ 4,158,969 ============ ============== ============== See accompanying notes. F-4 PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three years in the period ended December 31, 2002 (amounts in thousands) 2002 2001 2000 ------------ ------------ ------------ Cash flows from operating activities: Net income............................................................... $ 318,738 $ 324,208 $ 297,088 Adjustments to reconcile net income to net cash provided by operating activities: Gain included in equity in earnings of real estate investments...... (3,737) - (3,210) Loss (gain) on disposition of real estate and real estate 2,541 (4,091) (576) investments......................................................... Depreciation and amortization....................................... 179,634 166,178 148,195 Depreciation included in equity in earnings of real estate entities. 27,078 25,096 21,825 Depreciation, impairment losses, and other items associated with discontinued operations (Note 4).................................. 10,648 1,883 772 Minority interest in income......................................... 44,087 46,015 38,356 Other operating activities.......................................... 9,972 (20,755) 23,325 ------------ ------------ ------------ Total adjustments................................................. 270,223 214,326 228,687 ------------ ------------ ------------ Net cash provided by operating activities......................... 588,961 538,534 525,775 ------------ ------------ ------------ Cash flows from investing activities: Principal payments received on mortgage notes receivable............ 35,513 2,199 7,650 Issuance of notes receivable to affiliates.......................... - (35,000) (11,400) Business combinations (Note 3)...................................... (139,680) 6,276 (66,776) Capital improvements to real estate facilities ..................... (26,993) (35,478) (33,023) Construction in process............................................. (101,110) (184,290) (232,918) Acquisition of minority interests................................... (27,544) (11,841) (31,271) Acquisition of real estate facilities............................... (30,117) (3,503) (62,938) Acquisition of investments in real estate entities.................. (33,956) (55,468) (78,356) Proceeds from the sale of real estate facilities and real estate 15,209 19,936 58,319 investments....................................................... Other investing activities.......................................... (14,786) (8,889) (14,751) ------------ ------------ ------------ Net cash used in investing activities............................. (323,464) (306,058) (465,464) ------------ ------------ ------------ Cash flows from financing activities: Net borrowings on line of credit.................................... (25,000) 25,000 - Principal payments on notes payable................................. (27,685) (12,451) (11,335) Net proceeds from the issuance of Common Stock...................... 23,333 15,857 4,608 Net proceeds from the issuance of Cumulative Preferred Stock........ 457,016 799,073 - Net proceeds from the issuance of Equity Stock, Series A............ - 74,820 68,318 Net proceeds from the issuance of preferred partnership units....... - - 361,250 Issuance of Put Option (Note 9)..................................... - 910 - Repurchase of Common Stock.......................................... (381) (276,861) (77,799) Repurchase of preferred partnership units........................... - (80,000) - Redemption of Cumulative Preferred Stock............................ (195,661) (441,325) - Distributions paid to shareholders.................................. (391,726) (342,030) (343,388) Distributions paid to minority interests............................ (52,174) (53,862) (45,494) Investment by minority interests.................................... 558 18,273 17,871 ------------ ------------ ------------ Net cash used in financing activities............................. (211,720) (272,596) (25,969) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents..................... 53,777 (40,120) 34,342 Cash and cash equivalents at the beginning of the year................... 49,347 89,467 55,125 ------------ ------------ ------------ Cash and cash equivalents at the end of the year......................... $ 103,124 $ 49,347 $ 89,467 ============ ============ ============ See accompanying notes. F-5 PUBLIC STORAGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three years in the period ended December 31, 2002 (amounts in thousands) (Continued) 2002 2001 2000 ------------ ------------ ------------ Supplemental schedule of non cash investing and financing activities: Business combinations (Note 3): Real estate facilities.............................................. $(330,426) $ - $ (82,163) Investment in real estate entities.................................. 160,236 - 14,393 Other assets........................................................ (8,187) (4,538) (183) Accrued and other liabilities....................................... 23,891 6,993 1,177 Minority interest................................................... 14,806 - - Goodwill............................................................ - (26,993) - Acquisition of real estate facilities in exchange for minority interests, common stock, and the reduction of investment in real estate entities. - - (19,281) Minority interest acquired in exchange for the sale of real estate - - (6,427) facilities ........................................................... Cancellation of mortgage notes receivable to acquire real estate facilities - - - Reduction of investment in real estate entities in exchange for real estate facilities........................................................... - - 3,144 Disposition of real estate facilities in exchange for notes receivable, other assets, and investment in real estate entities.................. 493 16,150 20,265 Notes receivable issued in connection with real estate dispositions..... (493) (305) (3,690) Disposition of minority interest in exchange for other assets: Other assets........................................................ (1,450) - - Minority interest................................................... 3,289 - - Acquisition of minority interest in exchange for common stock: Real estate facilities.............................................. (39,780) - - Minority interest................................................... (25,668) - (22,988) Distributions payable................................................... - - (82,086) Exchange of Cumulative Preferred Stock, Series B for Cumulative Preferred Stock, Series T: Reduction in Cumulative Preferred Stock, Series B.................. (2,150) - - Increase in Cumulative Preferred Stock, Series T................... 2,150 - - Issuance of Common Stock................................................ In connection with business combinations............................ - 30,814 - To acquire minority interests and real estate....................... 37,904 - 6,829 Issuance of Equity Stock, Series A in connection with special distribution to common shareholders and in connection with acquisition of real estate facilities............................................................ - - 45,037 See accompanying notes. F-6 PUBLIC STORAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002 1. Description of the business Public Storage, Inc. (the "Company") is a California corporation, which was organized in 1980. We are a fully integrated, self-administered and self-managed real estate investment trust ("REIT") whose principal business activities include the acquisition, development, ownership and operation of self-storage facilities which offer storage spaces for lease, usually on a month-to-month basis, for personal and business use. In addition, to a much lesser extent, we have interests in commercial properties, containing commercial and industrial rental space, and interests in facilities that lease storage containers. We invest in real estate facilities by acquiring wholly owned facilities or by acquiring interests in real estate entities which own facilities. At December 31, 2002, we had direct and indirect equity interests in 1,403 storage facilities located in 37 states and operating under the "Public Storage" name. We also have direct and indirect equity interests in approximately 16.1 million net rentable square feet of commercial space located in 11 states. 2. Summary of significant accounting policies Basis of presentation --------------------- The consolidated financial statements include the accounts of the Company and 33 controlled entities (the "Consolidated Entities"). Collectively, the Company and the Consolidated Entities own a total of 1,376 real estate facilities, consisting of 1,367 self-storage facilities, six containerized storage facilities and three commercial properties. At December 31, 2002, we had equity investments in seven limited partnerships in which we do not have a controlling interest. These limited partnerships collectively own 36 self-storage facilities, which are managed by the Company. In addition, we own approximately 44% of the common equity of PS Business Parks, Inc. ("PSB"), which owns and operates 14.4 million net rentable square feet of commercial space as of December 31, 2002. We do not control these entities, accordingly, our investments in these limited partnerships and PSB are accounted for using the equity method. Certain amounts previously reported have been reclassified to conform to the December 31, 2002 presentation, including Discontinued Operations (see Note 4). Use of estimates ---------------- The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Income taxes ------------ For all taxable years subsequent to 1980, the Company qualified and intends to continue to qualify as a REIT, as defined in Section 856 of the Internal Revenue Code. As a REIT, we are not taxed on that portion of our taxable income which is distributed to our shareholders provided that we meet certain tests. We believe we have met these tests during 2002, 2001 and 2000; accordingly, no provision for income taxes has been made in the accompanying financial statements. F-7 Financial instruments --------------------- The methods and assumptions used to estimate the fair value of financial instruments is described below. We have estimated the fair value of our financial instruments using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop estimates of market value. Accordingly, estimated fair values are not necessarily indicative of the amounts that could be realized in current market exchanges. For purposes of financial statement presentation, we consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Due to the short period to maturity of our cash and cash equivalents, accounts receivable, and other financial assets included in other assets, and accrued and other liabilities, the carrying values as presented on the consolidated balance sheets are reasonable estimates of fair value. The carrying amount of notes receivable approximates fair value because the applicable interest rates approximates market rates for these loans. Notes receivable were all current at December 31, 2002. A comparison of the carrying amount of notes payable to their estimated fair value is included in Note 8, "Notes Payable." Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, accounts receivable, and notes receivable. Cash and cash equivalents, which consist of short-term investments, including commercial paper, are only invested in entities with an investment grade rating. Notes receivable are secured by real estate facilities that we believe are valued (unaudited) in excess of the related note receivable. Accounts receivable from customers are a component of other assets, and are not a significant component of total assets. Included in cash and cash equivalents at December 31, 2002 is $11,423,000 held by STOR-Re Mutual Insurance Company, Inc. ("STOR-Re"), a newly consolidated entity (see Note 3). Insurance and other regulations place significant restrictions on our ability to withdraw these funds for purposes other than insurance activities. Real estate facilities ---------------------- Real estate facilities are recorded at cost. Costs associated with the acquisition, development, construction, renovation, and improvement of properties are capitalized. Interest, property taxes, and other costs associated with development incurred during the construction period are capitalized as building cost. Expenditures for repairs and maintenance are charged to expense when incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 25 years. Evaluation of asset impairment ------------------------------ In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). We adopted both of these statements effective January 1, 2002. With respect to goodwill, we evaluate impairment annually through a two-step process. In the first step, if the fair value of the reporting unit to which the goodwill applies is equal to or greater than the carrying amount of the assets of the reporting unit, including the goodwill, the goodwill is considered unimpaired and the second step is unnecessary. If, however, the carrying amount is less than the fair value of the reporting unit, the second step is performed. In this test, we compute the implied fair value of the goodwill based upon the allocations that would be made to the goodwill, other assets and liabilities of the reporting unit if a business combination transaction were consummated at the fair value of the reporting unit. An impairment loss is recorded to the extent that the implied fair value of the goodwill is less than the goodwill's carrying amount. No impairment of our goodwill was identified in our annual evaluation. F-8 With respect to other long-lived assets, we evaluate such assets on a quarterly basis. We first evaluate these assets for indicators of impairment such as a) a significant decrease in the market price of a long-lived asset, b) a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition, c) a significant adverse change in legal factors or the business climate that could affect the value of the long-lived asset, d) an accumulation of costs significantly in excess of the amount originally projected for the acquisition or construction of the long-lived asset, or e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset. When any such indicators of impairment are noted, we compare the carrying value of these assets to the future estimated undiscounted cash flows attributable to these assets. If the asset's recoverable amount is less than the carrying value of the asset, then an impairment charge is booked for the excess of carrying value over the asset's fair value. Any long-lived assets which we expect to sell or dispose of prior to their previously estimated useful life are stated at the lower of their estimated net realizable value or their carrying value (less cost to sell), and are evaluated throughout the sales process for impairment. Impairments were identified with respect to our other long-lived assets with respect to Discontinued Operations as described further in Note 4. In addition, our evaluations identified impairments with respect to machinery and equipment that is no longer required for the continuing containerized storage operations, and accordingly an asset impairment charge of $750,000 was recorded for the year ended December 31, 2002. No other impairments were identified. Accounting for Employee Stock Options ------------------------------------- We utilize the Fair Value Method (described below) of accounting for our employee stock options issued after December 31, 2001, and utilize the APB 25 Method (described below) for employee stock options issued prior to January 1, 2002. Accordingly, a total of $163,000 in related compensation expense was recorded in the year ended December 31, 2002 and included in general and administrative expense. See Note 12 for a full discussion of our accounting with respect to employee stock options. Other assets ------------ Other assets primarily consist of furniture, fixtures, equipment, and other such assets associated with the containerized storage operations, system development and computer software costs, assets associated with the truck rental business, accounts receivable, and prepaid expenses. Accounts receivable due from tenants are net of allowances for estimated doubtful accounts. Other assets includes assets utilized in our containerized storage business which totaled $20,275,000 and $30,699,000 at December 31, 2002 and 2001, respectively. The carrying amounts are net of accumulated depreciation and, in the case of the amount at December 31, 2002, net of asset impairment charges. As discussed in Note 4, during 2002 an impairment charge of $6,187,000 was recorded with respect to assets used in the containerized storage operations. In addition, included in cost of operations - containerized storage is an impairment charge of $750,000 with respect to assets used in the continuing containerized storage operations. Included in depreciation and amortization expense for 2002, 2001 and 2000 is $5,545,000, $4,422,000, and $4,257,000 respectively, related to depreciation of other assets. Included in discontinued operations for 2002, 2001, and 2000, respectively, is depreciation expense of $1,322,000 and $1,515,000, and $544,000 respectively, related to depreciation of furniture, fixtures, and equipment of the discontinued operations of the containerized storage business. F-9 Other assets at December 31, 2002 also includes investments totaling $13,801,000 in held to maturity debt securities owned by STOR-Re (see Note 3) stated at amortized cost, which approximates fair value. Accrued and other liabilities ----------------------------- Accrued and other liabilities consist primarily of trade payables, real and personal property tax accruals, accrued interest, and losses and loss adjustment liabilities, as discussed below. STOR-Re (see Note 3), provides limited property and liability insurance coverage to the Company and affiliates of the Company. This entity accrues liabilities for losses and loss adjustment expense, which at December 31, 2002 totaled $22,911,000. PS Insurance Company, Ltd. reinsures policies against claims for losses to goods stored by tenants in our self-storage facilities (see Note 3). This entity accrues liabilities for losses and loss adjustment expense, which at December 31, 2002 totaled $2,135,000. These liabilities for losses and loss adjustment expenses include an amount determined from loss reports and individual cases and an amount, based on recommendations from an outside actuary using a frequency and severity method, for losses incurred but not reported. Determining the liability for unpaid losses and loss adjustment expense is based upon estimates and while we believe that the amount is adequate, the ultimate liability may be in excess of or less than the amounts provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed. The Company, Stor-RE, and its affiliates' maximum aggregate annual exposure for losses that are below the deductibles set forth in the third-party insurance contracts, assuming multiple significant events occur, is approximately $30 million. In addition, if losses exhaust the third-party insurers' limit of coverage of $125,000,000 for property coverage and $101,000,000 for general liability, our exposure could be greater. These limits are higher than estimates of maximum probable losses that could occur from individual catastrophic events (i.e., earthquake and wind damage) determined in recent engineering and actuarial studies. PS Insurance Company, Ltd. has outside third-party insurance coverage for losses from any individual event that exceeds a loss of $500,000, to a limit of $10,000,000. Losses below the third-party insurers' deductible amounts are accrued as cost of operations for the tenant reinsurance operations. Intangible assets and goodwill ------------------------------ Intangible assets consist of property management contracts ($165,000,000) and the excess of the acquisition cost over the fair value of net tangible and identifiable intangible assets or "goodwill" ($94,719,000) acquired in business combinations. Prior to January 1, 2002, we amortized goodwill using the straight-line method over 25 years. Goodwill on our balance sheet has an indeterminate life and, in accordance with the provisions of Statement of Financial Accounting Standards No. 142, amortization of goodwill ceased effective January 1, 2002. Our other intangibles continue to be amortized over 25 years. Had we continued to amortize goodwill in 2002, net income would have been $316,033,000, and basic and diluted earnings per share, respectively, would have been $1.18 and $1.17, respectively. Goodwill is net of accumulated amortization of $16,515,000 at December 31, 2002 and 2001. At December 31, 2002, property management contracts are net of accumulated amortization of $47,107,000 ($40,503,000 at December 31, 2001). Included in depreciation and amortization expense for 2002 and 2001 is $6,604,000 with respect to the amortization of property management contracts. In addition, included in depreciation and amortization expense for 2001 is $2,705,000 relating to the amortization of goodwill. F-10 Revenue and expense recognition ------------------------------- Rental income, which is generally earned pursuant to month-to-month leases for storage space, is recognized as earned. Tenant reinsurance premiums are recognized as premiums are collected. Interest income is recognized as earned. Equity in earnings of real estate entities is recognized based on our ownership interest in the earnings of each of the unconsolidated real estate entities. Cost of operations, general and administrative cost and interest are expensed as incurred. We accrue for property tax expense based upon estimates and historical trends. If these estimates are incorrect, the timing of expense recognition could be affected. Environmental costs ------------------- Our policy is to accrue environmental assessments and/or remediation cost when it is probable that such efforts will be required and the related costs can be reasonably estimated. Our current practice is to conduct environmental investigations in connection with property acquisitions. Although there can be no assurance, we are not aware of any environmental contamination of any of our facilities, which individually or in the aggregate would be material to our overall business, financial condition, or results of operations. Net income per common share --------------------------- Cumulative Preferred Stock dividends totaling $148,926,000, $117,979,000 and $100,138,000 for the years ended December 31, 2002, 2001 and 2000, respectively, have been deducted from net income to arrive at net income allocable to our common shareholders. Net income allocated to our common shareholders has been further allocated among our two classes of common stock; our regular common stock and our Equity Stock, Series A. The allocation among each class was based upon the two-class method. Under the two-class method, earnings per share for each class of common stock is determined according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, the Equity Stock, Series A for the years ended December 31, 2002, 2001 and 2000 were allocated approximately $21,501,000, $19,455,000 and $11,042,000, respectively, of net income. The remaining $148,311,000, $186,774,000, and $185,908,000, for the years ended December 31, 2002, 2001, and 2000, respectively, was allocated to the regular common shares. Basic net income per share is computed using the weighted average common shares outstanding (prior to the dilutive impact of stock options outstanding). Diluted net income per common share is computed using the weighted average common shares outstanding (adjusted for the dilutive impact of stock options outstanding that totaled 1,566,000 in 2002, 1,267,000 in 2001 and 91,000 shares in 2000). Commencing January 1, 2000, the 7,000,000 Class B common shares outstanding began to participate in distributions of the Company's earnings. Distributions per share of Class B common stock are equal to 97% of the per share distribution paid to the regular common shares. As a result of this participation in the distribution of our earnings, we have include 6,790,000 (7,000,000 x 97%) Class B common shares in the weighted average common equivalent shares for the years ended December 31, 2001 and 2000. As of March 31, 2002, the remaining contingency for the conversion of the Class B common stock into regular common stock had been satisfied (see Note 10). As a result, beginning April 1, 2002, we began to include all 7,000,000 Class B common shares in the computation of the weighted average common equivalent shares. The Class B common stock converted into 7,000,000 shares of common stock on January 1, 2003. F-11 Reclassifications ----------------- Certain amounts previously reported have been reclassified to conform to the December 31, 2002 presentation, including Discontinued Operations (see Note 4). 3. Business combinations Development Joint Venture ------------------------- On January 16, 2002, we acquired the remaining 70% interest we did not own in a partnership (the "Development Joint Venture"). The Development Joint Venture was formed in April 1997 to develop self-storage facilities and was funded with equity capital consisting of 30% from the Company and 70% from an institutional investor. The Development Joint Venture developed and owns a total of 47 self-storage facilities. Prior to January 16, 2002, we accounted for our investment in the Development Joint Venture using the equity method of accounting. The aggregate cost of this business combination was $268,209,000, consisting of our pre-existing investment in the Development Joint Venture of $115,131,000 and cash of $153,078,000 paid to the institutional investor to acquire its interest. STOR-Re Mutual Insurance Company, Inc. (STOR-Re) ------------------------------------------------ As a result of obtaining a controlling ownership interest, effective July 1, 2002 we began consolidating STOR-Re. Accordingly, the assets and liabilities and operating results subsequent to July 1, 2002 of STOR-Re are included on our financial statements. Our investment in STOR-Re, which at June 30, 2002 was classified as an Other Asset in the amount of $8,541,000, was allocated to the cash, other assets, and liabilities of STOR-Re as described in the table below. STOR-Re was formed in 1994 as an association captive insurance company owned by the Company and its affiliates. STOR-Re provides limited property and liability insurance to the Company and its affiliates. The Company also utilizes other insurance carriers to provide property and liability coverage in excess of STOR-Re's limitations. Prior to July 1, 2002, the insurance premiums paid to STOR-Re were included in property operating expenses. After June 30, 2002, the insured liabilities costs incurred by STOR-Re with respect to the Company and the Consolidated Entities facilities are presented as property operating expenses. The insured liability costs incurred by STOR-Re are substantially equivalent to the premiums paid by the Company and its affiliates; accordingly, the consolidation of STOR-Re had no material impact upon the Company's income statement. The net operating results of STOR-Re with respect to its insurance services provided to the Unconsolidated Entities are included in "interest and other income." Other Partnerships ------------------ As a result of obtaining a controlling ownership interest, we began to consolidate the accounts of two publicly-held limited partnerships owning 31 self-storage facilities in which we are the general partner, effective January 1, 2002. Our $45,105,000 investment at December 31, 2001 was allocated to the cash, other assets, liabilities, and minority interests of these entities as described in the table below. Prior to 2002, we accounted for our investment in these entities using the equity method of accounting. During 2000, we acquired the remaining ownership interests in a partnership, of which we are the general partner, for an aggregate acquisition cost of $81,169,000, consisting of cash of $66,776,000 and the reduction of our pre-existing investment in the amount of $14,393,000. Prior to the acquisition, we accounted for our investment in the partnership using the equity method of accounting. F-12 PS Insurance Company, Ltd. -------------------------- On December 31, 2001, we acquired all of the capital stock of PS Insurance Company, Ltd. ("PS Insurance Company"), which reinsures policies against losses to goods stored by tenants in our self-storage facilities and which owned, and continues to own, 301,032 shares of the Company's common stock. Prior to December 31, 2001, PS Insurance Company was owned by our chairman and former chief executive officer, B. Wayne Hughes, and members of his family (collectively, "Hughes"). The acquisition cost was $24,538,000, which was composed of $30,814,000 in common stock (1,439,765 shares issued to Hughes less the 301,032 shares held by PS Insurance Company) valued at the market price of the common stock at the time the acquisition agreement was entered into and announced publicly) less $6,276,000 cash held by PS Insurance Company. The purchase price was allocated first to the tangible assets and liabilities of PS Insurance Company. The difference between the purchase price and the net tangible assets was determined to be related to the value of the ongoing operations of the enterprise as a whole (and not to any specific intangible asset) and was therefore allocated to goodwill. The goodwill has an indeterminate life and therefore will not be amortized. Each of the business combinations, indicated above, has been accounted for using the purchase method. Accordingly, allocations of the total acquisition cost to the net assets acquired were made based upon the fair value of such assets and liabilities assumed with respect to the transactions, with the remainder, if any, allocated to goodwill. Accordingly, allocations of the total acquisition cost to the net assets acquired were made based upon the fair value of such assets and liabilities assumed with respect to the transactions occurring in 2002, 2001, and 2000 are summarized as follows: Development Partnership PS Insurance Joint Venture STOR - Re Acquisitions Acquisition Total ------------- --------- ------------ ----------- ------------- (Amounts in thousands) 2002 business combinations: Real estate facilities.............$ 269,898 $ - $ 60,528 $ - $ 330,426 Cash............................... - 12,647 751 - 13,398 Other assets....................... 1,122 14,553 1,053 - 16,728 Accrued and other liabilities (2,811) (18,659) (2,421) - (23,891) Minority interest ................. - - (14,806) - (14,806) ------------- --------- ------------ ----------- ------------- $ 268,209 $ 8,541 $ 45,105 $ - $ 321,855 ============= ========= ============ =========== ============= 2001 business combinations: Goodwill...........................$ - $ - $ - $ 26,993 $ 26,993 Other assets....................... - - - 4,538 4,538 Accrued and other liabilities...... - - - (6,993) (6,993) ------------- --------- ------------ ----------- ------------- $ - $ - $ - $ 24,538 $ 24,538 ============= ========= ============ =========== ============= 2000 business combinations: Real estate facilities.............$ - $ - $ 82,163 $ - $ 82,163 Other assets....................... - - 183 - 183 Accrued and other liabilities...... - - (1,177) - (1,177) ------------- --------- ------------ ----------- ------------- $ - $ - $ 81,169 $ - $ 81,169 ============= ========= ============ =========== ============= The historical operating results of the above acquisitions prior to each respective acquisition date have not been included in the Company's historical operating results. Pro forma data (unaudited) for each of the two years ended December 31, 2002 as though the business combinations above had been effective at the beginning of fiscal 2001 are as follows: F-13 For the Years Ended December 31, -------------------------------- 2002 2001 -------------- -------------- (in thousands except per share data) Revenues................................... $842,799 $852,255 Net income................................. $318,503 $328,793 Net income per common share (Basic)........ $1.20 $1.55 Net income per common share (Diluted)...... $1.19 $1.53 The pro forma data does not purport to be indicative either of results of operations that would have occurred had the transactions occurred at the beginning of fiscal 2001 or future results of operations of the Company. Certain pro forma adjustments were made to the combined historical amounts to reflect (i) expected reductions in general and administrative expense, (ii) estimated increased interest expense from bank borrowings to finance the cash portion of the acquisition cost and (iii) estimated increase in depreciation expense. 4. Discontinued Operations SFAS No. 144 addresses accounting for discontinued operations. The Statement requires the segregation of all disposed components of an entity with operations that (i) can be distinguished from the rest of the entity and (ii) will be eliminated from the ongoing operations of the entity in a disposal transaction. During 2002, we adopted a business plan that included the closure of several non-strategic containerized storage facilities (the "Closed Facilities"), representing components of our containerized storage business. The related assets of the Closed Facilities (consisting primarily of storage containers) were deemed not recoverable from future operations, and as a result an asset impairment charge for the excess of these assets' net book value over their fair value was recorded in 2002 totaling $6,187,000. In addition, lease termination costs, representing the expected remaining lease liability following closure of the facilities, were recorded in the amount of $2,447,000 for 2002. In accordance with SFAS 144, the historical operations of the Closed Facilities (including the asset impairment and lease termination costs) are classified as discontinued operations, with the rental income, cost of operations, and depreciation expense with respect to these facilities for current and prior periods included in the line-item "Discontinued Operations" on the income statement. During 2002, we sold one of our commercial facilities to a third party. The historical operations with respect to this facility for current and prior periods is included in Discontinued Operations. The following table summarizes the historical operations of the Closed Facilities and the commercial property sold: F-14 Discontinued Operations: Year ended December 31, --------------------------------------- 2002 2001 2000 ----------- ----------- ----------- (Amounts in thousands) Rental income (a): Containerized storage facilities $ 14,343 $ 13,474 $ 5,823 Commercial properties 268 460 492 ----------- ----------- ----------- Total rental income 14,611 13,934 6,315 ----------- ----------- ----------- Cost of operations (a): Containerized storage facilities 15,274 13,088 6,696 Commercial properties 84 111 125 Depreciation and amortization (a): Containerized storage facilities 1,907 1,767 657 Commercial properties 107 116 115 ----------- ----------- ----------- Total expenses 17,372 15,082 7,593 ----------- ----------- ----------- Loss before charges (2,761) (1,148) (1,278) Discontinued operation charges (b) (8,634) - - ----------- ----------- ----------- Net discounted operations (c) $ (11,395) $ (1,148) $ (1,278) =========== =========== =========== (a) These amounts represent the historical operations of the Closed Facilities and the commercial property sold. Amounts with respect to these facilities for periods prior to 2002 were previously classified as rental income, cost of operations, and depreciation expense in the financial statements. (b) Amount includes asset impairment charges totaling $6,187,000 and lease termination costs totaling $2,447,000. (c) The net discontinued operations have resulted in reductions to our earnings per share of $0.09, $0.01 and $0.01 per diluted common share for each of the three years ended December 31, 2002, 2001 and 2000, respectively. Other than accruals for future lease termination costs, there are no significant assets or liabilities of the discontinued operations. F-15 5. Real estate facilities Activity in real estate facilities during 2002, 2001 and 2000 is as follows: 2002 2001 2000 ------------- ------------- ------------- (Amounts in thousands) Operating facilities, at cost: Beginning balance....................................... $ 4,431,054 $ 4,134,417 $ 3,822,433 Property acquisitions: Business combinations (Note 3) ...................... 330,426 - 82,163 Other acquisitions.................................. 30,117 3,503 67,107 Disposition of facilities............................... (4,619) (9,603) (20,516) Newly developed facilities opened for operations........ 134,775 264,161 135,095 Acquisition of minority interest (Note 8)............... 39,780 3,098 15,112 Capital improvements.................................... 26,993 35,478 33,023 ------------- ------------- ------------- Ending balance.......................................... 4,988,526 4,431,054 4,134,417 ------------- ------------- ------------- Accumulated depreciation: Beginning balance....................................... (819,932) (668,018) (533,412) Additions during the year (a)........................... (168,023) (152,901) (134,857) Disposition of facilities............................... 409 987 251 ------------- ------------- ------------- Ending balance.......................................... (987,546) (819,932) (668,018) ------------- ------------- ------------- Construction in process: Beginning balance...................................... 121,181 217,140 125,812 Current development.................................... 101,110 171,865 226,423 Transfers to land held for development................. - (3,663) - Newly developed facilities opened for operations....... (134,775) (264,161) (135,095) ------------- ------------- ------------- Ending balance......................................... 87,516 121,181 217,140 ------------- ------------- ------------- Land held for development: Beginning balance....................................... 30,001 21,447 14,952 Acquisitions............................................ - 12,425 6,495 Transfers from construction in process.................. - 3,663 - Dispositions............................................ (12,194) (7,534) - ------------- ------------- ------------- Ending balance.......................................... 17,807 30,001 21,447 ------------- ------------- ------------- Total real estate facilities............................. $ 4,106,303 $ 3,762,304 $ 3,704,986 ============= ============= ============= (a) Included in additions for the years ended December 31, 2002, 2001, and 2000, respectively, is $538,000, $454,000, and $228,000 in real estate depreciation expense with respect to discontinued operations. See Note 4. Operating Facilities -------------------- During 2002, we opened 14 newly developed traditional self-storage facilities with an aggregate cost of $92,109,000 and two newly developed facilities that combine traditional self-storage facilities and containerized storage facilities in the same location ("Combination Facilities") with an aggregate cost of $14,852,000. We also completed expansions to existing self-storage facilities with a total cost of $27,814,000. and acquired nine self-storage facilities, in separate transactions from third parties, for $30,117,000 cash. During 2002, we sold four plots of land and one commercial facility for an aggregate of $15,702,000, consisting of $15,209,000 of cash and notes receivable in the amount of $493,000. An aggregate loss in the amount of $702,000 was recorded on the sale of these properties. F-16 During 2001, we opened 12 newly developed self-storage facilities at a total cost of approximately $66,905,000 and 10 Combination Facilities at a total cost of approximately $106,004,000. In addition, we opened an industrial facility we had acquired and renovated for use in the containerized storage operations, at a total cost of approximately $9,993,000. We also completed expansions to existing self-storage facilities with a total cost of approximately $81,259,000 and acquired one self-storage facility from a third party for approximately $3,503,000 in cash. During 2001, we disposed of two facilities and a parcel of land for a total of $20,241,000, composed of $19,936,000 cash and a note receivable of $305,000. An aggregate gain of $4,091,000 was recorded on these dispositions. During 2000, we acquired a total of 13 facilities for an aggregate cost of $82,163,000 in connection with a business combination (Note 3). In addition, we acquired 7 storage facilities from third parties for an aggregate of $41,638,000 cash, and 5 storage facilities from entities in which we had an equity interest for at an aggregate cost of $19,539,000, composed of $15,370,000 cash, the issuance of Equity Stock, Series A ($1,025,000) and an existing investment ($3,144,000). In addition, we acquired one industrial facility for $5,930,000 cash. During 2000, we opened 18 newly-developed traditional self-storage facilities at a total cost of $82,819,000, 5 combination facilities at a total cost of $33,321,000 and opened an industrial facility we had acquired and renovated for use in the containerized storage operations at a total cost of $6,518,000. In addition, we completed expansions of existing storage facilities at a total cost of $12,437,000. During 2000, we disposed of eight storage facilities and two parcels of land for an aggregate of $20,561,000, consisting of cash ($10,444,000), the acquisition of minority interest ($6,427,000), and a note receivable ($3,690,000). An aggregate gain of $296,000 was recorded on these dispositions. At December 31, 2002, the unaudited adjusted basis of real estate facilities for Federal income tax purposes was approximately $3.0 billion. Construction in process and land held for development ----------------------------------------------------- Construction in process consists of land and development costs relating to the development of storage facilities. At December 31, 2002, construction in process consists primarily of 20 facilities being developed on newly acquired land and the expansion of 16 existing self-storage facilities. In addition, we have nine parcels of land held for development with total costs of approximately $17,807,000. 6. Investments in real estate entities At December 31, 2002, our investments in real estate entities consist of ownership interests in seven partnerships, which principally own self-storage facilities, and our ownership interest in PSB. These interests are non-controlling interests of less than 50% and are accounted for using the equity method of accounting. Accordingly, earnings are recognized based upon our ownership interest in each of the partnerships. The accounting policies of these entities are similar to the Company's. During 2002, 2001 and 2000, we recognized earnings from our investments of $29,888,000, $38,542,000 and $39,319,000, respectively, and received cash distributions totaling $19,496,000, $24,124,000 and $16,984,000, respectively. In addition, during 2002 and 2000, we recognized gains of $3,737,000 and $3,210,000, respectively, representing our share of PSB's gains on sale of real estate and real estate investments; these gains are presented in "Equity in earnings from real estate entities" in our consolidated income statement. F-17 During 2002, 2001, and 2000, we invested a total of $223,000, $15,954,000, and $37,406,000 in the real estate entities. The following table sets forth our investments in the Unconsolidated Entities at December 31, 2002 and 2001 and our equity in earnings of real estate investments for each of the three years ended December 31, 2002: Investments in Real Estate Entities Equity in Earnings of Real Estate Entities for the at December 31, year ended December 31, ------------------------------------- -------------------------------------------------------- 2002 2001 2002 2001 2000 ------------------ ---------------- ------------------ ---------------- ---------------- PSB (a)........................ $ 273,790 $ 267,472 $ 23,406 $ 22,361 $ 23,950 Development Joint Venture (b).. - 114,908 223 4,227 2,694 Acquired Partnerships (b)...... - 45,105 - 5,877 7,081 Other investments.............. 55,889 51,815 6,259 6,077 5,594 ------------------ ---------------- ------------------ ---------------- ---------------- Total...................... $ 329,679 $ 479,300 $ 29,888 $ 38,542 $ 39,319 ================== ================ ================== ================ ================ (a) Included in equity in earnings for 2002 and 2000 is our pro rata share of PSB's gain on sale of real estate in the amount of $3,737,000 and $3,210,000, respectively. (b) Represents amounts associated with investments no longer held as of December 31, 2002. As described in Note 3, in 2002 we began consolidating the results of the Development Joint Venture and two other partnerships (the Acquired Partnerships), and as a result eliminated our respective investment in each entity. Investment in PS Business Parks, Inc. ------------------------------------- On January 2, 1997, we reorganized our commercial property operations into an entity now known as PS Business Parks, Inc., a REIT traded on the American Stock Exchange, and an operating partnership controlled by PS Business Parks, Inc. (collectively, the REIT and the operating partnership are referred to as "PSB"). The Company and certain partnerships in which the Company has a controlling interest have a 44% common equity interest in PSB as of December 31, 2001. This 44% common equity interest is comprised of the ownership of 5,418,273 shares of common stock and 7,305,355 limited partnership units in the operating partnership; these limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB common stock. Based upon PSB's trading price at December 31, 2002 ($31.80), the shares and units had a market value of approximately $404.6 million as compared to a book value of $273.8 million. At December 31, 2002, PSB owned and operated approximately 14.4 million net rentable square feet of commercial space. In addition, PSB manages 992,000 net rentable square feet of commercial space owned by the Company and the Consolidated Entities pursuant to property mangement agreements. The following table sets forth the condensed statements of operations for each of the two years ended December 31, 2002, and the condensed balance sheets of PSB at December 31, 2002 and 2001. These amounts below represent 100% of PSB's balances and not our pro-rata share. F-18 For the Year Ended December 31, ------------------------------- 2002 2001 ---------------- ------------- (Amount in thousands) For the year ended December 31, Total revenue..................................... $ 201,265 $ 164,938 Gain on real estate investments................... 8,164 8 Cost of operations and other expenses............. (63,467) (49,302) Depreciation and amortization..................... (57,658) (39,680) Discontinued operations........................... 1,296 1,395 Minority interest................................. (32,170) (27,489) ---------------- ------------- Net income...................................... $ 57,430 $ 49,870 ================ ============= At December 31, --------------- Total assets (primarily real estate).............. $1,156,802 $1,169,955 Total debt........................................ 70,279 165,145 Other liabilities................................. 36,902 45,188 Preferred equity and preferred minority interests. 388,563 318,750 Common equity..................................... 661,058 640,872 Other Investments ----------------- The Other Investments consist primarily of an average 40% common equity ownership, which we owned throughout the three-year period ending December 31, 2002, in eight limited partnerships (collectively, the "Other Investments") owning an aggregate of 36 storage facilities. During 2002 and 2001, we acquired additional equity interests in these entities for a total of $223,000 and $299,000, respectively. The following table sets forth certain condensed financial information (representing 100% of these entities' balances and not our pro-rata share) with respect to Other Investments: 2002 2001 --------------- --------------- (Amount in thousands) For the year ended December 31, ------------------------------- Total revenue........................ $ 25,884 $ 26,673 Cost of operations and other expenses (8,605) (9,266) Depreciation and amortization........ (2,535) (2,560) --------------- --------------- Net income....................... $ 14,744 $ 14,847 =============== =============== At December 31, --------------- Total assets (primarily storage $ 56,731 $ 58,222 facilities)...................... Total debt........................... 5,450 11,357 Other liabilities.................... 1,121 976 Partners' equity..................... 50,160 45,889 7. Revolving line of credit We have a $200 million revolving line of credit (the "Credit Agreement") that has a maturity date of October 31, 2004 and bears an annual interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus 0.45% to LIBOR plus 1.50% depending on our credit ratings (currently 0.45%). In addition, we are required to pay a quarterly commitment fee ranging from 0.20% per annum to 0.30% per annum depending on our credit ratings (currently the fee is 0.20% per annum). At December 31, 2002, we had no borrowings on our line of credit. F-19 The Credit Agreement includes various covenants, the more significant of which requires us to (i) maintain a balance sheet leverage ratio of less than 0.50 to 1.00, (ii) maintain certain quarterly interest and fixed-charge coverage ratios (as defined) of not less than 2.50 to 1.0 and 1.75 to 1.0, respectively, and (iii) maintain a minimum total shareholders' equity (as defined). In addition, we are limited in our ability to incur additional borrowings (we are required to maintain unencumbered assets with an aggregate book value equal to or greater than two times our unsecured recourse debt). We were in compliance with all the covenants of the Credit Agreement at December 31, 2002. 8. Notes payable Notes payable at December 31, 2002 and 2001 consist of the following: 2002 2001 ------------------------- ------------------------- Carrying Carrying amount Fair value amount Fair value ----------- ------------ ----------- ------------ (Amounts in thousands) Unsecured senior notes: 7.08% note due November 2003............................ $ 10,000 $ 10,000 $ 19,750 $ 19,750 7.47% note due January 2004............................. 29,300 29,300 44,000 44,000 7.66% note due January 2007............................. 56,000 56,000 56,000 56,000 Mortgage notes payable: 10.55% mortgage notes secured by real estate facilities, principal and interest payable monthly, due August 2004 18,167 19,409 21,142 22,499 7.134% to 10.5% mortgage notes secured by real estate facilities, principal and interest payable monthly, due at varying dates between May 2004 and September 2028 2,400 2,400 2,660 2,660 ----------- ------------ ----------- ------------ Total notes payable.............................. $115,867 $117,109 $143,552 $144,909 =========== ============ =========== ============ All of our notes payable are fixed rate. The senior notes require interest and principal payments to be paid semi-annually and have various restrictive covenants, all of which have been met at December 31, 2002. The 10.55% mortgage notes consist of five notes, which are cross-collateralized by 19 properties and are due to a life insurance company. Although there is a negative spread between the carrying value and the estimated fair value of the notes, the notes provide for the prepayment of principal subject to the payment of penalties, which exceed this negative spread. Accordingly, prepayment of the notes at this time would not be economically practicable (unaudited). Mortgage notes payable are secured by 24 real estate facilities having an aggregate net book value of approximately $56.4 million at December 31, 2002. At December 31, 2002, approximate principal maturities of notes payable are as follows: F-20 Unsecured Senior Notes Mortgage debt Total ------------ ------------- ----------- (in thousands) 2003....................... $ 35,900 $ 3,884 $ 39,784 2004....................... 25,800 15,063 40,863 2005....................... 11,200 156 11,356 2006....................... 11,200 170 11,370 2007....................... 11,200 185 11,385 Thereafter................. - 1,109 1,109 ------------ ------------- ----------- $ 95,300 $ 20,567 $ 115,867 ============ ============= =========== Weighted average rate...... 7.5% 10.2% 7.9% ============ ============= =========== Interest paid (including interest related to the borrowings under the Credit Agreement) during 2002, 2001 and 2000 was $10,322,000, $12,219,000 and $13,071,000, respectively. In addition, in 2002, 2001 and 2000, capitalized interest totaled $6,513,000, $8,992,000 and $9,778,000, respectively, related to construction of real estate facilities. 9. Minority interest In consolidation, we classify ownership interests in the net assets of each of the Consolidated Entities, other than our own, as minority interest on the consolidated financial statements. Minority interest in income consists of the minority interests' share of the operating results of the Company relating to the consolidated operations of the Consolidated Entities. Preferred partnership interests: -------------------------------- During 2000, one of our consolidated operating partnerships issued in aggregate $365.0 million of preferred partnership units: March 17, 2000, - $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred Units, March 29, 2000 - $75.0 million of 9.125% Series O Cumulative Redeemable Perpetual Preferred Units, and August 11, 2000 - $50.0 million of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units. We incurred approximately $3,750,000 in costs in connection with the issuances; these costs were recorded as a reduction to Paid in Capital during 2000. The issuance of these units in 2000 had the effect of increasing minority interest by $365.0 million. For the years ended December 31, 2002 and 2001, the holders of these preferred units were paid in aggregate approximately $26,906,000 and $31,737,000, respectively, in distributions and received an equivalent allocation of minority interest in earnings. During 2001, we repurchased all of the 8.75% Series P Cumulative Redeemable Perpetual Preferred Units amount and $30 million of the 9.125% Series O Cumulative Redeemable Perpetual Preferred Units. The units were repurchased at an amount equal to the original issuance price. The following table summarizes the preferred partnership units outstanding: F-21 At December 31, 2002 and 2001 --------------------------------- Distribution Units Carrying Series Rate Outstanding Amount - ---------------------- ------------- --------------- --------------- (Dollar amounts and Units in thousands) Series N............ 9.500% 9,600 $ 240,000 Series O............ 9.125% 1,800 45,000 --------------- --------------- Total............... 11,400 $285,000 =============== =============== These preferred units are not redeemable during the first 5 years, thereafter, at our option, we can call the units for redemption at the issuance amount plus any unpaid distributions. The units are not redeemable by the holder. Subject to certain conditions, the Series N preferred units are convertible into shares of 9.5% Series N Cumulative Preferred Stock, and the Series O preferred units are convertible into shares of 9.125% Series O Cumulative Preferred Stock of the Company. Other partnership interests: ---------------------------- Minority interest at December 31, 2002 and 2001, and minority interest in income for the three years ended December 31, 2002 with respect to the other partnership interests are comprised of the following: Minority interest at Minority interest in income for the year ended December 31, December 31, December 31, December 31, December 31, Description of Minority Interest 2002 2001 2002 2001 2000 - ----------------------------------- ------------- ------------- ------------- ------------- ------------- (Amounts in thousands) Consolidated Development Joint Venture........................ $ 75,432 $ 82,879 $ 2,399 $ 1,074 $ 325 Convertible Partnership Units... 6,274 6,418 283 359 577 Newly consolidated partnerships . 18,215 - 3,357 - - Other consolidated partnerships.. 54,578 80,304 11,142 12,845 12,595 ------------- ------------- ------------- ------------- ------------- Total other partnership interests $ 154,499 $ 169,601 $ 17,181 $ 14,278 $ 13,497 ============= ============= ============= ============= ============= Consolidated Development Joint Venture -------------------------------------- In November 1999, we formed a development joint venture (the "Consolidated Development Joint Venture") with a joint venture partner (PSAC Storage Investors, LLC) whose partners include a third party institutional investor and Mr. Hughes, to develop approximately $100 million of storage facilities and to purchase $100 million of the Company's Equity Stock, Series AAA (see Note 10). At December 31, 2002, the Consolidated Development Joint Venture was fully committed, having completed construction on 22 storage facilities with a total cost of approximately $108.5 million. The Consolidated Development Joint Venture is funded solely with equity capital consisting of 51% from the Company and 49% from PSAC Storage Investors. The accounts of the Consolidated Development Joint Venture are included in the Company's consolidated financial statements. The accounts of PSAC Storage Investors are not included in the Company's consolidated financial statements, as the Company has no ownership interest in this entity. Minority interests primarily represent the total contributions received from PSAC Storage Investors combined with the accumulated net income allocated to PSAC Storage Investors, net of cumulative distributions. The amounts included in our financial statements with respect to the minority interest in the Consolidated Development Joint Venture are denoted in the tables above. F-22 The term of the Consolidated Development Joint Venture is 15 years; however, during the sixth year PSAC Storage Investors has the right to cause an early termination of the partnership. If PSAC Storage Investors exercises this right, we then have the option, but not the obligation, to acquire their interest for an amount that will allow them to receive an annual return of 10.75%. If the Company does not exercise its option to acquire PSAC Storage Investors' interest, the partnership's assets will be sold to third parties and the proceeds distributed to the Company and PSAC Storage Investors in accordance with the partnership agreement. If PSAC Storage Investors does not exercise its right to early termination during the sixth year, the partnership will be liquidated 15 years after its formation with the assets sold to third parties and the proceeds distributed to the Company and PSAC Storage Investors in accordance with the partnership agreement. PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield of approximately 8.0% per annum on his preferred non-voting interest (representing an investment of approximately $64.1 million at December 31, 2002 and 2001). In addition, Mr. Hughes receives 1% of the remaining cash flow of PSAC Storage Investors, LLC (estimated to be less than $50,000 per year). If PSAC Storage Investors, LLC does not elect to cause an early termination, Mr. Hughes' 1% interest in residual cash flow can increase to 10%. In consolidation, the Equity Stock, Series AAA owned by the joint venture and the related dividend income has been eliminated. Minority interests primarily represent the total contributions received from PSAC Storage Investors combined with the accumulated net income allocated to PSAC Storage Investors, net of cumulative distributions. Convertible Partnership Units ----------------------------- As of December 31, 2002, one of our Consolidated Entities had approximately 237,935 operating partnership units ("Convertible Units") outstanding, representing a limited partnership interest in the partnership. The Convertible Units are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the option of the unitholder. Minority interest in income with respect to Convertible Units reflects the Convertible Units' share of the net income of the Company, with net income allocated to minority interests with respect to weighted average outstanding Convertible Units on a per unit basis equal to diluted earnings per common share. During the years ended December 31, 2002 and 2001, no units were converted. During the year ended December 31, 2000, 277,104 Convertible Units were redeemed in connection with the sale of real estate facilities (reducing minority interest by $6,427,000) and 255,853 Convertible Units were converted into shares of the Company's common stock (reducing minority interest by $6,829,000). Newly consolidated partnerships ------------------------------- As described in Note 3, effective January 1, 2002, we began consolidating the results of two partnerships owning 31 properties, and as a result, minority interest increased by $14,806,000 in 2002. Other consolidated partnerships ------------------------------- At December 31, 2002, the Other Consolidated Partnerships reflect common equity interests that the Company does not own in 23 entities owning an aggregate of 141 real estate facilities. During fiscal 2002, we acquired minority interests in the Consolidated Entities for an aggregate cash cost of $27,544,000 and issued an aggregate of 1,091,608 shares ($37,904,000) of our common stock; these acquisitions had the effect of reducing minority interest by $25,668,000, with the excess of cost over underlying book value ($39,780,000) allocated to real estate. F-23 In addition, during 2002, we recorded the pending sale of a partnership interest in the Consolidated Entities for an aggregate of $1,450,000. We recorded a loss on sale of the interest in the amount of $1,839,000. As a result of this pending sale, minority interest increased by $3,289,000. This sale is subject to litigation; see Note 16. During 2001, we acquired minority interests in the Consolidated Entities for an aggregate cash cost of $11,841,000; these acquisitions had the effect of reducing minority interest by $8,743,000, with the excess of cost over underlying book value ($3,098,000) to real estate. 10. Shareholders' equity Cumulative Preferred Stock -------------------------- At December 31, 2002 and 2001, we had the following series of Cumulative Preferred Stock outstanding: At December 31, 2002 At December 31, 2001 ------------------------------- ------------------------------- Dividend Shares Carrying Shares Carrying Series Rate Outstanding Amount Outstanding Amount - ----------------------------------- ------------ ------------- -------------- ------------- -------------- (Dollar amount in thousands) (Dollar amount in thousands) Series A 10.000% - $ - 1,825,000 $ 45,625 Series B 9.200% 2,300,000 57,500 2,386,000 59,650 Series C Adjustable 1,200,000 30,000 1,200,000 30,000 Series D 9.500% 1,200,000 30,000 1,200,000 30,000 Series E 10.000% 2,195,000 54,875 2,195,000 54,875 Series F 9.750% 2,300,000 57,500 2,300,000 57,500 Series J 8.000% - - 6,000 150,000 Series K 8.250% 4,600 115,000 4,600 115,000 Series L 8.250% 4,600 115,000 4,600 115,000 Series M 8.750% 2,250 56,250 2,250 56,250 Series Q 8.600% 6,900 172,500 6,900 172,500 Series R 8.000% 20,400 510,000 20,400 510,000 Series S 7.875% 5,750 143,750 5,750 143,750 Series T 7.625% 6,086 152,150 - - Series U 7.625% 6,000 150,000 - - Series V 7.500% 6,900 172,500 - - ------------- -------------- ------------- -------------- Total Cumulative Preferred Stock 9,258,486 $ 1,817,025 11,156,500 $ 1,540,150 ============= ============== ============= ============== During 2002, we issued our Series T, Series U and Series V Cumulative Preferred Stock: Series T - issued on January 18, 2002, net proceeds of $145,075,000, Series U - issued on February 19, 2002, net proceeds of $145,075,000 and Series V - issued September 30, 2002, net proceeds of $166,866,000. During 2002, we redeemed our Series A and Series J Cumulative Preferred Stock, at par, at a total cost of $45,643,000 and $150,018,000 (including related redemption expenses), respectively. F-24 On August 30, 2002, in a privately negotiated transaction, we exchanged an aggregate of 86,000 shares (par value of $2,150,000) of our Preferred Stock, Series B for 86 shares (representing 86,000 depositary shares with a par value of $2,150,000) of our Preferred Stock, Series T. In addition, on March 31, 2003 (unaudited), we will redeem all outstanding shares of our 9.20% Cumulative Preferred Stock, Series B at a redemption price of $25 per share for a total of $57,500,000 plus accrued dividends. During 2001, we issued our Series Q, Series R and Series S Preferred Stock: Series Q - issued on January 19, 2001, net proceeds of $166,966,000, Series R - issued on September 28, 2001, net proceeds of $493,085,000 and Series S - issued October 31, 2001, net proceeds of $139,022,000. The Series A through Series V (collectively the "Cumulative Senior Preferred Stock") have general preference rights with respect to liquidation and quarterly distributions. Holders of the preferred stock, except under certain conditions and as noted below, will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends or failure to maintain a Debt Ratio (as defined) of 50% or less, holders of all outstanding series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until events of default have been cured. At December 31, 2002, there were no dividends in arrears and the Debt Ratio was 2.0%. Except under certain conditions relating to the Company's qualification as a REIT, the Senior Preferred Stock is not redeemable prior to the following dates: Series B - March 31, 2003, Series C - June 30, 1999, Series D - September 30, 2004, Series E - January 31, 2005, Series F - April 30, 2005, Series K - January 19, 2004, Series L - March 10, 2004, Series M - August 17, 2004, Series Q - January 19, 2006, Series R - September 28, 2006 , Series S - October 31, 2006, Series T - January 18, 2007, Series U - February 19, 2007 and Series V - September 30, 2007. On or after the respective dates, each of the series of Cumulative Senior Preferred Stock will be redeemable, at the option of the Company, in whole or in part, at $25 per share (or depositary share in the case of the Series K through Series V), plus accrued and unpaid dividends. Common Stock ------------ During 2002, 2001 and 2000, we issued and repurchased shares of our common stock as follows: 2002 2001 2000 ------------------------- ------------------------- ------------------------- (Dollar amount in thousands) Shares Amount Shares Amount Shares Amount ----------- ----------- ----------- ----------- ----------- ----------- Exercise of stock options........... 948,932 $ 23,333 704,901 $ 15,857 242,598 $ 4,608 Acquisition of minority interests 1,091,608 37,904 - - - - Business Combinations (Note 3)... - - 1,138,733 30,814 - - Conversion of Convertible Units - - - - 255,853 6,829 Repurchases of common stock (a).. (11,000) (381) (10,585,593) (276,861) (3,491,600) (77,799) ----------- ----------- ----------- ----------- ----------- ----------- 2,029,540 $ 60,856 (8,741,959) $ (230,190) (2,993,149) $ (66,362) =========== =========== =========== =========== =========== =========== (a) Includes 10,000 shares purchased in January 2001 from a corporation wholly-owned by a director of the Company for an aggregate of $251,875 cash. Includes 2,619,893 shares purchased in March 2001 from a limited liability company of which a director of the Company is a controlling member for an aggregate of $68,064,820 in cash. In each transaction, the purchase price approximated market value as of the date of each transaction. As previously announced, the Board of Directors authorized the repurchase from time to time of up to 10,000,000 shares of the Company's common stock on the open market or in privately negotiated transactions. On March 4, 2000, the Board of Directors increased the authorized number of shares that the Company could repurchase to 15,000,000. On March 15, 2001, the Board of Directors increased the authorized number of shares the Company could repurchase to 20,000,000. During 2001, the Board of Directors increased the authorized number of shares the Company could repurchase to 25,000,000. Cumulatively through December 31, 2002, we repurchased a total of 21,497,020 shares of common stock at an aggregate cost of approximately $535,862,000. F-25 During 2001, we entered into an arrangement with a financial institution whereby we sold to the institution the right to require us to purchase from the institution (or, at our option, pay in cash or common stock the differential between the market price and $26.26 per share) up to 1,000,000 shares of our common stock at a price of $26.26 on certain dates in September 2001 and October 2001. In exchange for this right, the financial institution paid us $910,000, the amount of which was reflected as an increase to our paid-in capital. The right expired without being exercised. At December 31, 2002, we had 10,291,914 shares of common stock reserved in connection with the Company's stock option plans (Note 12), 7,000,000 shares of common stock reserved for the conversion of the Class B Common Stock and 237,935 shares reserved for the conversion of Convertible Units. Class B Common Stock -------------------- The Class B Common Stock participates in distributions at the rate of 97% of the per share distributions on the Common Stock, provided that cumulative distributions of at least $0.22 per quarter per share have been paid on the Common Stock. The Class B Common Stock will not participate in liquidating distributions, not be entitled to vote (except as expressly required by California law) and automatically converts into Common Stock, on a share for share basis, upon the later to occur of FFO, as defined, per common share aggregating $3.00 during any period of four consecutive calendar quarters or January 1, 2003. The financial condition of attaining FFO per common share was met on March 31, 2002, accordingly, on January 1, 2003, the Class B Common Stock converted into Common Stock on a share for share basis. Equity Stock ------------ The Company is authorized to issue up to 200,000,000 shares of Equity Stock. The Articles of Incorporation provide that the Equity Stock may be issued from time to time in one or more series and gives the Board of Directors broad authority to fix the dividend and distribution rights, conversion and voting rights, redemption provisions and liquidation rights of each series of Equity Stock. Equity Stock, Series A ---------------------- As of December 31, 2002, there were 8,776,102 depositary shares, each representing 1/1,000 of a share, of Equity Stock, Series A outstanding. The following table summarizes the activity: F-26 2002 2001 2000 -------------------------- -------------------------- -------------------------- Depositary Issuance Depositary Issuance Depositary Issuance Shares Amount Shares Amount Shares Amount ------------ ------------ ------------ ------------ ------------ ------------ (Dollar amounts in thousands) Amount at beginning 8,776,102 $ 188,174 5,635,602 $ 113,354 - $ - of year............. Public offerings...... - - 2,210,500 51,836 3,382,500 68,318 Direct placements..... - - 930,000 22,984 - - Special dividend...... - - - - 2,200,555 44,011 Issued to related party in connection with the acquisition of rea estate facilities.......... - - - - 52,547 1,025 ------------ ------------ ------------ ------------ ------------ ------------ Amount at end of year. 8,776,102 $ 188,174 8,776,102 $ 188,174 5,635,602 $ 113,354 ============ ============ ============ ============ ============ ============ The issuance amounts have been recorded as part of paid-in capital on the consolidated balance sheet. The Equity Stock, Series A ranks on a parity with our common stock and junior to the Cumulative Preferred Stock with respect to general preference rights and has a liquidation amount which cannot exceed $24.50 per share. Distributions with respect to each depositary share shall be the lesser of: a) five times the per share dividend on the common stock or b) $2.45 per annum. Except in order to preserve the Company's federal income tax status as a REIT, we may not redeem the depositary shares before March 31, 2010. On or after March 31, 2010, we may, at our option, redeem the depositary shares at $24.50 per depositary share. If the Company fails to preserve its federal income tax status as a REIT, each depositary share will be convertible into 0.956 shares of our common stock. The depositary shares are otherwise not convertible into common stock. Holders of depositary shares vote as a single class with our holders of common stock on shareholder matters, but the depositary shares have the equivalent of one-tenth of a vote per depositary share. We have no obligation to pay distributions if no distributions are paid to common shareholders. Equity Stock, Series AA ----------------------- In June 1997, we contributed $22,500,000 (225,000 shares) of equity stock, now designated as Equity Stock, Series AA (Equity Stock AA") to a partnership in which we are the general partner. The Company has a controlling interest in the partnership and therefore consolidates the accounts of the partnership. As a result, the Equity Stock AA is eliminated in consolidation. The Equity Stock AA ranks on a parity with our common stock and junior to the Cumulative Preferred Stock with respect to general preference rights and has a liquidation amount of ten times the amount paid to each common share up to a maximum of $100 per share. Quarterly distributions per share on the Equity Stock AA are equal to the lesser of (i) 10 times the amount paid per share of Common Stock or (ii) $2.20. We have no obligation to pay distributions on these shares if no distributions are paid to common shareholders. If the Company determines that it is necessary to maintain its status as a Real Estate Investment Trust, subject to certain limitations it may cause the redemption of shares of Equity Stock, Series AA at a price of $100 per share. The shares are not otherwise redeemable or convertible into shares of any other class or series of the Company's capital stock. Other than as required by law, the Equity Stock, Series AA has no voting rights. F-27 Equity Stock, Series AAA ------------------------ In November 1999, we sold $100,000,000 (4,289,544 shares) of Equity Stock, Series AAA ("Equity Stock AAA") to a newly formed joint venture. We control the joint venture and consolidate the accounts of the joint venture, and accordingly the Equity Stock AAA is eliminated in consolidation. The Equity Stock AAA ranks on a parity with our common stock and junior to the Cumulative Preferred Stock (as defined below) with respect to general preference rights, and has a liquidation amount equal to 120% of the amount distributed to each common share. Annual distributions per share are equal to the lesser of (i) five times the amount paid per common share or (ii) $2.1564. We have no obligation to pay distributions on these shares if no distributions are paid to common stockholders. Upon liquidation of the Consolidated Development Joint Venture, at the Company's option either a) each share of Equity Stock, Series AAA shall convert into 1.2 shares of our common stock or b) the Company can redeem the Equity Stock, Series AAA at a per share amount equal to 120% of the market price of our common stock. In addition, if the Company determines that it is necessary to maintain its status as a Real Estate Investment Trust, subject to certain limitations it may cause the redemption of shares of Equity Stock, Series AAA at a per share amount equal to 120% of the market price of our common stock. The shares are not otherwise redeemable or convertible into shares of any other class or series of the Company's capital stock. Other than as required by law, the Equity Stock, Series AAA has no voting rights. Dividends --------- On August 9, 2001, the Board of Directors increased the quarterly distribution paid on the Company's common stock from $0.22 to $0.45, an increase of $0.23 or 104.5% over the previous quarterly distribution. Also on this date, the Board of Directors declared a special distribution to the common shareholders of $0.35 per common share in cash, which was paid on September 30, 2001. The unaudited characterization of dividends for Federal income tax purposes is made based upon earnings and profits of the Company, as defined by the Internal Revenue Code. Distributions declared in 2002, by the Board of Directors on our common stock, Equity Stock, Series A, and all the various preferred stock series were characterized 100% as ordinary income. The following summarizes dividends during 2002, 2001 and 2000: F-28 2002 2001 2000 ----------------------- ----------------------- ---------------------- Per Share Total Per share Total Per share Total ----------- --------- ----------- --------- ----------- --------- (in thousands, except per share data) Cumulative Preferred Stock Series A .......................... $ 1.87 $ 3,422 $ 2.50 $ 4,563 $ 2.50 $ 4,563 Series B .......................... $ 2.34 5,389 $ 2.30 5,488 $ 2.30 5,488 Series C .......................... $ 1.68 2,024 $ 1.68 2,024 $ 1.71 2,052 Series D .......................... $ 2.37 2,850 $ 2.37 2,850 $ 2.37 2,850 Series E .......................... $ 2.50 5,488 $ 2.50 5,488 $ 2.50 5,488 Series F .......................... $ 2.43 5,606 $ 2.43 5,606 $ 2.43 5,606 Series G .......................... -- -- $ 1.66 11,482 $ 2.21 15,309 Series H .......................... -- -- $ 1.60 10,853 $ 2.11 14,259 Series I .......................... -- -- $ 1.86 7,475 $ 2.15 8,625 Series J .......................... $ 1.53 9,200 $ 2.00 12,000 $ 2.00 12,000 Series K .......................... $ 2.06 9,488 $ 2.06 9,488 $ 2.06 9,488 Series L .......................... $ 2.06 9,488 $ 2.06 9,488 $ 2.06 9,488 Series M .......................... $ 2.18 4,922 $ 2.18 4,922 $ 2.18 4,922 Series Q .......................... $ 2.15 14,835 $ 2.04 14,134 -- -- Series R .......................... $ 2.00 40,800 $ 0.50 10,200 -- -- Series S .......................... $ 1.96 11,320 $ 0.33 1,918 -- -- Series T .......................... $ 1.80 11,011 -- -- -- -- Series U .......................... $ 1.64 9,849 -- -- -- -- Series V .......................... $ 0.46 3,234 -- -- -- -- --------- --------- --------- 148,926 117,979 100,138 Common Stock Common Stock ...................... $ 1.80 209,077 $ 1.69 193,121 $ 1.48 184,084 Equity Stock, Series A ............ $ 2.45 21,501 $ 2.45 19,455 $ 2.36 11,042 Class B Common Stock .............. $ 1.74 12,222 $ 1.63 11,475 $ 1.43 10,049 --------- --------- --------- $391,726 $342,030 $305,313 ========= ========= ========= The dividend rate on the Series C Preferred Stock is adjusted quarterly and is equal to the highest of one of three U.S. Treasury indices (Treasury Bill Rate, Ten Year Constant Maturity Rate, and Thirty Year Constant Maturity Rate) multiplied by 110%. However, the dividend rate for any dividend period will not be less than 6.75% per annum nor greater than 10.75% per annum. The dividend rate with respect to the first quarter of 2003 will be equal to 6.75% per annum. 11. Related Party Transactions On December 31, 2001, the Company purchased all of the capital stock of PS Insurance Company from B. Wayne Hughes, who is Chairman, and at the time was chief executive officer of the Company, and members of his family. This acquisition is discussed more fully in Note 3. In November 1999, we formed the Consolidated Development Joint Venture with a joint venture partner whose partners include an institutional investor and Mr. Hughes. This transaction is discussed more fully in Note 8. Ronald L. Havner, Jr. is our vice-chairman and chief executive officer, and he is chairman and chief executive officer of PSB. Mr. Havner's compensation is allocated between the Company and PSB. F-29 On December 31, 2001, the Company acquired equity interests in the Consolidated Entities from Mr. Hughes for a cash price of $786,770, a price representing the Hughes family's original cost in these equity interests. This amount is included in the acquisition of minority interests described as the "Other consolidated partnerships" in Note 9. In January 2001, the Company repurchased 10,000 shares of common stock from a corporation wholly-owned by a director of the Company for an aggregate of $251,875 cash. In March 2001, the Company repurchased 2,619,893 shares of common stock from a limited liability company of which a director of the Company is a controlling member for an aggregate of $68,064,820 cash. In each transaction, the purchase price approximated market value as of the date of each transaction. In December 2001, the Company loaned $35,000,000 to PSB. This loan bore interest at the rate of 3.25% per year. This loan, which was repaid in full on January 28, 2002, was included in Notes Receivable at December 31, 2001. In June 2002, we sold an undeveloped parcel of land at cost to PSB for an aggregate of $1,100,000 cash. PSB manages certain of the commercial facilities owned by the Company pursuant to management agreements for a management fee equal to 5% of revenues. The Company paid a total of $578,000, $642,000, and $589,000, respectively, in 2002, 2001 and 2000 in management fees with respect to PSB's property management services. 12. Stock options The Company has a 1990 Stock Option Plan (the "1990 Plan") which provides for the grant of non-qualified stock options. The Company has a 1994 Stock Option Plan (the "1994 Plan"), a 1996 Stock Option and Incentive Plan (the "1996 Plan") and a 2000 Non-Executive/Non-Director Stock Option and Incentive Plan (the "2000 Plan"), each of which provides for the grant of non-qualified options and incentive stock options. (The 1990 Plan, the 1994 Plan, the 1996 Plan and the 2000 Plan are collectively referred to as the "PSI Plans"). Under the PSI Plans, the Company has granted non-qualified options to certain directors, officers and key employees to purchase shares of the Company's common stock at a price equal to the fair market value of the common stock at the date of grant. Generally, options under the Plans vest over a three-year period from the date of grant at the rate of one-third per year and expire (i) under the 1990 Plan, five years after the date they became exercisable and (ii) under the 1994 Plan, the 1996 Plan and the 2000 Plan, ten years after the date of grant. The 1996 Plan and the 2000 Plan also provide for the grant of restricted stock to officers, key employees and service providers on terms determined by an authorized committee of the Board of Directors; no shares of restricted stock have been granted. In connection with the Storage Trust merger in March 1999, we assumed the outstanding non-qualified options under the Storage Trust Realty 1994 Share Incentive Plan (the "Storage Trust Plan"), which were converted into non-qualified options to purchase our common stock (the PSI Plans and the Storage Trust Plan are collectively referred to as the "Plans.") Information with respect to the Plans during 2002, 2001 and 2000 is as follows: F-30 2002 2001 2000 ---------------------------- ---------------------------- ---------------------------- Number Average Number Average Number Average of Price per of Price per of Price per Options Share Options Share Options Share --------------- ----------- --------------- ----------- --------------- ----------- Options outstanding January 1 6,677,334 $24.81 6,412,576 $23.65 3,024,274 $24.08 Granted 792,000 33.20 1,776,500 27.93 3,762,500 23.06 Exercised (948,932) 24.59 (704,901) 22.50 (242,598) 18.99 Canceled (581,178) 26.61 (806,841) 24.51 (131,600) 26.01 --------------- ----------- --------------- ----------- --------------- ----------- Options outstanding December 31 5,939,224 $25.79 6,677,334 $24.81 6,412,576 $23.65 =========== =========== =========== $14.88 $14.88 $14.13 Option price range at December 31 (a) to $37.40 to $34.68 to $33.56 Options exercisable at December 31 3,666,641 $24.46 2,618,889 $24.14 1,680,083 $23.83 =============== =========== =============== =========== =============== =========== Options available for grant at December 31 4,352,690 4,563,512 33,171 =============== =============== =============== (a) Approximately 5,059,000, 6,532,334 and 6,362,575 of options outstanding at December 31, 2002, 2001 and 2000, had exercise prices less than $30. Accounting for stock options ---------------------------- Accounting principles generally accepted in the United States permit, but do not require, companies to recognize compensation expense for stock-based awards based on their fair value at date of grant, which is then amortized as compensation expense over the vesting period (the "Fair Value Method"). Companies can also elect to disclose, but not recognize as an expense, stock option expense when stock options are granted to employees at an exercise price equal to the market price at the date of grant (the "APB 25 Method"). Companies can change their accounting method from the APB 25 Method to the Fair Value Method, and in doing so can elect between three different methods of transition. The first is the prospective method, whereby the Company applies the recognition provisions of the Fair Value Method to all stock options granted after the beginning of the fiscal year in which the company adopts the Fair Value Method. The second is the retroactive restatement method, whereby the company restates all periods presented to reflect compensation cost utilizing the fair value method for all periods. The third is the modified prospective method, where the company applies the Fair Value Method from the beginning of the current fiscal year with respect to all options which vest during the year regardless of when they were granted For periods prior to December 31, 2001, we utilized the APB 25 Method of accounting for employee stock options. As of January 1, 2002, we adopted the Fair Value Method, and have elected to use the prospective method of transition described above. Accordingly, we recognize compensation expense in our income statement using the Fair Value Method only with respect to stock options issued after January 1, 2002. The following table sets forth financial disclosures with respect to the accounting for stock options: F-31 For the years ended December 31, ----------------------------------------------------------- SELECTED INFORMATION WITH RESPECT TO EMPLOYEE STOCK OPTIONS 2002 2001 2000 ------------------- ------------------- ------------- Average estimated value per option granted, utilizing the Black-Scholes method.............................................. $1.86 $1.48 $2.30 Assumptions used in valuing options with the Black-Scholes method: Expected life of options in years............................. 5 5 5 Risk-free interest rate....................................... 3.2% 4.1% 6.2% Expected volatility........................................... 0.170 0.155 0.191 Expected dividend yield....................................... 7% 7% 7% Net income information with respect to each year Net income, as reported........................................... $318,738 $324,208 $297,088 Add back: stock-based employee compensation expense included in net income......................................................... 163 Less: stock-based employee compensation cost that would have been included if the fair value method were applied for all awards.. (3,595) (4,176) (1,671) ------------------- ------------------- ------------- Net income, assuming consistent application of the fair value method $315,306 $320,032 $295,417 =================== =================== ============= Earnings per share, as reported: Basic ......................................................... $1.21 $1.53 $1.41 Diluted........................................................ $1.19 $1.51 $1.41 Earnings per share, assuming consistent application of the fair value method Basic ......................................................... $1.18 $1.49 $1.40 Diluted........................................................ $1.17 $1.48 $1.40 13. Disclosures regarding segment reporting Description of each reportable segment -------------------------------------- Our reportable segments reflect significant operating activities that are evaluated separately by management. We have four reportable segments: self-storage operations, containerized storage operations, commercial property operations, and tenant reinsurance operations. The self-storage segment comprises the direct ownership, development, and operation of traditional storage facilities, and the ownership of equity interests in entities that own storage properties. The containerized storage operations represent another segment. The commercial property segment reflects our interest in the ownership, operation, and management of commercial properties. The vast majority of the commercial property operations are conducted through PSB, and to a much lesser extent the Company and certain of its unconsolidated subsidiaries own commercial space, managed by PSB, within facilities that combines storage and commercial space for rent. The tenant reinsurance segment reflects the operations of PS Insurance Company, which reinsures policies against losses to goods stored by tenants in our self-storage facilities F-32 Measurement of segment profit or loss ------------------------------------- We evaluate performance and allocate resources based upon the net segment income of each segment. Net segment income represents net income in conformity with accounting principles generally accepted in the United States and our significant accounting policies as denoted in Note 2, before interest and other income, interest expense, corporate general and administrative expense, and minority interest in income. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies. Interest and other income, interest expense, corporate general and administrative expense, and minority interest in income are not allocated to segments because management does not utilize them to evaluate the results of operations of each segment. Measurement of segment assets ----------------------------- No segment data relative to assets or liabilities is presented, because management does not consider the historical cost of the Company's real estate facilities and investments in real estate entities in evaluating the performance of operating management or in evaluating alternative courses of action. The only other types of assets that might be allocated to individual segments are trade receivables, payables, and other assets which arise in the ordinary course of business, but they are also not a significant factor in the measurement of segment performance. Presentation of segment information ----------------------------------- Our income statement provides most of the information required in order to determine the performance of each of the Company's three segments. The following tables reconcile the performance of each segment, in terms of segment revenues and segment income, to our consolidated revenues and net income. It further provides detail of the segment components of the income statement item, "Equity in earnings of real estate entities." The following table reconciles revenue by segment to the Company's consolidated revenues: RECONCILIATION OF REVENUES BY SEGMENT Year Ended December 31, Year Ended December 31, -------------------------------------------- ------------------------------------------- 2002 2001 Change 2001 2000 Change ------------ ------------ ------------ ------------ ------------ ------------ (amounts in thousands) Self-storage facility rentals....... $ 763,287 $ 721,662 $ 41,625 $ 721,662 $ 653,110 $ 68,552 Commercial property rentals......... 11,781 12,070 (289) 12,070 10,849 1,221 Containerized storage rentals....... 37,776 34,212 3,564 34,212 32,091 2,121 Tenant re-insurance premiums........ 19,947 - 19,947 - - - Interest and other income (not allocated to segments)............ 8,661 14,225 (5,564) 14,225 18,836 (4,611) ------------ ------------ ------------ ------------ ------------ ------------ Total revenues.................. $ 841,452 $ 782,169 $ 59,283 $ 782,169 $ 714,886 $ 67,283 ============ ============ ============ ============ ============ ============ F-33 The following table sets forth a reconciliation of each segment's net income to the Company's consolidated net income: Year Ended December 31, Year Ended December 31, --------------------- ---------------------- 2002 2001 Change 2001 2000 Change --------- --------- -------- --------- --------- -------- (Dollar amounts in thousands) Reconciliation of Net Income by Segment: Self-storage Self-storage net operating income......... $512,330 $492,451 $19,879 $492,451 $442,648 $49,803 Self-storage depreciation................. (171,415) (158,476) (12,939) (158,476) (141,425) (17,051) Equity in earnings - storage property operations............................. 7,047 22,912 (15,865) 22,912 21,265 1,647 Equity in earnings - depreciation (self-storage) ........................ (1,619) (7,562) 5,943 (7,562) (7,153) (409) --------- --------- -------- --------- --------- -------- Total self-storage segment net income. 346,343 349,325 (2,982) 349,325 315,335 33,990 --------- --------- -------- --------- --------- -------- Commercial properties Commercial properties..................... 7,319 8,209 (890) 8,209 7,148 1,061 Depreciation and amortization - commercial properties............................. (2,544) (2,569) 25 (2,569) (2,176) (393) Equity in earnings - commercial property operations............................. 63,233 51,335 11,898 51,335 42,562 8,773 Equity in earnings - depreciation (commercial properties) ............... (25,459) (17,534) (7,925) (17,534) (14,672) (2,862) Discontinued operations (Note 4) ......... 77 233 (156) 233 252 (19) --------- --------- -------- --------- --------- -------- Total commercial property segment net income............................... 42,626 39,674 2,952 39,674 33,114 6,560 --------- --------- -------- --------- --------- -------- Containerized storage Containerized storage net operating income 7,089 4,296 2,793 4,296 989 3,307 Containerized storage depreciation........ (5,675) (5,133) (542) (5,133) (4,594) (539) Discontinued operations (Note 4) ......... (11,472) (1,381) (10,091) (1,381) (1,530) 149 --------- --------- -------- --------- --------- -------- Total containerized storage segment net loss........................... (10,058) (2,218) (7,840) (2,218) (5,135) 2,917 --------- --------- -------- --------- --------- -------- Tenant Reinsurance Tenant reinsurance operating income.... 10,536 - 10,536 - - - --------- --------- -------- --------- --------- -------- Other items not allocated to segments Equity in earnings - general and administrative and other.............. (13,314) (10,609) (2,705) (10,609) (2,683) (7,926) Interest and other income................. 8,661 14,225 (5,564) 14,225 18,836 (4,611) General and administrative ............... (15,619) (21,038) 5,419 (21,038) (21,306) 268 Interest expense.......................... (3,809) (3,227) (582) (3,227) (3,293) 66 Minority interest in income .............. (44,087) (46,015) 1,928 (46,015) (38,356) (7,659) Gain/(loss) on disposition of real estate. (2,541) 4,091 (6,632) 4,091 576 3,515 --------- --------- -------- --------- --------- -------- Total other items not allocated to segments (70,709) (62,573) (8,136) (62,573) (46,226) (16,347) --------- --------- -------- --------- --------- -------- Total consolidated company net income $318,738 $324,208 $(5,470) $324,208 $297,088 $27,120 ========= ========= ======== ========= ========= ======== 14. Events subsequent to December 31, 2002 (Unaudited) We have called for redemption all of the outstanding shares of our 9.20% Cumulative Preferred Stock, Series B, at $25 per share plus accrued dividends. The redemption will be completed on March 31, 2003. F-34 On April 28, 2003 we expect to acquire all of the 52,851 limited partnership units that we did not own in PS Partners IV, Ltd., a partnership which is consolidated with the Company. The acquisition of the 52,851 units will be accomplished through a merger of a subsidiary of the Company into the partnership and the conversion of the 52,851 units into either cash or common stock of the Company. Each unit will be converted into the right to receive a value of $442 in our common stock or, cash at the election of the unitholder. 15. Recent accounting pronouncements and guidance In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("FAS 146"), which is effective for disposal activities entered into after December 31, 2002, with early adoption encouraged. FAS 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. Current accounting principles generally accepted in the United States result in the recognition of such liabilities at the time management has committed to an exit plan. There would have been no material impact upon the Company's income statement if we had early adopted this standard in 2002. The impact of this statement on the Company's future operating results cannot be determined at this time, because such impact is dependent upon the Company's future level of exit and disposal activities, which is unknown. 16. Commitments and Contingencies Legal proceedings ----------------- Salaam, et. Al V. Public Storage, Inc. (filed February 2000) ------------------------------------------------------------ The plaintiffs in this case are suing the Company on behalf of a purported class of California resident property managers who claim that they were not compensated for all the hours they worked. The named plaintiffs have indicated that their claims total less than $20,000 in aggregate. This maximum potential liability cannot be estimated, but can only be increased if a class is certified or if claims are permitted to be brought on behalf of the others under the California Unfair Business Practices Act. The plaintiffs' motion for class certification was denied in August 2002; the plaintiffs have appealed this denial. This denial does not deal with the claim under the California Unfair Business Practices Act. The Company is continuing to vigorously contest the claims in this case and intends to resist any expansion beyond the named plaintiffs on the grounds of lack of commonality of claims. The Company's resistance will include opposing the plaintiffs' appeal of the court's denial of class certification and opposing the claim on behalf of others under the California Unfair Business Practices Act. Henriquez v. Public Storage, Inc. (Filed June 2002; Dismissed ------------------------------------------------------------- January, 2003) The plaintiff in this case filed a suit against the Company on behalf of a purported class of renters who rented self-storage units from the Company. Plaintiff alleged that the Company misrepresents the size of its units and sought damages and injunctive and declaratory relief under California statutory and common law relating to consumer protection, unfair competition, fraud and deceit and negligent misrepresentation. In January 2003, the plaintiff caused this suit to be dismissed. The plaintiff's attorney has advised that he anticipates filing a similar suit against the Company on behalf of a new plaintiff. The Company cannot presently determine the potential total damages, if any, or the ultimate outcome of any such litigation. If a new suit is filed, the Company intends to vigorously contest any claims on which it is based. The Company is a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time, that are not described above. We believe that it is unlikely that the outcome of these other pending legal proceedings, in the aggregate, will have a material adverse effect upon the operations or financial position of the Company. F-35 Sale of Partnership Units ------------------------- In February 2000, the Company entered into a settlement of litigation arising out of a 1997 tender offer for limited partnership units in two affiliated partnerships. Under the settlement agreement, the Company agreed to sell to the plaintiff units representing a 4% interest in each of the partnerships for a total payment of approximately $1,523,000. The plaintiff failed to tender the full purchase price at the scheduled closing and the settlement collapsed. In September 2000, the plaintiff amended its complaint to add a claim for breach of the settlement agreement seeking specific enforcement and a claim seeking damages for unfair and deceptive trade practices in connection with the alleged breach. By amending the complaint the Company believes the plaintiff elected to abandon its underlying claims in the litigation. The Company asserted affirmative defenses including the material breach by the plaintiff. Cross motions for summary judgment were filed by the parties. In July 2002, the court granted plaintiff's motion for summary judgment as to its claim for breach of the settlement agreement and granted the Company's motion for summary judgment to dismiss plaintiff's claim for unfair and deceptive trade practices. In March 2003, the court granted plaintiff's motion to compel the sale of the units to the plaintiff. The Company is considering whether to appeal. If the Company is compelled to sell the units to plaintiff, the Company would incur a loss of approximately $1,839,000, which has been accrued as a loss on sale of real estate investments in the Company's income statement during 2002. Insurance and Loss Exposure --------------------------- Our facilities have historically carried comprehensive insurance, including fire, earthquake, liability and extended coverage through STOR-Re, one of the Consolidated Entities, and insures portions of these risks through nationally recognized insurance carriers. STOR-Re also insures affiliates of the Company. The Company, Stor-RE, and its affiliates' maximum aggregate annual exposure for losses that are below the deductibles set forth in the third-party insurance contracts, assuming multiple significant events occur, is approximately $30 million. In addition, if losses exhaust the third-party insurers' limit of coverage of $125,000,000 for property coverage and $101,000,000 for general liability, our exposure could be greater. These limits are higher than estimates of maximum probable losses that could occur from individual catastrophic events (i.e., earthquake and wind damage) determined in recent engineering and actuarial studies. PS Insurance Company reinsures policies against claims for losses to goods stored by tenants at our self-storage facilities (see Note 3). PSIC reinsures its risks with third-party insures from any individual event that exceeds a loss of $500,000 up to the policy limit of $10,000,000. F-36 16. Supplementary quarterly financial data (unaudited) Three months ended -------------------------------------------------------------- March 31, June 30, September 30, December 31, 2002 2002 2002 2002 ------------ ------------ ------------ ------------ (in thousands, except per share data) Revenues from operations (a)..... $ 203,790 $ 205,657 $ 215,797 $ 207,547 ============ ============ ============ ============ Cost of operations (a)........... $ 67,365 $ 69,668 $ 76,004 $ 82,480 ============ ============ ============ ============ Net income....................... $ 87,455 $ 80,718 $ 83,351 $ 67,214 ============ ============ ============ ============ Per Common Share (Note 2): Net income - Basic........... $ 0.38 $ 0.30 $ 0.32 $ 0.20 ============ ============ ============ ============ Net income - Diluted......... $ 0.37 $ 0.30 $ 0.32 $ 0.20 ============ ============ ============ ============ Three months ended -------------------------------------------------------------- March 31, June 30, September 30, December 31, 2001 2001 2001 2001 ------------ ------------ ------------ ------------ (in thousands, except per share data) Revenues from operations (a)..... $ 181,758 $ 190,459 $ 199,818 $ 195,909 ============ ============ ============ ============ Cost of operations (a)........... $ 63,852 $ 62,881 $ 67,658 $ 68,597 ============ ============ ============ ============ Net income....................... $ 74,635 $ 81,773 $ 83,604 $ 84,196 ============ ============ ============ ============ Per Common Share (Note 2): Net income - Basic............ $ 0.34 $ 0.40 $ 0.41 $ 0.38 ============ ============ ============ ============ Net income - Diluted.......... $ 0.34 $ 0.39 $ 0.41 $ 0.38 ============ ============ ============ ============ (a) Revenues and cost of operations as presented in this table differ from the revenue and cost of operations as presented in the Company's quarterly reports due primarily to the impact of discontinued operations accounting with respect to certain containerized storage facilities that were closed in 2002, as described in Note 4. F-37 PUBLIC STORAGE, INC. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- Mini-warehouses 1/1/81 Newport News / Jefferson Ave 463,000 108,000 1,071,000 591,000 - 1/1/81 Virginia Beach / Diamond Springs 527,000 186,000 1,094,000 652,000 - 8/1/81 San Jose / Snell - 312,000 1,815,000 391,000 - 10/1/81 Tampa / Lazy Lane - 282,000 1,899,000 637,000 - 6/1/82 San Jose / Tully 669,000 645,000 1,579,000 12,123,000 - 6/1/82 San Carlos / Storage 807,000 780,000 1,387,000 569,000 - 6/1/82 Mountain View 1,153,000 1,180,000 1,182,000 562,000 - 6/1/82 Cupertino / Storage 907,000 572,000 1,270,000 460,000 - 10/1/82 Sorrento Valley 823,000 1,002,000 1,343,000 (809,000) - 10/1/82 Northwood 1,244,000 1,034,000 1,522,000 325,000 - 12/1/82 Port/Halsey - 357,000 1,150,000 (407,000) 326,000 12/1/82 Sacto/Folsom - 396,000 329,000 656,000 323,000 1/1/83 Platte - 409,000 953,000 391,000 428,000 1/1/83 Semoran - 442,000 1,882,000 6,157,000 720,000 1/1/83 Raleigh/Yonkers - 203,000 914,000 442,000 425,000 3/1/83 Blackwood - 213,000 1,559,000 278,000 595,000 4/1/83 Vailsgate - 103,000 990,000 445,000 505,000 5/1/83 Delta Drive - 67,000 481,000 222,000 241,000 6/1/83 Ventura - 658,000 1,734,000 195,000 583,000 9/1/83 Southington - 124,000 1,233,000 326,000 546,000 9/1/83 Southhampton - 331,000 1,738,000 643,000 806,000 9/1/83 Webster/Keystone - 449,000 1,688,000 725,000 813,000 9/1/83 Dover - 107,000 1,462,000 468,000 627,000 9/1/83 Newcastle - 227,000 2,163,000 427,000 817,000 9/1/83 Newark - 208,000 2,031,000 319,000 746,000 9/1/83 Langhorne - 263,000 3,549,000 495,000 1,445,000 9/1/83 Hobart - 215,000 1,491,000 583,000 838,000 9/1/83 Ft. Wayne/W. Coliseum - 160,000 1,395,000 286,000 535,000 9/1/83 Ft. Wayne/Bluffton - 88,000 675,000 172,000 285,000 10/1/83 Orlando J. Y. Parkway - 383,000 1,512,000 375,000 622,000 11/1/83 Aurora - 505,000 758,000 310,000 341,000 11/1/83 Campbell - 1,379,000 1,849,000 (511,000) 474,000 11/1/83 Col Springs/Ed - 471,000 1,640,000 155,000 554,000 11/1/83 Col Springs/Mv - 320,000 1,036,000 266,000 441,000 11/1/83 Thorton - 418,000 1,400,000 118,000 536,000 11/1/83 Oklahoma City - 454,000 1,030,000 838,000 620,000 11/1/83 Tucson - 343,000 778,000 636,000 420,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- Mini-warehouses 1/1/81 Newport News / Jefferson Ave 108,000 1,662,000 1,770,000 1,429,000 1/1/81 Virginia Beach / Diamond Springs 186,000 1,746,000 1,932,000 1,488,000 8/1/81 San Jose / Snell 312,000 2,206,000 2,518,000 1,915,000 10/1/81 Tampa / Lazy Lane 282,000 2,536,000 2,818,000 2,145,000 6/1/82 San Jose / Tully 4,528,000 9,819,000 14,347,000 2,104,000 6/1/82 San Carlos / Storage 781,000 1,955,000 2,736,000 1,603,000 6/1/82 Mountain View 1,181,000 1,743,000 2,924,000 1,467,000 6/1/82 Cupertino / Storage 573,000 1,729,000 2,302,000 1,390,000 10/1/82 Sorrento Valley 652,000 884,000 1,536,000 729,000 10/1/82 Northwood 1,035,000 1,846,000 2,881,000 1,445,000 12/1/82 Port/Halsey 357,000 1,069,000 1,426,000 670,000 12/1/82 Sacto/Folsom 396,000 1,308,000 1,704,000 853,000 1/1/83 Platte 409,000 1,772,000 2,181,000 1,087,000 1/1/83 Semoran 443,000 8,758,000 9,201,000 2,097,000 1/1/83 Raleigh/Yonkers 203,000 1,781,000 1,984,000 1,172,000 3/1/83 Blackwood 213,000 2,432,000 2,645,000 1,491,000 4/1/83 Vailsgate 103,000 1,940,000 2,043,000 1,216,000 5/1/83 Delta Drive 68,000 943,000 1,011,000 583,000 6/1/83 Ventura 659,000 2,511,000 3,170,000 1,535,000 9/1/83 Southington 123,000 2,106,000 2,229,000 1,259,000 9/1/83 Southhampton 331,000 3,187,000 3,518,000 1,987,000 9/1/83 Webster/Keystone 450,000 3,225,000 3,675,000 2,051,000 9/1/83 Dover 107,000 2,557,000 2,664,000 1,544,000 9/1/83 Newcastle 227,000 3,407,000 3,634,000 2,073,000 9/1/83 Newark 208,000 3,096,000 3,304,000 1,867,000 9/1/83 Langhorne 263,000 5,489,000 5,752,000 3,328,000 9/1/83 Hobart 215,000 2,912,000 3,127,000 1,786,000 9/1/83 Ft. Wayne/W. Coliseum 160,000 2,216,000 2,376,000 1,309,000 9/1/83 Ft. Wayne/Bluffton 88,000 1,132,000 1,220,000 690,000 10/1/83 Orlando J. Y. Parkway 383,000 2,509,000 2,892,000 1,518,000 11/1/83 Aurora 506,000 1,408,000 1,914,000 844,000 11/1/83 Campbell 1,381,000 1,810,000 3,191,000 1,079,000 11/1/83 Col Springs/Ed 472,000 2,348,000 2,820,000 1,458,000 11/1/83 Col Springs/Mv 320,000 1,743,000 2,063,000 1,046,000 11/1/83 Thorton 418,000 2,054,000 2,472,000 1,268,000 11/1/83 Oklahoma City 455,000 2,487,000 2,942,000 1,495,000 11/1/83 Tucson 343,000 1,834,000 2,177,000 1,068,000 F-38 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 11/1/83 Webster/Nasa - 1,570,000 2,457,000 1,066,000 1,372,000 12/1/83 Charlotte - 165,000 1,274,000 465,000 442,000 12/1/83 Greensboro/Market - 214,000 1,653,000 658,000 794,000 12/1/83 Greensboro/Electra - 112,000 869,000 353,000 382,000 12/1/83 Columbia - 171,000 1,318,000 518,000 492,000 12/1/83 Richmond - 176,000 1,360,000 430,000 468,000 12/1/83 Augusta - 97,000 747,000 333,000 324,000 12/1/83 Tacoma - 553,000 1,173,000 400,000 487,000 1/1/84 Fremont/Albrae - 636,000 1,659,000 491,000 532,000 1/1/84 Belton - 175,000 858,000 667,000 378,000 1/1/84 Gladstone - 275,000 1,799,000 472,000 640,000 1/1/84 Hickman/112 - 257,000 1,848,000 456,000 618,000 1/1/84 Holmes - 289,000 1,333,000 383,000 455,000 1/1/84 Independence - 221,000 1,848,000 381,000 609,000 1/1/84 Merriam - 255,000 1,469,000 433,000 480,000 1/1/84 Olathe - 107,000 992,000 341,000 361,000 1/1/84 Shawnee - 205,000 1,420,000 466,000 502,000 1/1/84 Topeka - 75,000 1,049,000 257,000 356,000 2/1/84 Unicorn/Nkoxville - 662,000 1,887,000 720,000 692,000 2/1/84 Central/Knoxville - 449,000 1,281,000 597,000 455,000 3/1/84 Marrietta/Cobb - 73,000 542,000 313,000 259,000 3/1/84 Manassas - 320,000 1,556,000 409,000 553,000 3/1/84 Pico Rivera - 743,000 807,000 354,000 321,000 4/1/84 Providence - 92,000 1,087,000 390,000 423,000 4/1/84 Milwaukie/Oregon - 289,000 584,000 279,000 311,000 5/1/84 Raleigh/Departure - 302,000 2,484,000 525,000 788,000 5/1/84 Virginia Beach - 509,000 2,121,000 725,000 776,000 5/1/84 Philadelphia/Grant - 1,041,000 3,262,000 522,000 971,000 5/1/84 Garland - 356,000 844,000 243,000 360,000 6/1/84 Lorton - 435,000 2,040,000 542,000 682,000 6/1/84 Baltimore - 382,000 1,793,000 870,000 634,000 6/1/84 Laurel - 501,000 2,349,000 706,000 824,000 6/1/84 Delran - 279,000 1,472,000 325,000 573,000 6/1/84 Orange Blossom - 226,000 924,000 250,000 398,000 6/1/84 Cincinnati - 402,000 1,573,000 607,000 672,000 6/1/84 Florence - 185,000 740,000 449,000 376,000 7/1/84 Trevose/Old Lincoln - 421,000 1,749,000 428,000 582,000 8/1/84 Medley - 584,000 1,016,000 361,000 464,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 11/1/83 Webster/Nasa 1,573,000 4,892,000 6,465,000 3,057,000 12/1/83 Charlotte 165,000 2,181,000 2,346,000 1,375,000 12/1/83 Greensboro/Market 214,000 3,105,000 3,319,000 1,983,000 12/1/83 Greensboro/Electra 112,000 1,604,000 1,716,000 1,022,000 12/1/83 Columbia 171,000 2,328,000 2,499,000 1,500,000 12/1/83 Richmond 176,000 2,258,000 2,434,000 1,413,000 12/1/83 Augusta 97,000 1,404,000 1,501,000 894,000 12/1/83 Tacoma 554,000 2,059,000 2,613,000 1,325,000 1/1/84 Fremont/Albrae 637,000 2,681,000 3,318,000 1,748,000 1/1/84 Belton 175,000 1,903,000 2,078,000 1,183,000 1/1/84 Gladstone 275,000 2,911,000 3,186,000 1,852,000 1/1/84 Hickman/112 257,000 2,922,000 3,179,000 1,876,000 1/1/84 Holmes 289,000 2,171,000 2,460,000 1,363,000 1/1/84 Independence 221,000 2,838,000 3,059,000 1,794,000 1/1/84 Merriam 255,000 2,382,000 2,637,000 1,504,000 1/1/84 Olathe 107,000 1,694,000 1,801,000 1,078,000 1/1/84 Shawnee 205,000 2,388,000 2,593,000 1,496,000 1/1/84 Topeka 75,000 1,662,000 1,737,000 1,051,000 2/1/84 Unicorn/Nkoxville 663,000 3,298,000 3,961,000 2,049,000 2/1/84 Central/Knoxville 450,000 2,332,000 2,782,000 1,390,000 3/1/84 Marrietta/Cobb 73,000 1,114,000 1,187,000 706,000 3/1/84 Manassas 320,000 2,518,000 2,838,000 1,581,000 3/1/84 Pico Rivera 744,000 1,481,000 2,225,000 972,000 4/1/84 Providence 92,000 1,900,000 1,992,000 1,219,000 4/1/84 Milwaukie/Oregon 289,000 1,174,000 1,463,000 746,000 5/1/84 Raleigh/Departure 302,000 3,797,000 4,099,000 2,398,000 5/1/84 Virginia Beach 500,000 3,631,000 4,131,000 2,256,000 5/1/84 Philadelphia/Grant 1,041,000 4,755,000 5,796,000 2,994,000 5/1/84 Garland 356,000 1,447,000 1,803,000 878,000 6/1/84 Lorton 436,000 3,263,000 3,699,000 2,064,000 6/1/84 Baltimore 382,000 3,297,000 3,679,000 1,967,000 6/1/84 Laurel 502,000 3,878,000 4,380,000 2,456,000 6/1/84 Delran 279,000 2,370,000 2,649,000 1,406,000 6/1/84 Orange Blossom 226,000 1,572,000 1,798,000 937,000 6/1/84 Cincinnati 402,000 2,852,000 3,254,000 1,696,000 6/1/84 Florence 185,000 1,565,000 1,750,000 926,000 7/1/84 Trevose/Old Lincoln 421,000 2,759,000 3,180,000 1,727,000 8/1/84 Medley 585,000 1,840,000 2,425,000 1,113,000 F-39 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 8/1/84 Oklahoma City - 340,000 1,310,000 579,000 652,000 8/1/84 Newport News - 356,000 2,395,000 708,000 1,013,000 8/1/84 Kaplan/Walnut Hill - 971,000 2,359,000 888,000 1,041,000 8/1/84 Kaplan/Irving - 677,000 1,592,000 3,453,000 639,000 9/1/84 Cockrell Hill - 380,000 913,000 1,087,000 675,000 11/1/84 Omaha - 109,000 806,000 519,000 399,000 11/1/84 Hialeah - 886,000 1,784,000 347,000 672,000 12/1/84 Austin/Lamar - 643,000 947,000 511,000 443,000 12/1/84 Pompano - 399,000 1,386,000 669,000 698,000 12/1/84 Fort Worth - 122,000 928,000 37,000 303,000 12/1/84 Montgomeryville - 215,000 2,085,000 380,000 776,000 1/1/85 Cranston - 175,000 722,000 340,000 267,000 1/1/85 Bossier City - 184,000 1,542,000 521,000 656,000 2/1/85 Simi Valley - 737,000 1,389,000 339,000 520,000 2/1/85 Hurst - 231,000 1,220,000 246,000 480,000 3/1/85 Chattanooga - 202,000 1,573,000 501,000 683,000 3/1/85 Portland - 285,000 941,000 304,000 438,000 3/1/85 Fern Park - 144,000 1,107,000 241,000 432,000 3/1/85 Fairfield - 338,000 1,187,000 484,000 527,000 3/1/85 Houston / Westheimer 397,000 850,000 1,179,000 763,000 - 4/1/85 Austin/ S. First - 778,000 1,282,000 375,000 170,000 4/1/85 Cincinnati/ E. Kemper - 232,000 1,573,000 313,000 223,000 4/1/85 Cincinnati/ Colerain - 253,000 1,717,000 401,000 230,000 4/1/85 Florence/ Tanner Lane - 218,000 1,477,000 369,000 209,000 4/1/85 Laguna Hills - 1,224,000 3,303,000 425,000 1,213,000 5/1/85 Tacoma/ Phillips Rd. - 396,000 1,204,000 292,000 167,000 5/1/85 Milwaukie/ Mcloughlin - 458,000 742,000 382,000 210,000 5/1/85 Manchester/ S. Willow - 371,000 2,129,000 (128,000) 199,000 5/1/85 Longwood - 355,000 1,645,000 309,000 669,000 5/1/85 Columbus/Busch Blvd. - 202,000 1,559,000 409,000 592,000 5/1/85 Columbus/Kinnear Rd. - 241,000 1,865,000 393,000 771,000 5/1/85 Worthington - 221,000 1,824,000 393,000 709,000 5/1/85 Arlington - 201,000 1,497,000 455,000 618,000 6/1/85 N. Hollywood/ Raymer - 967,000 848,000 264,000 143,000 6/1/85 Grove City/ Marlane Drive - 150,000 1,157,000 379,000 471,000 6/1/85 Reynoldsburg - 204,000 1,568,000 443,000 598,000 7/1/85 San Diego/ Kearny Mesa Rd - 783,000 1,750,000 347,000 264,000 7/1/85 Scottsdale/ 70th St - 632,000 1,368,000 326,000 174,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 8/1/84 Oklahoma City 340,000 2,541,000 2,881,000 1,477,000 8/1/84 Newport News 356,000 4,116,000 4,472,000 2,455,000 8/1/84 Kaplan/Walnut Hill 972,000 4,287,000 5,259,000 2,527,000 8/1/84 Kaplan/Irving 679,000 5,682,000 6,361,000 1,774,000 9/1/84 Cockrell Hill 380,000 2,675,000 3,055,000 1,628,000 11/1/84 Omaha 109,000 1,724,000 1,833,000 1,029,000 11/1/84 Hialeah 887,000 2,802,000 3,689,000 1,668,000 12/1/84 Austin/Lamar 644,000 1,900,000 2,544,000 1,072,000 12/1/84 Pompano 399,000 2,753,000 3,152,000 1,598,000 12/1/84 Fort Worth 122,000 1,268,000 1,390,000 760,000 12/1/84 Montgomeryville 215,000 3,241,000 3,456,000 1,877,000 1/1/85 Cranston 175,000 1,329,000 1,504,000 814,000 1/1/85 Bossier City 184,000 2,719,000 2,903,000 1,547,000 2/1/85 Simi Valley 738,000 2,247,000 2,985,000 1,312,000 2/1/85 Hurst 231,000 1,946,000 2,177,000 1,138,000 3/1/85 Chattanooga 202,000 2,757,000 2,959,000 1,560,000 3/1/85 Portland 285,000 1,683,000 1,968,000 958,000 3/1/85 Fern Park 144,000 1,780,000 1,924,000 1,033,000 3/1/85 Fairfield 338,000 2,198,000 2,536,000 1,227,000 3/1/85 Houston / Westheimer 851,000 1,941,000 2,792,000 1,360,000 4/1/85 Austin/ S. First 779,000 1,826,000 2,605,000 1,217,000 4/1/85 Cincinnati/ E. Kemper 232,000 2,109,000 2,341,000 1,386,000 4/1/85 Cincinnati/ Colerain 253,000 2,348,000 2,601,000 1,531,000 4/1/85 Florence/ Tanner Lane 218,000 2,055,000 2,273,000 1,369,000 4/1/85 Laguna Hills 1,225,000 4,940,000 6,165,000 2,890,000 5/1/85 Tacoma/ Phillips Rd. 396,000 1,663,000 2,059,000 1,093,000 5/1/85 Milwaukie/ Mcloughlin 459,000 1,333,000 1,792,000 884,000 5/1/85 Manchester/ S. Willow 371,000 2,200,000 2,571,000 1,458,000 5/1/85 Longwood 355,000 2,623,000 2,978,000 1,516,000 5/1/85 Columbus/Busch Blvd. 202,000 2,560,000 2,762,000 1,425,000 5/1/85 Columbus/Kinnear Rd. 241,000 3,029,000 3,270,000 1,699,000 5/1/85 Worthington 221,000 2,926,000 3,147,000 1,639,000 5/1/85 Arlington 201,000 2,570,000 2,771,000 1,448,000 6/1/85 N. Hollywood/ Raymer 968,000 1,254,000 2,222,000 854,000 6/1/85 Grove City/ Marlane Drive 150,000 2,007,000 2,157,000 1,129,000 6/1/85 Reynoldsburg 204,000 2,609,000 2,813,000 1,451,000 7/1/85 San Diego/ Kearny Mesa Rd 784,000 2,360,000 3,144,000 1,593,000 7/1/85 Scottsdale/ 70th St 633,000 1,867,000 2,500,000 1,201,000 F-40 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 7/1/85 Concord/ Hwy 29 - 150,000 750,000 381,000 189,000 7/1/85 Columbus/Morse Rd. - 195,000 1,510,000 422,000 670,000 7/1/85 Columbus/Kenney Rd. - 199,000 1,531,000 429,000 598,000 7/1/85 Westerville - 199,000 1,517,000 476,000 620,000 7/1/85 Springfield - 90,000 699,000 329,000 332,000 7/1/85 Dayton/Needmore Road - 144,000 1,108,000 411,000 460,000 7/1/85 Dayton/Executive Blvd. - 160,000 1,207,000 429,000 569,000 7/1/85 Lilburn - 331,000 969,000 243,000 424,000 9/1/85 Madison/ Copps Ave. - 450,000 1,150,000 419,000 151,000 9/1/85 Columbus/ Sinclair - 307,000 893,000 339,000 110,000 9/1/85 Philadelphia/ Tacony St - 118,000 1,782,000 291,000 186,000 10/1/85 N. Hollywood/ Whitsett - 1,524,000 2,576,000 384,000 332,000 10/1/85 Portland/ SE 82nd St - 354,000 496,000 321,000 96,000 10/1/85 Perrysburg/ Helen Dr. - 110,000 1,590,000 (26,000) 140,000 10/1/85 Columbus/ Ambleside - 124,000 1,526,000 22,000 139,000 10/1/85 Indianapolis/ Pike Place - 229,000 1,531,000 254,000 215,000 10/1/85 Indianapolis/ Beach Grove - 198,000 1,342,000 246,000 176,000 10/1/85 Hartford/ Roberts - 219,000 1,481,000 362,000 319,000 10/1/85 Wichita/ S. Rock Rd. - 501,000 1,478,000 244,000 142,000 10/1/85 Wichita/ E. Harry - 313,000 1,050,000 84,000 74,000 10/1/85 Wichita/ S. Woodlawn - 263,000 905,000 114,000 91,000 10/1/85 Wichita/ E. Kellogg - 185,000 658,000 (35,000) 55,000 10/1/85 Wichita/ S. Tyler - 294,000 1,004,000 78,000 151,000 10/1/85 Wichita/ W. Maple - 234,000 805,000 (50,000) 68,000 10/1/85 Wichita/ Carey Lane - 192,000 674,000 23,000 63,000 10/1/85 Wichita/ E. Macarthur - 220,000 775,000 (101,000) 93,000 10/1/85 Joplin/ S. Range Line - 264,000 904,000 195,000 98,000 10/1/85 San Antonio/ Wetmore Rd. - 306,000 1,079,000 529,000 621,000 10/1/85 San Antonio/ Callaghan - 288,000 1,016,000 382,000 523,000 10/1/85 San Antonio/ Zarzamora - 364,000 1,281,000 595,000 669,000 10/1/85 San Antonio/ Hackberry - 388,000 1,367,000 2,461,000 1,002,000 10/1/85 San Antonio/ Fredericksburg - 287,000 1,009,000 435,000 554,000 10/1/85 Dallas/ S. Westmoreland - 474,000 1,670,000 172,000 734,000 10/1/85 Dallas/ Alvin St. - 359,000 1,266,000 172,000 565,000 10/1/85 Fort Worth/ W. Beach St. - 356,000 1,252,000 187,000 532,000 10/1/85 Fort Worth/ E. Seminary - 382,000 1,346,000 206,000 560,000 10/1/85 Fort Worth/ Cockrell St. - 323,000 1,136,000 171,000 519,000 11/1/85 Everett/ Evergreen - 706,000 2,294,000 528,000 1,061,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - --------------------------------------------------------------------------------------------------------- 7/1/85 Concord/ Hwy 29 150,000 1,320,000 1,470,000 897,000 7/1/85 Columbus/Morse Rd. 195,000 2,602,000 2,797,000 1,445,000 7/1/85 Columbus/Kenney Rd. 199,000 2,558,000 2,757,000 1,446,000 7/1/85 Westerville 199,000 2,613,000 2,812,000 1,469,000 7/1/85 Springfield 90,000 1,360,000 1,450,000 757,000 7/1/85 Dayton/Needmore Road 144,000 1,979,000 2,123,000 1,108,000 7/1/85 Dayton/Executive Blvd. 159,000 2,206,000 2,365,000 1,266,000 7/1/85 Lilburn 330,000 1,637,000 1,967,000 927,000 9/1/85 Madison/ Copps Ave. 451,000 1,719,000 2,170,000 1,120,000 9/1/85 Columbus/ Sinclair 307,000 1,342,000 1,649,000 857,000 9/1/85 Philadelphia/ Tacony St 118,000 2,259,000 2,377,000 1,479,000 10/1/85 N. Hollywood/ Whitsett 1,526,000 3,290,000 4,816,000 2,173,000 10/1/85 Portland/ SE 82nd St 354,000 913,000 1,267,000 624,000 10/1/85 Perrysburg/ Helen Dr. 110,000 1,704,000 1,814,000 1,104,000 10/1/85 Columbus/ Ambleside 124,000 1,687,000 1,811,000 1,056,000 10/1/85 Indianapolis/ Pike Place 229,000 2,000,000 2,229,000 1,301,000 10/1/85 Indianapolis/ Beach Grove 198,000 1,764,000 1,962,000 1,158,000 10/1/85 Hartford/ Roberts 219,000 2,162,000 2,381,000 1,388,000 10/1/85 Wichita/ S. Rock Rd. 643,000 1,722,000 2,365,000 1,082,000 10/1/85 Wichita/ E. Harry 285,000 1,236,000 1,521,000 856,000 10/1/85 Wichita/ S. Woodlawn 263,000 1,110,000 1,373,000 725,000 10/1/85 Wichita/ E. Kellogg 185,000 678,000 863,000 467,000 10/1/85 Wichita/ S. Tyler 294,000 1,233,000 1,527,000 891,000 10/1/85 Wichita/ W. Maple 234,000 823,000 1,057,000 551,000 10/1/85 Wichita/ Carey Lane 192,000 760,000 952,000 510,000 10/1/85 Wichita/ E. Macarthur 220,000 767,000 987,000 514,000 10/1/85 Joplin/ S. Range Line 264,000 1,197,000 1,461,000 758,000 10/1/85 San Antonio/ Wetmore Rd. 306,000 2,229,000 2,535,000 1,104,000 10/1/85 San Antonio/ Callaghan 288,000 1,921,000 2,209,000 1,012,000 10/1/85 San Antonio/ Zarzamora 364,000 2,545,000 2,909,000 1,253,000 10/1/85 San Antonio/ Hackberry 389,000 4,829,000 5,218,000 1,388,000 10/1/85 San Antonio/ Fredericksburg 287,000 1,998,000 2,285,000 1,057,000 10/1/85 Dallas/ S. Westmoreland 475,000 2,575,000 3,050,000 1,372,000 10/1/85 Dallas/ Alvin St. 359,000 2,003,000 2,362,000 1,075,000 10/1/85 Fort Worth/ W. Beach St. 356,000 1,971,000 2,327,000 1,050,000 10/1/85 Fort Worth/ E. Seminary 382,000 2,112,000 2,494,000 1,129,000 10/1/85 Fort Worth/ Cockrell St. 323,000 1,826,000 2,149,000 984,000 11/1/85 Everett/ Evergreen 707,000 3,882,000 4,589,000 2,107,000 F-41 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ---------------------------------------------------------------------------------------------------------------------------- 11/1/85 Seattle/ Empire Way - 1,652,000 5,348,000 661,000 2,223,000 12/1/85 Milpitas - 1,623,000 1,577,000 265,000 274,000 12/1/85 Pleasanton/ Santa Rita - 1,226,000 2,078,000 365,000 327,000 12/1/85 Amherst/ Niagra Falls - 132,000 701,000 248,000 401,000 12/1/85 West Sams Blvd. - 164,000 1,159,000 (266,000) 381,000 12/1/85 MacArthur Rd. - 204,000 1,628,000 193,000 646,000 12/1/85 Brockton/ Main - 153,000 2,020,000 (205,000) 681,000 12/1/85 Eatontown/ Hwy 35 - 308,000 4,067,000 480,000 1,670,000 12/1/85 Denver/ Leetsdale - 603,000 847,000 232,000 403,000 1/1/86 Mapleshade/ Rudderow - 362,000 1,811,000 328,000 828,000 1/1/86 Bordentown/ Groveville - 196,000 981,000 167,000 472,000 1/1/86 Sun Valley/ Sheldon - 544,000 1,836,000 357,000 801,000 1/1/86 Las Vegas/ Highland - 432,000 848,000 283,000 425,000 2/1/86 Costa Mesa/ Pomona - 1,405,000 1,520,000 386,000 703,000 2/1/86 Brea/ Imperial Hwy - 1,069,000 2,165,000 377,000 967,000 2/1/86 Skokie/ McCormick - 638,000 1,912,000 284,000 790,000 2/1/86 Colorado Springs/ Sinton - 535,000 1,115,000 319,000 615,000 2/1/86 Oklahoma City/ Penn - 146,000 829,000 161,000 410,000 2/1/86 Oklahoma City/ 39th - 238,000 812,000 320,000 473,000 3/1/86 Jacksonville/ Wiley - 140,000 510,000 290,000 334,000 3/1/86 St. Louis/ Forder - 517,000 1,133,000 325,000 535,000 3/3/86 Tampa / 56th 358,000 450,000 1,360,000 533,000 - 4/1/86 Reno/ Telegraph - 649,000 1,051,000 488,000 675,000 4/1/86 St. Louis/Kirkham - 199,000 1,001,000 228,000 405,000 4/1/86 St. Louis/Reavis - 192,000 958,000 210,000 388,000 4/1/86 Fort Worth/East Loop - 196,000 804,000 249,000 369,000 5/1/86 Westlake Village - 1,205,000 995,000 248,000 435,000 5/1/86 Sacramento/Franklin Blvd. - 872,000 978,000 483,000 394,000 6/1/86 Richland Hills - 543,000 857,000 445,000 410,000 6/1/86 West Valley/So. 3600 - 208,000 1,552,000 422,000 415,000 7/1/86 Colorado Springs/ Hollow Tree - 574,000 726,000 277,000 418,000 7/1/86 West LA/Purdue Ave. - 2,415,000 3,585,000 257,000 1,231,000 7/1/86 Capital Heights/Central Ave. - 649,000 3,851,000 374,000 1,287,000 7/1/86 Pontiac/Dixie Hwy. - 259,000 2,091,000 135,000 758,000 7/1/86 Portland/Johns Landing Area - 663,000 1,637,000 (19,000) 538,000 8/1/86 Laurel/Ft. Meade Rd. - 475,000 1,475,000 291,000 632,000 8/1/86 Hammond / Calumet - 97,000 751,000 497,000 366,000 9/1/86 Kansas City/S. 44th. - 509,000 1,906,000 560,000 745,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - --------------------------------------------------------------------------------------------------------- 11/1/85 Seattle/ Empire Way 1,654,000 8,230,000 9,884,000 4,364,000 12/1/85 Milpitas 1,625,000 2,114,000 3,739,000 1,391,000 12/1/85 Pleasanton/ Santa Rita 1,227,000 2,769,000 3,996,000 1,786,000 12/1/85 Amherst/ Niagra Falls 132,000 1,350,000 1,482,000 728,000 12/1/85 West Sams Blvd. 164,000 1,274,000 1,438,000 697,000 12/1/85 MacArthur Rd. 204,000 2,467,000 2,671,000 1,294,000 12/1/85 Brockton/ Main 153,000 2,496,000 2,649,000 1,319,000 12/1/85 Eatontown/ Hwy 35 308,000 6,217,000 6,525,000 3,281,000 12/1/85 Denver/ Leetsdale 604,000 1,481,000 2,085,000 779,000 1/1/86 Mapleshade/ Rudderow 362,000 2,967,000 3,329,000 1,521,000 1/1/86 Bordentown/ Groveville 196,000 1,620,000 1,816,000 839,000 1/1/86 Sun Valley/ Sheldon 545,000 2,993,000 3,538,000 1,598,000 1/1/86 Las Vegas/ Highland 433,000 1,555,000 1,988,000 808,000 2/1/86 Costa Mesa/ Pomona 1,407,000 2,607,000 4,014,000 1,377,000 2/1/86 Brea/ Imperial Hwy 1,070,000 3,508,000 4,578,000 1,847,000 2/1/86 Skokie/ McCormick 639,000 2,985,000 3,624,000 1,537,000 2/1/86 Colorado Springs/ Sinton 536,000 2,048,000 2,584,000 1,006,000 2/1/86 Oklahoma City/ Penn 146,000 1,400,000 1,546,000 733,000 2/1/86 Oklahoma City/ 39th 238,000 1,605,000 1,843,000 857,000 3/1/86 Jacksonville/ Wiley 140,000 1,134,000 1,274,000 590,000 3/1/86 St. Louis/ Forder 518,000 1,992,000 2,510,000 1,024,000 3/3/86 Tampa / 56th 451,000 1,892,000 2,343,000 1,258,000 4/1/86 Reno/ Telegraph 650,000 2,213,000 2,863,000 1,194,000 4/1/86 St. Louis/Kirkham 199,000 1,634,000 1,833,000 883,000 4/1/86 St. Louis/Reavis 192,000 1,556,000 1,748,000 854,000 4/1/86 Fort Worth/East Loop 196,000 1,422,000 1,618,000 765,000 5/1/86 Westlake Village 1,206,000 1,677,000 2,883,000 873,000 5/1/86 Sacramento/Franklin Blvd. 873,000 1,854,000 2,727,000 1,039,000 6/1/86 Richland Hills 544,000 1,711,000 2,255,000 959,000 6/1/86 West Valley/So. 3600 208,000 2,389,000 2,597,000 1,258,000 7/1/86 Colorado Springs/ Hollow Tree 575,000 1,420,000 1,995,000 723,000 7/1/86 West LA/Purdue Ave. 2,419,000 5,069,000 7,488,000 2,673,000 7/1/86 Capital Heights/Central Ave. 650,000 5,511,000 6,161,000 2,898,000 7/1/86 Pontiac/Dixie Hwy. 259,000 2,984,000 3,243,000 1,537,000 7/1/86 Portland/Johns Landing Area 664,000 2,155,000 2,819,000 1,155,000 8/1/86 Laurel/Ft. Meade Rd. 476,000 2,397,000 2,873,000 1,234,000 8/1/86 Hammond / Calumet 97,000 1,614,000 1,711,000 875,000 9/1/86 Kansas City/S. 44th. 510,000 3,210,000 3,720,000 1,694,000 F-42 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ---------------------------------------------------------------------------------------------------------------------------- 9/1/86 Lakewood / Wadsworth - 6th - 1,070,000 3,155,000 663,000 1,027,000 10/1/86 Peralta/Fremont - 851,000 1,074,000 303,000 458,000 10/1/86 Birmingham/Highland - 89,000 786,000 233,000 401,000 10/1/86 Birmingham/Riverchase - 262,000 1,338,000 432,000 646,000 10/1/86 Birmingham/Eastwood - 166,000 1,184,000 301,000 613,000 10/1/86 Birmingham/Forestdale - 152,000 948,000 254,000 518,000 10/1/86 Birmingham/Centerpoint - 265,000 1,305,000 325,000 526,000 10/1/86 Birmingham/Roebuck Plaza - 101,000 399,000 271,000 418,000 10/1/86 Birmingham/Greensprings - 347,000 1,173,000 339,000 282,000 10/1/86 Birmingham/Hoover-Lorna - 372,000 1,128,000 364,000 428,000 10/1/86 Midfield/Bessemer - 170,000 355,000 315,000 104,000 10/1/86 Huntsville/Leeman Ferry Rd. - 158,000 992,000 271,000 555,000 10/1/86 Huntsville/Drake - 253,000 1,172,000 252,000 532,000 10/1/86 Anniston/Whiteside - 59,000 566,000 200,000 332,000 10/1/86 Houston/Glenvista - 595,000 1,043,000 544,000 467,000 10/1/86 Houston/I-45 - 704,000 1,146,000 792,000 610,000 10/1/86 Houston/Rogerdale - 1,631,000 2,792,000 600,000 1,232,000 10/1/86 Houston/Gessner - 1,032,000 1,693,000 922,000 745,000 10/1/86 Houston/Richmond-Fairdale - 1,502,000 2,506,000 1,019,000 1,150,000 10/1/86 Houston/Gulfton - 1,732,000 3,036,000 977,000 1,385,000 10/1/86 Houston/Westpark - 503,000 854,000 195,000 433,000 10/1/86 Jonesboro - 157,000 718,000 234,000 371,000 10/1/86 Houston / South Loop West - 1,299,000 3,491,000 1,177,000 1,366,000 10/1/86 Houston / Plainfield Road - 904,000 2,319,000 708,000 920,000 10/1/86 Houston / North Freeway - 719,000 1,987,000 60,000 609,000 10/1/86 Houston / Old Katy Road - 1,365,000 3,431,000 996,000 1,274,000 10/1/86 Houston / Long Point - 451,000 1,187,000 611,000 563,000 10/1/86 Austin / Research Blvd. - 1,390,000 1,710,000 546,000 672,000 11/1/86 Arleta / Osborne Street - 987,000 663,000 267,000 290,000 12/1/86 Lynnwood / 196th Street - 1,063,000 1,602,000 5,763,000 571,000 12/1/86 N. Auburn / Auburn Way N. - 606,000 1,144,000 394,000 533,000 12/1/86 Gresham / Burnside & 202nd - 351,000 1,056,000 386,000 482,000 12/1/86 Denver / Sheridan Blvd. - 1,033,000 2,792,000 830,000 1,007,000 12/1/86 Marietta / Cobb Parkway - 536,000 2,764,000 739,000 1,016,000 12/1/86 Hillsboro / T.V. Highway - 461,000 574,000 266,000 414,000 12/1/86 San Antonio / West Sunset Road - 1,206,000 1,594,000 557,000 649,000 12/31/86 Monrovia / Myrtle Avenue 919,000 1,149,000 2,446,000 201,000 - 12/31/86 Chatsworth / Topanga 618,000 1,447,000 1,243,000 247,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - ------------------------------------------------------------------------------------------------------- 9/1/86 Lakewood / Wadsworth - 6th 1,071,000 4,844,000 5,915,000 2,674,000 10/1/86 Peralta/Fremont 852,000 1,834,000 2,686,000 965,000 10/1/86 Birmingham/Highland 150,000 1,359,000 1,509,000 758,000 10/1/86 Birmingham/Riverchase 278,000 2,400,000 2,678,000 1,292,000 10/1/86 Birmingham/Eastwood 232,000 2,032,000 2,264,000 1,062,000 10/1/86 Birmingham/Forestdale 190,000 1,682,000 1,872,000 866,000 10/1/86 Birmingham/Centerpoint 273,000 2,148,000 2,421,000 1,103,000 10/1/86 Birmingham/Roebuck Plaza 340,000 849,000 1,189,000 476,000 10/1/86 Birmingham/Greensprings 16,000 2,125,000 2,141,000 1,104,000 10/1/86 Birmingham/Hoover-Lorna 266,000 2,026,000 2,292,000 1,057,000 10/1/86 Midfield/Bessemer 95,000 849,000 944,000 454,000 10/1/86 Huntsville/Leeman Ferry Rd. 198,000 1,778,000 1,976,000 970,000 10/1/86 Huntsville/Drake 248,000 1,961,000 2,209,000 1,025,000 10/1/86 Anniston/Whiteside 107,000 1,050,000 1,157,000 582,000 10/1/86 Houston/Glenvista 596,000 2,053,000 2,649,000 1,141,000 10/1/86 Houston/I-45 705,000 2,547,000 3,252,000 1,488,000 10/1/86 Houston/Rogerdale 1,633,000 4,622,000 6,255,000 2,393,000 10/1/86 Houston/Gessner 1,033,000 3,359,000 4,392,000 1,885,000 10/1/86 Houston/Richmond-Fairdale 1,504,000 4,673,000 6,177,000 2,553,000 10/1/86 Houston/Gulfton 1,734,000 5,396,000 7,130,000 2,945,000 10/1/86 Houston/Westpark 504,000 1,481,000 1,985,000 775,000 10/1/86 Jonesboro 157,000 1,323,000 1,480,000 712,000 10/1/86 Houston / South Loop West 1,301,000 6,032,000 7,333,000 3,399,000 10/1/86 Houston / Plainfield Road 905,000 3,946,000 4,851,000 2,230,000 10/1/86 Houston / North Freeway 662,000 2,713,000 3,375,000 1,556,000 10/1/86 Houston / Old Katy Road 1,367,000 5,699,000 7,066,000 3,302,000 10/1/86 Houston / Long Point 452,000 2,360,000 2,812,000 1,383,000 10/1/86 Austin / Research Blvd. 1,392,000 2,926,000 4,318,000 1,618,000 11/1/86 Arleta / Osborne Street 988,000 1,219,000 2,207,000 684,000 12/1/86 Lynnwood / 196th Street 1,306,000 7,693,000 8,999,000 1,746,000 12/1/86 N. Auburn / Auburn Way N. 607,000 2,070,000 2,677,000 1,174,000 12/1/86 Gresham / Burnside & 202nd 351,000 1,924,000 2,275,000 1,071,000 12/1/86 Denver / Sheridan Blvd. 1,034,000 4,628,000 5,662,000 2,507,000 12/1/86 Marietta / Cobb Parkway 537,000 4,518,000 5,055,000 2,465,000 12/1/86 Hillsboro / T.V. Highway 462,000 1,253,000 1,715,000 770,000 12/1/86 San Antonio / West Sunset Road 1,208,000 2,798,000 4,006,000 1,538,000 12/31/86 Monrovia / Myrtle Avenue 1,150,000 2,646,000 3,796,000 1,715,000 12/31/86 Chatsworth / Topanga 1,449,000 1,488,000 2,937,000 1,100,000 F-43 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 12/31/86 Houston / Larkwood 223,000 247,000 602,000 356,000 - 12/31/86 Northridge 1,378,000 3,624,000 1,922,000 3,392,000 - 12/31/86 Santa Clara / Duane 548,000 1,950,000 1,004,000 394,000 - 12/31/86 Oyster Point - 1,569,000 1,490,000 365,000 - 12/31/86 Walnut - 767,000 613,000 3,592,000 - 3/1/87 Annandale / Ravensworth - 679,000 1,621,000 265,000 596,000 4/1/87 City Of Industry / Amar - 748,000 2,052,000 510,000 702,000 5/1/87 Oklahoma City / W. Hefner - 459,000 941,000 249,000 417,000 7/1/87 Oakbrook Terrace - 912,000 2,688,000 71,000 399,000 8/1/87 San Antonio/Austin Hwy. - 400,000 850,000 (44,000) 164,000 10/1/87 Plantation/S. State Rd. - 924,000 1,801,000 (225,000) 298,000 10/1/87 Rockville/Fredrick Rd. - 1,695,000 3,305,000 (219,000) 519,000 2/1/88 Anaheim/Lakeview - 995,000 1,505,000 8,000 256,000 6/7/88 Mesquite / Sorrento Drive - 928,000 1,011,000 3,400,000 - 7/1/88 Fort Wayne - 101,000 1,524,000 70,000 143,000 1/1/92 Costa Mesa - 533,000 980,000 673,000 - 3/1/92 Dallas / Walnut St. - 537,000 1,008,000 290,000 - 5/1/92 Camp Creek - 576,000 1,075,000 309,000 - 9/1/92 Orlando/W. Colonial - 368,000 713,000 149,000 - 9/1/92 Jacksonville/Arlington - 554,000 1,065,000 218,000 - 10/1/92 Stockton/Mariners - 381,000 730,000 177,000 - 11/18/92 Virginia Beach/General Booth Blvd - 599,000 1,119,000 385,000 - 1/1/93 Redwood City/Storage - 907,000 1,684,000 246,000 - 1/1/93 City Of Industry - 1,611,000 2,991,000 309,000 - 1/1/93 San Jose/Felipe - 1,124,000 2,088,000 308,000 - 1/1/93 Baldwin Park/Garvey Ave - 840,000 1,561,000 350,000 - 3/19/93 Westminister / W. 80th - 840,000 1,586,000 243,000 - 4/26/93 Costa Mesa / Newport 921,000 2,141,000 3,989,000 146,000 - 5/13/93 Austin /N. Lamar - 919,000 1,695,000 7,555,000 - 5/28/93 Jacksonville/Phillips Hwy. - 406,000 771,000 201,000 - 5/28/93 Tampa/Nebraska Avenue - 550,000 1,043,000 158,000 - 6/9/93 Calabasas / Ventura Blvd. - 1,762,000 3,269,000 190,000 - 6/9/93 Carmichael / Fair Oaks - 573,000 1,052,000 243,000 - 6/9/93 Santa Clara / Duane - 454,000 834,000 107,000 - 6/10/93 Citrus Heights / Sylvan Road - 438,000 822,000 193,000 - 6/25/93 Trenton / Allen Road - 623,000 1,166,000 218,000 - 6/30/93 Los Angeles/W.Jefferson Blvd - 1,085,000 2,017,000 169,000 - 7/16/93 Austin / So. Congress Ave - 777,000 1,445,000 331,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 12/31/86 Houston / Larkwood 247,000 958,000 1,205,000 582,000 12/31/86 Northridge 3,628,000 5,310,000 8,938,000 2,064,000 12/31/86 Santa Clara / Duane 1,952,000 1,396,000 3,348,000 873,000 12/31/86 Oyster Point 1,571,000 1,853,000 3,424,000 1,142,000 12/31/86 Walnut 770,000 4,202,000 4,972,000 861,000 3/1/87 Annandale / Ravensworth 680,000 2,481,000 3,161,000 1,360,000 4/1/87 City Of Industry / Amar 749,000 3,263,000 4,012,000 998,000 5/1/87 Oklahoma City / W. Hefner 460,000 1,606,000 2,066,000 868,000 7/1/87 Oakbrook Terrace 913,000 3,157,000 4,070,000 2,301,000 8/1/87 San Antonio/Austin Hwy. 400,000 970,000 1,370,000 737,000 10/1/87 Plantation/S. State Rd. 925,000 1,873,000 2,798,000 1,367,000 10/1/87 Rockville/Fredrick Rd. 1,697,000 3,603,000 5,300,000 2,596,000 2/1/88 Anaheim/Lakeview 996,000 1,768,000 2,764,000 1,255,000 6/7/88 Mesquite / Sorrento Drive 1,046,000 4,293,000 5,339,000 1,335,000 7/1/88 Fort Wayne 101,000 1,737,000 1,838,000 964,000 1/1/92 Costa Mesa 536,000 1,650,000 2,186,000 1,135,000 3/1/92 Dallas / Walnut St. 538,000 1,297,000 1,835,000 1,229,000 5/1/92 Camp Creek 577,000 1,383,000 1,960,000 651,000 9/1/92 Orlando/W. Colonial 368,000 862,000 1,230,000 413,000 9/1/92 Jacksonville/Arlington 555,000 1,282,000 1,837,000 606,000 10/1/92 Stockton/Mariners 381,000 907,000 1,288,000 422,000 11/18/92 Virginia Beach/General Booth Blvd 600,000 1,503,000 2,103,000 678,000 1/1/93 Redwood City/Storage 908,000 1,929,000 2,837,000 831,000 1/1/93 City Of Industry 1,613,000 3,298,000 4,911,000 1,329,000 1/1/93 San Jose/Felipe 1,125,000 2,395,000 3,520,000 1,034,000 1/1/93 Baldwin Park/Garvey Ave 841,000 1,910,000 2,751,000 840,000 3/19/93 Westminister / W. 80th 841,000 1,828,000 2,669,000 781,000 4/26/93 Costa Mesa / Newport 2,144,000 4,132,000 6,276,000 1,637,000 5/13/93 Austin /N. Lamar 1,423,000 8,746,000 10,169,000 1,997,000 5/28/93 Jacksonville/Phillips Hwy. 406,000 972,000 1,378,000 447,000 5/28/93 Tampa/Nebraska Avenue 551,000 1,200,000 1,751,000 512,000 6/9/93 Calabasas / Ventura Blvd. 1,764,000 3,457,000 5,221,000 1,413,000 6/9/93 Carmichael / Fair Oaks 574,000 1,294,000 1,868,000 576,000 6/9/93 Santa Clara / Duane 455,000 940,000 1,395,000 402,000 6/10/93 Citrus Heights / Sylvan Road 439,000 1,014,000 1,453,000 458,000 6/25/93 Trenton / Allen Road 624,000 1,383,000 2,007,000 550,000 6/30/93 Los Angeles/W.Jefferson Blvd 1,086,000 2,185,000 3,271,000 880,000 7/16/93 Austin / So. Congress Ave 778,000 1,775,000 2,553,000 812,000 F-44 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 8/1/93 Gaithersburg / E. Diamond - 602,000 1,139,000 165,000 - 8/11/93 Atlanta / Northside - 1,150,000 2,149,000 302,000 - 8/11/93 Smyrna/ Rosswill Rd - 446,000 842,000 204,000 - 8/13/93 So. Brunswick/Highway - 1,076,000 2,033,000 313,000 - 10/1/93 Denver / Federal Blvd - 875,000 1,633,000 194,000 - 10/1/93 Citrus Heights - 527,000 987,000 114,000 - 10/1/93 Lakewood / 6th Ave - 798,000 1,489,000 4,000 - 10/27/93 Houston / S Shaver St - 481,000 896,000 188,000 - 11/3/93 Upland/S. Euclid Ave. - 431,000 807,000 420,000 - 11/16/93 Norcross / Jimmy Carter - 627,000 1,167,000 198,000 - 11/16/93 Seattle / 13th - 1,085,000 2,015,000 622,000 - 12/9/93 Salt Lake City - 765,000 1,422,000 (25,000) - 12/16/93 West Valley City - 683,000 1,276,000 189,000 - 12/21/93 Pinellas Park / 34th St. W - 607,000 1,134,000 225,000 - 12/28/93 New Orleans / S. Carrollton Ave - 1,575,000 2,941,000 404,000 - 12/29/93 Orange / Main - 1,238,000 2,317,000 1,417,000 - 12/29/93 Sunnyvale / Wedell - 554,000 1,037,000 780,000 - 12/29/93 El Cajon / Magnolia - 421,000 791,000 533,000 - 12/29/93 Orlando / S. Semoran Blvd. - 462,000 872,000 647,000 - 12/29/93 Tampa / W. Hillsborough Ave - 352,000 665,000 428,000 - 12/29/93 Irving / West Loop 12 - 341,000 643,000 197,000 - 12/29/93 Fullerton / W. Commonwealth - 904,000 1,687,000 1,039,000 - 12/29/93 N. Lauderdale / Mcnab Rd - 628,000 1,182,000 701,000 - 12/29/93 Los Alimitos / Cerritos - 695,000 1,299,000 701,000 - 12/29/93 Frederick / Prospect Blvd. - 573,000 1,082,000 581,000 - 12/29/93 Indianapolis / E. Washington - 403,000 775,000 493,000 - 12/29/93 Gardena / Western Ave. - 552,000 1,035,000 594,000 - 12/29/93 Palm Bay / Bobcock Street - 409,000 775,000 527,000 - 1/10/94 Hialeah / W. 20Th Ave. - 1,855,000 3,497,000 221,000 - 1/12/94 Sunnyvale / N. Fair Oaks Ave - 689,000 1,285,000 331,000 - 1/12/94 Honolulu / Iwaena - - 3,382,000 688,000 - 1/12/94 Miami / Golden Glades - 579,000 1,081,000 397,000 - 1/21/94 Herndon / Centreville Road - 1,584,000 2,981,000 343,000 - 2/8/94 Las Vegas/S. Martin Luther King Blvd. - 1,383,000 2,592,000 1,073,000 - 2/28/94 Arlingtn/Old Jeffersn Davishwy - 735,000 1,399,000 284,000 - 3/8/94 Beaverton / Sw Barnes Road - 942,000 1,810,000 176,000 - 3/21/94 Austin / Arboretum - 473,000 897,000 2,773,000 - 3/25/94 Tinton Falls / Shrewsbury Ave - 1,074,000 2,033,000 226,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 8/1/93 Gaithersburg / E. Diamond 603,000 1,303,000 1,906,000 524,000 8/11/93 Atlanta / Northside 1,151,000 2,450,000 3,601,000 1,015,000 8/11/93 Smyrna/ Rosswill Rd 447,000 1,045,000 1,492,000 475,000 8/13/93 So. Brunswick/Highway 1,077,000 2,345,000 3,422,000 961,000 10/1/93 Denver / Federal Blvd 876,000 1,826,000 2,702,000 722,000 10/1/93 Citrus Heights 528,000 1,100,000 1,628,000 456,000 10/1/93 Lakewood / 6th Ave 686,000 1,605,000 2,291,000 631,000 10/27/93 Houston / S Shaver St 482,000 1,083,000 1,565,000 462,000 11/3/93 Upland/S. Euclid Ave. 509,000 1,149,000 1,658,000 465,000 11/16/93 Norcross / Jimmy Carter 628,000 1,364,000 1,992,000 555,000 11/16/93 Seattle / 13th 1,086,000 2,636,000 3,722,000 1,148,000 12/9/93 Salt Lake City 634,000 1,528,000 2,162,000 245,000 12/16/93 West Valley City 684,000 1,464,000 2,148,000 592,000 12/21/93 Pinellas Park / 34th St. W 608,000 1,358,000 1,966,000 567,000 12/28/93 New Orleans / S. Carrollton Ave 1,577,000 3,343,000 4,920,000 1,277,000 12/29/93 Orange / Main 1,595,000 3,377,000 4,972,000 1,252,000 12/29/93 Sunnyvale / Wedell 726,000 1,645,000 2,371,000 625,000 12/29/93 El Cajon / Magnolia 543,000 1,202,000 1,745,000 472,000 12/29/93 Orlando / S. Semoran Blvd. 602,000 1,379,000 1,981,000 554,000 12/29/93 Tampa / W. Hillsborough Ave 437,000 1,008,000 1,445,000 393,000 12/29/93 Irving / West Loop 12 355,000 826,000 1,181,000 345,000 12/29/93 Fullerton / W. Commonwealth 1,161,000 2,469,000 3,630,000 922,000 12/29/93 N. Lauderdale / Mcnab Rd 799,000 1,712,000 2,511,000 645,000 12/29/93 Los Alimitos / Cerritos 875,000 1,820,000 2,695,000 665,000 12/29/93 Frederick / Prospect Blvd. 693,000 1,543,000 2,236,000 578,000 12/29/93 Indianapolis / E. Washington 506,000 1,165,000 1,671,000 446,000 12/29/93 Gardena / Western Ave. 696,000 1,485,000 2,181,000 543,000 12/29/93 Palm Bay / Bobcock Street 526,000 1,185,000 1,711,000 453,000 1/10/94 Hialeah / W. 20Th Ave. 1,592,000 3,981,000 5,573,000 1,502,000 1/12/94 Sunnyvale / N. Fair Oaks Ave 658,000 1,647,000 2,305,000 610,000 1/12/94 Honolulu / Iwaena - 4,070,000 4,070,000 1,492,000 1/12/94 Miami / Golden Glades 558,000 1,499,000 2,057,000 597,000 1/21/94 Herndon / Centreville Road 1,360,000 3,548,000 4,908,000 1,146,000 2/8/94 Las Vegas/S. Martin Luther King Blvd1,438,000 3,610,000 5,048,000 1,336,000 2/28/94 Arlingtn/Old Jeffersn Davishwy 631,000 1,787,000 2,418,000 707,000 3/8/94 Beaverton / Sw Barnes Road 808,000 2,120,000 2,928,000 851,000 3/21/94 Austin / Arboretum 1,556,000 2,587,000 4,143,000 693,000 3/25/94 Tinton Falls / Shrewsbury Ave 922,000 2,411,000 3,333,000 947,000 F-45 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/25/94 East Brunswick / Milltown Road - 1,282,000 2,411,000 318,000 - 3/25/94 Mercerville / Quakerbridge Road - 1,109,000 2,111,000 257,000 - 3/31/94 Hypoluxo - 735,000 1,404,000 1,844,000 - 4/26/94 No. Highlands / Roseville Road - 980,000 1,835,000 333,000 - 5/12/94 Fort Pierce/Okeechobee Road - 438,000 842,000 280,000 - 5/24/94 Hempstead/Peninsula Blvd. - 2,053,000 3,832,000 300,000 - 5/24/94 La/Huntington - 483,000 905,000 152,000 - 6/9/94 Chattanooga / Brainerd Road - 613,000 1,170,000 232,000 - 6/9/94 Chattanooga / Ringgold Road - 761,000 1,433,000 396,000 - 6/18/94 Las Vegas / S. Valley View Blvd - 837,000 1,571,000 157,000 - 6/23/94 Las Vegas / Tropicana - 750,000 1,408,000 217,000 - 6/23/94 Henderson / Green Valley Pkwy - 1,047,000 1,960,000 179,000 - 6/24/94 Las Vegas / N. Lamb Blvd. - 869,000 1,629,000 39,000 - 6/30/94 Birmingham / W. Oxmoor Road - 532,000 1,004,000 386,000 - 7/20/94 Milpitas / Dempsey Road - 1,260,000 2,358,000 206,000 - 8/17/94 New Orleans/I-10 - 784,000 1,470,000 198,000 - 8/17/94 Beaverton / S.W. Denny Road - 663,000 1,245,000 117,000 - 8/17/94 Irwindale / Central Ave. - 674,000 1,263,000 93,000 - 8/17/94 Suitland / St. Barnabas Rd - 1,530,000 2,913,000 292,000 - 8/17/94 North Brunswick / How Lane - 1,238,000 2,323,000 115,000 - 8/17/94 Lombard / 64th - 847,000 1,583,000 131,000 - 8/17/94 Alsip / 27th - 406,000 765,000 109,000 - 9/15/94 Huntsville / Old Monrovia Road - 613,000 1,157,000 245,000 - 9/27/94 West Haven / Bull Hill Lane - 455,000 873,000 5,297,000 - 9/30/94 San Francisco / Marin St. - 1,227,000 2,339,000 1,229,000 - 9/30/94 Baltimore / Hillen Street - 580,000 1,095,000 261,000 - 9/30/94 San Francisco /10th & Howard - 1,423,000 2,668,000 251,000 - 9/30/94 Montebello / E. Whittier - 383,000 732,000 150,000 - 9/30/94 Arlington / Collins - 228,000 435,000 243,000 - 9/30/94 Miami / S.W. 119th Ave - 656,000 1,221,000 66,000 - 9/30/94 Blackwood / Erial Road - 774,000 1,437,000 119,000 - 9/30/94 Concord / Monument - 1,092,000 2,027,000 378,000 - 9/30/94 Rochester / Lee Road - 469,000 871,000 224,000 - 9/30/94 Houston / Bellaire - 623,000 1,157,000 215,000 - 9/30/94 Austin / Lamar Blvd - 781,000 1,452,000 147,000 - 9/30/94 Milwaukee / Lovers Lane Rd - 469,000 871,000 119,000 - 9/30/94 Monterey / Del Rey Oaks - 1,093,000 1,897,000 100,000 - 9/30/94 St. Petersburg / 66Th St. - 427,000 793,000 173,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 3/25/94 East Brunswick / Milltown Road 1,100,000 2,911,000 4,011,000 1,123,000 3/25/94 Mercerville / Quakerbridge Road 951,000 2,526,000 3,477,000 978,000 3/31/94 Hypoluxo 631,000 3,352,000 3,983,000 2,342,000 4/26/94 No. Highlands / Roseville Road 841,000 2,307,000 3,148,000 899,000 5/12/94 Fort Pierce/Okeechobee Road 375,000 1,185,000 1,560,000 502,000 5/24/94 Hempstead/Peninsula Blvd. 1,765,000 4,420,000 6,185,000 1,601,000 5/24/94 La/Huntington 414,000 1,126,000 1,540,000 448,000 6/9/94 Chattanooga / Brainerd Road 526,000 1,489,000 2,015,000 586,000 6/9/94 Chattanooga / Ringgold Road 654,000 1,936,000 2,590,000 782,000 6/18/94 Las Vegas / S. Valley View Blvd 719,000 1,846,000 2,565,000 691,000 6/23/94 Las Vegas / Tropicana 644,000 1,731,000 2,375,000 670,000 6/23/94 Henderson / Green Valley Pkwy 899,000 2,287,000 3,186,000 855,000 6/24/94 Las Vegas / N. Lamb Blvd. 670,000 1,867,000 2,537,000 358,000 6/30/94 Birmingham / W. Oxmoor Road 462,000 1,460,000 1,922,000 698,000 7/20/94 Milpitas / Dempsey Road 1,081,000 2,743,000 3,824,000 1,004,000 8/17/94 New Orleans/I-10 673,000 1,779,000 2,452,000 664,000 8/17/94 Beaverton / S.W. Denny Road 569,000 1,456,000 2,025,000 534,000 8/17/94 Irwindale / Central Ave. 579,000 1,451,000 2,030,000 525,000 8/17/94 Suitland / St. Barnabas Rd 1,314,000 3,421,000 4,735,000 1,248,000 8/17/94 North Brunswick / How Lane 1,063,000 2,613,000 3,676,000 911,000 8/17/94 Lombard / 64th 727,000 1,834,000 2,561,000 668,000 8/17/94 Alsip / 27th 348,000 932,000 1,280,000 359,000 9/15/94 Huntsville / Old Monrovia Road 526,000 1,489,000 2,015,000 577,000 9/27/94 West Haven / Bull Hill Lane 1,966,000 4,659,000 6,625,000 851,000 9/30/94 San Francisco / Marin St. 1,373,000 3,422,000 4,795,000 1,203,000 9/30/94 Baltimore / Hillen Street 498,000 1,438,000 1,936,000 539,000 9/30/94 San Francisco /10th & Howard 1,222,000 3,120,000 4,342,000 1,106,000 9/30/94 Montebello / E. Whittier 329,000 936,000 1,265,000 359,000 9/30/94 Arlington / Collins 195,000 711,000 906,000 362,000 9/30/94 Miami / S.W. 119th Ave 564,000 1,379,000 1,943,000 484,000 9/30/94 Blackwood / Erial Road 664,000 1,666,000 2,330,000 585,000 9/30/94 Concord / Monument 937,000 2,560,000 3,497,000 949,000 9/30/94 Rochester / Lee Road 402,000 1,162,000 1,564,000 449,000 9/30/94 Houston / Bellaire 535,000 1,460,000 1,995,000 529,000 9/30/94 Austin / Lamar Blvd 670,000 1,710,000 2,380,000 621,000 9/30/94 Milwaukee / Lovers Lane Rd 402,000 1,057,000 1,459,000 411,000 9/30/94 Monterey / Del Rey Oaks 904,000 2,186,000 3,090,000 814,000 9/30/94 St. Petersburg / 66Th St. 366,000 1,027,000 1,393,000 403,000 F-46 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 9/30/94 Dayton Bch / N. Nova Road - 396,000 735,000 150,000 - 9/30/94 Maple Shade / Route 38 - 994,000 1,846,000 179,000 - 9/30/94 Marlton / Route 73 N. - 938,000 1,742,000 82,000 - 9/30/94 Naperville / E. Ogden Ave - 683,000 1,268,000 116,000 - 9/30/94 Long Beach / South Street - 1,778,000 3,307,000 283,000 - 9/30/94 Aloha / S.W. Shaw - 805,000 1,495,000 137,000 - 9/30/94 Alexandria / S. Pickett - 1,550,000 2,879,000 222,000 - 9/30/94 Houston / Highway 6 North - 1,120,000 2,083,000 225,000 - 9/30/94 San Antonio/Nacogdoches Rd - 571,000 1,060,000 209,000 - 9/30/94 San Ramon/San Ramon Valley - 1,530,000 2,840,000 369,000 - 9/30/94 San Rafael / Merrydale Rd - 1,705,000 3,165,000 213,000 - 9/30/94 San Antonio / Austin Hwy - 592,000 1,098,000 185,000 - 9/30/94 Sharonville / E. Kemper - 574,000 1,070,000 236,000 - 10/7/94 Alcoa / Airport Plaza Drive - 543,000 1,017,000 182,000 - 10/13/94 Davie / State Road 84 - 744,000 1,467,000 867,000 - 10/13/94 Carrollton / Marsh Lane - 770,000 1,437,000 1,402,000 - 10/31/94 Sherman Oaks / Van Nuys Blvd - 1,278,000 2,461,000 908,000 - 12/19/94 Salt Lake City/West North Temple - 490,000 917,000 (55,000) - 12/27/94 Knoxville / Chapman Highway - 753,000 1,411,000 412,000 - 12/28/94 Milpitas / Watson - 1,575,000 2,925,000 239,000 - 12/28/94 Las Vegas / Jones Blvd - 1,208,000 2,243,000 163,000 - 12/28/94 Venice / Guthrie - 578,000 1,073,000 131,000 - 12/30/94 Apple Valley / Foliage Ave - 910,000 1,695,000 223,000 - 1/4/95 Chula Vista / Main Street - 735,000 1,802,000 184,000 - 1/5/95 Pantego / West Park - 315,000 735,000 156,000 - 1/12/95 Roswell / Alpharetta - 423,000 993,000 303,000 - 1/23/95 North Bergen / Tonne - 1,564,000 3,772,000 340,000 - 1/23/95 San Leandro / Hesperian - 734,000 1,726,000 127,000 - 1/24/95 Nashville / Elm Hill - 338,000 791,000 362,000 - 2/3/95 Reno / S. Mccarron Blvd - 1,080,000 2,537,000 176,000 - 2/15/95 Schiller Park - 1,688,000 3,939,000 264,000 - 2/15/95 Lansing - 1,514,000 3,534,000 161,000 - 2/15/95 Pleasanton - 1,257,000 2,932,000 71,000 - 2/15/95 LA/Sepulveda - 1,453,000 3,390,000 112,000 - 2/28/95 Decatur / Flat Shoal - 970,000 2,288,000 409,000 - 2/28/95 Smyrna / S. Cobb - 663,000 1,559,000 241,000 - 2/28/95 Downey / Bellflower - 916,000 2,158,000 135,000 - 2/28/95 Vallejo / Lincoln - 445,000 1,052,000 193,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 9/30/94 Dayton Bch / N. Nova Road 339,000 942,000 1,281,000 367,000 9/30/94 Maple Shade / Route 38 853,000 2,166,000 3,019,000 766,000 9/30/94 Marlton / Route 73 N. 805,000 1,957,000 2,762,000 685,000 9/30/94 Naperville / E. Ogden Ave 586,000 1,481,000 2,067,000 530,000 9/30/94 Long Beach / South Street 1,526,000 3,842,000 5,368,000 1,340,000 9/30/94 Aloha / S.W. Shaw 691,000 1,746,000 2,437,000 634,000 9/30/94 Alexandria / S. Pickett 1,331,000 3,320,000 4,651,000 1,156,000 9/30/94 Houston / Highway 6 North 961,000 2,467,000 3,428,000 916,000 9/30/94 San Antonio/Nacogdoches Rd 490,000 1,350,000 1,840,000 487,000 9/30/94 San Ramon/San Ramon Valley 1,313,000 3,426,000 4,739,000 1,265,000 9/30/94 San Rafael / Merrydale Rd 1,463,000 3,620,000 5,083,000 1,279,000 9/30/94 San Antonio / Austin Hwy 508,000 1,367,000 1,875,000 531,000 9/30/94 Sharonville / E. Kemper 493,000 1,387,000 1,880,000 497,000 10/7/94 Alcoa / Airport Plaza Drive 466,000 1,276,000 1,742,000 517,000 10/13/94 Davie / State Road 84 639,000 2,439,000 3,078,000 839,000 10/13/94 Carrollton / Marsh Lane 1,023,000 2,586,000 3,609,000 881,000 10/31/94 Sherman Oaks / Van Nuys Blvd 1,425,000 3,222,000 4,647,000 1,176,000 12/19/94 Salt Lake City/West North Temple 385,000 967,000 1,352,000 151,000 12/27/94 Knoxville / Chapman Highway 646,000 1,930,000 2,576,000 761,000 12/28/94 Milpitas / Watson 1,352,000 3,387,000 4,739,000 1,157,000 12/28/94 Las Vegas / Jones Blvd 1,036,000 2,578,000 3,614,000 885,000 12/28/94 Venice / Guthrie 496,000 1,286,000 1,782,000 452,000 12/30/94 Apple Valley / Foliage Ave 781,000 2,047,000 2,828,000 723,000 1/4/95 Chula Vista / Main Street 736,000 1,985,000 2,721,000 774,000 1/5/95 Pantego / West Park 315,000 891,000 1,206,000 362,000 1/12/95 Roswell / Alpharetta 423,000 1,296,000 1,719,000 485,000 1/23/95 North Bergen / Tonne 1,553,000 4,123,000 5,676,000 1,354,000 1/23/95 San Leandro / Hesperian 735,000 1,852,000 2,587,000 623,000 1/24/95 Nashville / Elm Hill 338,000 1,153,000 1,491,000 533,000 2/3/95 Reno / S. Mccarron Blvd 1,081,000 2,712,000 3,793,000 923,000 2/15/95 Schiller Park 1,690,000 4,201,000 5,891,000 1,212,000 2/15/95 Lansing 1,516,000 3,693,000 5,209,000 1,031,000 2/15/95 Pleasanton 1,258,000 3,002,000 4,260,000 828,000 2/15/95 LA/Sepulveda 1,455,000 3,500,000 4,955,000 976,000 2/28/95 Decatur / Flat Shoal 971,000 2,696,000 3,667,000 1,017,000 2/28/95 Smyrna / S. Cobb 664,000 1,799,000 2,463,000 660,000 2/28/95 Downey / Bellflower 917,000 2,292,000 3,209,000 763,000 2/28/95 Vallejo / Lincoln 446,000 1,244,000 1,690,000 460,000 F-47 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 2/28/95 Lynnwood / 180th St - 516,000 1,205,000 205,000 - 2/28/95 Kent / Pacific Hwy - 728,000 1,711,000 148,000 - 2/28/95 Kirkland - 1,254,000 2,932,000 217,000 - 2/28/95 Federal Way/Pacific - 785,000 1,832,000 270,000 - 2/28/95 Tampa / S. Dale - 791,000 1,852,000 234,000 - 2/28/95 Burlingame/Adrian Rd - 2,280,000 5,349,000 315,000 - 2/28/95 Miami / Cloverleaf - 606,000 1,426,000 218,000 - 2/28/95 Pinole / San Pablo - 639,000 1,502,000 233,000 - 2/28/95 South Gate / Firesto - 1,442,000 3,449,000 350,000 - 2/28/95 San Jose / Mabury - 892,000 2,088,000 141,000 - 2/28/95 La Puente / Valley Blvd - 591,000 1,390,000 222,000 - 2/28/95 San Jose / Capitol E - 1,215,000 2,852,000 145,000 - 2/28/95 Milwaukie / 40th Street - 576,000 1,388,000 114,000 - 2/28/95 Portland / N. Lombard - 812,000 1,900,000 199,000 - 2/28/95 Miami / Biscayne - 1,313,000 3,076,000 131,000 - 2/28/95 Chicago / Clark Street - 442,000 1,031,000 328,000 - 2/28/95 Palatine / Dundee - 698,000 1,643,000 178,000 - 2/28/95 Williamsville/Transit - 284,000 670,000 181,000 - 2/28/95 Amherst / Sheridan - 484,000 1,151,000 158,000 - 3/2/95 Everett / Highway 99 - 859,000 2,022,000 234,000 - 3/2/95 Burien / 1St Ave South - 763,000 1,783,000 263,000 - 3/2/95 Kent / South 238th Street - 763,000 1,783,000 267,000 - 3/31/95 Cheverly / Central Ave - 911,000 2,164,000 166,000 - 5/1/95 Sandy / S. State Street - 1,043,000 2,442,000 (302,000) - 5/3/95 Largo / Ulmerton Roa - 263,000 654,000 139,000 - 5/8/95 Fairfield/Western Street - 439,000 1,030,000 85,000 - 5/8/95 Dallas / W. Mockingbird - 1,440,000 3,371,000 163,000 - 5/8/95 East Point / Lakewood - 884,000 2,071,000 333,000 - 5/25/95 Falls Church / Gallo - 350,000 835,000 212,000 - 6/12/95 Baltimore / Old Waterloo - 769,000 1,850,000 134,000 - 6/12/95 Pleasant Hill / Hookston - 766,000 1,848,000 133,000 - 6/12/95 Mountain View/Old Middlefield - 2,095,000 4,913,000 107,000 - 6/30/95 San Jose / Blossom Hill - 1,467,000 3,444,000 179,000 - 6/30/95 Fairfield / Kings Highway - 1,811,000 4,273,000 224,000 - 6/30/95 Pacoima / Paxton Street 1,008,000 840,000 1,976,000 139,000 - 6/30/95 Portland / Prescott - 647,000 1,509,000 179,000 - 6/30/95 St. Petersburg - 352,000 827,000 198,000 - 6/30/95 Dallas / Audelia Road - 1,166,000 2,725,000 822,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 2/28/95 Lynnwood / 180th St 517,000 1,409,000 1,926,000 526,000 2/28/95 Kent / Pacific Hwy 729,000 1,858,000 2,587,000 643,000 2/28/95 Kirkland 1,255,000 3,148,000 4,403,000 1,053,000 2/28/95 Federal Way/Pacific 786,000 2,101,000 2,887,000 794,000 2/28/95 Tampa / S. Dale 792,000 2,085,000 2,877,000 762,000 2/28/95 Burlingame/Adrian Rd 2,283,000 5,661,000 7,944,000 1,889,000 2/28/95 Miami / Cloverleaf 607,000 1,643,000 2,250,000 593,000 2/28/95 Pinole / San Pablo 640,000 1,734,000 2,374,000 651,000 2/28/95 South Gate / Firesto 1,444,000 3,797,000 5,241,000 1,370,000 2/28/95 San Jose / Mabury 893,000 2,228,000 3,121,000 721,000 2/28/95 La Puente / Valley Blvd 592,000 1,611,000 2,203,000 620,000 2/28/95 San Jose / Capitol E 1,216,000 2,996,000 4,212,000 1,007,000 2/28/95 Milwaukie / 40th Street 580,000 1,498,000 2,078,000 530,000 2/28/95 Portland / N. Lombard 813,000 2,098,000 2,911,000 724,000 2/28/95 Miami / Biscayne 1,315,000 3,205,000 4,520,000 1,061,000 2/28/95 Chicago / Clark Street 443,000 1,358,000 1,801,000 516,000 2/28/95 Palatine / Dundee 699,000 1,820,000 2,519,000 643,000 2/28/95 Williamsville/Transit 284,000 851,000 1,135,000 320,000 2/28/95 Amherst / Sheridan 485,000 1,308,000 1,793,000 478,000 3/2/95 Everett / Highway 99 860,000 2,255,000 3,115,000 822,000 3/2/95 Burien / 1St Ave South 764,000 2,045,000 2,809,000 780,000 3/2/95 Kent / South 238th Street 764,000 2,049,000 2,813,000 771,000 3/31/95 Cheverly / Central Ave 912,000 2,329,000 3,241,000 768,000 5/1/95 Sandy / S. State Street 924,000 2,259,000 3,183,000 349,000 5/3/95 Largo / Ulmerton Roa 263,000 793,000 1,056,000 334,000 5/8/95 Fairfield/Western Street 440,000 1,114,000 1,554,000 377,000 5/8/95 Dallas / W. Mockingbird 1,442,000 3,532,000 4,974,000 1,138,000 5/8/95 East Point / Lakewood 885,000 2,403,000 3,288,000 862,000 5/25/95 Falls Church / Gallo 350,000 1,047,000 1,397,000 447,000 6/12/95 Baltimore / Old Waterloo 770,000 1,983,000 2,753,000 641,000 6/12/95 Pleasant Hill / Hookston 767,000 1,980,000 2,747,000 648,000 6/12/95 Mountain View/Old Middlefield 2,097,000 5,018,000 7,115,000 1,558,000 6/30/95 San Jose / Blossom Hill 1,469,000 3,621,000 5,090,000 1,159,000 6/30/95 Fairfield / Kings Highway 1,813,000 4,495,000 6,308,000 1,466,000 6/30/95 Pacoima / Paxton Street 841,000 2,114,000 2,955,000 677,000 6/30/95 Portland / Prescott 648,000 1,687,000 2,335,000 577,000 6/30/95 St. Petersburg 352,000 1,025,000 1,377,000 380,000 6/30/95 Dallas / Audelia Road 1,167,000 3,546,000 4,713,000 1,369,000 F-48 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 6/30/95 Miami Gardens - 823,000 1,929,000 183,000 - 6/30/95 Grand Prairie / 19th - 566,000 1,329,000 145,000 - 6/30/95 Joliet / Jefferson Street - 501,000 1,181,000 175,000 - 6/30/95 Bridgeton / Pennridge - 283,000 661,000 171,000 - 6/30/95 Portland / S.E.92nd - 638,000 1,497,000 167,000 - 6/30/95 Houston / S.W. Freeway - 537,000 1,254,000 5,294,000 - 6/30/95 Milwaukee / Brown - 358,000 849,000 164,000 - 6/30/95 Orlando / W. Oak Ridge - 698,000 1,642,000 205,000 - 6/30/95 Lauderhill / State Road - 644,000 1,508,000 135,000 - 6/30/95 Orange Park /Blanding Blvd - 394,000 918,000 204,000 - 6/30/95 St. Petersburg /Joe'S Creek - 704,000 1,642,000 197,000 - 6/30/95 St. Louis / Page Service Drive - 531,000 1,241,000 169,000 - 6/30/95 Independence /E. 42nd - 438,000 1,023,000 176,000 - 6/30/95 Cherry Hill / Dobbs Lane - 716,000 1,676,000 123,000 - 6/30/95 Edgewater Park / Route 130 - 683,000 1,593,000 113,000 - 6/30/95 Beaverton / S.W. 110 - 572,000 1,342,000 152,000 - 6/30/95 Markham / W. 159Th Place - 230,000 539,000 129,000 - 6/30/95 Houston / N.W. Freeway - 447,000 1,066,000 122,000 - 6/30/95 Portland / Gantenbein - 537,000 1,262,000 165,000 - 6/30/95 Upper Chichester/Market St. - 569,000 1,329,000 113,000 - 6/30/95 Fort Worth / Hwy 80 - 379,000 891,000 132,000 - 6/30/95 Greenfield/ S. 108th - 728,000 1,707,000 204,000 - 6/30/95 Altamonte Springs - 566,000 1,326,000 118,000 - 6/30/95 East Hazel Crest / Halsted - 483,000 1,127,000 165,000 - 6/30/95 Seattle / Delridge Way - 760,000 1,779,000 163,000 - 6/30/95 Elmhurst / Lake Frontage Rd - 748,000 1,758,000 156,000 - 6/30/95 Los Angeles / Beverly Blvd - 787,000 1,886,000 313,000 - 6/30/95 Lawrenceville / Brunswick - 841,000 1,961,000 115,000 - 6/30/95 Richmond / Carlson - 865,000 2,025,000 297,000 - 6/30/95 Liverpool / Oswego Road - 545,000 1,279,000 245,000 - 6/30/95 Rochester / East Ave - 578,000 1,375,000 150,000 - 6/30/95 Pasadena / E. Beltway - 757,000 1,767,000 140,000 - 7/13/95 Tarzana / Burbank Blvd - 2,895,000 6,823,000 391,000 - 7/31/95 Orlando / Lakehurst 911,000 450,000 1,063,000 152,000 - 7/31/95 Livermore / Portola 1,222,000 921,000 2,157,000 190,000 - 7/31/95 San Jose / Tully 1,512,000 912,000 2,137,000 277,000 - 7/31/95 Mission Bay 3,752,000 1,617,000 3,785,000 461,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 6/30/95 Miami Gardens 824,000 2,111,000 2,935,000 693,000 6/30/95 Grand Prairie / 19th 567,000 1,473,000 2,040,000 504,000 6/30/95 Joliet / Jefferson Street 502,000 1,355,000 1,857,000 474,000 6/30/95 Bridgeton / Pennridge 283,000 832,000 1,115,000 319,000 6/30/95 Portland / S.E.92nd 639,000 1,663,000 2,302,000 577,000 6/30/95 Houston / S.W. Freeway 1,608,000 5,477,000 7,085,000 634,000 6/30/95 Milwaukee / Brown 358,000 1,013,000 1,371,000 366,000 6/30/95 Orlando / W. Oak Ridge 699,000 1,846,000 2,545,000 653,000 6/30/95 Lauderhill / State Road 645,000 1,642,000 2,287,000 557,000 6/30/95 Orange Park /Blanding Blvd 394,000 1,122,000 1,516,000 411,000 6/30/95 St. Petersburg /Joe'S Creek 705,000 1,838,000 2,543,000 610,000 6/30/95 St. Louis / Page Service Drive 532,000 1,409,000 1,941,000 486,000 6/30/95 Independence /E. 42nd 439,000 1,198,000 1,637,000 432,000 6/30/95 Cherry Hill / Dobbs Lane 717,000 1,798,000 2,515,000 565,000 6/30/95 Edgewater Park / Route 130 684,000 1,705,000 2,389,000 539,000 6/30/95 Beaverton / S.W. 110 573,000 1,493,000 2,066,000 504,000 6/30/95 Markham / W. 159Th Place 230,000 668,000 898,000 253,000 6/30/95 Houston / N.W. Freeway 448,000 1,187,000 1,635,000 436,000 6/30/95 Portland / Gantenbein 538,000 1,426,000 1,964,000 478,000 6/30/95 Upper Chichester/Market St. 570,000 1,441,000 2,011,000 477,000 6/30/95 Fort Worth / Hwy 80 379,000 1,023,000 1,402,000 365,000 6/30/95 Greenfield/ S. 108th 729,000 1,910,000 2,639,000 651,000 6/30/95 Altamonte Springs 567,000 1,443,000 2,010,000 480,000 6/30/95 East Hazel Crest / Halsted 484,000 1,291,000 1,775,000 460,000 6/30/95 Seattle / Delridge Way 761,000 1,941,000 2,702,000 656,000 6/30/95 Elmhurst / Lake Frontage Rd 749,000 1,913,000 2,662,000 631,000 6/30/95 Los Angeles / Beverly Blvd 788,000 2,198,000 2,986,000 829,000 6/30/95 Lawrenceville / Brunswick 842,000 2,075,000 2,917,000 658,000 6/30/95 Richmond / Carlson 866,000 2,321,000 3,187,000 773,000 6/30/95 Liverpool / Oswego Road 546,000 1,523,000 2,069,000 518,000 6/30/95 Rochester / East Ave 579,000 1,524,000 2,103,000 519,000 6/30/95 Pasadena / E. Beltway 758,000 1,906,000 2,664,000 622,000 7/13/95 Tarzana / Burbank Blvd 2,898,000 7,211,000 10,109,000 2,407,000 7/31/95 Orlando / Lakehurst 451,000 1,214,000 1,665,000 409,000 7/31/95 Livermore / Portola 922,000 2,346,000 3,268,000 767,000 7/31/95 San Jose / Tully 913,000 2,413,000 3,326,000 799,000 7/31/95 Mission Bay 1,619,000 4,244,000 5,863,000 1,469,000 F-49 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 7/31/95 Las Vegas / Decatur - 1,147,000 2,697,000 278,000 - 7/31/95 Pleasanton / Stanley - 1,624,000 3,811,000 203,000 - 7/31/95 Castro Valley / Grove - 757,000 1,772,000 85,000 - 7/31/95 Honolulu / Kaneohe - 1,215,000 2,846,000 2,037,000 - 7/31/95 Chicago / Wabash Ave - 645,000 1,535,000 646,000 - 7/31/95 Springfield / Parker - 765,000 1,834,000 149,000 - 7/31/95 Huntington Bch/Gotham - 765,000 1,808,000 168,000 - 7/31/95 Tucker / Lawrenceville - 630,000 1,480,000 175,000 - 7/31/95 Marietta / Canton Road - 600,000 1,423,000 226,000 - 7/31/95 Wheeling / Hintz - 450,000 1,054,000 120,000 - 8/1/95 Gresham / Division - 607,000 1,428,000 102,000 - 8/1/95 Tucker / Lawrenceville - 600,000 1,405,000 254,000 - 8/1/95 Decatur / Covington - 720,000 1,694,000 199,000 - 8/11/95 Studio City/Ventura - 1,285,000 3,015,000 157,000 - 8/12/95 Smyrna / Hargrove Road - 1,020,000 3,038,000 346,000 - 9/1/95 Hayward / Mission Blvd - 1,020,000 2,383,000 158,000 - 9/1/95 Park City / Belvider - 600,000 1,405,000 105,000 - 9/1/95 New Castle/Dupont Parkway - 990,000 2,369,000 158,000 - 9/1/95 Las Vegas / Rainbow - 1,050,000 2,459,000 113,000 - 9/1/95 Mountain View / Reng - 945,000 2,216,000 126,000 - 9/1/95 Venice / Cadillac - 930,000 2,182,000 213,000 - 9/1/95 Simi Valley /Los Angeles - 1,590,000 3,724,000 190,000 - 9/1/95 Spring Valley/Foreman - 1,095,000 2,572,000 156,000 - 9/6/95 Darien / Frontage Road - 975,000 2,321,000 104,000 - 9/30/95 Whittier - 215,000 384,000 206,000 772,000 9/30/95 Van Nuys/Balboa - 295,000 657,000 130,000 1,165,000 9/30/95 Huntington Beach - 176,000 321,000 170,000 723,000 9/30/95 Monterey Park 82,000 124,000 346,000 129,000 785,000 9/30/95 Downey - 191,000 317,000 154,000 816,000 9/30/95 Del Amo - 474,000 742,000 144,000 940,000 9/30/95 Carson - 375,000 735,000 119,000 422,000 9/30/95 Van Nuys/Balboa Blvd - 1,920,000 4,504,000 317,000 - 10/31/95 San Lorenzo /Hesperian - 1,590,000 3,716,000 381,000 - 10/31/95 Chicago / W. 47th Street - 300,000 708,000 202,000 - 10/31/95 Los Angeles / Eastern - 455,000 1,070,000 133,000 - 11/15/95 Costa Mesa - 522,000 1,218,000 68,000 - 11/15/95 Plano / E. 14th - 705,000 1,646,000 91,000 - 11/15/95 Citrus Heights/Sunrise - 520,000 1,213,000 125,000 - 11/15/95 Modesto/Briggsmore Ave - 470,000 1,097,000 111,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 7/31/95 Las Vegas / Decatur 1,148,000 2,974,000 4,122,000 968,000 7/31/95 Pleasanton / Stanley 1,626,000 4,012,000 5,638,000 1,264,000 7/31/95 Castro Valley / Grove 758,000 1,856,000 2,614,000 589,000 7/31/95 Honolulu / Kaneohe 2,136,000 3,962,000 6,098,000 1,110,000 7/31/95 Chicago / Wabash Ave 646,000 2,180,000 2,826,000 911,000 7/31/95 Springfield / Parker 766,000 1,982,000 2,748,000 650,000 7/31/95 Huntington Bch/Gotham 766,000 1,975,000 2,741,000 670,000 7/31/95 Tucker / Lawrenceville 631,000 1,654,000 2,285,000 585,000 7/31/95 Marietta / Canton Road 601,000 1,648,000 2,249,000 582,000 7/31/95 Wheeling / Hintz 451,000 1,173,000 1,624,000 405,000 8/1/95 Gresham / Division 608,000 1,529,000 2,137,000 503,000 8/1/95 Tucker / Lawrenceville 601,000 1,658,000 2,259,000 601,000 8/1/95 Decatur / Covington 721,000 1,892,000 2,613,000 653,000 8/11/95 Studio City/Ventura 1,287,000 3,170,000 4,457,000 992,000 8/12/95 Smyrna / Hargrove Road 1,021,000 3,383,000 4,404,000 1,027,000 9/1/95 Hayward / Mission Blvd 1,021,000 2,540,000 3,561,000 793,000 9/1/95 Park City / Belvider 601,000 1,509,000 2,110,000 478,000 9/1/95 New Castle/Dupont Parkway 991,000 2,526,000 3,517,000 789,000 9/1/95 Las Vegas / Rainbow 1,051,000 2,571,000 3,622,000 807,000 9/1/95 Mountain View / Reng 946,000 2,341,000 3,287,000 734,000 9/1/95 Venice / Cadillac 931,000 2,394,000 3,325,000 800,000 9/1/95 Simi Valley /Los Angeles 1,592,000 3,912,000 5,504,000 1,233,000 9/1/95 Spring Valley/Foreman 1,096,000 2,727,000 3,823,000 851,000 9/6/95 Darien / Frontage Road 976,000 2,424,000 3,400,000 784,000 9/30/95 Whittier 215,000 1,362,000 1,577,000 456,000 9/30/95 Van Nuys/Balboa 295,000 1,952,000 2,247,000 722,000 9/30/95 Huntington Beach 176,000 1,214,000 1,390,000 433,000 9/30/95 Monterey Park 124,000 1,260,000 1,384,000 477,000 9/30/95 Downey 191,000 1,287,000 1,478,000 459,000 9/30/95 Del Amo 475,000 1,825,000 2,300,000 826,000 9/30/95 Carson 375,000 1,276,000 1,651,000 397,000 9/30/95 Van Nuys/Balboa Blvd 1,922,000 4,819,000 6,741,000 1,310,000 10/31/95 San Lorenzo /Hesperian 1,592,000 4,095,000 5,687,000 1,029,000 10/31/95 Chicago / W. 47th Street 300,000 910,000 1,210,000 279,000 10/31/95 Los Angeles / Eastern 456,000 1,202,000 1,658,000 357,000 11/15/95 Costa Mesa 523,000 1,285,000 1,808,000 385,000 11/15/95 Plano / E. 14th 706,000 1,736,000 2,442,000 503,000 11/15/95 Citrus Heights/Sunrise 521,000 1,337,000 1,858,000 434,000 11/15/95 Modesto/Briggsmore Ave 471,000 1,207,000 1,678,000 376,000 F-50 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 11/15/95 So San Francisco/Spruce - 1,905,000 4,444,000 346,000 - 11/15/95 Pacheco/Buchanan Circle - 1,681,000 3,951,000 209,000 - 11/16/95 Palm Beach Gardens - 657,000 1,540,000 150,000 - 11/16/95 Delray Beach - 600,000 1,407,000 168,000 - 1/1/96 Bensenville/York Rd - 667,000 1,602,000 175,000 895,000 1/1/96 Louisville/Preston - 211,000 1,060,000 78,000 594,000 1/1/96 San Jose/Aborn Road - 615,000 1,342,000 97,000 759,000 1/1/96 Englewood/Federal - 481,000 1,395,000 128,000 777,000 1/1/96 W. Hollywood/Santa Monica - 3,415,000 4,577,000 210,000 2,552,000 1/1/96 Orland Hills/W. 159th - 917,000 2,392,000 206,000 1,342,000 1/1/96 Merrionette Park - 818,000 2,020,000 95,000 1,122,000 1/1/96 Denver/S Quebec - 1,849,000 1,941,000 171,000 1,086,000 1/1/96 Tigard/S.W. Pacific - 633,000 1,206,000 126,000 705,000 1/1/96 Coram/Middle Count - 507,000 1,421,000 103,000 792,000 1/1/96 Houston/FM 1960 - 635,000 1,294,000 221,000 783,000 1/1/96 Kent/Military Trail - 409,000 1,670,000 160,000 956,000 1/1/96 Turnersville/Black - 165,000 1,360,000 119,000 758,000 1/1/96 Sewell/Rts. 553 - 323,000 1,138,000 116,000 658,000 1/1/96 Maple Shade/Fellowship - 331,000 1,421,000 125,000 803,000 1/1/96 Hyattsville/Kenilworth - 509,000 1,757,000 128,000 1,000,000 1/1/96 Waterbury/Captain - 434,000 2,089,000 131,000 1,162,000 1/1/96 Bedford Hts/Miles - 835,000 1,577,000 267,000 929,000 1/1/96 Livonia/Newburgh - 635,000 1,407,000 115,000 783,000 1/1/96 Sunland/Sunland Blvd. - 631,000 1,965,000 84,000 1,090,000 1/1/96 Des Moines - 448,000 1,350,000 101,000 768,000 1/1/96 Oxonhill/Indianhead - 772,000 2,017,000 256,000 1,141,000 1/1/96 Sacramento/N. 16th - 582,000 2,610,000 157,000 1,466,000 1/1/96 Houston/Westheimer - 1,508,000 2,274,000 202,000 1,304,000 1/1/96 San Pablo/San Pablo - 565,000 1,232,000 141,000 713,000 1/1/96 Bowie/Woodcliff - 718,000 2,336,000 99,000 1,292,000 1/1/96 Milwaukee/S. 84th - 444,000 1,868,000 249,000 1,091,000 1/1/96 Clinton/Malcolm Road - 593,000 2,123,000 207,000 1,187,000 1/3/96 San Gabriel - 1,005,000 2,345,000 229,000 - 1/5/96 San Francisco, Second St. - 2,880,000 6,814,000 198,000 - 1/12/96 San Antonio, TX - 912,000 2,170,000 75,000 - 2/29/96 Naples, FL/Old US 41 - 849,000 2,016,000 147,000 - 2/29/96 Lake Worth, FL/S. Military Tr. - 1,782,000 4,723,000 168,000 - 2/29/96 Brandon, FL/W Brandon Blvd. - 1,928,000 4,523,000 904,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - ------------------------------------------------------------------------------------------------------- 11/15/95 So San Francisco/Spruce 1,907,000 4,788,000 6,695,000 1,390,000 11/15/95 Pacheco/Buchanan Circle 1,683,000 4,158,000 5,841,000 1,200,000 11/16/95 Palm Beach Gardens 658,000 1,689,000 2,347,000 544,000 11/16/95 Delray Beach 601,000 1,574,000 2,175,000 528,000 1/1/96 Bensenville/York Rd 668,000 2,671,000 3,339,000 706,000 1/1/96 Louisville/Preston 211,000 1,732,000 1,943,000 450,000 1/1/96 San Jose/Aborn Road 616,000 2,197,000 2,813,000 583,000 1/1/96 Englewood/Federal 482,000 2,299,000 2,781,000 621,000 1/1/96 W. Hollywood/Santa Monica 3,419,000 7,335,000 10,754,000 1,873,000 1/1/96 Orland Hills/W. 159th 918,000 3,939,000 4,857,000 1,041,000 1/1/96 Merrionette Park 819,000 3,236,000 4,055,000 840,000 1/1/96 Denver/S Quebec 1,851,000 3,196,000 5,047,000 824,000 1/1/96 Tigard/S.W. Pacific 634,000 2,036,000 2,670,000 531,000 1/1/96 Coram/Middle Count 508,000 2,315,000 2,823,000 573,000 1/1/96 Houston/FM 1960 636,000 2,297,000 2,933,000 638,000 1/1/96 Kent/Military Trail 409,000 2,786,000 3,195,000 703,000 1/1/96 Turnersville/Black 165,000 2,237,000 2,402,000 564,000 1/1/96 Sewell/Rts. 553 323,000 1,912,000 2,235,000 496,000 1/1/96 Maple Shade/Fellowship 331,000 2,349,000 2,680,000 572,000 1/1/96 Hyattsville/Kenilworth 510,000 2,884,000 3,394,000 706,000 1/1/96 Waterbury/Captain 435,000 3,381,000 3,816,000 733,000 1/1/96 Bedford Hts/Miles 836,000 2,772,000 3,608,000 695,000 1/1/96 Livonia/Newburgh 636,000 2,304,000 2,940,000 563,000 1/1/96 Sunland/Sunland Blvd. 632,000 3,138,000 3,770,000 737,000 1/1/96 Des Moines 449,000 2,218,000 2,667,000 574,000 1/1/96 Oxonhill/Indianhead 773,000 3,413,000 4,186,000 807,000 1/1/96 Sacramento/N. 16th 583,000 4,232,000 4,815,000 871,000 1/1/96 Houston/Westheimer 1,510,000 3,778,000 5,288,000 958,000 1/1/96 San Pablo/San Pablo 566,000 2,085,000 2,651,000 515,000 1/1/96 Bowie/Woodcliff 719,000 3,726,000 4,445,000 829,000 1/1/96 Milwaukee/S. 84th 445,000 3,207,000 3,652,000 740,000 1/1/96 Clinton/Malcolm Road 594,000 3,516,000 4,110,000 763,000 1/3/96 San Gabriel 1,006,000 2,573,000 3,579,000 847,000 1/5/96 San Francisco, Second St. 2,883,000 7,009,000 9,892,000 2,012,000 1/12/96 San Antonio, TX 913,000 2,244,000 3,157,000 662,000 2/29/96 Naples, FL/Old US 41 850,000 2,162,000 3,012,000 640,000 2/29/96 Lake Worth, FL/S. Military Tr. 1,784,000 4,889,000 6,673,000 1,392,000 2/29/96 Brandon, FL/W Brandon Blvd. 1,930,000 5,425,000 7,355,000 2,059,000 F-51 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 2/29/96 Coral Springs FL/W Sample Rd. - 3,480,000 8,148,000 225,000 - 2/29/96 Delray Beach FL/S Military Tr. - 941,000 2,222,000 178,000 - 2/29/96 Jupiter FL/Military Trail - 2,280,000 5,347,000 290,000 - 2/29/96 Lakeworth FL/Lake Worth Rd - 737,000 1,742,000 156,000 - 2/29/96 New Port Richey/State Rd 54 - 857,000 2,025,000 145,000 - 2/29/96 Sanford FL/S Orlando Dr - 734,000 1,749,000 1,894,000 - 3/8/96 Atlanta/Roswell - 898,000 3,649,000 94,000 - 3/31/96 Oakland - 1,065,000 2,764,000 244,000 - 3/31/96 Saratoga - 2,339,000 6,081,000 126,000 - 3/31/96 Randallstown - 1,359,000 3,527,000 240,000 - 3/31/96 Plano - 650,000 1,682,000 126,000 - 3/31/96 Houston - 543,000 1,402,000 120,000 - 3/31/96 Irvine - 1,920,000 4,975,000 503,000 - 3/31/96 Milwaukee - 542,000 1,402,000 109,000 - 3/31/96 Carrollton - 578,000 1,495,000 107,000 - 3/31/96 Torrance - 1,415,000 3,675,000 158,000 - 3/31/96 Jacksonville - 713,000 1,845,000 192,000 - 3/31/96 Dallas - 315,000 810,000 1,728,000 - 3/31/96 Houston - 669,000 1,724,000 447,000 - 3/31/96 Baltimore - 842,000 2,180,000 177,000 - 3/31/96 New Haven - 740,000 1,907,000 (241,000) - 4/1/96 Chicago/Pulaski - 764,000 1,869,000 152,000 - 4/1/96 Las Vegas/Desert Inn - 1,115,000 2,729,000 115,000 - 4/1/96 Torrance/Crenshaw - 916,000 2,243,000 87,000 - 4/1/96 Weymouth - 485,000 1,187,000 150,000 - 4/1/96 St. Louis/Barrett Station Road - 630,000 1,542,000 111,000 - 4/1/96 Rockville/Randolph - 1,153,000 2,823,000 148,000 - 4/1/96 Simi Valley/East Street - 970,000 2,374,000 67,000 - 4/1/96 Houston/Westheimer - 1,390,000 3,402,000 4,203,000 - 4/3/96 Naples - 1,187,000 2,809,000 216,000 - 6/26/96 Boca Raton - 3,180,000 7,468,000 967,000 - 6/28/96 Venice - 669,000 1,575,000 160,000 - 6/30/96 Las Vegas - 921,000 2,155,000 188,000 - 6/30/96 Bedford Park - 606,000 1,419,000 195,000 - 6/30/96 Los Angeles - 692,000 1,616,000 96,000 - 6/30/96 Silver Spring - 1,513,000 3,535,000 247,000 - 6/30/96 Newark - 1,051,000 2,458,000 114,000 - 6/30/96 Brooklyn - 783,000 1,830,000 416,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 2/29/96 Coral Springs FL/W Sample Rd. 3,484,000 8,369,000 11,853,000 2,337,000 2/29/96 Delray Beach FL/S Military Tr. 942,000 2,399,000 3,341,000 751,000 2/29/96 Jupiter FL/Military Trail 2,283,000 5,634,000 7,917,000 1,564,000 2/29/96 Lakeworth FL/Lake Worth Rd 738,000 1,897,000 2,635,000 597,000 2/29/96 New Port Richey/State Rd 54 858,000 2,169,000 3,027,000 653,000 2/29/96 Sanford FL/S Orlando Dr 976,000 3,401,000 4,377,000 988,000 3/8/96 Atlanta/Roswell 899,000 3,742,000 4,641,000 1,045,000 3/31/96 Oakland 1,066,000 3,007,000 4,073,000 899,000 3/31/96 Saratoga 2,342,000 6,204,000 8,546,000 1,709,000 3/31/96 Randallstown 1,361,000 3,765,000 5,126,000 1,073,000 3/31/96 Plano 651,000 1,807,000 2,458,000 543,000 3/31/96 Houston 544,000 1,521,000 2,065,000 454,000 3/31/96 Irvine 1,922,000 5,476,000 7,398,000 1,557,000 3/31/96 Milwaukee 543,000 1,510,000 2,053,000 454,000 3/31/96 Carrollton 579,000 1,601,000 2,180,000 473,000 3/31/96 Torrance 1,417,000 3,831,000 5,248,000 1,076,000 3/31/96 Jacksonville 714,000 2,036,000 2,750,000 611,000 3/31/96 Dallas 315,000 2,538,000 2,853,000 406,000 3/31/96 Houston 670,000 2,170,000 2,840,000 668,000 3/31/96 Baltimore 843,000 2,356,000 3,199,000 676,000 3/31/96 New Haven 669,000 1,737,000 2,406,000 522,000 4/1/96 Chicago/Pulaski 765,000 2,020,000 2,785,000 529,000 4/1/96 Las Vegas/Desert Inn 1,116,000 2,843,000 3,959,000 753,000 4/1/96 Torrance/Crenshaw 917,000 2,329,000 3,246,000 582,000 4/1/96 Weymouth 486,000 1,336,000 1,822,000 300,000 4/1/96 St. Louis/Barrett Station Road 631,000 1,652,000 2,283,000 413,000 4/1/96 Rockville/Randolph 1,154,000 2,970,000 4,124,000 734,000 4/1/96 Simi Valley/East Street 971,000 2,440,000 3,411,000 605,000 4/1/96 Houston/Westheimer 1,392,000 7,603,000 8,995,000 1,874,000 4/3/96 Naples 1,188,000 3,024,000 4,212,000 917,000 6/26/96 Boca Raton 3,184,000 8,431,000 11,615,000 2,370,000 6/28/96 Venice 670,000 1,734,000 2,404,000 530,000 6/30/96 Las Vegas 922,000 2,342,000 3,264,000 679,000 6/30/96 Bedford Park 607,000 1,613,000 2,220,000 495,000 6/30/96 Los Angeles 693,000 1,711,000 2,404,000 490,000 6/30/96 Silver Spring 1,515,000 3,780,000 5,295,000 1,063,000 6/30/96 Newark 1,052,000 2,571,000 3,623,000 700,000 6/30/96 Brooklyn 784,000 2,245,000 3,029,000 714,000 F-52 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 7/2/96 Glen Burnie/Furnace Br Rd - 1,755,000 4,150,000 156,000 - 7/22/96 Lakewood/W Hampton - 717,000 2,092,000 73,000 - 8/13/96 Norcross/Holcomb Bridge Rd - 955,000 3,117,000 122,000 - 9/5/96 Spring Valley/S Pascack rd - 1,260,000 2,966,000 282,000 - 9/16/96 Dallas/Royal Lane - 1,008,000 2,426,000 202,000 - 9/16/96 Colorado Springs/Tomah Drive - 731,000 1,759,000 106,000 - 9/16/96 Lewisville/S. Stemmons - 603,000 1,451,000 137,000 - 9/16/96 Las Vegas/Boulder Hwy. - 947,000 2,279,000 244,000 - 9/16/96 Sarasota/S. Tamiami Trail - 584,000 1,407,000 112,000 - 9/16/96 Willow Grove/Maryland Road - 673,000 1,620,000 83,000 - 9/16/96 Houston/W. Montgomery Rd. - 524,000 1,261,000 184,000 - 9/16/96 Denver/W. Hampden - 1,084,000 2,609,000 143,000 - 9/16/96 Littleton/Southpark Way - 922,000 2,221,000 237,000 - 9/16/96 Petaluma/Baywood Drive - 861,000 2,074,000 147,000 - 9/16/96 Canoga Park/Sherman Way - 1,543,000 3,716,000 529,000 - 9/16/96 Jacksonville/South Lane Ave. - 554,000 1,334,000 182,000 - 9/16/96 Newport News/Warwick Blvd. - 575,000 1,385,000 144,000 - 9/16/96 Greenbrook/Route 22 - 1,227,000 2,954,000 243,000 - 9/16/96 Monsey/Route 59 - 1,068,000 2,572,000 109,000 - 9/16/96 Santa Rosa/Santa Rosa Ave. - 575,000 1,385,000 104,000 - 9/16/96 Fort Worth/Brentwood - 823,000 2,016,000 134,000 - 9/16/96 Glendale/San Fernando Road - 2,500,000 6,124,000 121,000 - 9/16/96 Houston/Harwin - 549,000 1,344,000 129,000 - 9/16/96 Irvine/Cowan Street - 1,890,000 4,631,000 211,000 - 9/16/96 Fairfield/Dixie Highway - 427,000 1,046,000 106,000 - 9/16/96 Mesa/Country Club Drive - 701,000 1,718,000 163,000 - 9/16/96 San Francisco/Geary Blvd. - 2,957,000 7,244,000 260,000 - 9/16/96 Houston/Gulf Freeway - 701,000 1,718,000 3,303,000 - 9/16/96 Las Vegas/S. Decatur Blvd. - 1,037,000 2,539,000 140,000 - 9/16/96 Tempe/McKellips Road - 823,000 1,972,000 210,000 - 9/16/96 Richland Hills/Airport Fwy. - 473,000 1,158,000 143,000 - 10/11/96 Hampton/Pembroke Road - 1,080,000 2,346,000 (254,000) - 10/11/96 Norfolk/Widgeon Road - 1,110,000 2,405,000 (360,000) - 10/11/96 Richmond/Bloom Lane - 1,188,000 2,512,000 (204,000) - 10/11/96 Virginia Beach/Southern Blvd - 282,000 610,000 227,000 - 10/11/96 Chesapeake/Military Hwy - 912,000 1,974,000 373,000 - 10/11/96 Richmond/Midlothian Park - 762,000 1,588,000 450,000 - 10/11/96 Roanoke/Peters Creek Road - 819,000 1,776,000 232,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 7/2/96 Glen Burnie/Furnace Br Rd 1,757,000 4,304,000 6,061,000 1,162,000 7/22/96 Lakewood/W Hampton 717,000 2,165,000 2,882,000 575,000 8/13/96 Norcross/Holcomb Bridge Rd 956,000 3,238,000 4,194,000 854,000 9/5/96 Spring Valley/S Pascack rd 1,261,000 3,247,000 4,508,000 935,000 9/16/96 Dallas/Royal Lane 1,009,000 2,627,000 3,636,000 710,000 9/16/96 Colorado Springs/Tomah Drive 732,000 1,864,000 2,596,000 502,000 9/16/96 Lewisville/S. Stemmons 604,000 1,587,000 2,191,000 449,000 9/16/96 Las Vegas/Boulder Hwy. 948,000 2,522,000 3,470,000 660,000 9/16/96 Sarasota/S. Tamiami Trail 585,000 1,518,000 2,103,000 419,000 9/16/96 Willow Grove/Maryland Road 674,000 1,702,000 2,376,000 450,000 9/16/96 Houston/W. Montgomery Rd. 525,000 1,444,000 1,969,000 408,000 9/16/96 Denver/W. Hampden 1,085,000 2,751,000 3,836,000 711,000 9/16/96 Littleton/Southpark Way 923,000 2,457,000 3,380,000 649,000 9/16/96 Petaluma/Baywood Drive 862,000 2,220,000 3,082,000 585,000 9/16/96 Canoga Park/Sherman Way 1,545,000 4,243,000 5,788,000 1,034,000 9/16/96 Jacksonville/South Lane Ave. 555,000 1,515,000 2,070,000 450,000 9/16/96 Newport News/Warwick Blvd. 576,000 1,528,000 2,104,000 424,000 9/16/96 Greenbrook/Route 22 1,228,000 3,196,000 4,424,000 845,000 9/16/96 Monsey/Route 59 1,069,000 2,680,000 3,749,000 691,000 9/16/96 Santa Rosa/Santa Rosa Ave. 576,000 1,488,000 2,064,000 392,000 9/16/96 Fort Worth/Brentwood 824,000 2,149,000 2,973,000 589,000 9/16/96 Glendale/San Fernando Road 2,503,000 6,242,000 8,745,000 1,562,000 9/16/96 Houston/Harwin 550,000 1,472,000 2,022,000 421,000 9/16/96 Irvine/Cowan Street 1,892,000 4,840,000 6,732,000 1,253,000 9/16/96 Fairfield/Dixie Highway 428,000 1,151,000 1,579,000 303,000 9/16/96 Mesa/Country Club Drive 702,000 1,880,000 2,582,000 500,000 9/16/96 San Francisco/Geary Blvd. 2,960,000 7,501,000 10,461,000 1,882,000 9/16/96 Houston/Gulf Freeway 702,000 5,020,000 5,722,000 707,000 9/16/96 Las Vegas/S. Decatur Blvd. 1,038,000 2,678,000 3,716,000 703,000 9/16/96 Tempe/McKellips Road 824,000 2,181,000 3,005,000 590,000 9/16/96 Richland Hills/Airport Fwy. 474,000 1,300,000 1,774,000 390,000 10/11/96 Hampton/Pembroke Road 915,000 2,257,000 3,172,000 354,000 10/11/96 Norfolk/Widgeon Road 909,000 2,246,000 3,155,000 364,000 10/11/96 Richmond/Bloom Lane 996,000 2,500,000 3,496,000 408,000 10/11/96 Virginia Beach/Southern Blvd 282,000 837,000 1,119,000 316,000 10/11/96 Chesapeake/Military Hwy 913,000 2,346,000 3,259,000 741,000 10/11/96 Richmond/Midlothian Park 763,000 2,037,000 2,800,000 730,000 10/11/96 Roanoke/Peters Creek Road 820,000 2,007,000 2,827,000 596,000 F-53 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ---------------------------------------------------------------------------------------------------------------------------- 10/11/96 Orlando/E Oakridge Rd - 927,000 2,020,000 217,000 - 10/11/96 Orlando/South Hwy 17-92 - 1,170,000 2,549,000 182,000 - 10/25/96 Austin/Renelli - 1,710,000 3,990,000 220,000 - 10/25/96 Austin/Santiago - 900,000 2,100,000 199,000 - 10/25/96 Dallas/East N.W. Highway - 698,000 1,628,000 153,000 - 10/25/96 Dallas/Denton Drive - 900,000 2,100,000 133,000 - 10/25/96 Houston/Hempstead - 518,000 1,207,000 214,000 - 10/25/96 Pasadena/So. Shaver - 420,000 980,000 188,000 - 10/31/96 Houston/Joel Wheaton Rd - 465,000 1,085,000 184,000 - 10/31/96 Mt Holly/541 Bypass - 360,000 840,000 160,000 - 11/13/96 Town East/Mesquite - 330,000 770,000 119,000 - 11/14/96 Bossier City LA - 633,000 1,488,000 (158,000) - 12/5/96 Lake Forest/Bake Parkway - 971,000 2,173,000 568,000 - 12/16/96 Cherry Hill/Old Cuthbert - 645,000 1,505,000 299,000 - 12/16/96 Oklahoma City/SW 74th - 375,000 875,000 109,000 - 12/16/96 Oklahoma City/S Santa Fe - 360,000 840,000 138,000 - 12/16/96 Oklahoma City/S. May - 360,000 840,000 130,000 - 12/16/96 Arlington/S. Watson Rd. - 930,000 2,170,000 410,000 - 12/16/96 Richardson/E. Arapaho - 1,290,000 3,010,000 221,000 - 12/23/96 Eagle Rock/Colorado - 330,000 813,000 371,000 - 12/23/96 Upper Darby/Lansdowne - 899,000 2,272,000 170,000 - 12/23/96 Plymouth Meeting /Chemical - 1,109,000 2,802,000 132,000 - 12/23/96 Philadelphia/Byberry - 1,019,000 2,575,000 140,000 - 12/23/96 Ft. Lauderdale/State Road - 1,199,000 3,030,000 157,000 - 12/23/96 Englewood/Costilla - 1,739,000 4,393,000 129,000 - 12/23/96 Lilburn/Beaver Ruin Road - 600,000 1,515,000 151,000 - 12/23/96 Carmichael/Fair Oaks - 809,000 2,045,000 179,000 - 12/23/96 Portland/Division Street - 989,000 2,499,000 120,000 - 12/23/96 Napa/Industrial - 660,000 1,666,000 131,000 - 12/23/96 Wheatridge/W. 44th Avenue - 1,439,000 3,636,000 133,000 - 12/23/96 Las Vegas/Charleston - 1,049,000 2,651,000 118,000 - 12/23/96 Las Vegas/South Arvill - 929,000 2,348,000 117,000 - 12/23/96 Los Angeles/Santa Monica - 3,328,000 8,407,000 204,000 - 12/23/96 Warren/Schoenherr Rd. - 749,000 1,894,000 169,000 - 12/23/96 Portland/N.E. 71st Avenue - 869,000 2,196,000 177,000 - 12/23/96 Seattle/Pacific Hwy. South - 689,000 1,742,000 185,000 - 12/23/96 Broadview/S. 25th Avenue - 1,289,000 3,257,000 203,000 - 12/23/96 Winter Springs/W. St. Rte 434 - 689,000 1,742,000 103,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 10/11/96 Orlando/E Oakridge Rd 928,000 2,236,000 3,164,000 616,000 10/11/96 Orlando/South Hwy 17-92 1,171,000 2,730,000 3,901,000 750,000 10/25/96 Austin/Renelli 1,712,000 4,208,000 5,920,000 1,129,000 10/25/96 Austin/Santiago 901,000 2,298,000 3,199,000 643,000 10/25/96 Dallas/East N.W. Highway 699,000 1,780,000 2,479,000 498,000 10/25/96 Dallas/Denton Drive 901,000 2,232,000 3,133,000 619,000 10/25/96 Houston/Hempstead 519,000 1,420,000 1,939,000 455,000 10/25/96 Pasadena/So. Shaver 420,000 1,168,000 1,588,000 339,000 10/31/96 Houston/Joel Wheaton Rd 466,000 1,268,000 1,734,000 371,000 10/31/96 Mt Holly/541 Bypass 360,000 1,000,000 1,360,000 291,000 11/13/96 Town East/Mesquite 330,000 889,000 1,219,000 261,000 11/14/96 Bossier City LA 558,000 1,405,000 1,963,000 235,000 12/5/96 Lake Forest/Bake Parkway 974,000 2,738,000 3,712,000 603,000 12/16/96 Cherry Hill/Old Cuthbert 646,000 1,803,000 2,449,000 521,000 12/16/96 Oklahoma City/SW 74th 375,000 984,000 1,359,000 290,000 12/16/96 Oklahoma City/S Santa Fe 360,000 978,000 1,338,000 298,000 12/16/96 Oklahoma City/S. May 360,000 970,000 1,330,000 297,000 12/16/96 Arlington/S. Watson Rd. 931,000 2,579,000 3,510,000 788,000 12/16/96 Richardson/E. Arapaho 1,292,000 3,229,000 4,521,000 856,000 12/23/96 Eagle Rock/Colorado 445,000 1,069,000 1,514,000 171,000 12/23/96 Upper Darby/Lansdowne 900,000 2,441,000 3,341,000 631,000 12/23/96 Plymouth Meeting /Chemical 1,110,000 2,933,000 4,043,000 349,000 12/23/96 Philadelphia/Byberry 1,020,000 2,714,000 3,734,000 708,000 12/23/96 Ft. Lauderdale/State Road 1,200,000 3,186,000 4,386,000 825,000 12/23/96 Englewood/Costilla 1,741,000 4,520,000 6,261,000 1,123,000 12/23/96 Lilburn/Beaver Ruin Road 601,000 1,665,000 2,266,000 442,000 12/23/96 Carmichael/Fair Oaks 810,000 2,223,000 3,033,000 590,000 12/23/96 Portland/Division Street 990,000 2,618,000 3,608,000 685,000 12/23/96 Napa/Industrial 661,000 1,796,000 2,457,000 492,000 12/23/96 Wheatridge/W. 44th Avenue 1,441,000 3,767,000 5,208,000 944,000 12/23/96 Las Vegas/Charleston 1,050,000 2,768,000 3,818,000 703,000 12/23/96 Las Vegas/South Arvill 930,000 2,464,000 3,394,000 632,000 12/23/96 Los Angeles/Santa Monica 3,332,000 8,607,000 11,939,000 2,137,000 12/23/96 Warren/Schoenherr Rd. 750,000 2,062,000 2,812,000 541,000 12/23/96 Portland/N.E. 71st Avenue 870,000 2,372,000 3,242,000 647,000 12/23/96 Seattle/Pacific Hwy. South 690,000 1,926,000 2,616,000 536,000 12/23/96 Broadview/S. 25th Avenue 1,291,000 3,458,000 4,749,000 891,000 12/23/96 Winter Springs/W. St. Rte 434 690,000 1,844,000 2,534,000 495,000 F-54 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ---------------------------------------------------------------------------------------------------------------------------- 12/23/96 Tampa/15th Street - 420,000 1,060,000 209,000 - 12/23/96 Pompano Beach/S. Dixie Hwy. - 930,000 2,292,000 253,000 - 12/23/96 Overland Park/Mastin - 990,000 2,440,000 3,147,000 - 12/23/96 Auburn/R Street - 690,000 1,700,000 186,000 - 12/23/96 Federal Heights/W. 48th Ave. - 720,000 1,774,000 88,000 - 12/23/96 Decatur/Covington - 930,000 2,292,000 157,000 - 12/23/96 Forest Park/Jonesboro Rd. - 540,000 1,331,000 152,000 - 12/23/96 Mangonia Park/Australian Ave. - 840,000 2,070,000 148,000 - 12/23/96 Whittier/Colima - 540,000 1,331,000 81,000 - 12/23/96 Kent/Pacific Hwy South - 930,000 2,292,000 141,000 - 12/23/96 Topeka/8th Street - 150,000 370,000 125,000 - 12/23/96 Denver East Evans - 1,740,000 4,288,000 182,000 - 12/23/96 Pittsburgh/California Ave. - 630,000 1,552,000 112,000 - 12/23/96 Ft. Lauderdale/Powerline - 660,000 1,626,000 282,000 - 12/23/96 Philadelphia/Oxford - 900,000 2,218,000 140,000 - 12/23/96 Dallas/Lemmon Ave. - 1,710,000 4,214,000 139,000 - 12/23/96 Alsip/115th Street - 750,000 1,848,000 1,910,000 - 12/23/96 Green Acres/Jog Road - 600,000 1,479,000 131,000 - 12/23/96 Pompano Beach/Sample Road - 1,320,000 3,253,000 154,000 - 12/23/96 Wyndmoor/Ivy Hill - 2,160,000 5,323,000 188,000 - 12/23/96 W. Palm Beach/Belvedere - 960,000 2,366,000 184,000 - 12/23/96 Renton 174th St. - 960,000 2,366,000 214,000 - 12/23/96 Sacramento/Northgate - 1,021,000 2,647,000 140,000 - 12/23/96 Phoenix/19th Avenue - 991,000 2,569,000 184,000 - 12/23/96 Bedford Park/Cicero - 1,321,000 3,426,000 218,000 - 12/23/96 Lake Worth/Lk Worth - 1,111,000 2,880,000 162,000 - 12/23/96 Arlington/Algonquin - 991,000 2,569,000 296,000 - 12/23/96 Seattle/15th Avenue - 781,000 2,024,000 167,000 - 12/23/96 Southington/Spring - 811,000 2,102,000 130,000 - 12/23/96 Clifton/Broad Street - 1,411,000 3,659,000 133,000 - 12/23/96 Hillside/Glenwood - 563,000 4,051,000 260,000 - 12/23/96 Nashville/Dickerson Pike - 990,000 2,440,000 182,000 - 12/23/96 Madison/Gallatin Road - 780,000 1,922,000 221,000 - 12/30/96 Concorde/Treat - 1,396,000 3,258,000 126,000 - 12/30/96 Virginia Beach - 535,000 1,248,000 120,000 - 12/30/96 San Mateo - 2,408,000 5,619,000 166,000 - 1/22/97 Austin, 1033 E. 41 Street - 257,000 3,633,000 63,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 12/23/96 Tampa/15th Street 420,000 1,269,000 1,689,000 379,000 12/23/96 Pompano Beach/S. Dixie Hwy. 931,000 2,544,000 3,475,000 714,000 12/23/96 Overland Park/Mastin 1,308,000 5,269,000 6,577,000 772,000 12/23/96 Auburn/R Street 691,000 1,885,000 2,576,000 516,000 12/23/96 Federal Heights/W. 48th Ave. 721,000 1,861,000 2,582,000 469,000 12/23/96 Decatur/Covington 931,000 2,448,000 3,379,000 638,000 12/23/96 Forest Park/Jonesboro Rd. 541,000 1,482,000 2,023,000 420,000 12/23/96 Mangonia Park/Australian Ave. 841,000 2,217,000 3,058,000 588,000 12/23/96 Whittier/Colima 541,000 1,411,000 1,952,000 382,000 12/23/96 Kent/Pacific Hwy South 931,000 2,432,000 3,363,000 653,000 12/23/96 Topeka/8th Street 150,000 495,000 645,000 174,000 12/23/96 Denver East Evans 1,742,000 4,468,000 6,210,000 1,132,000 12/23/96 Pittsburgh/California Ave. 631,000 1,663,000 2,294,000 454,000 12/23/96 Ft. Lauderdale/Powerline 661,000 1,907,000 2,568,000 551,000 12/23/96 Philadelphia/Oxford 901,000 2,357,000 3,258,000 605,000 12/23/96 Dallas/Lemmon Ave. 1,712,000 4,351,000 6,063,000 1,110,000 12/23/96 Alsip/115th Street 751,000 3,757,000 4,508,000 683,000 12/23/96 Green Acres/Jog Road 601,000 1,609,000 2,210,000 436,000 12/23/96 Pompano Beach/Sample Road 1,322,000 3,405,000 4,727,000 879,000 12/23/96 Wyndmoor/Ivy Hill 2,163,000 5,508,000 7,671,000 1,381,000 12/23/96 W. Palm Beach/Belvedere 961,000 2,549,000 3,510,000 673,000 12/23/96 Renton 174th St. 961,000 2,579,000 3,540,000 682,000 12/23/96 Sacramento/Northgate 1,022,000 2,786,000 3,808,000 727,000 12/23/96 Phoenix/19th Avenue 992,000 2,752,000 3,744,000 698,000 12/23/96 Bedford Park/Cicero 1,323,000 3,642,000 4,965,000 950,000 12/23/96 Lake Worth/Lk Worth 1,112,000 3,041,000 4,153,000 795,000 12/23/96 Arlington/Algonquin 992,000 2,864,000 3,856,000 778,000 12/23/96 Seattle/15th Avenue 782,000 2,190,000 2,972,000 579,000 12/23/96 Southington/Spring 812,000 2,231,000 3,043,000 592,000 12/23/96 Clifton/Broad Street 1,413,000 3,790,000 5,203,000 953,000 12/23/96 Hillside/Glenwood 564,000 4,310,000 4,874,000 1,137,000 12/23/96 Nashville/Dickerson Pike 991,000 2,621,000 3,612,000 710,000 12/23/96 Madison/Gallatin Road 781,000 2,142,000 2,923,000 597,000 12/30/96 Concorde/Treat 1,398,000 3,382,000 4,780,000 860,000 12/30/96 Virginia Beach 536,000 1,367,000 1,903,000 371,000 12/30/96 San Mateo 2,411,000 5,782,000 8,193,000 1,422,000 1/22/97 Austin, 1033 E. 41 Street 257,000 3,696,000 3,953,000 867,000 F-55 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 4/12/97 Annandale / Backlick - 955,000 2,229,000 322,000 - 4/12/97 Ft. Worth / West Freeway - 667,000 1,556,000 244,000 - 4/12/97 Campbell / S. Curtner - 2,550,000 5,950,000 677,000 - 4/12/97 Aurora / S. Idalia - 1,002,000 2,338,000 418,000 - 4/12/97 Santa Cruz / Capitola - 1,037,000 2,420,000 310,000 - 4/12/97 Indianapolis / Lafayette Road - 682,000 1,590,000 267,000 - 4/12/97 Indianapolis / Route 31 - 619,000 1,444,000 271,000 - 4/12/97 Farmingdale / Broad Hollow Rd. - 1,568,000 3,658,000 543,000 - 4/12/97 Tyson's Corner / Springhill Rd. - 3,861,000 9,010,000 1,208,000 - 4/12/97 Fountain Valley / Newhope - 1,137,000 2,653,000 312,000 - 4/12/97 Dallas / Winsted - 1,375,000 3,209,000 453,000 - 4/12/97 Columbia / Broad River Rd. - 121,000 282,000 151,000 - 4/12/97 Livermore / S. Front Road - 876,000 2,044,000 186,000 - 4/12/97 Garland / Plano - 889,000 2,073,000 218,000 - 4/12/97 San Jose / Story Road - 1,352,000 3,156,000 329,000 - 4/12/97 Aurora / Abilene - 1,406,000 3,280,000 356,000 - 4/12/97 Antioch / Sunset Drive - 1,035,000 2,416,000 218,000 - 4/12/97 Rancho Cordova / Sunrise - 1,048,000 2,445,000 336,000 - 4/12/97 Berlin / Wilbur Cross - 756,000 1,764,000 247,000 - 4/12/97 Whittier / Whittier Blvd. - 648,000 1,513,000 136,000 - 4/12/97 Peabody / Newbury Street - 1,159,000 2,704,000 407,000 - 4/12/97 Denver / Blake - 602,000 1,405,000 173,000 - 4/12/97 Evansville / Green River Road - 470,000 1,096,000 151,000 - 4/12/97 Burien / First Ave. So. - 792,000 1,847,000 245,000 - 4/12/97 Rancho Cordova / Mather Field - 494,000 1,153,000 160,000 - 4/12/97 Sugar Land / Eldridge - 705,000 1,644,000 215,000 - 4/12/97 Columbus / Eastland Drive - 602,000 1,405,000 214,000 - 4/12/97 Slickerville / Black Horse Pike - 539,000 1,258,000 194,000 - 4/12/97 Seattle / Aurora - 1,145,000 2,671,000 253,000 - 4/12/97 Gaithersburg / Christopher Ave. - 972,000 2,268,000 262,000 - 4/12/97 Manchester / Tolland Turnpike - 807,000 1,883,000 202,000 - 6/25/97 L.A./Venice Blvd. - 523,000 1,221,000 1,782,000 - 6/25/97 Kirkland-Totem - 2,131,000 4,972,000 176,000 - 6/25/97 Idianapolis - 471,000 1,098,000 98,000 - 6/25/97 Dallas - 699,000 1,631,000 61,000 - 6/25/97 Atlanta - 1,183,000 2,761,000 83,000 - 6/25/97 Bensalem - 1,159,000 2,705,000 65,000 - 6/25/97 Evansville - 429,000 1,000,000 27,000 - 6/25/97 Austin - 813,000 1,897,000 54,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 4/12/97 Annandale / Backlick 956,000 2,550,000 3,506,000 617,000 4/12/97 Ft. Worth / West Freeway 668,000 1,799,000 2,467,000 457,000 4/12/97 Campbell / S. Curtner 2,553,000 6,624,000 9,177,000 1,544,000 4/12/97 Aurora / S. Idalia 1,003,000 2,755,000 3,758,000 647,000 4/12/97 Santa Cruz / Capitola 1,038,000 2,729,000 3,767,000 652,000 4/12/97 Indianapolis / Lafayette Road 683,000 1,856,000 2,539,000 481,000 4/12/97 Indianapolis / Route 31 620,000 1,714,000 2,334,000 438,000 4/12/97 Farmingdale / Broad Hollow Rd. 1,570,000 4,199,000 5,769,000 1,043,000 4/12/97 Tyson's Corner / Springhill Rd. 3,866,000 10,213,000 14,079,000 2,420,000 4/12/97 Fountain Valley / Newhope 1,138,000 2,964,000 4,102,000 699,000 4/12/97 Dallas / Winsted 1,377,000 3,660,000 5,037,000 903,000 4/12/97 Columbia / Broad River Rd. 121,000 433,000 554,000 161,000 4/12/97 Livermore / S. Front Road 877,000 2,229,000 3,106,000 536,000 4/12/97 Garland / Plano 890,000 2,290,000 3,180,000 569,000 4/12/97 San Jose / Story Road 1,354,000 3,483,000 4,837,000 849,000 4/12/97 Aurora / Abilene 1,408,000 3,634,000 5,042,000 869,000 4/12/97 Antioch / Sunset Drive 1,036,000 2,633,000 3,669,000 631,000 4/12/97 Rancho Cordova / Sunrise 1,049,000 2,780,000 3,829,000 695,000 4/12/97 Berlin / Wilbur Cross 757,000 2,010,000 2,767,000 517,000 4/12/97 Whittier / Whittier Blvd. 649,000 1,648,000 2,297,000 397,000 4/12/97 Peabody / Newbury Street 1,160,000 3,110,000 4,270,000 743,000 4/12/97 Denver / Blake 603,000 1,577,000 2,180,000 390,000 4/12/97 Evansville / Green River Road 471,000 1,246,000 1,717,000 323,000 4/12/97 Burien / First Ave. So. 793,000 2,091,000 2,884,000 514,000 4/12/97 Rancho Cordova / Mather Field 495,000 1,312,000 1,807,000 346,000 4/12/97 Sugar Land / Eldridge 706,000 1,858,000 2,564,000 473,000 4/12/97 Columbus / Eastland Drive 603,000 1,618,000 2,221,000 419,000 4/12/97 Slickerville / Black Horse Pike 540,000 1,451,000 1,991,000 385,000 4/12/97 Seattle / Aurora 1,146,000 2,923,000 4,069,000 705,000 4/12/97 Gaithersburg / Christopher Ave. 973,000 2,529,000 3,502,000 625,000 4/12/97 Manchester / Tolland Turnpike 808,000 2,084,000 2,892,000 518,000 6/25/97 L.A./Venice Blvd. 1,045,000 2,481,000 3,526,000 392,000 6/25/97 Kirkland-Totem 2,134,000 5,145,000 7,279,000 1,243,000 6/25/97 Idianapolis 472,000 1,195,000 1,667,000 299,000 6/25/97 Dallas 700,000 1,691,000 2,391,000 419,000 6/25/97 Atlanta 1,184,000 2,843,000 4,027,000 681,000 6/25/97 Bensalem 1,160,000 2,769,000 3,929,000 648,000 6/25/97 Evansville 401,000 1,055,000 1,456,000 262,000 6/25/97 Austin 814,000 1,950,000 2,764,000 464,000 F-56 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 6/25/97 Harbor City - 1,244,000 2,904,000 218,000 - 6/25/97 Birmingham - 539,000 1,258,000 88,000 - 6/25/97 Sacramento - 489,000 1,396,000 (201,000) - 6/25/97 Carrollton - 441,000 1,029,000 36,000 - 6/25/97 La Habra - 822,000 1,918,000 55,000 - 6/25/97 Lombard - 1,527,000 3,564,000 1,722,000 - 6/25/97 Fairfield - 740,000 1,727,000 34,000 - 6/25/97 Seattle - 1,498,000 3,494,000 255,000 - 6/25/97 Bellevue - 1,653,000 3,858,000 70,000 - 6/25/97 Citrus Heights - 642,000 1,244,000 506,000 - 6/25/97 San Jose - 1,273,000 2,971,000 14,000 - 6/25/97 Stanton - 948,000 2,212,000 52,000 - 6/25/97 Garland - 486,000 1,135,000 53,000 - 6/25/97 Westford - 857,000 1,999,000 68,000 - 6/25/97 Dallas - 1,627,000 3,797,000 631,000 - 6/25/97 Wheat Ridge - 1,054,000 2,459,000 339,000 - 6/25/97 Berlin - 825,000 1,925,000 261,000 - 6/25/97 Gretna - 1,069,000 2,494,000 425,000 - 6/25/97 Spring - 461,000 1,077,000 186,000 - 6/25/97 Sacramento - 592,000 1,380,000 886,000 - 6/25/97 Houston/South Dairyashford - 856,000 1,997,000 274,000 - 6/25/97 Naperville - 1,108,000 2,585,000 349,000 - 6/25/97 Carrollton - 1,158,000 2,702,000 476,000 - 6/25/97 Waipahu - 1,620,000 3,780,000 515,000 - 6/25/97 Davis - 628,000 1,465,000 228,000 - 6/25/97 Decatur - 951,000 2,220,000 379,000 - 6/25/97 Jacksonville - 653,000 1,525,000 287,000 - 6/25/97 Chicoppe - 663,000 1,546,000 304,000 - 6/25/97 Alexandria - 1,533,000 3,576,000 483,000 - 6/25/97 Houston/Veterans Memorial Dr. - 458,000 1,070,000 183,000 - 6/25/97 Los Angeles/Olympic - 4,392,000 10,247,000 1,223,000 - 6/25/97 Littleton - 1,340,000 3,126,000 449,000 - 6/25/97 Metairie - 1,229,000 2,868,000 453,000 - 6/25/97 Louisville - 717,000 1,672,000 284,000 - 6/25/97 East Hazel Crest - 753,000 1,757,000 272,000 - 6/25/97 Edmonds - 1,187,000 2,770,000 407,000 - 6/25/97 Foster City - 1,064,000 2,483,000 318,000 - 6/25/97 Chicago - 1,160,000 2,708,000 423,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 6/25/97 Harbor City 1,245,000 3,121,000 4,366,000 774,000 6/25/97 Birmingham 540,000 1,345,000 1,885,000 333,000 6/25/97 Sacramento 490,000 1,194,000 1,684,000 289,000 6/25/97 Carrollton 442,000 1,064,000 1,506,000 261,000 6/25/97 La Habra 823,000 1,972,000 2,795,000 475,000 6/25/97 Lombard 2,049,000 4,764,000 6,813,000 1,028,000 6/25/97 Fairfield 741,000 1,760,000 2,501,000 416,000 6/25/97 Seattle 1,500,000 3,747,000 5,247,000 1,007,000 6/25/97 Bellevue 1,655,000 3,926,000 5,581,000 941,000 6/25/97 Citrus Heights 643,000 1,749,000 2,392,000 449,000 6/25/97 San Jose 1,274,000 2,984,000 4,258,000 688,000 6/25/97 Stanton 949,000 2,263,000 3,212,000 524,000 6/25/97 Garland 487,000 1,187,000 1,674,000 294,000 6/25/97 Westford 858,000 2,066,000 2,924,000 499,000 6/25/97 Dallas 1,629,000 4,426,000 6,055,000 1,048,000 6/25/97 Wheat Ridge 1,055,000 2,797,000 3,852,000 635,000 6/25/97 Berlin 826,000 2,185,000 3,011,000 496,000 6/25/97 Gretna 1,070,000 2,918,000 3,988,000 700,000 6/25/97 Spring 462,000 1,262,000 1,724,000 308,000 6/25/97 Sacramento 721,000 2,137,000 2,858,000 469,000 6/25/97 Houston/South Dairyashford 857,000 2,270,000 3,127,000 542,000 6/25/97 Naperville 1,109,000 2,933,000 4,042,000 677,000 6/25/97 Carrollton 1,159,000 3,177,000 4,336,000 758,000 6/25/97 Waipahu 1,622,000 4,293,000 5,915,000 1,005,000 6/25/97 Davis 629,000 1,692,000 2,321,000 406,000 6/25/97 Decatur 952,000 2,598,000 3,550,000 609,000 6/25/97 Jacksonville 654,000 1,811,000 2,465,000 455,000 6/25/97 Chicoppe 664,000 1,849,000 2,513,000 470,000 6/25/97 Alexandria 1,535,000 4,057,000 5,592,000 923,000 6/25/97 Houston/Veterans Memorial Dr. 459,000 1,252,000 1,711,000 303,000 6/25/97 Los Angeles/Olympic 4,397,000 11,465,000 15,862,000 2,613,000 6/25/97 Littleton 1,342,000 3,573,000 4,915,000 832,000 6/25/97 Metairie 1,230,000 3,320,000 4,550,000 789,000 6/25/97 Louisville 718,000 1,955,000 2,673,000 466,000 6/25/97 East Hazel Crest 754,000 2,028,000 2,782,000 483,000 6/25/97 Edmonds 1,188,000 3,176,000 4,364,000 747,000 6/25/97 Foster City 1,065,000 2,800,000 3,865,000 642,000 6/25/97 Chicago 1,161,000 3,130,000 4,291,000 739,000 F-57 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 6/25/97 Philadelphia - 924,000 2,155,000 322,000 - 6/25/97 Dallas/Vilbig Rd. - 508,000 1,184,000 209,000 - 6/25/97 Staten Island - 1,676,000 3,910,000 555,000 - 6/25/97 Pelham Manor - 1,209,000 2,820,000 538,000 - 6/25/97 Irving - 469,000 1,093,000 197,000 - 6/25/97 Elk Grove - 642,000 1,497,000 244,000 - 6/25/97 LAX - 1,312,000 3,062,000 484,000 - 6/25/97 Denver - 1,316,000 3,071,000 476,000 - 6/25/97 Plano - 1,369,000 3,193,000 404,000 - 6/25/97 Lynnwood - 839,000 1,959,000 343,000 - 6/25/97 Lilburn - 507,000 1,182,000 325,000 - 6/25/97 Parma - 881,000 2,055,000 480,000 - 6/25/97 Davie - 1,086,000 2,533,000 577,000 - 6/25/97 Allen Park - 953,000 2,223,000 510,000 - 6/25/97 Aurora - 808,000 1,886,000 400,000 - 6/25/97 San Diego/16th Street - 932,000 2,175,000 592,000 - 6/25/97 Sterling Heights - 766,000 1,787,000 437,000 - 6/25/97 East L.A./Boyle Heights - 957,000 2,232,000 482,000 - 6/25/97 Springfield/Alban Station - 1,317,000 3,074,000 651,000 - 6/25/97 Littleton - 868,000 2,026,000 461,000 - 6/25/97 Sacramento/57th Street - 869,000 2,029,000 464,000 - 6/25/97 Miami - 1,762,000 4,111,000 823,000 - 8/13/97 Santa Monica / Wilshire Blvd. - 2,040,000 4,760,000 257,000 - 10/1/97 Marietta /Austell Rd - 398,000 1,326,000 258,000 468,000 10/1/97 Denver / Leetsdale - 1,407,000 1,682,000 203,000 595,000 10/1/97 Baltimore / York Road - 1,538,000 1,952,000 313,000 705,000 10/1/97 Bolingbrook - 737,000 1,776,000 207,000 613,000 10/1/97 Kent / Central - 483,000 1,321,000 204,000 469,000 10/1/97 Geneva / Roosevelt - 355,000 1,302,000 174,000 460,000 10/1/97 Denver / Sheridan - 429,000 1,105,000 156,000 400,000 10/1/97 Mountlake Terrace - 1,017,000 1,783,000 229,000 612,000 10/1/97 Carol Stream/ St.Charles - 185,000 1,187,000 164,000 419,000 10/1/97 Marietta / Cobb Park - 420,000 1,131,000 295,000 431,000 10/1/97 Venice / Rose - 5,468,000 5,478,000 616,000 1,836,000 10/1/97 Ventura / Ventura Blvd - 911,000 2,227,000 226,000 768,000 10/1/97 Studio City/ Ventura - 2,421,000 1,610,000 149,000 541,000 10/1/97 Madison Heights - 428,000 1,686,000 2,047,000 572,000 10/1/97 Lax / Imperial - 1,662,000 2,079,000 202,000 724,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 6/25/97 Philadelphia 925,000 2,476,000 3,401,000 574,000 6/25/97 Dallas/Vilbig Rd. 509,000 1,392,000 1,901,000 348,000 6/25/97 Staten Island 1,678,000 4,463,000 6,141,000 1,030,000 6/25/97 Pelham Manor 1,210,000 3,357,000 4,567,000 772,000 6/25/97 Irving 470,000 1,289,000 1,759,000 327,000 6/25/97 Elk Grove 643,000 1,740,000 2,383,000 413,000 6/25/97 LAX 1,314,000 3,544,000 4,858,000 845,000 6/25/97 Denver 1,318,000 3,545,000 4,863,000 826,000 6/25/97 Plano 1,371,000 3,595,000 4,966,000 820,000 6/25/97 Lynnwood 840,000 2,301,000 3,141,000 555,000 6/25/97 Lilburn 508,000 1,506,000 2,014,000 375,000 6/25/97 Parma 882,000 2,534,000 3,416,000 587,000 6/25/97 Davie 1,087,000 3,109,000 4,196,000 753,000 6/25/97 Allen Park 954,000 2,732,000 3,686,000 634,000 6/25/97 Aurora 809,000 2,285,000 3,094,000 522,000 6/25/97 San Diego/16th Street 933,000 2,766,000 3,699,000 687,000 6/25/97 Sterling Heights 767,000 2,223,000 2,990,000 520,000 6/25/97 East L.A./Boyle Heights 958,000 2,713,000 3,671,000 630,000 6/25/97 Springfield/Alban Station 1,319,000 3,723,000 5,042,000 860,000 6/25/97 Littleton 869,000 2,486,000 3,355,000 563,000 6/25/97 Sacramento/57th Street 870,000 2,492,000 3,362,000 594,000 6/25/97 Miami 1,764,000 4,932,000 6,696,000 1,137,000 8/13/97 Santa Monica / Wilshire Blvd. 2,042,000 5,015,000 7,057,000 1,221,000 10/1/97 Marietta /Austell Rd 398,000 2,052,000 2,450,000 527,000 10/1/97 Denver / Leetsdale 1,409,000 2,478,000 3,887,000 657,000 10/1/97 Baltimore / York Road 1,540,000 2,968,000 4,508,000 758,000 10/1/97 Bolingbrook 738,000 2,595,000 3,333,000 672,000 10/1/97 Kent / Central 484,000 1,993,000 2,477,000 514,000 10/1/97 Geneva / Roosevelt 355,000 1,936,000 2,291,000 511,000 10/1/97 Denver / Sheridan 430,000 1,660,000 2,090,000 440,000 10/1/97 Mountlake Terrace 1,018,000 2,623,000 3,641,000 654,000 10/1/97 Carol Stream/ St.Charles 185,000 1,770,000 1,955,000 451,000 10/1/97 Marietta / Cobb Park 420,000 1,857,000 2,277,000 472,000 10/1/97 Venice / Rose 5,474,000 7,924,000 13,398,000 1,857,000 10/1/97 Ventura / Ventura Blvd 912,000 3,220,000 4,132,000 818,000 10/1/97 Studio City/ Ventura 2,424,000 2,297,000 4,721,000 597,000 10/1/97 Madison Heights 429,000 4,304,000 4,733,000 585,000 10/1/97 Lax / Imperial 1,664,000 3,003,000 4,667,000 766,000 F-58 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 10/1/97 Justice / Industrial - 233,000 1,181,000 138,000 410,000 10/1/97 Burbank / San Fernando - 1,825,000 2,210,000 202,000 752,000 10/1/97 Pinole / Appian Way - 728,000 1,827,000 186,000 626,000 10/1/97 Denver / Tamarac Park - 2,545,000 1,692,000 367,000 658,000 10/1/97 Gresham / Powell - 322,000 1,298,000 204,000 446,000 10/1/97 Warren / Mound Road - 268,000 1,025,000 191,000 364,000 10/1/97 Woodside/Brooklyn - 5,016,000 3,950,000 373,000 1,392,000 10/1/97 Enfield / Elm Street - 399,000 1,900,000 275,000 652,000 10/1/97 Roselle / Lake Street - 312,000 1,411,000 193,000 495,000 10/1/97 Milwaukee / Appleton - 324,000 1,385,000 220,000 491,000 10/1/97 Emeryville / Bay St - 1,602,000 1,830,000 186,000 637,000 10/1/97 Monterey / Del Rey - 257,000 1,048,000 201,000 360,000 10/1/97 San Leandro / Washington - 660,000 1,142,000 175,000 401,000 10/1/97 Boca Raton / N.W. 20 - 1,140,000 2,256,000 381,000 782,000 10/1/97 Washington Dc/So Capital - 1,437,000 4,489,000 431,000 1,531,000 10/1/97 Lynn / Lynnway - 463,000 3,059,000 366,000 1,077,000 10/1/97 Pompano Beach - 1,077,000 1,527,000 537,000 540,000 10/1/97 Lake Oswego/ N.State - 465,000 1,956,000 262,000 670,000 10/1/97 Daly City / Mission - 389,000 2,921,000 248,000 971,000 10/1/97 Odenton / Route 175 - 456,000 2,104,000 248,000 732,000 10/1/97 Novato / Landing - 2,416,000 3,496,000 237,000 275,000 10/1/97 St. Louis / Lindberg - 584,000 1,508,000 224,000 124,000 10/1/97 Oakland/International - 358,000 1,568,000 228,000 127,000 10/1/97 Stockton / March Lane - 663,000 1,398,000 122,000 110,000 10/1/97 Des Plaines / Golf Rd - 1,363,000 3,093,000 209,000 236,000 10/1/97 Morton Grove / Wauke - 2,658,000 3,232,000 3,601,000 327,000 10/1/97 Los Angeles / Jefferson - 1,090,000 1,580,000 234,000 126,000 10/1/97 Los Angeles / Martin - 869,000 1,152,000 110,000 92,000 10/1/97 San Leandro / E. 14th - 627,000 1,289,000 112,000 102,000 10/1/97 Tucson / Tanque Verde - 345,000 1,709,000 160,000 135,000 10/1/97 Randolph / Warren St - 2,330,000 1,914,000 462,000 153,000 10/1/97 Forrestville / Penn. - 1,056,000 2,347,000 244,000 188,000 10/1/97 Bridgeport - 4,877,000 2,739,000 584,000 228,000 10/1/97 North Hollywood/Vine - 906,000 2,379,000 176,000 183,000 10/1/97 Santa Cruz / Portola - 535,000 1,526,000 152,000 122,000 10/1/97 Hyde Park / River St - 626,000 1,748,000 247,000 139,000 10/1/97 Dublin / San Ramon Rd - 942,000 1,999,000 158,000 153,000 10/1/97 Vallejo / Humboldt - 473,000 1,651,000 148,000 129,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 10/1/97 Justice / Industrial 233,000 1,729,000 1,962,000 452,000 10/1/97 Burbank / San Fernando 1,827,000 3,162,000 4,989,000 797,000 10/1/97 Pinole / Appian Way 729,000 2,638,000 3,367,000 674,000 10/1/97 Denver / Tamarac Park 2,548,000 2,714,000 5,262,000 746,000 10/1/97 Gresham / Powell 322,000 1,948,000 2,270,000 485,000 10/1/97 Warren / Mound Road 268,000 1,580,000 1,848,000 379,000 10/1/97 Woodside/Brooklyn 5,022,000 5,709,000 10,731,000 1,246,000 10/1/97 Enfield / Elm Street 399,000 2,827,000 3,226,000 661,000 10/1/97 Roselle / Lake Street 312,000 2,099,000 2,411,000 524,000 10/1/97 Milwaukee / Appleton 324,000 2,096,000 2,420,000 494,000 10/1/97 Emeryville / Bay St 1,604,000 2,651,000 4,255,000 652,000 10/1/97 Monterey / Del Rey 257,000 1,609,000 1,866,000 376,000 10/1/97 San Leandro / Washington 661,000 1,717,000 2,378,000 421,000 10/1/97 Boca Raton / N.W. 20 1,141,000 3,418,000 4,559,000 803,000 10/1/97 Washington Dc/So Capital 1,439,000 6,449,000 7,888,000 1,316,000 10/1/97 Lynn / Lynnway 464,000 4,501,000 4,965,000 1,043,000 10/1/97 Pompano Beach 1,078,000 2,603,000 3,681,000 564,000 10/1/97 Lake Oswego/ N.State 466,000 2,887,000 3,353,000 667,000 10/1/97 Daly City / Mission 389,000 4,140,000 4,529,000 953,000 10/1/97 Odenton / Route 175 457,000 3,083,000 3,540,000 625,000 10/1/97 Novato / Landing 2,419,000 4,005,000 6,424,000 1,170,000 10/1/97 St. Louis / Lindberg 585,000 1,855,000 2,440,000 522,000 10/1/97 Oakland/International 358,000 1,923,000 2,281,000 536,000 10/1/97 Stockton / March Lane 664,000 1,629,000 2,293,000 463,000 10/1/97 Des Plaines / Golf Rd 1,365,000 3,536,000 4,901,000 1,035,000 10/1/97 Morton Grove / Wauke 2,661,000 7,157,000 9,818,000 1,646,000 10/1/97 Los Angeles / Jefferson 1,091,000 1,939,000 3,030,000 529,000 10/1/97 Los Angeles / Martin 870,000 1,353,000 2,223,000 383,000 10/1/97 San Leandro / E. 14th 628,000 1,502,000 2,130,000 422,000 10/1/97 Tucson / Tanque Verde 345,000 2,004,000 2,349,000 516,000 10/1/97 Randolph / Warren St 2,333,000 2,526,000 4,859,000 604,000 10/1/97 Forrestville / Penn. 1,057,000 2,778,000 3,835,000 767,000 10/1/97 Bridgeport 4,883,000 3,545,000 8,428,000 951,000 10/1/97 North Hollywood/Vine 907,000 2,737,000 3,644,000 704,000 10/1/97 Santa Cruz / Portola 536,000 1,799,000 2,335,000 479,000 10/1/97 Hyde Park / River St 627,000 2,133,000 2,760,000 536,000 10/1/97 Dublin / San Ramon Rd 943,000 2,309,000 3,252,000 685,000 10/1/97 Vallejo / Humboldt 474,000 1,927,000 2,401,000 507,000 F-59 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 10/1/97 Fremont/Warm Springs - 848,000 2,885,000 244,000 225,000 10/1/97 Seattle / Stone Way - 829,000 2,180,000 280,000 173,000 10/1/97 W. Olympia - 149,000 1,096,000 267,000 90,000 10/1/97 Mercer/Parkside Ave - 359,000 1,763,000 205,000 141,000 10/1/97 Bridge Water / Main - 445,000 2,054,000 255,000 159,000 10/1/97 Norwalk / Hoyt Street - 2,369,000 3,049,000 535,000 253,000 11/2/97 Lansing - 758,000 1,768,000 120,000 - 11/7/97 Phoenix - 1,197,000 2,793,000 124,000 - 11/13/97 Tinley Park - 1,422,000 3,319,000 49,000 - 3/17/98 Houston/De Soto Dr. - 659,000 1,537,000 90,000 - 3/17/98 Houston / East Freeway - 593,000 1,384,000 128,000 - 3/17/98 Austin/Ben White - 692,000 1,614,000 75,000 - 3/17/98 Arlington/E.Pioneer - 922,000 2,152,000 147,000 - 3/17/98 Las Vegas/Tropicana - 1,285,000 2,998,000 128,000 - 3/17/98 Branford / Summit Place - 728,000 1,698,000 105,000 - 3/17/98 Las Vegas / Charleston - 791,000 1,845,000 106,000 - 3/17/98 So. San Francisco - 1,550,000 3,617,000 77,000 - 3/17/98 Pasadena / Arroyo Prkwy - 3,005,000 7,012,000 132,000 - 3/17/98 Tempe / E. Broadway - 633,000 1,476,000 125,000 - 3/17/98 Phoenix / N. 43rd Ave - 443,000 1,033,000 141,000 - 3/17/98 Phoenix/No. 43rd - 380,000 886,000 362,000 - 3/17/98 Phoenix / Black Canyon - 380,000 886,000 128,000 - 3/17/98 Phoenix/Black Canyon - 136,000 317,000 185,000 - 3/17/98 Nesconset / Southern - 1,423,000 3,321,000 100,000 - 4/1/98 St. Louis / Hwy. 141 - 659,000 1,628,000 4,472,000 - 4/1/98 Island Park / Austin - 2,313,000 3,015,000 (626,000) - 4/1/98 Akron / Brittain Rd. - 275,000 2,248,000 (209,000) - 4/1/98 Patchogue/W.Sunrise - 936,000 2,184,000 118,000 - 4/1/98 Havertown/West Chester - 1,254,000 2,926,000 92,000 - 4/1/98 Schiller Park/River - 568,000 1,390,000 64,000 - 4/1/98 Chicago / Cuyler - 1,400,000 2,695,000 87,000 - 4/1/98 Chicago Heights/West - 468,000 1,804,000 64,000 - 4/1/98 Arlington Hts/University - 670,000 3,004,000 77,000 - 4/1/98 Cicero / Ogden - 1,678,000 2,266,000 267,000 - 4/1/98 Chicago/W. Howard St. - 974,000 2,875,000 124,000 - 4/1/98 Chicago/N. Western Ave - 1,453,000 3,205,000 107,000 - 4/1/98 Chicago/Northwest Hwy - 925,000 2,412,000 64,000 - 4/1/98 Chicago/N. Wells St. - 1,446,000 2,828,000 89,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 10/1/97 Fremont/Warm Springs 849,000 3,353,000 4,202,000 832,000 10/1/97 Seattle / Stone Way 830,000 2,632,000 3,462,000 629,000 10/1/97 W. Olympia 149,000 1,453,000 1,602,000 347,000 10/1/97 Mercer/Parkside Ave 359,000 2,109,000 2,468,000 529,000 10/1/97 Bridge Water / Main 446,000 2,467,000 2,913,000 605,000 10/1/97 Norwalk / Hoyt Street 2,372,000 3,834,000 6,206,000 900,000 11/2/97 Lansing 759,000 1,887,000 2,646,000 460,000 11/7/97 Phoenix 1,198,000 2,916,000 4,114,000 661,000 11/13/97 Tinley Park 1,424,000 3,366,000 4,790,000 704,000 3/17/98 Houston/De Soto Dr. 660,000 1,626,000 2,286,000 334,000 3/17/98 Houston / East Freeway 594,000 1,511,000 2,105,000 335,000 3/17/98 Austin/Ben White 693,000 1,688,000 2,381,000 349,000 3/17/98 Arlington/E.Pioneer 923,000 2,298,000 3,221,000 462,000 3/17/98 Las Vegas/Tropicana 1,287,000 3,124,000 4,411,000 625,000 3/17/98 Branford / Summit Place 729,000 1,802,000 2,531,000 381,000 3/17/98 Las Vegas / Charleston 792,000 1,950,000 2,742,000 398,000 3/17/98 So. San Francisco 1,552,000 3,692,000 5,244,000 731,000 3/17/98 Pasadena / Arroyo Prkwy 3,009,000 7,140,000 10,149,000 1,385,000 3/17/98 Tempe / E. Broadway 634,000 1,600,000 2,234,000 330,000 3/17/98 Phoenix / N. 43rd Ave 444,000 1,173,000 1,617,000 261,000 3/17/98 Phoenix/No. 43rd 380,000 1,248,000 1,628,000 205,000 3/17/98 Phoenix / Black Canyon 380,000 1,014,000 1,394,000 228,000 3/17/98 Phoenix/Black Canyon 136,000 502,000 638,000 123,000 3/17/98 Nesconset / Southern 1,425,000 3,419,000 4,844,000 674,000 4/1/98 St. Louis / Hwy. 141 1,346,000 5,413,000 6,759,000 603,000 4/1/98 Island Park / Austin 1,376,000 3,326,000 4,702,000 634,000 4/1/98 Akron / Brittain Rd. 670,000 1,644,000 2,314,000 264,000 4/1/98 Patchogue/W.Sunrise 937,000 2,301,000 3,238,000 480,000 4/1/98 Havertown/West Chester 1,250,000 3,022,000 4,272,000 612,000 4/1/98 Schiller Park/River 569,000 1,453,000 2,022,000 310,000 4/1/98 Chicago / Cuyler 1,402,000 2,780,000 4,182,000 617,000 4/1/98 Chicago Heights/West 469,000 1,867,000 2,336,000 417,000 4/1/98 Arlington Hts/University 671,000 3,080,000 3,751,000 668,000 4/1/98 Cicero / Ogden 1,680,000 2,531,000 4,211,000 580,000 4/1/98 Chicago/W. Howard St. 975,000 2,998,000 3,973,000 675,000 4/1/98 Chicago/N. Western Ave 1,455,000 3,310,000 4,765,000 728,000 4/1/98 Chicago/Northwest Hwy 926,000 2,475,000 3,401,000 539,000 4/1/98 Chicago/N. Wells St. 1,448,000 2,915,000 4,363,000 641,000 F-60 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 4/1/98 Chicago / Pulaski Rd. - 1,276,000 2,858,000 62,000 - 4/1/98 Artesia / Artesia - 625,000 1,419,000 93,000 - 4/1/98 Arcadia / Lower Azusa - 821,000 1,369,000 92,000 - 4/1/98 Manassas / Centreville - 405,000 2,137,000 166,000 - 4/1/98 La Downtwn/10 Fwy - 1,608,000 3,358,000 129,000 - 4/1/98 Bellevue / Northup - 1,232,000 3,306,000 218,000 - 4/1/98 Hollywood/Cole & Wilshire - 1,590,000 1,785,000 80,000 - 4/1/98 Atlanta/John Wesley - 1,233,000 1,665,000 169,000 - 4/1/98 Montebello/S. Maple - 1,274,000 2,299,000 62,000 - 4/1/98 Lake City/Forest Park - 248,000 1,445,000 79,000 - 4/1/98 Baltimore / W. Patap - 403,000 2,650,000 122,000 - 4/1/98 Fraser/Groesbeck Hwy - 368,000 1,796,000 74,000 - 4/1/98 Vallejo / Mini Drive - 560,000 1,803,000 78,000 - 4/1/98 San Diego/54th & Euclid - 952,000 2,550,000 98,000 - 4/1/98 Miami / 5th Street - 2,327,000 3,234,000 108,000 - 4/1/98 Silver Spring/Hill - 922,000 2,080,000 131,000 - 4/1/98 Chicago/E. 95th St. - 397,000 2,357,000 98,000 - 4/1/98 Chicago / S. Harlem - 791,000 1,424,000 70,000 - 4/1/98 St. Charles /Highway - 623,000 1,501,000 114,000 - 4/1/98 Chicago/Burr Ridge Rd. - 421,000 2,165,000 60,000 - 4/1/98 Yonkers / Route 9a - 1,722,000 3,823,000 114,000 - 4/1/98 Silverlake/Glendale - 2,314,000 5,481,000 107,000 - 4/1/98 Chicago/Harlem Ave - 1,430,000 3,038,000 95,000 - 4/1/98 Bethesda / Butler Rd - 1,146,000 2,509,000 64,000 - 4/1/98 Dundalk / Wise Ave - 447,000 2,005,000 81,000 - 4/1/98 St. Louis / Hwy. 141 - 659,000 1,628,000 57,000 - 4/1/98 Island Park / Austin - 2,313,000 3,015,000 78,000 - 4/1/98 Dallas / Kingsly - 1,095,000 1,712,000 103,000 - 5/1/98 Berkeley / 2nd St. - 1,914,000 4,466,000 (130,000) - 5/8/98 Cleveland / W. 117th - 930,000 2,277,000 182,000 - 5/8/98 La /Venice Blvd - 1,470,000 3,599,000 80,000 - 5/8/98 Aurora / Farnsworth - 960,000 2,350,000 70,000 - 5/8/98 Santa Rosa / Hopper - 1,020,000 2,497,000 93,000 - 5/8/98 Golden Valley / Winn - 630,000 1,542,000 88,000 - 5/8/98 St. Louis / Benham - 810,000 1,983,000 143,000 - 5/8/98 Chicago / S. Chicago - 840,000 2,057,000 59,000 - 10/1/98 El Segundo / Sepulveda - 6,586,000 5,795,000 106,000 - 10/1/98 Atlanta / Memorial Dr. - 414,000 2,239,000 157,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 4/1/98 Chicago / Pulaski Rd. 1,277,000 2,919,000 4,196,000 616,000 4/1/98 Artesia / Artesia 626,000 1,511,000 2,137,000 430,000 4/1/98 Arcadia / Lower Azusa 822,000 1,460,000 2,282,000 410,000 4/1/98 Manassas / Centreville 405,000 2,303,000 2,708,000 659,000 4/1/98 La Downtwn/10 Fwy 1,610,000 3,485,000 5,095,000 962,000 4/1/98 Bellevue / Northup 1,233,000 3,523,000 4,756,000 1,007,000 4/1/98 Hollywood/Cole & Wilshire 1,592,000 1,863,000 3,455,000 517,000 4/1/98 Atlanta/John Wesley 1,234,000 1,833,000 3,067,000 576,000 4/1/98 Montebello/S. Maple 1,275,000 2,360,000 3,635,000 653,000 4/1/98 Lake City/Forest Park 248,000 1,524,000 1,772,000 431,000 4/1/98 Baltimore / W. Patap 403,000 2,772,000 3,175,000 741,000 4/1/98 Fraser/Groesbeck Hwy 368,000 1,870,000 2,238,000 506,000 4/1/98 Vallejo / Mini Drive 561,000 1,880,000 2,441,000 517,000 4/1/98 San Diego/54th & Euclid 953,000 2,647,000 3,600,000 817,000 4/1/98 Miami / 5th Street 2,330,000 3,339,000 5,669,000 1,000,000 4/1/98 Silver Spring/Hill 923,000 2,210,000 3,133,000 689,000 4/1/98 Chicago/E. 95th St. 397,000 2,455,000 2,852,000 758,000 4/1/98 Chicago / S. Harlem 792,000 1,493,000 2,285,000 471,000 4/1/98 St. Charles /Highway 624,000 1,614,000 2,238,000 519,000 4/1/98 Chicago/Burr Ridge Rd. 421,000 2,225,000 2,646,000 696,000 4/1/98 Yonkers / Route 9a 1,724,000 3,935,000 5,659,000 1,181,000 4/1/98 Silverlake/Glendale 2,317,000 5,585,000 7,902,000 1,670,000 4/1/98 Chicago/Harlem Ave 1,432,000 3,131,000 4,563,000 945,000 4/1/98 Bethesda / Butler Rd 1,147,000 2,572,000 3,719,000 749,000 4/1/98 Dundalk / Wise Ave 448,000 2,085,000 2,533,000 591,000 4/1/98 St. Louis / Hwy. 141 660,000 1,684,000 2,344,000 565,000 4/1/98 Island Park / Austin 2,316,000 3,090,000 5,406,000 1,030,000 4/1/98 Dallas / Kingsly 1,096,000 1,814,000 2,910,000 505,000 5/1/98 Berkeley / 2nd St. 1,839,000 4,411,000 6,250,000 870,000 5/8/98 Cleveland / W. 117th 931,000 2,458,000 3,389,000 499,000 5/8/98 La /Venice Blvd 1,472,000 3,677,000 5,149,000 687,000 5/8/98 Aurora / Farnsworth 961,000 2,419,000 3,380,000 462,000 5/8/98 Santa Rosa / Hopper 1,021,000 2,589,000 3,610,000 493,000 5/8/98 Golden Valley / Winn 631,000 1,629,000 2,260,000 331,000 5/8/98 St. Louis / Benham 811,000 2,125,000 2,936,000 426,000 5/8/98 Chicago / S. Chicago 841,000 2,115,000 2,956,000 395,000 10/1/98 El Segundo / Sepulveda 6,594,000 5,893,000 12,487,000 1,084,000 10/1/98 Atlanta / Memorial Dr. 414,000 2,396,000 2,810,000 478,000 F-61 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 10/1/98 Chicago / W. 79th St - 861,000 2,789,000 222,000 - 10/1/98 Chicago / N. Broadway - 1,918,000 3,824,000 123,000 - 10/1/98 Dallas / Greenville - 1,933,000 2,892,000 90,000 - 10/1/98 Tacoma / Orchard - 358,000 1,987,000 75,000 - 10/1/98 St. Louis / Gravois - 312,000 2,327,000 129,000 - 10/1/98 White Bear Lake - 578,000 2,079,000 71,000 - 10/1/98 Santa Cruz / Soquel - 832,000 2,385,000 93,000 - 10/1/98 Coon Rapids / Hwy 10 - 330,000 1,646,000 71,000 - 10/1/98 Oxnard / Hueneme Rd - 923,000 3,925,000 103,000 - 10/1/98 Vancouver/ Millplain - 343,000 2,000,000 76,000 - 10/1/98 Tigard / Mc Ewan - 597,000 1,652,000 81,000 - 10/1/98 Griffith / Cline - 299,000 2,118,000 43,000 - 10/1/98 Miami / Sunset Drive - 1,656,000 2,321,000 1,932,000 - 10/1/98 Farmington / 9 Mile - 580,000 2,526,000 79,000 - 10/1/98 Los Gatos / University - 2,234,000 3,890,000 (258,000) - 10/1/98 N. Hollywood - 1,484,000 3,143,000 42,000 - 10/1/98 Petaluma / Transport - 460,000 1,840,000 4,935,000 - 10/1/98 Chicago / 111th - 341,000 2,898,000 2,143,000 - 10/1/98 Upper Darby / Market - 808,000 5,011,000 123,000 - 10/1/98 San Jose / Santa - 966,000 3,870,000 82,000 - 10/1/98 San Diego / Morena - 3,173,000 5,469,000 90,000 - 10/1/98 Brooklyn /Rockaway Ave - 6,272,000 9,691,000 292,000 - 10/1/98 Revere / Charger St - 1,997,000 3,727,000 171,000 - 10/1/98 Las Vegas / E. Charles - 602,000 2,545,000 99,000 - 10/1/98 Laurel / Baltimore Ave - 1,899,000 4,498,000 150,000 - 10/1/98 East La/Figueroa & 4th - 1,213,000 2,689,000 50,000 - 10/1/98 Oldsmar / Tampa Road - 760,000 2,154,000 2,727,000 - 10/1/98 Ft. Lauderdale /S.W. - 1,046,000 2,928,000 75,000 - 10/1/98 Miami / Nw 73rd St - 1,050,000 3,064,000 83,000 - 1/1/99 New Orleans/St.Charles - 1,463,000 2,634,000 56,000 - 1/6/99 Brandon / E. Brandon Blvd - 1,560,000 3,695,000 64,000 - 3/12/99 St. Louis / N. Lindbergh Blvd. - 1,688,000 3,939,000 159,000 - 3/12/99 St. Louis /Vandeventer Midtown - 699,000 1,631,000 107,000 - 3/12/99 St. Ann / Maryland Heights - 1,035,000 2,414,000 96,000 - 3/12/99 Florissant / N. Hwy 67 - 971,000 2,265,000 121,000 - 3/12/99 Ferguson Area-W.Florissant - 1,194,000 2,732,000 223,000 - 3/12/99 Florissant / New Halls Ferry Rd - 1,144,000 2,670,000 199,000 - 3/12/99 St. Louis / Airport - 785,000 1,833,000 80,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 10/1/98 Chicago / W. 79th St 862,000 3,010,000 3,872,000 609,000 10/1/98 Chicago / N. Broadway 1,920,000 3,945,000 5,865,000 760,000 10/1/98 Dallas / Greenville 1,935,000 2,980,000 4,915,000 552,000 10/1/98 Tacoma / Orchard 358,000 2,062,000 2,420,000 405,000 10/1/98 St. Louis / Gravois 312,000 2,456,000 2,768,000 481,000 10/1/98 White Bear Lake 579,000 2,149,000 2,728,000 409,000 10/1/98 Santa Cruz / Soquel 833,000 2,477,000 3,310,000 477,000 10/1/98 Coon Rapids / Hwy 10 330,000 1,717,000 2,047,000 335,000 10/1/98 Oxnard / Hueneme Rd 924,000 4,027,000 4,951,000 755,000 10/1/98 Vancouver/ Millplain 343,000 2,076,000 2,419,000 410,000 10/1/98 Tigard / Mc Ewan 598,000 1,732,000 2,330,000 350,000 10/1/98 Griffith / Cline 299,000 2,161,000 2,460,000 403,000 10/1/98 Miami / Sunset Drive 2,270,000 3,639,000 5,909,000 535,000 10/1/98 Farmington / 9 Mile 581,000 2,604,000 3,185,000 483,000 10/1/98 Los Gatos / University 2,237,000 3,629,000 5,866,000 666,000 10/1/98 N. Hollywood 1,486,000 3,183,000 4,669,000 590,000 10/1/98 Petaluma / Transport 858,000 6,377,000 7,235,000 539,000 10/1/98 Chicago / 111th 433,000 4,949,000 5,382,000 548,000 10/1/98 Upper Darby / Market 809,000 5,133,000 5,942,000 947,000 10/1/98 San Jose / Santa 967,000 3,951,000 4,918,000 745,000 10/1/98 San Diego / Morena 3,177,000 5,555,000 8,732,000 1,022,000 10/1/98 Brooklyn /Rockaway Ave 6,279,000 9,976,000 16,255,000 1,841,000 10/1/98 Revere / Charger St 1,999,000 3,896,000 5,895,000 745,000 10/1/98 Las Vegas / E. Charles 603,000 2,643,000 3,246,000 510,000 10/1/98 Laurel / Baltimore Ave 1,901,000 4,646,000 6,547,000 861,000 10/1/98 East La/Figueroa & 4th 1,214,000 2,738,000 3,952,000 511,000 10/1/98 Oldsmar / Tampa Road 1,050,000 4,591,000 5,641,000 605,000 10/1/98 Ft. Lauderdale /S.W. 1,047,000 3,002,000 4,049,000 553,000 10/1/98 Miami / Nw 73rd St 1,051,000 3,146,000 4,197,000 594,000 1/1/99 New Orleans/St.Charles 1,465,000 2,688,000 4,153,000 427,000 1/6/99 Brandon / E. Brandon Blvd 1,562,000 3,757,000 5,319,000 506,000 3/12/99 St. Louis / N. Lindbergh Blvd. 1,690,000 4,096,000 5,786,000 641,000 3/12/99 St. Louis /Vandeventer Midtown 700,000 1,737,000 2,437,000 280,000 3/12/99 St. Ann / Maryland Heights 1,036,000 2,509,000 3,545,000 401,000 3/12/99 Florissant / N. Hwy 67 972,000 2,385,000 3,357,000 378,000 3/12/99 Ferguson Area-W.Florissant 1,195,000 2,954,000 4,149,000 495,000 3/12/99 Florissant / New Halls Ferry Rd 1,145,000 2,868,000 4,013,000 466,000 3/12/99 St. Louis / Airport 786,000 1,912,000 2,698,000 300,000 F-62 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/12/99 St. Louis/ S.Third St - 1,096,000 2,557,000 64,000 - 3/12/99 Kansas City / E. 47th St. - 610,000 1,424,000 123,000 - 3/12/99 Kansas City /E. 67th Terrace - 1,136,000 2,643,000 77,000 - 3/12/99 Kansas City / James A. Reed Rd - 749,000 1,748,000 73,000 - 3/12/99 Independence / 291 - 871,000 2,032,000 89,000 - 3/12/99 Raytown / Woodson Rd - 915,000 2,134,000 86,000 - 3/12/99 Kansas City / 34th Main Street - 114,000 2,599,000 546,000 - 3/12/99 Columbia / River Dr - 671,000 1,566,000 144,000 - 3/12/99 Columbia / Buckner Rd - 714,000 1,665,000 246,000 - 3/12/99 Columbia / Decker Park Rd - 605,000 1,412,000 102,000 - 3/12/99 Columbia / Rosewood Dr - 777,000 1,814,000 94,000 - 3/12/99 W. Columbia / Orchard Dr. - 272,000 634,000 112,000 - 3/12/99 W. Columbia / Airport Blvd - 493,000 1,151,000 96,000 - 3/12/99 Greenville / Whitehorse Rd - 882,000 2,058,000 75,000 - 3/12/99 Greenville / Woods Lake Rd - 364,000 849,000 107,000 - 3/12/99 Mauldin / N. Main Street - 571,000 1,333,000 103,000 - 3/12/99 Simpsonville / Grand View Dr - 582,000 1,358,000 112,000 - 3/12/99 Taylors / Wade Hampton Blvd - 650,000 1,517,000 125,000 - 3/12/99 Charleston/Ashley Phosphate - 839,000 1,950,000 173,000 - 3/12/99 N. Charleston / Dorchester Rd - 380,000 886,000 101,000 - 3/12/99 N. Charleston / Dorchester - 487,000 1,137,000 117,000 - 3/12/99 Charleston / Sam Rittenberg Blvd - 555,000 1,296,000 96,000 - 3/12/99 Hilton Head / Office Park Rd - 1,279,000 2,985,000 87,000 - 3/12/99 Columbia / Plumbers Rd - 368,000 858,000 117,000 - 3/12/99 Greenville / Pineknoll Rd - 927,000 2,163,000 139,000 - 3/12/99 Hilton Head / Yacht Cove Dr - 1,182,000 2,753,000 145,000 - 3/12/99 Spartanburg / Chesnee Hwy - 533,000 1,244,000 212,000 - 3/12/99 Charleston / Ashley River Rd - 1,114,000 2,581,000 112,000 - 3/12/99 Columbia / Broad River - 1,463,000 3,413,000 192,000 - 3/12/99 Charlotte / East Wt Harris Blvd - 736,000 1,718,000 86,000 - 3/12/99 Charlotte / North Tryon St. - 708,000 1,653,000 178,000 - 3/12/99 Charlotte / South Blvd - 641,000 1,496,000 105,000 - 3/12/99 Kannapolis / Oregon St - 463,000 1,081,000 84,000 - 3/12/99 Durham / E. Club Blvd - 947,000 2,209,000 89,000 - 3/12/99 Durham / N. Duke St. - 769,000 1,794,000 109,000 - 3/12/99 Raleigh / Maitland Dr - 679,000 1,585,000 95,000 - 3/12/99 Greensboro / O'henry Blvd - 577,000 1,345,000 180,000 - 3/12/99 Gastonia / S. York Rd - 467,000 1,089,000 113,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 3/12/99 St. Louis/ S.Third St 1,097,000 2,620,000 3,717,000 416,000 3/12/99 Kansas City / E. 47th St. 611,000 1,546,000 2,157,000 247,000 3/12/99 Kansas City /E. 67th Terrace 1,137,000 2,719,000 3,856,000 433,000 3/12/99 Kansas City / James A. Reed Rd 750,000 1,820,000 2,570,000 299,000 3/12/99 Independence / 291 872,000 2,120,000 2,992,000 335,000 3/12/99 Raytown / Woodson Rd 916,000 2,219,000 3,135,000 353,000 3/12/99 Kansas City / 34th Main Street 114,000 3,145,000 3,259,000 545,000 3/12/99 Columbia / River Dr 672,000 1,709,000 2,381,000 301,000 3/12/99 Columbia / Buckner Rd 715,000 1,910,000 2,625,000 380,000 3/12/99 Columbia / Decker Park Rd 606,000 1,513,000 2,119,000 264,000 3/12/99 Columbia / Rosewood Dr 778,000 1,907,000 2,685,000 318,000 3/12/99 W. Columbia / Orchard Dr. 272,000 746,000 1,018,000 150,000 3/12/99 W. Columbia / Airport Blvd 494,000 1,246,000 1,740,000 207,000 3/12/99 Greenville / Whitehorse Rd 883,000 2,132,000 3,015,000 351,000 3/12/99 Greenville / Woods Lake Rd 364,000 956,000 1,320,000 173,000 3/12/99 Mauldin / N. Main Street 572,000 1,435,000 2,007,000 258,000 3/12/99 Simpsonville / Grand View Dr 583,000 1,469,000 2,052,000 250,000 3/12/99 Taylors / Wade Hampton Blvd 651,000 1,641,000 2,292,000 281,000 3/12/99 Charleston/Ashley Phosphate 840,000 2,122,000 2,962,000 370,000 3/12/99 N. Charleston / Dorchester Rd 380,000 987,000 1,367,000 168,000 3/12/99 N. Charleston / Dorchester 488,000 1,253,000 1,741,000 221,000 3/12/99 Charleston / Sam Rittenberg Blvd 556,000 1,391,000 1,947,000 244,000 3/12/99 Hilton Head / Office Park Rd 1,281,000 3,070,000 4,351,000 486,000 3/12/99 Columbia / Plumbers Rd 368,000 975,000 1,343,000 174,000 3/12/99 Greenville / Pineknoll Rd 928,000 2,301,000 3,229,000 389,000 3/12/99 Hilton Head / Yacht Cove Dr 1,183,000 2,897,000 4,080,000 471,000 3/12/99 Spartanburg / Chesnee Hwy 534,000 1,455,000 1,989,000 260,000 3/12/99 Charleston / Ashley River Rd 1,115,000 2,692,000 3,807,000 428,000 3/12/99 Columbia / Broad River 1,465,000 3,603,000 5,068,000 609,000 3/12/99 Charlotte / East Wt Harris Blvd 737,000 1,803,000 2,540,000 307,000 3/12/99 Charlotte / North Tryon St. 709,000 1,830,000 2,539,000 317,000 3/12/99 Charlotte / South Blvd 642,000 1,600,000 2,242,000 276,000 3/12/99 Kannapolis / Oregon St 464,000 1,164,000 1,628,000 207,000 3/12/99 Durham / E. Club Blvd 948,000 2,297,000 3,245,000 378,000 3/12/99 Durham / N. Duke St. 770,000 1,902,000 2,672,000 310,000 3/12/99 Raleigh / Maitland Dr 680,000 1,679,000 2,359,000 288,000 3/12/99 Greensboro / O'henry Blvd 578,000 1,524,000 2,102,000 281,000 3/12/99 Gastonia / S. York Rd 468,000 1,201,000 1,669,000 222,000 F-63 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/12/99 Durham / Kangaroo Dr. - 1,102,000 2,572,000 213,000 - 3/12/99 Pensacola / Brent Lane - 402,000 938,000 92,000 - 3/12/99 Pensacola / Creighton Road - 454,000 1,060,000 209,000 - 3/12/99 Jacksonville / Park Avenue - 905,000 2,113,000 124,000 - 3/12/99 Jacksonville / Phillips Hwy - 665,000 1,545,000 162,000 - 3/12/99 Clearwater / Highland Ave - 724,000 1,690,000 105,000 - 3/12/99 Tarpon Springs / Us Highway 19 - 892,000 2,081,000 142,000 - 3/12/99 Orlando /S. Orange Blossom Trail - 1,229,000 2,867,000 145,000 - 3/12/99 Casselberry II - 1,160,000 2,708,000 87,000 - 3/12/99 Miami / Nw 14th Street - 1,739,000 4,058,000 110,000 - 3/12/99 Tarpon Springs / Highway 19 - 1,179,000 2,751,000 88,000 - 3/12/99 Ft. Myers / Tamiami Trail South - 834,000 1,945,000 74,000 - 3/12/99 Jacksonville / Ft. Caroline Rd. - 1,037,000 2,420,000 160,000 - 3/12/99 Orlando / South Semoran - 565,000 1,319,000 50,000 - 3/12/99 Jacksonville / Southside Blvd. - 1,278,000 2,982,000 162,000 - 3/12/99 Miami / Nw 7th Ave - 783,000 1,827,000 147,000 - 3/12/99 Vero Beach / Us Hwy 1 - 678,000 1,583,000 68,000 - 3/12/99 Ponte Vedra / Palm Valley Rd. - 745,000 2,749,000 433,000 - 3/12/99 Miami Lakes / Nw 153rd St. - 425,000 992,000 65,000 - 3/12/99 Deerfield Beach / Sw 10th St. - 1,844,000 4,302,000 64,000 - 3/12/99 Apopka / S. Orange Blossom - 307,000 717,000 97,000 - 3/12/99 Davie / University - 313,000 4,379,000 194,000 - 3/12/99 Arlington / Division - 998,000 2,328,000 79,000 - 3/12/99 Duncanville/S.Cedar Ridge - 1,477,000 3,447,000 157,000 - 3/12/99 Carrollton / Trinity Mills West - 530,000 1,237,000 88,000 - 3/12/99 Houston / Wallisville Rd. - 744,000 1,736,000 68,000 - 3/12/99 Houston / Fondren South - 647,000 1,510,000 50,000 - 3/12/99 Houston / Addicks Satsuma - 409,000 954,000 89,000 - 3/12/99 Addison / Inwood Road - 1,204,000 2,808,000 52,000 - 3/12/99 Garland / Jackson Drive - 755,000 1,761,000 68,000 - 3/12/99 Garland / Buckingham Road - 492,000 1,149,000 102,000 - 3/12/99 Houston / South Main - 1,461,000 3,409,000 83,000 - 3/12/99 Plano / Parker Road-Avenue K - 1,517,000 3,539,000 113,000 - 3/12/99 Houston / Bingle Road - 576,000 1,345,000 100,000 - 3/12/99 Houston / Mangum Road - 737,000 1,719,000 93,000 - 3/12/99 Houston / Hayes Road - 916,000 2,138,000 48,000 - 3/12/99 Katy / Dominion Drive - 995,000 2,321,000 52,000 - 3/12/99 Houston / Fm 1960 West - 513,000 1,198,000 75,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 3/12/99 Durham / Kangaroo Dr. 1,103,000 2,784,000 3,887,000 468,000 3/12/99 Pensacola / Brent Lane 402,000 1,030,000 1,432,000 179,000 3/12/99 Pensacola / Creighton Road 455,000 1,268,000 1,723,000 210,000 3/12/99 Jacksonville / Park Avenue 906,000 2,236,000 3,142,000 376,000 3/12/99 Jacksonville / Phillips Hwy 666,000 1,706,000 2,372,000 303,000 3/12/99 Clearwater / Highland Ave 725,000 1,794,000 2,519,000 303,000 3/12/99 Tarpon Springs / Us Highway 19 893,000 2,222,000 3,115,000 377,000 3/12/99 Orlando /S. Orange Blossom Trail 1,230,000 3,011,000 4,241,000 491,000 3/12/99 Casselberry II 1,161,000 2,794,000 3,955,000 456,000 3/12/99 Miami / Nw 14th Street 1,741,000 4,166,000 5,907,000 668,000 3/12/99 Tarpon Springs / Highway 19 1,180,000 2,838,000 4,018,000 460,000 3/12/99 Ft. Myers / Tamiami Trail South 835,000 2,018,000 2,853,000 333,000 3/12/99 Jacksonville / Ft. Caroline Rd. 1,038,000 2,579,000 3,617,000 427,000 3/12/99 Orlando / South Semoran 566,000 1,368,000 1,934,000 227,000 3/12/99 Jacksonville / Southside Blvd. 1,280,000 3,142,000 4,422,000 525,000 3/12/99 Miami / Nw 7th Ave 784,000 1,973,000 2,757,000 343,000 3/12/99 Vero Beach / Us Hwy 1 679,000 1,650,000 2,329,000 276,000 3/12/99 Ponte Vedra / Palm Valley Rd. 746,000 3,181,000 3,927,000 571,000 3/12/99 Miami Lakes / Nw 153rd St. 425,000 1,057,000 1,482,000 186,000 3/12/99 Deerfield Beach / Sw 10th St. 1,846,000 4,364,000 6,210,000 686,000 3/12/99 Apopka / S. Orange Blossom 307,000 814,000 1,121,000 153,000 3/12/99 Davie / University 313,000 4,573,000 4,886,000 698,000 3/12/99 Arlington / Division 999,000 2,406,000 3,405,000 379,000 3/12/99 Duncanville/S.Cedar Ridge 1,479,000 3,602,000 5,081,000 584,000 3/12/99 Carrollton / Trinity Mills West 531,000 1,324,000 1,855,000 226,000 3/12/99 Houston / Wallisville Rd. 745,000 1,803,000 2,548,000 299,000 3/12/99 Houston / Fondren South 648,000 1,559,000 2,207,000 257,000 3/12/99 Houston / Addicks Satsuma 409,000 1,043,000 1,452,000 180,000 3/12/99 Addison / Inwood Road 1,205,000 2,859,000 4,064,000 449,000 3/12/99 Garland / Jackson Drive 756,000 1,828,000 2,584,000 300,000 3/12/99 Garland / Buckingham Road 493,000 1,250,000 1,743,000 227,000 3/12/99 Houston / South Main 1,463,000 3,490,000 4,953,000 557,000 3/12/99 Plano / Parker Road-Avenue K 1,519,000 3,650,000 5,169,000 589,000 3/12/99 Houston / Bingle Road 577,000 1,444,000 2,021,000 246,000 3/12/99 Houston / Mangum Road 738,000 1,811,000 2,549,000 313,000 3/12/99 Houston / Hayes Road 917,000 2,185,000 3,102,000 349,000 3/12/99 Katy / Dominion Drive 996,000 2,372,000 3,368,000 377,000 3/12/99 Houston / Fm 1960 West 514,000 1,272,000 1,786,000 223,000 F-64 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/12/99 Webster / Fm 528 Road - 756,000 1,764,000 78,000 - 3/12/99 Houston / Loch Katrine Lane - 580,000 1,352,000 73,000 - 3/12/99 Houston / Milwee St. - 779,000 1,815,000 86,000 - 3/12/99 Lewisville / Highway 121 - 688,000 1,605,000 94,000 - 3/12/99 Richardson / Central Expressway - 465,000 1,085,000 103,000 - 3/12/99 Houston / Hwy 6 South - 569,000 1,328,000 47,000 - 3/12/99 Houston / Westheimer West - 1,075,000 2,508,000 45,000 - 3/12/99 Ft. Worth / Granbury Road - 763,000 1,781,000 50,000 - 3/12/99 Houston / New Castle - 2,346,000 5,473,000 1,207,000 - 3/12/99 Dallas / Inwood Road - 1,478,000 3,448,000 45,000 - 3/12/99 Fort Worth / Loop 820 North - 729,000 1,702,000 77,000 - 3/12/99 Carrollton / Marsh Lane South - 1,353,000 3,156,000 17,000 - 3/12/99 Dallas / Forest Central Dr - 859,000 2,004,000 35,000 - 3/12/99 Arlington / Cooper St - 779,000 1,818,000 48,000 - 3/12/99 Webster / Highway 3 - 677,000 1,580,000 72,000 - 3/12/99 Augusta / Peach Orchard Rd - 860,000 2,007,000 280,000 - 3/12/99 Martinez / Old Petersburg Rd - 407,000 950,000 108,000 - 3/12/99 Jonesboro / Tara Blvd - 785,000 1,827,000 184,000 - 3/12/99 Atlanta / Briarcliff Rd - 2,171,000 5,066,000 196,000 - 3/12/99 Decatur / N Decatur Rd - 933,000 2,177,000 136,000 - 3/12/99 Douglasville / Westmoreland - 453,000 1,056,000 170,000 - 3/12/99 Doraville / Mcelroy Rd - 827,000 1,931,000 185,000 - 3/12/99 Roswell / Alpharetta - 1,772,000 4,135,000 91,000 - 3/12/99 Douglasville / Duralee Lane - 533,000 1,244,000 86,000 - 3/12/99 Douglasville / Highway 5 - 804,000 1,875,000 377,000 - 3/12/99 Forest Park / Jonesboro - 659,000 1,537,000 141,000 - 3/12/99 Marietta / Whitlock - 1,016,000 2,370,000 116,000 - 3/12/99 Marietta / Cobb - 727,000 1,696,000 187,000 - 3/12/99 Norcross / Jones Mill Rd - 1,142,000 2,670,000 130,000 - 3/12/99 Norcross / Dawson Blvd - 1,232,000 2,874,000 157,000 - 3/12/99 Forest Park / Old Dixie Hwy - 895,000 2,070,000 168,000 - 3/12/99 Decatur / Covington - 1,764,000 4,116,000 103,000 - 3/12/99 Alpharetta / Maxwell Rd - 1,075,000 2,509,000 72,000 - 3/12/99 Alpharetta / N. Main St - 1,240,000 2,893,000 54,000 - 3/12/99 Atlanta / Bolton Rd - 866,000 2,019,000 135,000 - 3/12/99 Riverdale / Georgia Hwy 85 - 1,075,000 2,508,000 72,000 - 3/12/99 Kennesaw / Rutledge Road - 803,000 1,874,000 159,000 - 3/12/99 Lawrenceville / Buford Dr. - 256,000 597,000 72,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 3/12/99 Webster / Fm 528 Road 757,000 1,841,000 2,598,000 302,000 3/12/99 Houston / Loch Katrine Lane 581,000 1,424,000 2,005,000 241,000 3/12/99 Houston / Milwee St. 780,000 1,900,000 2,680,000 322,000 3/12/99 Lewisville / Highway 121 689,000 1,698,000 2,387,000 281,000 3/12/99 Richardson / Central Expressway 466,000 1,187,000 1,653,000 195,000 3/12/99 Houston / Hwy 6 South 570,000 1,374,000 1,944,000 228,000 3/12/99 Houston / Westheimer West 1,076,000 2,552,000 3,628,000 405,000 3/12/99 Ft. Worth / Granbury Road 764,000 1,830,000 2,594,000 299,000 3/12/99 Houston / New Castle 2,242,000 6,784,000 9,026,000 926,000 3/12/99 Dallas / Inwood Road 1,480,000 3,491,000 4,971,000 546,000 3/12/99 Fort Worth / Loop 820 North 730,000 1,778,000 2,508,000 293,000 3/12/99 Carrollton / Marsh Lane South 1,355,000 3,171,000 4,526,000 295,000 3/12/99 Dallas / Forest Central Dr 860,000 2,038,000 2,898,000 198,000 3/12/99 Arlington / Cooper St 780,000 1,865,000 2,645,000 300,000 3/12/99 Webster / Highway 3 678,000 1,651,000 2,329,000 272,000 3/12/99 Augusta / Peach Orchard Rd 861,000 2,286,000 3,147,000 437,000 3/12/99 Martinez / Old Petersburg Rd 407,000 1,058,000 1,465,000 186,000 3/12/99 Jonesboro / Tara Blvd 786,000 2,010,000 2,796,000 336,000 3/12/99 Atlanta / Briarcliff Rd 2,174,000 5,259,000 7,433,000 829,000 3/12/99 Decatur / N Decatur Rd 934,000 2,312,000 3,246,000 395,000 3/12/99 Douglasville / Westmoreland 454,000 1,225,000 1,679,000 231,000 3/12/99 Doraville / Mcelroy Rd 828,000 2,115,000 2,943,000 370,000 3/12/99 Roswell / Alpharetta 1,774,000 4,224,000 5,998,000 664,000 3/12/99 Douglasville / Duralee Lane 534,000 1,329,000 1,863,000 230,000 3/12/99 Douglasville / Highway 5 805,000 2,251,000 3,056,000 419,000 3/12/99 Forest Park / Jonesboro 660,000 1,677,000 2,337,000 300,000 3/12/99 Marietta / Whitlock 1,017,000 2,485,000 3,502,000 406,000 3/12/99 Marietta / Cobb 728,000 1,882,000 2,610,000 340,000 3/12/99 Norcross / Jones Mill Rd 1,143,000 2,799,000 3,942,000 463,000 3/12/99 Norcross / Dawson Blvd 1,233,000 3,030,000 4,263,000 497,000 3/12/99 Forest Park / Old Dixie Hwy 896,000 2,237,000 3,133,000 394,000 3/12/99 Decatur / Covington 1,766,000 4,217,000 5,983,000 670,000 3/12/99 Alpharetta / Maxwell Rd 1,076,000 2,580,000 3,656,000 414,000 3/12/99 Alpharetta / N. Main St 1,241,000 2,946,000 4,187,000 468,000 3/12/99 Atlanta / Bolton Rd 867,000 2,153,000 3,020,000 345,000 3/12/99 Riverdale / Georgia Hwy 85 1,076,000 2,579,000 3,655,000 418,000 3/12/99 Kennesaw / Rutledge Road 804,000 2,032,000 2,836,000 344,000 3/12/99 Lawrenceville / Buford Dr. 256,000 669,000 925,000 128,000 F-65 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/12/99 Hanover Park / W. Lake Street - 1,320,000 3,081,000 93,000 - 3/12/99 Chicago / W. Jarvis Ave - 313,000 731,000 77,000 - 3/12/99 Chicago / N. Broadway St - 535,000 1,249,000 212,000 - 3/12/99 Carol Stream / Phillips Court - 829,000 1,780,000 39,000 - 3/12/99 Winfield / Roosevelt Road - 1,109,000 2,587,000 106,000 - 3/12/99 Schaumburg / S. Roselle Road - 659,000 1,537,000 74,000 - 3/12/99 Tinley Park / Brennan Hwy - 771,000 1,799,000 110,000 - 3/12/99 Schaumburg / Palmer Drive - 1,333,000 3,111,000 93,000 - 3/12/99 Mobile / Hillcrest Road - 554,000 1,293,000 130,000 - 3/12/99 Mobile / Azalea Road - 517,000 1,206,000 114,000 - 3/12/99 Mobile / Moffat Road - 537,000 1,254,000 107,000 - 3/12/99 Mobile / Grelot Road - 804,000 1,877,000 108,000 - 3/12/99 Mobile / Government Blvd - 407,000 950,000 68,000 - 3/12/99 New Orleans / Tchoupitoulas - 1,092,000 2,548,000 205,000 - 3/12/99 Louisville / Breckenridge Lane - 581,000 1,356,000 82,000 - 3/12/99 Louisville - 554,000 1,292,000 128,000 - 3/12/99 Louisville / Poplar Level - 463,000 1,080,000 123,000 - 3/12/99 Chesapeake / Western Branch - 1,274,000 2,973,000 116,000 - 3/12/99 Centreville / Lee Hwy - 1,650,000 3,851,000 120,000 - 3/12/99 Sterling / S. Sterling Blvd - 1,282,000 2,992,000 109,000 - 3/12/99 Manassas / Sudley Road - 776,000 1,810,000 113,000 - 3/12/99 Longmont / Wedgewood Ave - 717,000 1,673,000 55,000 - 3/12/99 Fort Collins / So.College Ave - 745,000 1,739,000 105,000 - 3/12/99 Colo Sprngs / Parkmoor Village - 620,000 1,446,000 80,000 - 3/12/99 Colo Sprngs / Van Teylingen - 1,216,000 2,837,000 120,000 - 3/12/99 Denver / So. Clinton St. - 462,000 1,609,000 67,000 - 3/12/99 Denver / Washington St. - 795,000 1,846,000 263,000 - 3/12/99 Colo Sprngs / Centennial Blvd - 1,352,000 3,155,000 55,000 - 3/12/99 Colo Sprngs / Astrozon Court - 810,000 1,889,000 132,000 - 3/12/99 Arvada / 64th Ave - 671,000 1,566,000 73,000 - 3/12/99 Golden / Simms Street - 918,000 2,143,000 217,000 - 3/12/99 Lawrence / Haskell Ave - 636,000 1,484,000 96,000 - 3/12/99 Overland Park / Hemlock St - 1,168,000 2,725,000 63,000 - 3/12/99 Lenexa / Long St. - 720,000 1,644,000 41,000 - 3/12/99 Shawnee / Hedge Lane Terrace - 570,000 1,331,000 79,000 - 3/12/99 Mission / Foxridge Dr - 1,657,000 3,864,000 111,000 - 3/12/99 Milwaukee / W. Dean Road - 1,362,000 3,163,000 268,000 - 3/12/99 Columbus / Morse Road - 1,415,000 3,302,000 233,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 3/12/99 Hanover Park / W. Lake Street 1,322,000 3,172,000 4,494,000 509,000 3/12/99 Chicago / W. Jarvis Ave 313,000 808,000 1,121,000 156,000 3/12/99 Chicago / N. Broadway St 536,000 1,460,000 1,996,000 257,000 3/12/99 Carol Stream / Phillips Court 830,000 1,818,000 2,648,000 292,000 3/12/99 Winfield / Roosevelt Road 1,110,000 2,692,000 3,802,000 428,000 3/12/99 Schaumburg / S. Roselle Road 660,000 1,610,000 2,270,000 271,000 3/12/99 Tinley Park / Brennan Hwy 772,000 1,908,000 2,680,000 319,000 3/12/99 Schaumburg / Palmer Drive 1,335,000 3,202,000 4,537,000 514,000 3/12/99 Mobile / Hillcrest Road 555,000 1,422,000 1,977,000 240,000 3/12/99 Mobile / Azalea Road 518,000 1,319,000 1,837,000 228,000 3/12/99 Mobile / Moffat Road 538,000 1,360,000 1,898,000 238,000 3/12/99 Mobile / Grelot Road 805,000 1,984,000 2,789,000 328,000 3/12/99 Mobile / Government Blvd 407,000 1,018,000 1,425,000 179,000 3/12/99 New Orleans / Tchoupitoulas 1,093,000 2,752,000 3,845,000 456,000 3/12/99 Louisville / Breckenridge Lane 582,000 1,437,000 2,019,000 241,000 3/12/99 Louisville 555,000 1,419,000 1,974,000 236,000 3/12/99 Louisville / Poplar Level 464,000 1,202,000 1,666,000 207,000 3/12/99 Chesapeake / Western Branch 1,275,000 3,088,000 4,363,000 499,000 3/12/99 Centreville / Lee Hwy 1,652,000 3,969,000 5,621,000 634,000 3/12/99 Sterling / S. Sterling Blvd 1,284,000 3,099,000 4,383,000 497,000 3/12/99 Manassas / Sudley Road 777,000 1,922,000 2,699,000 320,000 3/12/99 Longmont / Wedgewood Ave 718,000 1,727,000 2,445,000 279,000 3/12/99 Fort Collins / So.College Ave 746,000 1,843,000 2,589,000 296,000 3/12/99 Colo Sprngs / Parkmoor Village 621,000 1,525,000 2,146,000 246,000 3/12/99 Colo Sprngs / Van Teylingen 1,217,000 2,956,000 4,173,000 467,000 3/12/99 Denver / So. Clinton St. 463,000 1,675,000 2,138,000 258,000 3/12/99 Denver / Washington St. 796,000 2,108,000 2,904,000 331,000 3/12/99 Colo Sprngs / Centennial Blvd 1,354,000 3,208,000 4,562,000 495,000 3/12/99 Colo Sprngs / Astrozon Court 811,000 2,020,000 2,831,000 333,000 3/12/99 Arvada / 64th Ave 672,000 1,638,000 2,310,000 270,000 3/12/99 Golden / Simms Street 919,000 2,359,000 3,278,000 386,000 3/12/99 Lawrence / Haskell Ave 637,000 1,579,000 2,216,000 252,000 3/12/99 Overland Park / Hemlock St 1,169,000 2,787,000 3,956,000 443,000 3/12/99 Lenexa / Long St. 721,000 1,684,000 2,405,000 268,000 3/12/99 Shawnee / Hedge Lane Terrace 571,000 1,409,000 1,980,000 238,000 3/12/99 Mission / Foxridge Dr 1,659,000 3,973,000 5,632,000 627,000 3/12/99 Milwaukee / W. Dean Road 1,364,000 3,429,000 4,793,000 599,000 3/12/99 Columbus / Morse Road 1,417,000 3,533,000 4,950,000 586,000 F-66 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 3/12/99 Milford / Branch Hill - 527,000 1,229,000 2,206,000 - 3/12/99 Fairfield / Dixie - 519,000 1,211,000 74,000 - 3/12/99 Cincinnati / Western Hills - 758,000 1,769,000 144,000 - 3/12/99 Austin / N. Mopac Expressway - 865,000 2,791,000 66,000 - 3/12/99 Atlanta / Dunwoody Place - 1,410,000 3,296,000 199,000 - 3/12/99 Kennedale/Bowman Sprgs - 425,000 991,000 66,000 - 3/12/99 Colo Sprngs/N.Powers - 1,124,000 2,622,000 141,000 - 3/12/99 St. Louis/S. Third St - 206,000 480,000 22,000 - 3/12/99 Orlando / L.B. Mcleod Road - 521,000 1,217,000 60,000 - 3/12/99 Jacksonville / Roosevelt Blvd. - 851,000 1,986,000 270,000 - 3/12/99 Miami-Kendall / Sw 84th Street - 935,000 2,180,000 145,000 - 3/12/99 North Miami Beach / 69th St - 1,594,000 3,720,000 151,000 - 3/12/99 Miami Beach / Dade Blvd - 962,000 2,245,000 103,000 - 3/12/99 Chicago / N. Natchez Ave - 1,684,000 3,930,000 115,000 - 3/12/99 Chicago / W. Cermak Road - 1,294,000 3,019,000 474,000 - 3/12/99 Kansas City / State Ave - 645,000 1,505,000 152,000 - 3/12/99 Lenexa / Santa Fe Trail Road - 713,000 1,663,000 83,000 - 3/12/99 Waukesha / Foster Court - 765,000 1,785,000 102,000 - 3/12/99 River Grove / N. 5th Ave. - 1,094,000 2,552,000 (20,000) - 3/12/99 St. Charles / E. Main St. - 951,000 2,220,000 (323,000) - 3/12/99 Chicago / West 47th St. - 705,000 1,645,000 42,000 - 3/12/99 Carol Stream / S. Main Place - 1,320,000 3,079,000 151,000 - 3/12/99 Carpentersville /N. Western Ave - 911,000 2,120,000 99,000 - 3/12/99 Elgin / E. Chicago St. - 570,000 2,163,000 67,000 - 3/12/99 Elgin / Big Timber Road - 1,347,000 3,253,000 215,000 - 3/12/99 Chicago / S. Pulaski Road - 458,000 2,118,000 251,000 - 3/12/99 Aurora / Business 30 - 900,000 2,097,000 98,000 - 3/12/99 Streamwood / Old Church Road - 855,000 1,991,000 41,000 - 3/12/99 Mt. Prospect / Central Road - 802,000 1,847,000 164,000 - 3/12/99 Geneva / Gary Ave - 1,072,000 2,501,000 67,000 - 3/12/99 Naperville / Lasalle Ave - 1,501,000 3,502,000 88,000 - 3/31/99 Forest Park - 270,000 3,378,000 988,000 - 4/1/99 Fresno 27,000 44,000 206,000 (302,000) 804,000 5/1/99 Stockton 98,000 151,000 402,000 (268,000) 2,017,000 6/30/99 Winter Park/N. Semor - 342,000 638,000 370,000 728,000 6/30/99 N. Richland Hills - 455,000 769,000 248,000 832,000 6/30/99 Rolling Meadows/Lois - 441,000 849,000 295,000 898,000 6/30/99 Gresham/Burnside - 354,000 544,000 199,000 627,000 Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - --------------------------------------------------------------------------------------------------------- 3/12/99 Milford / Branch Hill 528,000 3,434,000 3,962,000 331,000 3/12/99 Fairfield / Dixie 520,000 1,284,000 1,804,000 215,000 3/12/99 Cincinnati / Western Hills 759,000 1,912,000 2,671,000 321,000 3/12/99 Austin / N. Mopac Expressway 866,000 2,856,000 3,722,000 400,000 3/12/99 Atlanta / Dunwoody Place 1,412,000 3,493,000 4,905,000 537,000 3/12/99 Kennedale/Bowman Sprgs 425,000 1,057,000 1,482,000 177,000 3/12/99 Colo Sprngs/N.Powers 1,125,000 2,762,000 3,887,000 456,000 3/12/99 St. Louis/S. Third St 206,000 502,000 708,000 86,000 3/12/99 Orlando / L.B. Mcleod Road 522,000 1,276,000 1,798,000 212,000 3/12/99 Jacksonville / Roosevelt Blvd. 852,000 2,255,000 3,107,000 393,000 3/12/99 Miami-Kendall / Sw 84th Street 936,000 2,324,000 3,260,000 384,000 3/12/99 North Miami Beach / 69th St 1,596,000 3,869,000 5,465,000 623,000 3/12/99 Miami Beach / Dade Blvd 963,000 2,347,000 3,310,000 378,000 3/12/99 Chicago / N. Natchez Ave 1,686,000 4,043,000 5,729,000 645,000 3/12/99 Chicago / W. Cermak Road 1,296,000 3,491,000 4,787,000 653,000 3/12/99 Kansas City / State Ave 646,000 1,656,000 2,302,000 274,000 3/12/99 Lenexa / Santa Fe Trail Road 714,000 1,745,000 2,459,000 286,000 3/12/99 Waukesha / Foster Court 766,000 1,886,000 2,652,000 298,000 3/12/99 River Grove / N. 5th Ave. 1,035,000 2,591,000 3,626,000 635,000 3/12/99 St. Charles / E. Main St. 803,000 2,045,000 2,848,000 548,000 3/12/99 Chicago / West 47th St. 706,000 1,686,000 2,392,000 273,000 3/12/99 Carol Stream / S. Main Place 1,322,000 3,228,000 4,550,000 531,000 3/12/99 Carpentersville /N. Western Ave 912,000 2,218,000 3,130,000 363,000 3/12/99 Elgin / E. Chicago St. 571,000 2,229,000 2,800,000 347,000 3/12/99 Elgin / Big Timber Road 1,349,000 3,466,000 4,815,000 590,000 3/12/99 Chicago / S. Pulaski Road 459,000 2,368,000 2,827,000 341,000 3/12/99 Aurora / Business 30 901,000 2,194,000 3,095,000 362,000 3/12/99 Streamwood / Old Church Road 856,000 2,031,000 2,887,000 326,000 3/12/99 Mt. Prospect / Central Road 803,000 2,010,000 2,813,000 342,000 3/12/99 Geneva / Gary Ave 1,073,000 2,567,000 3,640,000 411,000 3/12/99 Naperville / Lasalle Ave 1,503,000 3,588,000 5,091,000 585,000 3/31/99 Forest Park 270,000 4,366,000 4,636,000 1,529,000 4/1/99 Fresno 193,000 559,000 752,000 89,000 5/1/99 Stockton 591,000 1,711,000 2,302,000 266,000 6/30/99 Winter Park/N. Semor 427,000 1,651,000 2,078,000 304,000 6/30/99 N. Richland Hills 569,000 1,735,000 2,304,000 284,000 6/30/99 Rolling Meadows/Lois 551,000 1,932,000 2,483,000 325,000 6/30/99 Gresham/Burnside 442,000 1,282,000 1,724,000 218,000 F-67 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 6/30/99 Jacksonville/University - 211,000 741,000 219,000 700,000 6/30/99 Irving/W. Airport - 419,000 960,000 196,000 857,000 6/30/99 Houston/Highway 6 So. - 751,000 1,006,000 312,000 1,057,000 6/30/99 Concord/Arnold - 827,000 1,553,000 391,000 1,874,000 6/30/99 Rockville/Gude Drive - 602,000 768,000 335,000 880,000 6/30/99 Bradenton/Cortez Road - 476,000 885,000 243,000 906,000 6/30/99 San Antonio/Nw Loop - 511,000 786,000 198,000 855,000 6/30/99 Anaheim / La Palma - 1,378,000 851,000 196,000 1,221,000 6/30/99 Spring Valley/Sweetwater - 271,000 380,000 86,000 416,000 6/30/99 Ft. Myers/Tamiami - 948,000 962,000 288,000 1,208,000 6/30/99 Littleton/Centennial - 421,000 804,000 230,000 812,000 6/30/99 Newark/Cedar Blvd - 729,000 971,000 218,000 1,067,000 6/30/99 Falls Church/Columbia - 901,000 975,000 264,000 1,141,000 6/30/99 Fairfax / Lee Highway - 586,000 1,078,000 268,000 1,106,000 6/30/99 Wheat Ridge / W. 44th - 480,000 789,000 237,000 831,000 6/30/99 Huntington Bch/Gotham - 952,000 890,000 267,000 1,130,000 6/30/99 Fort Worth/McCart - 372,000 942,000 162,000 703,000 6/30/99 San Diego/Clairemont - 1,601,000 2,035,000 329,000 2,034,000 6/30/99 Houston/Millridge N. - 1,160,000 1,983,000 219,000 2,433,000 6/30/99 Woodbridge/Jefferson - 840,000 1,689,000 242,000 1,446,000 6/30/99 Mountainside - 1,260,000 1,237,000 324,000 1,523,000 6/30/99 Woodbridge / Davis - 1,796,000 1,623,000 403,000 1,996,000 6/30/99 Huntington Beach - 1,026,000 1,437,000 115,000 1,450,000 6/30/99 Edison / Old Post Rd - 498,000 1,267,000 242,000 1,175,000 6/30/99 Northridge/Parthenia - 1,848,000 1,486,000 159,000 1,839,000 6/30/99 Brick Township/Brick - 590,000 1,431,000 279,000 1,364,000 6/30/99 Stone Mountain/Rock - 1,233,000 288,000 309,000 852,000 6/30/99 Hyattsville - 768,000 2,186,000 252,000 1,919,000 6/30/99 Union City / Alvarado - 992,000 1,776,000 204,000 1,690,000 6/30/99 Oak Park / Greenfield - 621,000 1,735,000 185,000 1,490,000 6/30/99 Tujunga/Foothill Blvd - 1,746,000 2,383,000 129,000 2,370,000 7/1/99 Pantego/W. Pioneer Pkwy - 432,000 1,228,000 60,000 - 7/1/99 Nashville/Lafayette St - 486,000 1,135,000 149,000 - 7/1/99 Nashville/Metroplex Dr - 380,000 886,000 127,000 - 7/1/99 Madison / Myatt Dr - 441,000 1,028,000 85,000 - 7/1/99 Hixson / Highway 153 - 488,000 1,138,000 169,000 - 7/1/99 Hixson / Gadd Rd - 207,000 484,000 228,000 - 7/1/99 Red Bank / Harding Rd - 452,000 1,056,000 165,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 6/30/99 Jacksonville/University 263,000 1,608,000 1,871,000 275,000 6/30/99 Irving/W. Airport 524,000 1,908,000 2,432,000 319,000 6/30/99 Houston/Highway 6 So. 937,000 2,189,000 3,126,000 356,000 6/30/99 Concord/Arnold 1,032,000 3,613,000 4,645,000 595,000 6/30/99 Rockville/Gude Drive 751,000 1,834,000 2,585,000 298,000 6/30/99 Bradenton/Cortez Road 594,000 1,916,000 2,510,000 319,000 6/30/99 San Antonio/Nw Loop 638,000 1,712,000 2,350,000 270,000 6/30/99 Anaheim / La Palma 1,720,000 1,926,000 3,646,000 293,000 6/30/99 Spring Valley/Sweetwater 338,000 815,000 1,153,000 129,000 6/30/99 Ft. Myers/Tamiami 1,183,000 2,223,000 3,406,000 350,000 6/30/99 Littleton/Centennial 526,000 1,741,000 2,267,000 270,000 6/30/99 Newark/Cedar Blvd 910,000 2,075,000 2,985,000 315,000 6/30/99 Falls Church/Columbia 1,125,000 2,156,000 3,281,000 319,000 6/30/99 Fairfax / Lee Highway 732,000 2,306,000 3,038,000 356,000 6/30/99 Wheat Ridge / W. 44th 599,000 1,738,000 2,337,000 270,000 6/30/99 Huntington Bch/Gotham 1,188,000 2,051,000 3,239,000 314,000 6/30/99 Fort Worth/McCart 464,000 1,715,000 2,179,000 247,000 6/30/99 San Diego/Clairemont 1,998,000 4,001,000 5,999,000 610,000 6/30/99 Houston/Millridge N. 1,448,000 4,347,000 5,795,000 653,000 6/30/99 Woodbridge/Jefferson 1,048,000 3,169,000 4,217,000 470,000 6/30/99 Mountainside 1,573,000 2,771,000 4,344,000 404,000 6/30/99 Woodbridge / Davis 2,242,000 3,576,000 5,818,000 501,000 6/30/99 Huntington Beach 1,281,000 2,747,000 4,028,000 386,000 6/30/99 Edison / Old Post Rd 622,000 2,560,000 3,182,000 376,000 6/30/99 Northridge/Parthenia 2,307,000 3,025,000 5,332,000 397,000 6/30/99 Brick Township/Brick 736,000 2,928,000 3,664,000 382,000 6/30/99 Stone Mountain/Rock 1,539,000 1,143,000 2,682,000 153,000 6/30/99 Hyattsville 959,000 4,166,000 5,125,000 532,000 6/30/99 Union City / Alvarado 1,238,000 3,424,000 4,662,000 456,000 6/30/99 Oak Park / Greenfield 775,000 3,256,000 4,031,000 422,000 6/30/99 Tujunga/Foothill Blvd 2,179,000 4,449,000 6,628,000 518,000 7/1/99 Pantego/W. Pioneer Pkwy 433,000 1,287,000 1,720,000 128,000 7/1/99 Nashville/Lafayette St 487,000 1,283,000 1,770,000 240,000 7/1/99 Nashville/Metroplex Dr 380,000 1,013,000 1,393,000 184,000 7/1/99 Madison / Myatt Dr 442,000 1,112,000 1,554,000 199,000 7/1/99 Hixson / Highway 153 489,000 1,306,000 1,795,000 231,000 7/1/99 Hixson / Gadd Rd 207,000 712,000 919,000 160,000 7/1/99 Red Bank / Harding Rd 453,000 1,220,000 1,673,000 221,000 F-68 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 7/1/99 Nashville/Welshwood Dr - 934,000 2,179,000 154,000 - 7/1/99 Madison/Williams Ave - 1,318,000 3,076,000 229,000 - 7/1/99 Nashville/Mcnally Dr - 884,000 2,062,000 318,000 - 7/1/99 Hermitage/Central Ct - 646,000 1,508,000 129,000 - 7/1/99 Antioch/Cane Ridge Rd - 353,000 823,000 117,000 - 9/1/99 Charlotte / Ashley Road - 664,000 1,551,000 19,000 - 9/1/99 Raleigh / Capital Blvd - 927,000 2,166,000 (27,000) - 9/1/99 Charlotte / South Blvd. - 734,000 1,715,000 15,000 - 9/1/99 Greensboro/W.Market St. - 603,000 1,409,000 7,000 - 10/8/99 Belmont / O'neill Ave - 869,000 4,659,000 94,000 - 10/11/99 Matthews - 937,000 3,165,000 242,000 - 11/15/99 Poplar, Memphis - 1,631,000 3,093,000 279,000 - 12/17/99 Dallas / Swiss Ave - 1,862,000 4,344,000 140,000 - 12/30/99 Oak Park/Greenfield Rd - 1,184,000 3,685,000 (107,000) - 12/30/99 Santa Anna - 2,657,000 3,293,000 359,000 - 1/21/00 Hanover Park - 262,000 3,104,000 28,000 - 1/25/00 Memphis / N.Germantwn Pkwy - 884,000 3,024,000 224,000 - 1/31/00 Rowland Heights/Walnut - 681,000 1,589,000 120,000 - 2/8/00 Lewisville / Justin Rd - 529,000 2,919,000 204,000 - 2/28/00 Plano / Avenue K - 2,064,000 10,407,000 386,000 - 4/1/00 Hyattsville/Edmonson - 1,036,000 2,657,000 36,000 - 4/29/00 St.Louis/Ellisville Twn Centre - 765,000 4,377,000 314,000 - 5/2/00 Mill Valley - 1,412,000 3,294,000 (387,000) - 5/2/00 Culver City - 2,439,000 5,689,000 (696,000) - 5/26/00 Phoenix/N. 35th Ave - 868,000 2,967,000 23,000 - 6/5/00 Mount Sinai / Route 25a - 950,000 3,338,000 245,000 - 6/15/00 Pinellas Park - 526,000 2,247,000 270,000 - 6/30/00 San Antonio/Broadway St - 1,131,000 4,558,000 22,000 - 7/13/00 Lincolnwood - 1,598,000 3,727,000 135,000 - 7/17/00 La Palco/New Orleans - 1,023,000 3,204,000 127,000 - 7/29/00 Tracy/1615& 1650 W.11th S - 1,745,000 4,530,000 276,000 - 8/1/00 Pineville - 2,197,000 3,417,000 354,000 - 8/23/00 Morris Plains - 1,501,000 4,300,000 318,000 - 8/31/00 Florissant/New Halls Fry - 800,000 4,225,000 70,000 - 8/31/00 Orange, CA - 661,000 1,542,000 53,000 - 9/1/00 Bayshore, NY - 1,277,000 2,980,000 959,000 - 9/1/00 Los Angeles, CA - 590,000 1,376,000 433,000 - 9/13/00 Merrillville - 343,000 2,474,000 164,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - --------------------------------------------------------------------------------------------------------- 7/1/99 Nashville/Welshwood Dr 935,000 2,332,000 3,267,000 396,000 7/1/99 Madison/Williams Ave 1,320,000 3,303,000 4,623,000 557,000 7/1/99 Nashville/Mcnally Dr 885,000 2,379,000 3,264,000 456,000 7/1/99 Hermitage/Central Ct 647,000 1,636,000 2,283,000 281,000 7/1/99 Antioch/Cane Ridge Rd 353,000 940,000 1,293,000 177,000 9/1/99 Charlotte / Ashley Road 652,000 1,582,000 2,234,000 250,000 9/1/99 Raleigh / Capital Blvd 910,000 2,156,000 3,066,000 340,000 9/1/99 Charlotte / South Blvd. 720,000 1,744,000 2,464,000 278,000 9/1/99 Greensboro/W.Market St. 592,000 1,427,000 2,019,000 237,000 10/8/99 Belmont / O'neill Ave 879,000 4,743,000 5,622,000 734,000 10/11/99 Matthews 995,000 3,349,000 4,344,000 373,000 11/15/99 Poplar, Memphis 1,733,000 3,270,000 5,003,000 384,000 12/17/99 Dallas / Swiss Ave 1,880,000 4,466,000 6,346,000 698,000 12/30/99 Oak Park/Greenfield Rd 1,197,000 3,565,000 4,762,000 501,000 12/30/99 Santa Anna 2,823,000 3,486,000 6,309,000 388,000 1/21/00 Hanover Park 256,000 3,138,000 3,394,000 310,000 1/25/00 Memphis / N.Germantwn Pkwy 938,000 3,194,000 4,132,000 369,000 1/31/00 Rowland Heights/Walnut 689,000 1,701,000 2,390,000 268,000 2/8/00 Lewisville / Justin Rd 563,000 3,089,000 3,652,000 355,000 2/28/00 Plano / Avenue K 2,090,000 10,767,000 12,857,000 3,751,000 4/1/00 Hyattsville/Edmonson 1,037,000 2,692,000 3,729,000 328,000 4/29/00 St.Louis/Ellisville Twn Centre 813,000 4,643,000 5,456,000 476,000 5/2/00 Mill Valley 1,285,000 3,034,000 4,319,000 359,000 5/2/00 Culver City 2,220,000 5,212,000 7,432,000 614,000 5/26/00 Phoenix/N. 35th Ave 869,000 2,989,000 3,858,000 387,000 6/5/00 Mount Sinai / Route 25a 1,009,000 3,524,000 4,533,000 350,000 6/15/00 Pinellas Park 548,000 2,495,000 3,043,000 150,000 6/30/00 San Antonio/Broadway St 1,132,000 4,579,000 5,711,000 510,000 7/13/00 Lincolnwood 1,615,000 3,845,000 5,460,000 528,000 7/17/00 La Palco/New Orleans 1,095,000 3,259,000 4,354,000 309,000 7/29/00 Tracy/1615& 1650 W.11th S 1,764,000 4,787,000 6,551,000 610,000 8/1/00 Pineville 2,335,000 3,633,000 5,968,000 372,000 8/23/00 Morris Plains 1,596,000 4,523,000 6,119,000 401,000 8/31/00 Florissant/New Halls Fry 808,000 4,287,000 5,095,000 545,000 8/31/00 Orange, CA 668,000 1,588,000 2,256,000 198,000 9/1/00 Bayshore, NY 1,535,000 3,681,000 5,216,000 524,000 9/1/00 Los Angeles, CA 709,000 1,690,000 2,399,000 244,000 9/13/00 Merrillville 364,000 2,617,000 2,981,000 228,000 F-69 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 9/15/00 Gardena / W. El Segundo - 1,532,000 3,424,000 106,000 - 9/15/00 Chicago / Ashland Avenue - 850,000 4,880,000 174,000 - 9/15/00 Oakland / Macarthur - 678,000 2,751,000 135,000 - 9/15/00 Alexandria / Pickett Ii - 2,743,000 6,198,000 276,000 - 9/15/00 Royal Oak / Coolidge Highway - 1,062,000 2,576,000 134,000 - 9/15/00 Hawthorne / Crenshaw Blvd. - 1,079,000 2,913,000 117,000 - 9/15/00 Rockaway / U.S. Route 46 - 2,424,000 4,945,000 249,000 - 9/15/00 Evanston / Greenbay - 846,000 4,436,000 153,000 - 9/15/00 Los Angeles / Coliseum - 3,109,000 4,013,000 113,000 - 9/15/00 Bethpage / Hempstead Turnpike - 2,899,000 5,457,000 229,000 - 9/15/00 Northport / Fort Salonga Road - 2,999,000 5,698,000 234,000 - 9/15/00 Brooklyn / St. Johns Place - 3,492,000 6,026,000 238,000 - 9/15/00 Lake Ronkonkoma / Portion Rd. - 937,000 4,199,000 154,000 - 9/15/00 Tampa/Gunn Hwy - 1,843,000 4,300,000 54,000 - 9/18/00 Tampa/N. Del Mabry - 2,204,000 2,447,000 7,424,000 - 9/30/00 Marietta/Kennestone& Hwy5 - 622,000 3,388,000 142,000 - 9/30/00 Lilburn/Indian Trail - 1,695,000 5,170,000 144,000 - 11/15/00 Largo/Missouri - 1,092,000 4,270,000 241,000 - 11/21/00 St. Louis/Wilson - 1,608,000 3,913,000 661,000 - 12/21/00 Houston/7715 Katy Frwy - 2,274,000 5,307,000 104,000 - 12/21/00 Houston/10801 Katy Frwy - 1,664,000 3,884,000 80,000 - 12/21/00 Houston/Main St - 1,681,000 3,924,000 71,000 - 12/21/00 Houston/W. Loop/S. Frwy - 2,036,000 4,749,000 87,000 - 12/29/00 Chicago - 1,946,000 6,002,000 19,000 - 12/30/00 Raleigh/Glenwood - 1,545,000 3,628,000 77,000 - 12/30/00 Frazier - 800,000 3,324,000 15,000 - 1/5/01 Troy/E. Big Beaver Rd - 2,195,000 4,221,000 358,000 - 1/11/01 Ft Lauderdale - 954,000 3,972,000 330,000 - 1/16/01 No Hollywood/Sherman Way - 2,173,000 5,442,000 32,000 - 1/18/01 Tuscon/E. Speedway - 735,000 2,895,000 190,000 - 1/25/01 Lombard/Finley - 851,000 3,806,000 256,000 - 3/15/01 Los Angeles/West Pico - 8,579,000 8,630,000 477,000 - 3/31/01 Long Island - 2,630,000 7,196,000 199,000 - 4/1/01 Lakewood/Cedar Dr. - 1,329,000 9,356,000 64,000 - 4/7/01 Farmingdale/Rte 110 - 2,364,000 5,807,000 (86,000) - 4/17/01 Philadelphia/Aramingo - 968,000 4,539,000 13,000 - 4/18/01 Largo/Walsingham Road - 1,000,000 3,545,000 17,000 - 6/17/01 Port Washington/Seaview &W.Sh - 2,381,000 4,608,000 112,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 9/15/00 Gardena / W. El Segundo 1,534,000 3,528,000 5,062,000 320,000 9/15/00 Chicago / Ashland Avenue 851,000 5,053,000 5,904,000 482,000 9/15/00 Oakland / Macarthur 679,000 2,885,000 3,564,000 265,000 9/15/00 Alexandria / Pickett Ii 2,746,000 6,471,000 9,217,000 529,000 9/15/00 Royal Oak / Coolidge Highway 1,063,000 2,709,000 3,772,000 238,000 9/15/00 Hawthorne / Crenshaw Blvd. 1,080,000 3,029,000 4,109,000 266,000 9/15/00 Rockaway / U.S. Route 46 2,427,000 5,191,000 7,618,000 445,000 9/15/00 Evanston / Greenbay 847,000 4,588,000 5,435,000 385,000 9/15/00 Los Angeles / Coliseum 3,113,000 4,122,000 7,235,000 336,000 9/15/00 Bethpage / Hempstead Turnpike 2,902,000 5,683,000 8,585,000 461,000 9/15/00 Northport / Fort Salonga Road 3,003,000 5,928,000 8,931,000 479,000 9/15/00 Brooklyn / St. Johns Place 3,496,000 6,260,000 9,756,000 499,000 9/15/00 Lake Ronkonkoma / Portion Rd. 938,000 4,352,000 5,290,000 342,000 9/15/00 Tampa/Gunn Hwy 1,845,000 4,352,000 6,197,000 405,000 9/18/00 Tampa/N. Del Mabry 2,228,000 9,847,000 12,075,000 2,295,000 9/30/00 Marietta/Kennestone& Hwy5 629,000 3,523,000 4,152,000 462,000 9/30/00 Lilburn/Indian Trail 1,714,000 5,295,000 7,009,000 553,000 11/15/00 Largo/Missouri 1,158,000 4,445,000 5,603,000 352,000 11/21/00 St. Louis/Wilson 1,630,000 4,552,000 6,182,000 507,000 12/21/00 Houston/7715 Katy Frwy 2,280,000 5,405,000 7,685,000 246,000 12/21/00 Houston/10801 Katy Frwy 1,669,000 3,959,000 5,628,000 182,000 12/21/00 Houston/Main St 1,686,000 3,990,000 5,676,000 181,000 12/21/00 Houston/W. Loop/S. Frwy 2,040,000 4,832,000 6,872,000 219,000 12/29/00 Chicago 1,940,000 6,027,000 7,967,000 468,000 12/30/00 Raleigh/Glenwood 1,562,000 3,688,000 5,250,000 382,000 12/30/00 Frazier 801,000 3,338,000 4,139,000 151,000 1/5/01 Troy/E. Big Beaver Rd 2,332,000 4,442,000 6,774,000 327,000 1/11/01 Ft Lauderdale 1,071,000 4,185,000 5,256,000 317,000 1/16/01 No Hollywood/Sherman Way 2,177,000 5,470,000 7,647,000 545,000 1/18/01 Tuscon/E. Speedway 781,000 3,039,000 3,820,000 226,000 1/25/01 Lombard/Finley 904,000 4,009,000 4,913,000 296,000 3/15/01 Los Angeles/West Pico 8,605,000 9,081,000 17,686,000 957,000 3/31/01 Long Island 2,776,000 7,249,000 10,025,000 351,000 4/1/01 Lakewood/Cedar Dr. 1,334,000 9,415,000 10,749,000 985,000 4/7/01 Farmingdale/Rte 110 2,345,000 5,740,000 8,085,000 454,000 4/17/01 Philadelphia/Aramingo 969,000 4,551,000 5,520,000 308,000 4/18/01 Largo/Walsingham Road 1,002,000 3,560,000 4,562,000 243,000 6/17/01 Port Washington/Seaview &W.Sh 2,361,000 4,740,000 7,101,000 267,000 F-70 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 6/18/01 Silver Springs/Prosperity - 1,065,000 5,391,000 (6,000) - 6/19/01 Tampa/W. Waters Ave & Wilsky - 953,000 3,785,000 17,000 - 6/26/01 Middletown - 1,535,000 4,258,000 310,000 - 7/29/01 Miami/Sw 85th Ave - 2,755,000 4,951,000 15,000 - 8/28/01 Hoover/John Hawkins Pkwy - 1,050,000 2,453,000 36,000 - 9/30/01 Syosset - 2,461,000 5,312,000 387,000 - 12/27/01 Los Angeles/W.Jefferson - 8,285,000 9,429,000 809,000 - 12/27/01 Howell/Hgwy 9 - 941,000 4,070,000 267,000 - 12/29/01 Catonsville/Kent - 1,378,000 5,289,000 638,000 - 12/29/01 Old Bridge/Rte 9 - 1,244,000 4,960,000 2,000 - 12/29/01 Sacremento/Roseville - 876,000 5,344,000 477,000 - 12/31/01 Santa Ana/E.Mcfadden - 7,587,000 8,612,000 918,000 - 1/1/02 Concord - 650,000 1,332,000 22,000 - 1/1/02 Tustin - 962,000 1,465,000 12,000 - 1/1/02 Pasadena/Sierra Madre - 706,000 872,000 33,000 - 1/1/02 Azusa - 933,000 1,659,000 9,000 - 1/1/02 Redlands - 423,000 1,202,000 41,000 - 1/1/02 Airport I - 346,000 861,000 27,000 - 1/1/02 Miami / Marlin Road - 562,000 1,345,000 17,000 - 1/1/02 Riverside - 95,000 1,106,000 21,000 - 1/1/02 Oakland / San Leandro - 330,000 1,116,000 28,000 - 1/1/02 Richmond / Jacuzzi - 419,000 1,224,000 20,000 - 1/1/02 Santa Clara / Laurel - 1,178,000 1,789,000 15,000 - 1/1/02 Pembroke Park - 475,000 1,259,000 11,000 - 1/1/02 Ft. Lauderdale / Sun - 452,000 1,254,000 26,000 - 1/1/02 San Carlos / Shorewa - 737,000 1,360,000 14,000 - 1/1/02 Ft. Lauderdale / Sun - 532,000 1,444,000 47,000 - 1/1/02 Sacramento / Howe - 361,000 1,181,000 15,000 - 1/1/02 Sacramento / Capitol - 186,000 1,284,000 11,000 - 1/1/02 Miami / Airport - 517,000 915,000 19,000 - 1/1/02 Marietta / Cobb Park - 419,000 1,571,000 15,000 - 1/1/02 Sacramento / Florin - 624,000 1,710,000 31,000 - 1/1/02 Belmont / Dairy Lane - 915,000 1,252,000 34,000 - 1/1/02 So. San Francisco - 1,018,000 2,464,000 34,000 - 1/1/02 Palmdale / P Street - 218,000 1,287,000 7,000 - 1/1/02 Tucker / Montreal Rd - 760,000 1,485,000 28,000 - 1/1/02 Pasadena / S Fair Oaks - 1,313,000 1,905,000 34,000 - 1/1/02 Carmichael/Fair Oaks - 584,000 1,431,000 13,000 - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 6/18/01 Silver Springs/Prosperity 1,066,000 5,384,000 6,450,000 380,000 6/19/01 Tampa/W. Waters Ave & Wilsky 955,000 3,800,000 4,755,000 233,000 6/26/01 Middletown 1,631,000 4,472,000 6,103,000 261,000 7/29/01 Miami/Sw 85th Ave 2,760,000 4,961,000 7,721,000 285,000 8/28/01 Hoover/John Hawkins Pkwy 1,052,000 2,487,000 3,539,000 138,000 9/30/01 Syosset 2,615,000 5,545,000 8,160,000 245,000 12/27/01 Los Angeles/W.Jefferson 8,311,000 10,212,000 18,523,000 405,000 12/27/01 Howell/Hgwy 9 999,000 4,279,000 5,278,000 191,000 12/29/01 Catonsville/Kent 1,380,000 5,925,000 7,305,000 267,000 12/29/01 Old Bridge/Rte 9 1,245,000 4,961,000 6,206,000 199,000 12/29/01 Sacremento/Roseville 877,000 5,820,000 6,697,000 267,000 12/31/01 Santa Ana/E.Mcfadden 7,611,000 9,506,000 17,117,000 384,000 1/1/02 Concord 651,000 1,353,000 2,004,000 137,000 1/1/02 Tustin 963,000 1,476,000 2,439,000 160,000 1/1/02 Pasadena/Sierra Madre 707,000 904,000 1,611,000 89,000 1/1/02 Azusa 934,000 1,667,000 2,601,000 187,000 1/1/02 Redlands 423,000 1,243,000 1,666,000 128,000 1/1/02 Airport I 346,000 888,000 1,234,000 97,000 1/1/02 Miami / Marlin Road 563,000 1,361,000 1,924,000 148,000 1/1/02 Riverside 95,000 1,127,000 1,222,000 118,000 1/1/02 Oakland / San Leandro 330,000 1,144,000 1,474,000 122,000 1/1/02 Richmond / Jacuzzi 419,000 1,244,000 1,663,000 128,000 1/1/02 Santa Clara / Laurel 1,179,000 1,803,000 2,982,000 187,000 1/1/02 Pembroke Park 476,000 1,269,000 1,745,000 139,000 1/1/02 Ft. Lauderdale / Sun 453,000 1,279,000 1,732,000 133,000 1/1/02 San Carlos / Shorewa 738,000 1,373,000 2,111,000 146,000 1/1/02 Ft. Lauderdale / Sun 533,000 1,490,000 2,023,000 156,000 1/1/02 Sacramento / Howe 361,000 1,196,000 1,557,000 128,000 1/1/02 Sacramento / Capitol 186,000 1,295,000 1,481,000 141,000 1/1/02 Miami / Airport 518,000 933,000 1,451,000 113,000 1/1/02 Marietta / Cobb Park 419,000 1,586,000 2,005,000 180,000 1/1/02 Sacramento / Florin 625,000 1,740,000 2,365,000 199,000 1/1/02 Belmont / Dairy Lane 916,000 1,285,000 2,201,000 153,000 1/1/02 So. San Francisco 1,019,000 2,497,000 3,516,000 275,000 1/1/02 Palmdale / P Street 218,000 1,294,000 1,512,000 157,000 1/1/02 Tucker / Montreal Rd 761,000 1,512,000 2,273,000 170,000 1/1/02 Pasadena / S Fair Oaks 1,315,000 1,937,000 3,252,000 229,000 1/1/02 Carmichael/Fair Oaks 585,000 1,443,000 2,028,000 170,000 F-71 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 1/1/02 Carson / Carson St - 507,000 877,000 26,000 - 1/1/02 San Jose / Felipe Ave - 517,000 1,482,000 39,000 - 1/1/02 Miami / 27th Ave - 272,000 1,572,000 27,000 - 1/1/02 San Jose / Capitol - 400,000 1,183,000 13,000 - 1/1/02 Tucker / Mountain - 519,000 1,385,000 53,000 - 1/3/02 St Charles/Veterans Memorial Pkwy - 687,000 1,602,000 117,000 - 1/7/02 Bothell/ N. Bothell Way - 1,063,000 4,995,000 146,000 - 1/15/02 Houston / N.Loop - 2,045,000 6,178,000 - - 1/16/02 Orlando / S. Kirkman - 889,000 3,180,000 - - 1/16/02 Austin / Us Hwy 183 - 608,000 3,856,000 - - 1/16/02 Rochelle Park / 168 - 744,000 4,430,000 - - 1/16/02 Honolulu / Waialae - 10,631,000 10,783,000 - - 1/16/02 Sunny Isles Bch - 931,000 2,845,000 - - 1/16/02 San Ramon / San Ramo - 1,522,000 3,510,000 - - 1/16/02 Austin / W. 6th St - 2,399,000 4,493,000 - - 1/16/02 Schaumburg / W. Wise - 1,158,000 2,598,000 - - 1/16/02 Laguna Hills / Moulton - 2,319,000 5,200,000 - - 1/16/02 Annapolis / West St - 955,000 3,669,000 - - 1/16/02 Birmingham / Commons - 1,125,000 3,938,000 - - 1/16/02 Crestwood / Watson Rd - 1,232,000 3,093,000 - - 1/16/02 Northglenn /Huron St - 688,000 2,075,000 - - 1/16/02 Skokie / Skokie Blvd - 716,000 5,285,000 - - 1/16/02 Garden City / Stewart - 1,489,000 4,039,000 - - 1/16/02 Millersville / Veterans - 1,036,000 4,229,000 - - 1/16/02 W. Babylon / Sunrise - 1,609,000 3,959,000 - - 1/16/02 Memphis / Summer Ave - 1,103,000 2,772,000 - - 1/16/02 Santa Clara/Lafayette - 1,393,000 4,626,000 - - 1/16/02 Naperville / Washington - 2,712,000 2,225,000 - - 1/16/02 Phoenix/W Union Hills - 1,071,000 2,934,000 - - 1/16/02 Woodlawn / Whitehead - 2,682,000 3,355,000 - - 1/16/02 Issaquah / Pickering - 1,138,000 3,704,000 - - 1/16/02 West La /W Olympic - 6,532,000 5,975,000 - - 1/16/02 New Orleans/I-10 - 1,286,000 3,380,000 - - 1/16/02 Pasadena / E. Colorado - 1,125,000 5,160,000 - - 1/16/02 Memphis / Covington - 620,000 3,076,000 - - 1/16/02 Hiawassee / N.Hiawassee - 1,622,000 1,892,000 - - 1/16/02 Longwood / State Rd - 2,123,000 3,083,000 - - 1/16/02 Casselberry / State - 1,628,000 3,308,000 - - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 1/1/02 Carson / Carson St 508,000 902,000 1,410,000 104,000 1/1/02 San Jose / Felipe Ave 518,000 1,520,000 2,038,000 171,000 1/1/02 Miami / 27th Ave 272,000 1,599,000 1,871,000 181,000 1/1/02 San Jose / Capitol 400,000 1,196,000 1,596,000 138,000 1/1/02 Tucker / Mountain 520,000 1,437,000 1,957,000 156,000 1/3/02 St Charles/Veterans Memorial Pkwy 687,000 1,719,000 2,406,000 66,000 1/7/02 Bothell/ N. Bothell Way 1,063,000 5,141,000 6,204,000 191,000 1/15/02 Houston / N.Loop 2,045,000 6,178,000 8,223,000 216,000 1/16/02 Orlando / S. Kirkman 889,000 3,180,000 4,069,000 116,000 1/16/02 Austin / Us Hwy 183 608,000 3,856,000 4,464,000 140,000 1/16/02 Rochelle Park / 168 744,000 4,430,000 5,174,000 161,000 1/16/02 Honolulu / Waialae 10,631,000 10,783,000 21,414,000 389,000 1/16/02 Sunny Isles Bch 931,000 2,845,000 3,776,000 106,000 1/16/02 San Ramon / San Ramo 1,522,000 3,510,000 5,032,000 136,000 1/16/02 Austin / W. 6th St 2,399,000 4,493,000 6,892,000 181,000 1/16/02 Schaumburg / W. Wise 1,158,000 2,598,000 3,756,000 97,000 1/16/02 Laguna Hills / Moulton 2,319,000 5,200,000 7,519,000 214,000 1/16/02 Annapolis / West St 955,000 3,669,000 4,624,000 138,000 1/16/02 Birmingham / Commons 1,125,000 3,938,000 5,063,000 149,000 1/16/02 Crestwood / Watson Rd 1,232,000 3,093,000 4,325,000 117,000 1/16/02 Northglenn /Huron St 688,000 2,075,000 2,763,000 83,000 1/16/02 Skokie / Skokie Blvd 716,000 5,285,000 6,001,000 208,000 1/16/02 Garden City / Stewart 1,489,000 4,039,000 5,528,000 152,000 1/16/02 Millersville / Veterans 1,036,000 4,229,000 5,265,000 171,000 1/16/02 W. Babylon / Sunrise 1,609,000 3,959,000 5,568,000 153,000 1/16/02 Memphis / Summer Ave 1,103,000 2,772,000 3,875,000 107,000 1/16/02 Santa Clara/Lafayette 1,393,000 4,626,000 6,019,000 182,000 1/16/02 Naperville / Washington 2,712,000 2,225,000 4,937,000 87,000 1/16/02 Phoenix/W Union Hills 1,071,000 2,934,000 4,005,000 116,000 1/16/02 Woodlawn / Whitehead 2,682,000 3,355,000 6,037,000 140,000 1/16/02 Issaquah / Pickering 1,138,000 3,704,000 4,842,000 142,000 1/16/02 West La /W Olympic 6,532,000 5,975,000 12,507,000 234,000 1/16/02 New Orleans/I-10 1,286,000 3,380,000 4,666,000 131,000 1/16/02 Pasadena / E. Colorado 1,125,000 5,160,000 6,285,000 203,000 1/16/02 Memphis / Covington 620,000 3,076,000 3,696,000 122,000 1/16/02 Hiawassee / N.Hiawassee 1,622,000 1,892,000 3,514,000 77,000 1/16/02 Longwood / State Rd 2,123,000 3,083,000 5,206,000 127,000 1/16/02 Casselberry / State 1,628,000 3,308,000 4,936,000 128,000 F-72 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ----------------------------------------------------------------------------------------------------------------------------- 1/16/02 Honolulu/Kahala - 3,722,000 8,525,000 - - 1/16/02 Waukegan / Greenbay - 933,000 3,826,000 - - 1/16/02 Southfield / Telegraph - 2,869,000 5,507,000 - - 1/16/02 San Mateo / S. Delaware - 1,921,000 4,602,000 - - 1/16/02 Scottsdale/N.Hayden - 2,111,000 3,564,000 - - 1/16/02 Gilbert/W Park Ave - 497,000 3,534,000 - - 1/16/02 W.Palm Beach/Okeechobee - 2,149,000 4,650,000 - - 1/16/02 Indianapolis / W.86th - 812,000 2,421,000 - - 1/16/02 Indianapolis / Madison - 716,000 2,655,000 - - 1/16/02 Indianapolis / Rockville - 704,000 2,704,000 - - 1/16/02 Santa Cruz / River - 2,148,000 6,584,000 - - 1/16/02 Novato / Rush Landing - 1,858,000 2,574,000 - - 1/16/02 Martinez / Arnold Dr - 847,000 5,422,000 - - 1/16/02 Charlotte/Cambridge - 836,000 3,908,000 - - 1/16/02 Rancho Cucamonga - 579,000 3,222,000 - - 1/16/02 Renton / Kent - 768,000 4,078,000 - - 1/16/02 Hawthorne / Goffle Rd - 2,414,000 4,918,000 - - 2/2/02 Nashua / Southwood Dr - 2,493,000 4,326,000 155,000 - 2/15/02 Houston/Fm 1960 East - 859,000 2,004,000 42,000 - 3/7/02 Baltimore / Russell Street - 1,763,000 5,821,000 175,000 - 3/11/02 Weymouth / Main St - 1,440,000 4,433,000 137,000 - 3/28/02 Clinton / Branch Ave & Schultz - 1,257,000 4,108,000 285,000 - 4/17/02 La Mirada/Alondra - 1,749,000 5,044,000 361,000 - 5/1/02 N.Richlnd Hls/Rufe Snow Dr - 632,000 6,337,000 - - 5/2/02 Parkville/E.Joppa - 898,000 4,306,000 117,000 - 6/17/02 Waltham / Lexington St - 3,183,000 5,733,000 198,000 - 6/30/02 Nashville / Charlotte - 876,000 2,004,000 28,000 - 7/2/02 Mt Juliet / Lebonan Rd - 516,000 1,203,000 19,000 - 7/14/02 Yorktown / George Washington - 707,000 1,684,000 (25,000) - 7/22/02 Brea/E. Lambert & Clifwood Pk - 2,114,000 3,555,000 123,000 - 8/1/02 Bricktown/Route 70 - 1,292,000 3,690,000 109,000 - 8/1/02 Danvers / Newbury St. - 1,311,000 4,140,000 120,000 - 8/15/02 Montclair / Holt Blvd. - 889,000 2,074,000 81,000 - 8/21/02 Rockville Centre/Merrick Rd - 3,693,000 6,990,000 221,000 - 9/13/02 Lacey / Martin Way - 1,379,000 3,217,000 4,000 - 9/13/02 Lakewood / Bridgeport - 1,286,000 3,000,000 5,000 - 9/13/02 Kent / Pacific Highway - 1,839,000 4,291,000 6,000 - 11/4/02 Scotch Plains /Route 22 - 2,124,000 5,072,000 5,000 - 12/23/02 Snta Clarita/Viaprincssa - 2,508,000 3,008,000 - - Gross Carrying Amount At December 31, 2002 Date --------------------------------------------- Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- 1/16/02 Honolulu/Kahala 3,722,000 8,525,000 12,247,000 325,000 1/16/02 Waukegan / Greenbay 933,000 3,826,000 4,759,000 151,000 1/16/02 Southfield / Telegraph 2,869,000 5,507,000 8,376,000 218,000 1/16/02 San Mateo / S. Delaware 1,921,000 4,602,000 6,523,000 179,000 1/16/02 Scottsdale/N.Hayden 2,111,000 3,564,000 5,675,000 144,000 1/16/02 Gilbert/W Park Ave 497,000 3,534,000 4,031,000 141,000 1/16/02 W.Palm Beach/Okeechobee 2,149,000 4,650,000 6,799,000 186,000 1/16/02 Indianapolis / W.86th 812,000 2,421,000 3,233,000 97,000 1/16/02 Indianapolis / Madison 716,000 2,655,000 3,371,000 106,000 1/16/02 Indianapolis / Rockville 704,000 2,704,000 3,408,000 108,000 1/16/02 Santa Cruz / River 2,148,000 6,584,000 8,732,000 264,000 1/16/02 Novato / Rush Landing 1,858,000 2,574,000 4,432,000 104,000 1/16/02 Martinez / Arnold Dr 847,000 5,422,000 6,269,000 219,000 1/16/02 Charlotte/Cambridge 836,000 3,908,000 4,744,000 155,000 1/16/02 Rancho Cucamonga 579,000 3,222,000 3,801,000 130,000 1/16/02 Renton / Kent 768,000 4,078,000 4,846,000 162,000 1/16/02 Hawthorne / Goffle Rd 2,414,000 4,918,000 7,332,000 193,000 2/2/02 Nashua / Southwood Dr 2,493,000 4,481,000 6,974,000 156,000 2/15/02 Houston/Fm 1960 East 860,000 2,045,000 2,905,000 64,000 3/7/02 Baltimore / Russell Street 1,763,000 5,996,000 7,759,000 195,000 3/11/02 Weymouth / Main St 1,440,000 4,570,000 6,010,000 150,000 3/28/02 Clinton / Branch Ave & Schultz 1,336,000 4,314,000 5,650,000 136,000 4/17/02 La Mirada/Alondra 1,858,000 5,296,000 7,154,000 131,000 5/1/02 N.Richlnd Hls/Rufe Snow Dr 632,000 6,337,000 6,969,000 228,000 5/2/02 Parkville/E.Joppa 898,000 4,423,000 5,321,000 114,000 6/17/02 Waltham / Lexington St 3,183,000 5,931,000 9,114,000 128,000 6/30/02 Nashville / Charlotte 876,000 2,032,000 2,908,000 42,000 7/2/02 Mt Juliet / Lebonan Rd 516,000 1,222,000 1,738,000 26,000 7/14/02 Yorktown / George Washington 708,000 1,658,000 2,366,000 34,000 7/22/02 Brea/E. Lambert & Clifwood Pk 2,114,000 3,678,000 5,792,000 69,000 8/1/02 Bricktown/Route 70 1,292,000 3,799,000 5,091,000 73,000 8/1/02 Danvers / Newbury St. 1,311,000 4,260,000 5,571,000 80,000 8/15/02 Montclair / Holt Blvd. 890,000 2,154,000 3,044,000 37,000 8/21/02 Rockville Centre/Merrick Rd 3,693,000 7,211,000 10,904,000 108,000 9/13/02 Lacey / Martin Way 1,379,000 3,221,000 4,600,000 32,000 9/13/02 Lakewood / Bridgeport 1,286,000 3,005,000 4,291,000 30,000 9/13/02 Kent / Pacific Highway 1,839,000 4,297,000 6,136,000 43,000 11/4/02 Scotch Plains /Route 22 2,124,000 5,077,000 7,201,000 43,000 12/23/02 Snta Clarita/Viaprincssa 2,508,000 3,008,000 5,516,000 - F-73 Adjustments Initial Cost Costs Resulting from ----------------------------- Subsequent the Acquisition Date Encum- Buildings & to of Minority Acquired Description brances Land Improvements Acquisition Interests - ------------------------------------------------------------------------------------------------------------------------- Other Properties Glendale/Western Avenue - 1,622,000 3,771,000 12,224,000 - 6/1/98 Renton / Sw 39th St. - 725,000 2,196,000 958,000 - 6/29/98 Pompano Bch/Center Port Circle - 795,000 2,312,000 1,348,000 - 12/9/98 Miami / Nw 115th Ave - 1,095,000 2,349,000 1,427,000 - 12/13/99 Burlingame (Commercial & PUD) - 4,043,000 9,434,000 1,161,000 - 12/30/99 West Palm Beach - 984,000 2,358,000 40,000 - 12/30/99 Tamarac Parkway - 1,902,000 4,467,000 1,916,000 - 4/28/00 San Diego/Sorrento - 1,282,000 3,016,000 (13,000) - 12/29/00 Gardena - 1,737,000 5,456,000 42,000 - 4/2/02 Long Beach - 887,000 6,251,000 - - Construction in Progress - - - 105,323,000 - ------------------------------------------------------------------------------ $20,567,000 $1,288,797,000 $3,049,409,000 $527,490,000 $228,153,000 ============================================================================== Gross Carrying Amount At December 31, 2002 Date ------------------------------------------------ Accumulated Acquired Description Land Building Total Depreciation - -------------------------------------------------------------------------------------------------------- Other Properties Glendale/Western Avenue 1,616,000 16,001,000 17,617,000 11,395,000 6/1/98 Renton / Sw 39th St. 725,000 3,154,000 3,879,000 906,000 6/29/98 Pompano Bch/Center Port Circle 795,000 3,660,000 4,455,000 1,038,000 12/9/98 Miami / Nw 115th Ave 1,102,000 3,769,000 4,871,000 1,040,000 12/13/99 Burlingame (Commercial & PUD) 4,043,000 10,595,000 14,638,000 1,671,000 12/30/99 West Palm Beach 913,000 2,469,000 3,382,000 295,000 12/30/99 Tamarac Parkway 1,890,000 6,395,000 8,285,000 818,000 4/28/00 San Diego/Sorrento 1,024,000 3,261,000 4,285,000 424,000 12/29/00 Gardena 1,737,000 5,498,000 7,235,000 1,143,000 4/2/02 Long Beach 887,000 6,251,000 7,138,000 905,000 Construction in Progress 17,807,000 87,516,000 105,323,000 - ------------------------------------------------------------- $1,322,688,000 $3,771,161,000 $5,093,849,000 $987,546,000 ============================================================= F-74