<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------
OR
[ ] 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 1-8971
------
Rockefeller Center Properties, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3280472
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1270 Avenue of the Americas, New York, N.Y. 10020
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 698-1440
---------------------------------------------------
(Registrant's telephone number, including area code)
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 12, 1995
---------------------------- ---------------------------
Common Stock, $.01 par value 38,260,704
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
INDEX PAGE
PART I--FINANCIAL INFORMATION ----
-----------------------------
ITEM 1. Financial Statements
The accompanying unaudited, interim financial statements
have been prepared in accordance with the instructions to
Form 10-Q. In the opinion of management, all adjustments
(consisting only of normal recurring items except as
described in Note 1) necessary for a fair presentation
have been included.
Balance Sheets as of March 31, 1995 (unaudited)
and December 31, 1994 3
Statements of Operations for the quarters ended
March 31, 1995 and 1994 (unaudited) 4
Statements of Cash Flows for the quarters ended
March 31, 1995 and 1994 (unaudited) 5
Notes to Financial Statements (unaudited) 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Supplemental information provided by the Borrower 22
PART II--OTHER INFORMATION 24
SIGNATURES 25
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
ROCKEFELLER CENTER PROPERTIES, INC.
BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
MARCH 31, 1995 DECEMBER 31, 1994
-------------- -----------------
ASSETS (UNAUDITED)
<S> <C> <C>
Loan receivable and interest receivable $1,300,226 $1,300,220
Deferred debt issuance costs, net 15,920 16,709
Cash and cash equivalents 17,518 2,897
Other assets 294 169
---------- ----------
$1,333,958 $1,319,995
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current coupon convertible debentures due 2000 $ 213,170 $ 213,170
Zero coupon convertible debentures due 2000, net of
unamortized discount of $251,170 and $259,322 335,015 326,863
Floating rate notes due 2000 150,000 150,000
14% Debentures due 2007, net of
unamortized discount of $4,549 and $4,639 70,451 70,361
Distributions payable to stockholders 5,739
Accrued interest payable 46,581 37,338
Stock appreciation rights 7,045 2,611
Accounts payable and accrued expenses 1,707 2,185
---------- ----------
829,708 802,528
---------- ----------
Contingencies
Stockholders' equity:
Common stock $.01 par value:
150,000,000 shares authorized,
38,260,704 shares issued and outstanding 383 383
Additional paid-in capital 707,545 707,545
Distributions to stockholders in excess
of net income (203,678) (190,461)
---------- ----------
Total stockholders' equity 504,250 517,467
---------- ----------
$1,333,958 $1,319,995
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-3-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
STATEMENTS OF OPERATIONS
($ in thousands except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31,
1995 1994
------- -------
<S> <C> <C>
Revenues:
Loan interest income $20,339 (1) $27,030
Short term investment and portfolio income 107 240
------- -------
20,446 27,270
------- -------
Expenses:
Interest expense:
Current coupon convertible debentures 5,618 5,495
Zero coupon convertible debentures 8,152 7,396
14% Debentures 2,750
Floating rate notes 4,845
Commercial paper and other 6,381
------- -------
21,365 19,272
General and administrative 1,276 1,155
Amortization of deferred debt issuance costs 849 176
Stock appreciation rights 4,434
------- -------
27,924 20,603
------- -------
Net (loss) income ($7,478) $6,667
------- -------
------- -------
Net (loss) income per share ($0.20) $0.17
------- -------
------- -------
<FN>
(1) Loan interest income for the quarter ended March 31, 1995 is presented on a
cash basis, see Note 1.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-4-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS
ENDED MARCH 31,
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Loan interest received $20,339 $19,674
Short term investment, portfolio and other interest income received 102 597
Interest paid on floating rate notes (3,881)
Interest paid on commercial paper and other (5,176)
Payments for accounts payable, accrued expenses and other assets (1,939) (1,037)
------- -------
Net cash provided by operating activities 14,621 14,058
------- -------
Cash flows from investing activities:
Portfolio maturities and redemptions 3,300
------- -------
Net cash provided by investing activities 0 3,300
------- -------
Cash flows from financing activities:
Maturities of commercial paper, net (17,484)
------- -------
Net cash used in financing activities 0 (17,484)
------- -------
Net increase (decrease) in cash 14,621 (126)
Cash and cash equivalents at the beginning of the period 2,897 252
------- -------
Cash and cash equivalents at the end of the period $17,518 $126
------- -------
------- -------
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net (Loss) Income ($7,478) $6,667
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of discount:
Zero coupon convertible debentures 8,152 7,396
14% Debentures 89
Loan receivable (1,195) (1,102)
Decrease (increase) in interest receivable 1,189 (5,898)
Decrease in deferred debt issuance costs and other assets, net 664 300
Increase in accrued interest payable and amortized
unpaid discount on commercial paper 9,244 6,773
Increase in stock appreciation rights liability 4,434
Decrease in accounts payable and accrued expenses (478) (78)
------- -------
Net cash provided by operating activities $14,621 $14,058
------- -------
------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-5-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND PURPOSE
Rockefeller Center Properties, Inc. (the "Company") was formed to permit public
investment in a portion of Rockefeller Center. From the proceeds of its
offering of Common Stock and the offerings of its Current Coupon Convertible
Debentures due 2000 and Zero Coupon Convertible Debentures due 2000
(collectively, the "Convertible Debentures"), the Company made a $1.3 billion
convertible, participating mortgage loan to two partnerships, Rockefeller Center
Properties and RCP Associates (collectively, the "Borrower"). The partners of
the Borrower are Rockefeller Group, Inc. ("RGI") and Radio City Music Hall
Productions, Inc. ("RCMHP"), a wholly owned subsidiary of RGI. Mitsubishi
Estate Company, Ltd. controls an 80% equity interest in RGI, and Rockefeller
Family interests hold the remaining 20%. The Borrower owns the real property
interest comprising most of the land and buildings known as Rockefeller Center
(the "Property"). In December 1994 the Company issued floating rate notes
("Floating Rate Notes") due December 31, 2000 and 14% debentures ("14%
Debentures") due December 31, 2007 and warrants ("Warrants") and stock
appreciation rights ("SARs") expiring December 31, 2007, the proceeds from which
were used to retire all of its commercial paper borrowings and certain of its
interest rate swap agreements.
STATUS OF THE BORROWER
On May 11, 1995, the two partnerships comprising the Borrower filed for
protection in New York under Chapter 11 of the Federal Bankruptcy Code. The
Company's only significant source of income is interest received on the mortgage
loan from the Borrower. As a result of this filing and until such time as these
proceedings have been brought to a conclusion, the Company does not expect to
receive interest payments from the Borrower and the Company's ability to enforce
its rights under the mortgage loan has been and will be stayed unless and until
the Court issues an order permitting the Company to take steps to enforce such
rights. The Company cannot predict either the length of time it will take to
conclude these proceedings or the ultimate outcome of these proceedings.
However, the Company believes that, based on the Company's current cash position
and the $50 million of letter of credit support available to it, the Company
will be able to service its debts for the near term. Under the terms of the
Floating Rate Notes a substantial portion of the proceeds from the $50 million
letter of credit support would have to be applied to a mandatory Floating Rate
Note prepayment on September 1, 1995 unless the holders agree to exclude these
proceeds from the calculation of Net Cash Flow (as defined). The Company also
believes that the value of the Property which secures the mortgage loan is
sufficient to enable the Company within the near term to obtain longer-term
financing to meet future cash needs.
Due to the significant uncertainties created by the Borrower's Chapter 11
filings, the Company has limited recognition of income on the mortgage loan for
the quarter ended March 31, 1995 to the cash actually received from the Borrower
during this period. The Company believes the carrying value of the mortgage
loan at March 31, 1995 ($1.3 billion) approximates the fair value of the
mortgage loan based upon the appraised value of the Property according to the
most recent appraisal report at December 31, 1994 ($1.25 billion) combined with
the $50 million of letter of credit support available to the Company. The
Company is unable at the present time to determine what impact, if any, the
effect of the Chapter 11 filings would have on the appraised value of the
Property. Due to the uncertainties caused by the Borrower's Chapter 11
filings, the Company intends to apply any future cash receipts, including any
draw downs on the letter of credit support, to reduce the carrying value of
the mortgage loan until these uncertainties are resolved.
-6-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS (cont'd)
(UNAUDITED)
If the Company were to acquire title to the Property, it would be required to
operate the Property and to fund cash shortfalls of the Property. The Company
believes that the value of the Property in the hands of the Company would be
sufficiently in excess of the Company's obligations (approximately $776 million
at March 31, 1995), to enable the Company to obtain sufficient financing to fund
cash shortfalls of the Property as well as to satisfy the Company's existing
obligations until such time as the Property will become cash flow positive.
However, because of the Company's inability to estimate when the Chapter 11
cases will be concluded, what prevailing conditions in the New York real estate
market and financial markets might be at such time and the availability or the
terms required to obtain any necessary consents of lenders to the Company, no
assurance can be given that the Company would have access to sufficient
financial resources to fund cash shortfalls of the Property and to meet its
other obligations.
The following is a pro forma summary of the Company's statement of operations
for the quarter ended March 31, 1995 to illustrate the impact on the
Company's results of operations for the quarter then ended if the Borrower
had filed for protection under Chapter 11 of the Federal Bankruptcy Code on
January 1, 1995 and the Company had received no interest payments for the
quarter ended March 31, 1995.
<TABLE>
<CAPTION>
($ in thousands) PRO FORMA
(unaudited) STATEMENT OF OPERATIONS
Quarter ended
March 31, 1995
--------------
<S> <C>
Revenues $107
Expenses (27,924)
--------
Net loss ($27,817)
--------
--------
Net loss per share ($0.73)
--------
--------
</TABLE>
2. LOAN RECEIVABLE AND INTEREST INCOME
The mortgage loan, which is in the face amount of $1.3 billion, was made
pursuant to a Loan Agreement between the Company and the Borrower on September
19, 1985 (as amended, the "Loan Agreement"), and is evidenced by two notes
(collectively, as amended, the "Note"). The mortgage loan and interest
receivable on the mortgage loan are combined on the Balance Sheet as of March
31, 1995 and a reclassification has been made to the previously reported
December 31, 1994 Balance Sheet to combine these items. Payment of the
mortgage loan is secured by leasehold mortgages in the aggregate amount
of approximately $44.8 million which were assigned to the Company,
consolidated, spread and recorded as a first mortgage lien against the entire
Property. Through September 6, 1994, the mortgage loan also was secured by
an unrecorded mortgage in the amount of approximately $1,255.2 million. On
September 6, 1994 the Company recorded this mortgage. The related recording
tax was paid by the Borrower. The mortgage loan is further secured by a
recorded assignment of rents pursuant to which the Borrower has assigned
to the Company, as security for repayment of the mortgage loan, the
Borrower's rights to collect certain rents with respect to the Property.
The Company is the beneficiary of standby irrevocable letters of credit in an
aggregate amount of $50 million that provide support for, among other things,
the Borrower's payment of base interest (as defined) on the mortgage loan.
See Note 1 for discussion of the status of the Borrower.
-7-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS (cont'd)
(UNAUDITED)
Loan interest income of Rockefeller Center Properties, Inc. for the three months
ended March 31, 1994 has been calculated on the basis of the average yield on
the Note through December 31, 2000 (the "Equity Conversion Date" and the date at
which the mortgage loan would have, if not converted, begun to bear floating
rates of interest). Based on the scheduled principal and interest payments
the average yield is 8.51% per annum and combines (using the interest method)
differing coupon rates of base interest with the amortization of original
issue discount applicable to the loan.
3. DEBT
CONVERTIBLE DEBENTURES
Interest expense recognized on the Convertible Debentures is based on the
average yields to the maturity date, December 31, 2000. The average yields are
computed (using the interest method with semiannual compounding) by (1)
combining the differing coupon rates on the Current Coupon Convertible
Debentures and (2) amortizing the original issue discount related to the Zero
Coupon Convertible Debentures. The resulting effective annual interest rates
are 9.23% and 10.23% for the Current Coupon and Zero Coupon Convertible
Debentures, respectively.
FLOATING RATE NOTES
Interest expense on the Floating Rate Notes is based on the 90-day London
Interbank Offered Rate ("LIBOR") plus 4%. At March 31, 1995 the interest rate
in effect was 10.25%. The average interest rate for the three months ended
March 31, 1995 was 10.33%. In addition to this interest based upon LIBOR,
interest expense on the Floating Rate Notes includes the financial effect
associated with interest rate swap agreements used for hedging purposes (see
below).
14% DEBENTURES
Interest expense on the 14% Debentures also includes the straight line
amortization of the original issue discount related to the Warrants and SARs
through the expiration date of December 31, 2007.
In connection with the issuance of the 14% Debentures in December 1994, the
Company separately issued to Whitehall Street Real Estate Limited Partnership V
("Whitehall") 5,349,541 SARs which remain outstanding as of March 31, 1995. The
SARs are exchangeable for 14% Debentures or under certain circumstances for
Warrants on a one-for-one basis. Each stock appreciation right is exchangeable
for a principal amount of 14% Debentures equal to the product of the average
daily market prices of the common stock for the 30 consecutive trading days
immediately preceding the date of exchange ($6.317 at March 31, 1995) minus the
exercise price per share of the Warrants into which the SARs are exchangeable
($5 per Warrant) times the number of Warrants into which the SARs are
exchangeable (5,349,541). The SARs would be automatically exchanged for
Warrants on a one-for-one basis following adoption and filing of an amendment to
the Certificate of Incorporation which would permit the holders of the SARs to
own in excess of 9.8% of the outstanding shares of the Company's stock and
adoption of any necessary Board resolutions. Upon such exchange, the SARs
liability would be reclassified to paid-in capital, requiring no further
adjustments to future earnings.
Due to the increase in the market price of the Company's stock during the
quarter ended March 31, 1995, the Company was required to increase its SARs
liability and record a current noncash charge to earnings of $4,434,000 in the
first quarter of 1995. The Company is required to make adjustments to earnings
for the difference between the aggregate principal amount of 14% Debentures
issuable upon exchange of the SARs (SARs liability) and the value at which the
SARs liability is carried by the Company.
-8-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS (cont'd)
(UNAUDITED)
INTEREST RATE SWAP AGREEMENTS
In connection with its issuance of commercial paper (subsequently replaced with
Floating Rate Notes and 14% Debentures) and its portfolio of investment
securities which was liquidated in 1993 and 1994, the Company entered into
interest rate swap agreements with financial institutions that were intended
either to fix a portion of the Company's interest rate risk on floating rate
debt ("Liability Swaps"), or to fix the yield on its floating rate portfolio
securities ("Asset Swaps"). Under the Liability Swaps, the Company pays a fixed
rate of interest semi-annually and receives a variable rate of interest semi-
annually based on 180-day LIBOR. Under the Asset Swaps, the Company received a
fixed rate of interest semi-annually and paid a variable rate of interest
quarterly based on 90-day LIBOR. In connection with the issuance of the
Floating Rate Notes and 14% Debentures in December 1994, the Company retired all
of its Asset Swaps and certain of its Liability Swaps. The amount to be paid or
received from interest rate swap agreements is accrued as floating interest
rates are reset semi-annually and, through the December 1994 retirement date of
the commercial paper borrowings, is included as a component of interest expense
on commercial paper and other. Since the retirement of the Company's commercial
paper, the Company presents the financial effect of interest rate swaps as a
component of interest expense on Floating Rate Notes. Approximately 70% of the
Company's exposure to interest rate fluctuations on its Floating Rate Notes was
hedged by interest rate swaps at March 31, 1995. The $105,000,000 notional
amount of Liability Swaps outstanding at March 31, 1995 represents three
contracts, each expiring during 1998.
The net notional principal, weighted average interest rate of net swaps
outstanding and annualized net payment relating to interest rate swap contracts,
as of March 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net notional principal $105,000,000 $245,000,000
------------ ------------
------------ ------------
Weighted average interest rate
of net swaps outstanding 3.40% 6.345%
------------ ------------
------------ ------------
Annualized net payment $3,570,000 $15,545,000
------------ ------------
------------ ------------
</TABLE>
The current settlement value of all swaps outstanding at March 31, 1995, based
on information supplied by the counterparties to the swap contracts, was a
liability for the Company of approximately $7.7 million as compared to $42
million at March 31, 1994. Generally, the net settlement value would decrease
with an increase in LIBOR rates and would increase as a result of a decrease in
LIBOR rates.
4. NET INCOME PER SHARE AND DISTRIBUTIONS
Net income (loss) per share is based upon 38,260,704 average shares of Common
Stock outstanding during the quarters ended March 31, 1995 and 1994,
respectively. For the quarters ended March 31, 1995 and 1994, fully diluted net
income (loss) per share is not presented since the effect of the assumed
conversion of the Convertible Debentures, Warrants and SARs would be anti-
dilutive.
On March 16, 1995 the Company declared a quarterly dividend of $0.15 per share,
which was paid on April 24, 1995 to stockholders of record at the close of
business on April 6, 1995.
-9-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS (cont'd)
(UNAUDITED)
5. LEGAL MATTERS
On January 23, 1995, Bear, Stearns & Co., Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation commenced an action against the Company in the Supreme
Court of New York, County of New York. The plaintiffs allege that the Company
breached a contract relating to the plaintiff's provision of investment banking
services to the Company. The plaintiffs seek $5,062,500 in damages, plus costs,
attorneys' fees and interest. The case is in the initial pleading stage. The
Company is vigorously contesting the plaintiffs' allegations and on February 15,
1995, counsel to the Company filed a notice of a motion for an order dismissing
the complaint for failure to state a cause of action and granting such other and
further relief as the Court deems just and proper. The Company does not expect
the outcome of this litigation to have a material effect on the financial
condition of the Company.
On May 11, 1995 the two partnerships comprising the Borrower filed for
protection under Chapter 11 of the Federal Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York as described in Note 1.
6. SUMMARIZED FINANCIAL INFORMATION
Summarized financial information concerning the results of operations of the
Property provided by the Borrower is presented below:
<TABLE>
<CAPTION>
($ in thousands)
(unaudited)
Quarters ended March 31,
1995 1994
---- ----
<S> <C> <C>
Gross Revenue $52,647 $55,248
------- -------
Less:
Operating expenses (40,305) (40,053)
Interest expense, net (31,007) (28,954)
------- -------
Net loss ($18,665) ($13,759)
------- -------
------- -------
</TABLE>
-10-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES--THE COMPANY
The discussion below relates primarily to the Company's financial condition and
results of operations for the first three months of 1995. Investors are
encouraged to review the financial statements and the Management's Discussion
and Analysis of Financial Condition and Results of Operations for the year ended
December 31, 1994 contained in the Annual Report for 1994 for a more complete
understanding of the Company's financial condition and results of operations.
The primary source of liquidity for the Company is interest income received on
its mortgage loan to two partnerships (collectively, the "Borrower"). The
mortgage loan is secured by leasehold mortgages in the aggregate amount of
approximately $44.8 million which were assigned to the Company, consolidated,
spread and recorded as a first mortgage lien against the entire property
("Property"). Through September 6, 1994, the mortgage loan also was secured by
an unrecorded mortgage in the amount of approximately $1,255.2 million. On
September 6, 1994 the Company recorded this mortgage. The related recording tax
was paid by the Borrower. The mortgage loan is further secured by a recorded
assignment of rents pursuant to which the Borrower has assigned to the Company,
as security for repayment of the mortgage loan, the Borrower's rights to collect
certain rents with respect to the Property.
STATUS OF THE BORROWER
On May 11, 1995, the two partnerships comprising the Borrower filed for
protection in New York under Chapter 11 of the Federal Bankruptcy Code. The
Company's only significant source of income is interest received on the mortgage
loan from the Borrower. As a result of this filing and until such time as these
proceedings have been brought to a conclusion, the Company does not expect to
receive interest payments from the Borrower and the Company's ability to enforce
its rights under the mortgage loan has been and will be stayed unless and until
the Court issues an order permitting the Company to take steps to enforce such
rights. The Company cannot predict either the length of time it will take to
conclude these proceedings or the ultimate outcome of these proceedings.
However, the Company believes that, based on the Company's current cash position
and the $50 million of letter of credit support available to it, the Company
will be able to service its debts for the near term. Under the terms of the
Floating Rate Notes a substantial portion of the proceeds from the $50 million
letter of credit support would have to be applied to a mandatory Floating Rate
Note prepayment on September 1, 1995 unless the holders agree to exclude these
proceeds from the calculation of Net Cash Flow (as defined). The Company also
believes that the value of the Property which secures the mortgage loan is
sufficient to enable the Company within the near term to obtain longer-term
financing to meet future cash needs.
Due to the significant uncertainties created by the Borrower's Chapter 11
filings, the Company has limited recognition of income on the mortgage loan for
the quarter ended March 31, 1995 to the cash actually received from the Borrower
during this period. The Company believes the carrying value of the mortgage
loan at March 31, 1995 ($1.3 billion) approximates the fair value of the
mortgage loan based upon the appraised value of the Property according to the
most recent appraisal report at December 31, 1994 ($1.25 billion) combined with
the $50 million of letter of credit support available to the Company. The
Company is unable at the present time to determine what impact, if any, the
effect of the Chapter 11 filings would have on the appraised value of the
Property. Due to the uncertainties caused by the Borrower's Chapter 11
filings, the Company intends to apply any future cash receipts, including any
draw downs on the letter of credit support, to reduce the carrying value of
the mortgage loan until these uncertainties are resolved.
-11-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
If the Company were to acquire title to the Property, it would be required to
operate the Property and to fund cash shortfalls of the Property. The Company
believes that the value of the Property in the hands of the Company would be
sufficiently in excess of the Company's obligations (approximately $776 million
at March 31, 1995), to enable the Company to obtain sufficient financing to fund
cash shortfalls of the Property as well as to satisfy the Company's existing
obligations until such time as the Property will become cash flow positive.
However, because of the Company's inability to estimate when the Chapter 11
cases will be concluded, what prevailing conditions in the New York real estate
market and financial markets might be at such time and the availability or the
terms required to obtain any necessary consents of lenders to the Company, no
assurance can be given that the Company would have access to sufficient
financial resources to fund cash shortfalls of the Property and to meet its
other obligations.
During the three months ended March 31, 1995 and 1994, cash generated from
interest income on the mortgage loan was $20,339,000 and $19,674,000,
respectively. The mortgage loan agreement, enforcement of which is stayed,
unless and until the Court orders otherwise, during the pendency of the
Borrower's Chapter 11 cases, provides for base interest to be paid by the
Borrower in accordance with a schedule requiring the Borrower to pay on November
30 of each year that portion of the base interest payment due for the whole year
equal to the interest that is payable during such year with respect to the
Current Coupon Convertible Debentures of the Company due 2000 and the remainder
quarterly on February 28, May 31, August 31 and November 30 of each such year.
Following is the schedule of the rate of base interest and the amount of base
interest payments contemplated by the loan agreement in each of the following
years ending December 31:
<TABLE>
<CAPTION>
Rate Amount Rate Amount
---- ------ ---- ------
<S> <C> <C> <C> <C> <C>
1995 8.390% $109,070,000 1998 8.410% $109,330,000
1996 8.400% 109,200,000 1999 8.420% 109,460,000
1997 8.410% 109,330,000 2000 8.430% 109,590,000
</TABLE>
The mortgage loan also provides for Additional Interest (as defined therein) to
be earned by the Company under certain circumstances. For each year through
2000 in which Gross Revenues (as defined therein) of the Property exceed
$312.5 million, Additional Interest would accrue in an amount equal to the sum
of (i) 31.5% of such excess plus (ii) $42.95 million and would be payable
currently only to the extent of available cash of the Borrower. If cash were
not available, the payment of Additional Interest would be deferred (without
interest) until December 31, 2000 (the "Equity Conversion Date," the date at
which the mortgage loan is convertible at the Company's option) or such earlier
time as cash became available. No Additional Interest has been earned by the
Company to date. Based on present conditions in the Midtown Manhattan rental
market, the Company does not currently expect that it would earn Additional
Interest even if the Borrower's reorganization proceedings were terminated.
Short term investment, portfolio and other interest income received during the
three months ended March 31, 1995 and 1994 was $102,000 and $597,000,
respectively. The decrease in short term investment, portfolio and other
interest income received of $495,000 was due to portfolio sales and maturities
during 1994, the proceeds from which were used to reduce the Company's short
term debt during 1994. This decrease in portfolio income was offset by interest
received on invested funds during the first three months of 1995. The Company's
short term investments are highly liquid and have the highest credit rating with
a maturity of less than three months.
-12-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
The following schedule presents the components of commercial paper and other
interest paid during the period shown.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1994
----------
<S> <C>
Interest rate swap agreements $2,350,000
Commercial paper (including commercial
paper fees and expenses) 2,826,000
----------
$5,176,000
----------
----------
</TABLE>
As discussed in Note 3 to the Financial Statements, the annualized payment
relating to the $105,000,000 notional principal of the interest rate swaps
outstanding at March 31, 1995 was $3,570,000. This amount may change during the
remainder of 1995 and in subsequent years, as the floating rates receivable are
periodically reset.
On December 29, 1994 the Company issued $150,000,000 of floating rate notes
("Floating Rate Notes") and $75,000,000 of 14% debentures ("14% Debentures") and
warrants ("Warrants") and stock appreciation rights ("SARs"). Interest payments
on the Floating Rate Notes are made quarterly on March 1, June 1, September 1
and December 1 of each year. The Company paid $2,723,000 of interest on the
Floating Rate Notes and $1,158,000 of interest on its swap agreements for a
total of $3,881,000 paid in floating rate interest during the three months ended
March 31, 1995. Interest on the 14% Debentures is payable semi-annually on June
2 and December 2, of each year.
Coupon payments on outstanding Current Coupon Convertible Debentures are made
annually on December 31. The interest rate payable on the $213,170,000 Current
Coupon Convertible Debentures outstanding as of March 31, 1995 is 13% per annum
and, assuming no change in the amount of Current Coupon Convertible Debentures
outstanding, the interest payment will total $27,712,100 on December 31, 1995.
Prior to January 1, 1995 this interest rate was 8% per annum. The Company has
not repurchased any of its Convertible Debentures since 1992 and, under the
terms of the 14% Debentures and Floating Rate Notes, the Company is not
permitted to repurchase any of its Convertible Debentures.
The Company is the beneficiary of standby irrevocable letters of credit in an
aggregate amount of $50 million that provide support for, among other things,
the Borrower's payment of base interest (as defined) on the mortgage loan.
The Company has executed non-disturbance agreements with tenants that occupy at
least a full floor in any of the buildings comprising a part of the Property and
certain other tenants upon request. Such agreements provide that in the event
of a foreclosure of the mortgage loan, such tenant's possession of space within
the Property will not be disturbed so long as such tenant is in compliance with
the terms of its lease. In addition, certain of these tenants, under their
leases, may offset fixed rent otherwise payable to the Borrower (up to specified
maximum amounts) in the event that the Borrower has failed to pay for certain
alterations to the leased property as provided for in such tenants' leases. In
the event the aggregate amount that all such tenants may offset (the "Rent
Offset Amount") exceeds $37.5 million, an agreement with the Borrower
(enforcement of which is stayed by the pendency of the Borrower's Chapter 11
cases) contemplates that the Borrower would maintain credit support facilities
to provide additional security in an amount equal to at least 50% of the
positive excess. As of March 31, 1995, the Company had executed seven rent
offset agreements with tenants. The total Rent Offset
-13-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
Amount at such date was $24.9 million which is below the $37.5 million and,
accordingly, the Borrower is not required to maintain credit support facilities
for this Rent Offset Amount.
RESULTS OF OPERATIONS--THE COMPANY
The Company's principal source of revenue during each of the three-month periods
ended March 31, 1995 and 1994 was loan interest income recognized on the
mortgage loan. As discussed in Note 1 to the Financial Statements, loan
interest income was recognized only to the extent of loan interest actually
received during the three-month period ended March 31, 1995. Loan interest
income exceeded loan interest received by $7,356,000 during the three-month
period ended March 31, 1994. The difference in the period ended March 31, 1994
is attributable partially to the aforementioned schedule of periodic interest
payments, partially to the amortization of original issue discount applicable to
the mortgage loan and partially to the recognition of interest income on the
mortgage loan according to the "interest method" by which interest is calculated
on the basis of the average yield on the notes evidencing the mortgage loan
through the Equity Conversion Date.
Short term investment and portfolio income for the three months ended
March 31, 1995, decreased by $133,000 or 55.4%, from that of the comparable
prior year period as a result of sales and maturities of portfolio securities.
The balance of the Company's portfolio of investment securities was sold during
the third quarter of 1994, and thus no portfolio income will be earned in 1995.
Interest expense on Current Coupon Convertible Debentures for the three months
ended March 31, 1995 increased by $123,000 or 2.2%, over that of the comparable
prior year period, principally as a result of the recognition of interest
expense according to the effective interest method by which interest is
calculated on the basis of the average interest expense on the Current Coupon
Convertible Debentures through the maturity date, December 31, 2000.
Interest expense on Zero Coupon Convertible Debentures for the three months
ended March 31, 1995 increased by $756,000 or 10.2%, over that of the comparable
prior year period, principally as a result of accruals of interest on the
increasing accretion of the principal amount of the Zero Coupon Convertible
Debentures. Such accruals of interest grow at the annual rate of 10.2%.
Interest expense on the 14% Debentures and Floating Rate Notes, which replaced
the short term commercial paper borrowings and retired a portion of the
Company's interest rate swap agreements in December 1994, increased by
$1,214,000 or 19%, over that incurred on the commercial paper in the comparable
prior year period principally due to the increase in interest rates between the
first quarters of 1995 and 1994.
Combined interest expense on all debt totaled $21,365,000 and $19,272,000 for
each of the three-month periods ended March 31, 1995 and 1994, respectively.
These amounts accounted for 76.5% and 93.5% of total expenses in each of the
respective periods.
General and administrative expenses for the three months ended March 31, 1995
increased by $121,000, or 10.5%, over that of the comparable prior year period,
principally due to increased legal fees.
Amortization of deferred debt issuance costs for the three months ended March
31, 1995 increased by $673,000 or 382.4% due to the increased deferred debt
issuance cost relating to the 14% Debentures and Floating Rate Notes issued in
December 1994.
-14-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
The Company was required to record a charge to earnings of $4,434,000 for the
three months ended March 31, 1995 to adjust the SARs liability to reflect the
aggregate principal amount of 14% Debentures that would have been issuable upon
exchange of the SARs on March 31, 1995. Until an amendment to the Company's
Certificate of Incorporation is adopted and filed and any necessary Board
resolutions are adopted which would result in an automatic exchange of SARs for
Warrants (see Note 3 to the Financial Statements), the Company will be required
to make future adjustments to earnings to reflect the aggregate principal amount
of 14% Debentures issuable upon exchange of the SARs based upon the current
market price of the Company's stock.
-15-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
THE PROPERTY
The financial information and analysis included in the following discussions of
the "Financial Condition and Outlook - The Property", "Results of Operations -
The Property", and "Cash Flow - The Property" have been furnished to the Company
by the Borrower.
FINANCIAL CONDITION AND OUTLOOK - THE PROPERTY
For the three months ended March 31, 1995, the Property experienced a net cash
outflow of $50.7 million consisting of an operating cash deficit of $19 million
(including interest payments of $20.3 million to the Company), and
disbursements totaling $31.7 million for tenant improvements, capital
improvements, and leasing commissions. This amount compared with a net cash
outflow of $24.6 million for the three months ended March 31, 1994 which was
comprised of a cash outflow from operations totaling $14.3 million (including
interest payments of $19.7 million to the Company) and expenditures aggregating
$10.3 million for capital and leasing disbursements.
These cash outflows brought the cumulative cash flow shortfall of the Property
since 1985 to $623.3 million at March 31, 1995.
On September 6, 1994, the Company, citing material adverse changes with respect
to the financial condition of the Borrower, perfected its lien by recording the
$1,255.2 million previously unrecorded portion of the mortgage loan at the
Borrower's expense. The mortgage recording tax totaled $34.5 million. The
funds were loaned to the Borrower by an affiliate of the Borrower.
On May 11, 1995, the Borrower filed voluntary petitions for protection under
Chapter 11 of the United States Bankruptcy Code. Since that date, post-petition
invoices are being paid by the Borrower as they come due pursuant to a cash
collateral order presently authorized by the Court.
FINANCIAL STATEMENT PRESENTATION
The Borrower's financial statements have been prepared on a going concern basis.
The financial statements do not contain any adjustments to reflect the possible
future effects from the outcome of the uncertainties arising out of the Chapter
11 filings.
RESULTS OF OPERATIONS - THE PROPERTY
The operating results of the Property during the quarter ended March 31, 1995
and 1994 are presented in summary form in the table below:
-16-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
<TABLE>
<CAPTION>
($ In Thousands)
(Unaudited)
-----------
Three Months Ended
March 31,
----------------------
1995 1994
------- -------
<S> <C> <C>
Gross revenue:
Fixed and percentage rents $44,102 $37,186
Operating and real estate tax escalation 4,301 12,290
Consideration revenues 540 1,731
Sales and service revenues 3,704 4,041
------- -------
52,647 55,248
------- -------
Operating Expenses:
Real estate taxes 9,822 10,558
Utilities 4,769 4,915
Maintenance and engineering 7,829 7,539
Other operating expenses 9,332 9,474
Depreciation and amortization 6,710 5,980
Management fee 678 657
General and administrative 1,165 930
------- -------
40,305 40,053
------- -------
Operating income before interest 12,342 15,195
Interest Expense, net 31,007 28,954
------- -------
Net Loss ($18,665) ($13,759)
------- -------
------- -------
</TABLE>
The gross revenue of the Property during the quarter ended March 31, 1995
decreased by $2.6 million from the comparable prior-year period. The decrease
in gross revenue during the quarter ended March 31, 1995 was primarily a result
of decreased operating and real estate tax escalation revenue, lower
consideration revenue, and decreased sales and service revenues. These
decreases were offset partially by increased fixed and percentage rents related
to new leases and lease renewals. The decrease in operating and real estate tax
escalation revenue reflects the establishment of new escalation base years in
connection with new leases and lease renewals. Consideration revenue consists
principally of one-time payments negotiated by tenants for the right to cancel
their leases prior to scheduled termination dates.
The following table shows the occupancy rates for the Property at specified
dates:
June 30, 1993 - 93.9% June 30, 1994 - 96.1%
September 30, 1993 - 94.1% October 1, 1994 - 90.4%
December 31, 1993 - 94.6% December 31, 1994 - 90.2%
March 31, 1994 - 95.6% March 31, 1995 - 90.1%
-17-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
As of March 31, 1995, the occupancy rate was 90.1%. This occupancy level
reflected a total of 616,000 square feet of vacant space resulting in large
measure from the significant turnover of leases which expired on September 30,
1994. In addition, a total of 597,000 square feet will become available during
the remainder of 1995. Releasing the space will represent a significant
challenge which may involve high levels of expenditures for tenant work and
concessions.
During the three months ended March 31, 1995, 49 leases covering approximately
206,000 square feet of office, retail, and storage space took effect, at net
effective annual fixed rents averaging $33.17 per square foot. The net
effective annual rental rates for office space, which accounted for
approximately 191,000 square feet of the total area leased, averaged $30.73 per
square foot. This amount compared to a net effective rental rate of $30.78 per
square foot for office space leases which took effect during all of 1994. Net
effective annual rental rates reflect the present value of base rental payments
less the current and future expenditures for tenant improvements, concessions,
and brokerage commissions. The gross rental rates for the office space leases
that were concluded and took effect during the three months ended March 31, 1995
averaged $34.43 per square foot (compared with $39.80 per square foot for office
space leases which took effect during all of 1994). The actual rate at which
each lease was executed depended upon its location within the Property, type of
space leased, length of lease term, and other factors. Of the approximately
191,000 square feet of office space leased during the three months ended March
31, 1995, approximately 130,000 square feet represented renewals of existing
tenants at an average gross rental rate of $34.10 per square foot. The combined
fixed rent and escalation payments prior to lease renewal for these renewing
tenants had averaged $28.53 per square foot.
The following table shows selected lease expiration and vacant space information
for the Property as of March 31, 1995 and has been furnished to the Company by
the Borrower. Actual renewal rents and rental income will be affected
significantly by market conditions at the time and by the terms at which the
Borrower can then lease space.
-18-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
Number of Percentage of
Year leases expiring Area (sq.ft.) total rentable area
---- --------------- ------------ -------------------
1995 110 596,678 9.64
1996 68 121,519 1.96
1997 45 75,708 1.22
1998 57 199,459 3.22
1999 59 166,906 2.69
2000 33 310,030 5.01
2001 13 35,956 .58
2002 23 136,678 2.21
2003 24 84,639 1.37
2004 70 387,145 6.25
2005 17 264,644 4.28
2006 22 144,127 2.33
2007 9 72,688 1.17
2008 10 165,608 2.68
2009 45 479,308 7.74
2010 7 109,576 1.77
2012 3 256,725 4.15
2013 2 59,741 .97
2014 6 300,068 4.85
2019 1 2,266 .04
2020 1 94,595 1.53
2022 3 1,283,576 20.74
Space under temporary occupancy N/A 133,824 2.16
Vacant space N/A 615,829 9.95
Space occupied by the Borrower N/A 92,382 1.49
--- --------- -----
628 6,189,675 100.0%
--- --------- -----
--- --------- -----
During the quarter ended March 31, 1995 the operating expenses of the Property
increased by $.3 million or 1% from the comparable prior-year period. This
increase was a result of increased charges for depreciation and amortization
($.7 million), higher maintenance and engineering expenses ($.3 million), and
increased general and administrative expense ($.2 million). These increases
were offset partially by lower real estate taxes ($.7 million), decreased
utility costs ($.1 million), and reduced other operating expenses ($.1 million).
Depreciation and amortization charges increased as a result of a higher fixed
asset base which included expenditures required by the Loan Agreement, other
capital expenditures, and improvements to tenant spaces necessitated by lease
commitments. The higher maintenance and engineering expenses were primarily a
result of increased heating, ventilation and air-conditioning maintenance and
increased engineering labor costs. The increase in general and administrative
expense was attributable primarily to an increase in the required provision for
doubtful accounts.
-19-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
Lower real estate taxes resulted from a decrease in both the assessed valuation
of the Property and New York City property tax rates. Utilities decreased
primarily as a result lower steam costs attributable to the mild winter. Other
operating expenses decreased as a result of lower costs related to sales of
services, offset partially by an increase in protection services.
As a result of the foregoing, operating income before interest for the quarter
ended March 31, 1995 decreased by $2.9 million or 19% from the comparable prior-
year period.
Interest expense, net during the quarter ended March 31, 1995 increased $2.1
million or 7% as a result of additional loans made to the Borrower by its
partners in order to fund certain of the Property's capital improvements
together with increased interest expense as a result of the payment of the
mortgage recording tax.
CASH FLOW-THE PROPERTY
For the three months ended March 31, 1995, the property experienced an operating
cash deficit of $19 million, after payments of interest to the Company of $20.3
million. For the quarter ended March 31, 1994, the Property experienced an
operating cash deficit of $14.3 million after payments of interest to the
Company totaling $19.7 million. The increase of $4.7 million in the operating
cash deficit reflected decreased operating income before interest ($2.9
million), higher levels of net working capital ($1.2 million), and increased
interest paid to the Company ($.6 million).
The Borrower also expended funds for capital improvements to the Property,
tenant improvements, and leasing commissions as follows:
<TABLE>
<CAPTION>
(In thousands) Quarters ended March 31,
------------------------
1995 1994
------- -------
<S> <C> <C>
Capital improvements $ 2,792 $2,170
Tenant improvements 26,804 2,408
Leasing commissions
(including legal fees) 2,147 5,726
------- -------
$31,743 $10,304
------- -------
------- -------
</TABLE>
The mortgage loan agreement provides for the establishment of loans for the
cumulative portion of capital improvements made by the Borrower in excess of
amounts specified in the mortgage loan agreement. The cumulative amounts of
excess capital improvements totaled $126.7 million and $123 million at March 31,
1995 and 1994, respectively. These excess capital improvement loans are deemed
to be made to the Borrower by its partners and bear interest at 80% of the prime
rate (as defined), compounded quarterly. Interest charges on excess capital
improvement loans are added to the loan principal at the end of each year. At
March 31, 1995 and 1994, the amount of excess capital improvement loans
(including accrued interest) totaled $160.7 million and $149.7 million,
respectively.
-20-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont'd)
The letters of credit previously discussed under "Liquidity and Capital
Resources-The Company", support the payment of base interest (as defined) on the
mortgage loan in the event of cash flow shortfalls from the Property. On January
1, 1995, the level of this support decreased from $200 million to approximately
$70 million, and on April 1, 1995, the level of such support decreased to $50
million.
-21-
<PAGE>
Supplemental information provided by the Borrower.
ROCKEFELLER CENTER PROPERTIES AND RCP ASSOCIATES
COMBINED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $3 $3
Accounts receivable, less allowance for doubtful accounts of $2,689 and $2,833 2,822 4,027
Due from RGI affiliates 996 1,286
Prepaid real estate taxes 10,694
Other current assets 541 856
--------- ---------
15,056 6,172
Fixed assets, at cost:
Land 402,419 402,419
Buildings 501,577 499,226
Furniture, fixtures and equipment 26,862 26,422
--------- ---------
930,858 928,067
Less accumulated depreciation (218,028) (214,035)
--------- ---------
712,830 714,032
Deferred renting expenses, less accumulated amortization of $23,378 and $20,659 118,294 93,735
Lease incentives 43,042 31,327
Deferred financing expenses, less accumulated amortization of $2,270 and $1,285 29,109 30,094
Other assets 3,150 2,960
--------- ---------
Total assets $921,481 $878,320
--------- ---------
--------- ---------
LIABILITIES AND PARTNERS' CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $29,222 $26,848
Due to RGI affiliates 326,249 273,778
Accrued interest payable 6,928
--------- ---------
362,399 300,626
Mortgage payable, net of unamortized original issue discount of $34,868 and $36,101 1,265,132 1,263,899
Loans payable to RGI 160,715 160,715
Non-current mortgage interest payable 35,141 36,321
Partners' capital deficiency (901,906) (883,241)
--------- ---------
Total liabilities and partner's capital deficiency $921,481 $878,320
--------- ---------
--------- ---------
</TABLE>
-22-
<PAGE>
Supplemental information provided by the Borrower.
ROCKEFELLER CENTER PROPERTIES AND RCP ASSOCIATES
COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($18,665) ($13,759)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 6,710 5,980
Increase in interest payable 10,661 9,279
Increase (decrease) in accounts payable and accrued expenses 3,423 (4,407)
Decrease in accounts receivable 1,205 1,445
Decrease in other assets 127 61
(Increase) in prepaid real estate taxes (10,694) (11,495)
(Increase) in lease incentives (11,714) (1,429)
-------- --------
NET CASH (USED) IN OPERATING ACTIVITIES (18,947) (14,325)
-------- --------
CASH FLOWS (USED) IN INVESTING ACTIVITIES:
Capital expenditures (2,792) (2,170)
Deferred expenses paid (28,951) (8,134)
-------- --------
NET CASH (USED) IN INVESTING ACTIVITIES (31,743) (10,304)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from RGI affiliates, principally cash management system, net 50,690 24,629
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 50,690 24,629
-------- --------
NET CHANGE IN CASH 0 0
CASH, BEGINNING OF PERIOD 3 4
-------- --------
CASH, END OF PERIOD $3 $4
-------- --------
-------- --------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest expense $20,339 $19,674
-------- --------
-------- --------
</TABLE>
-23-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
PART II.--OTHER INFORMATION
ITEM 1. Legal Proceedings
On January 23, 1995, Bear, Stearns & Co., Inc., and Donaldson, Lufkin
& Jenrette Securities Corporation commenced an action against the
Company in the Supreme Court of New York, County of New York. The
plaintiffs allege that the Company breached a contract relating to the
plaintiff's provision of investment banking services to the Company.
The plaintiffs seek $5,062,500 in damages, plus costs, attorneys' fees
and interest. The case is in the initial pleading stage. The Company
is vigorously contesting the plaintiffs' allegations and on February
15, 1995 counsel to the Company filed a notice of a motion for an
order dismissing the complaint for failure to state a cause of action
and granting such other and further relief as the Court deems just and
proper. The Company does not expect the outcome of this litigation to
have a material effect on its financial condition.
On May 11, 1995, the two partnerships comprising the Borrower filed
for protection under Chapter 11 of the Federal Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York
as described in Note 1 to the Financial Statements.
Other than the actions described above, the Company is not a party to
nor is any of its property the subject of any material legal
proceedings or environmental litigation.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10.1) Employment contract with Richard M. Scarlata, President
and Chief Executive Officer.
(10.2) Employment contract with Stephanie Leggett Young, Vice
President and Secretary.
(10.3) Employment contract with Janet P. King, Vice President
and Treasurer.
(b) Reports on Form 8-K
A report on Form 8-K was filed on February 22, 1995, reporting
events under Item 5 of Form 8-K.
-24-
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROCKEFELLER CENTER PROPERTIES, INC.
Date: May 22, 1995 By: /s/ Richard M. Scarlata
-------------------------------------
Richard M. Scarlata
President and Chief Executive Officer
(Principal Financial Officer and
Principal Accounting Officer)
-25-
<PAGE>
Exhibit 10.1
PERSONAL AND CONFIDENTIAL
May 5, 1995
Richard M. Scarlata
Address
Dear Rich:
The Board of Directors (the "Board") of Rockefeller Center Properties,
Inc. (the "Company") has determined that it is in the best interests of the
Company and its shareholders to retain your services as an officer of the
Company under the terms and provisions set forth below in this letter agreement
(this "Agreement").
You hereby confirm that you (1) have terminated all business
relationships between you and Rockefeller Group, Inc. ("RGI") and all affiliates
of RGI, including any employment relationships, (2) have no understandings or
agreements, formal or informal, with RGI or any affiliate of RGI with respect to
any future business relationships, including any employment relationships, (3)
that you will not enter into any relationships, understandings or agreements of
the types described above without the express, prior written consent of the
Board.
During the term of this Agreement, the Company agrees to employ you,
and you agree to be employed by the Company, as its President and Chief
Executive Officer; PROVIDED, that the Board may remove you from such position or
terminate your employment by the Company in any capacity with or without Cause
(as defined in the attached Schedule 1), at any time, with the consequences set
forth below. As such, you agree that you shall use your best efforts and devote
your entire business time to diligently furthering the interests of the Company.
In that regard, you agree to perform such duties and services, and to have such
responsibilities, as may from time to time be assigned to you by the Board,
including, without limitation, at all times maintaining and improving, to the
best of your ability, the relationship between the Company and its shareholders.
The term of this Agreement shall commence as of May 5, 1995, and shall
terminate on the earlier to occur of
- your death or Disability (as defined in the attached Schedule 1),
<PAGE>
2
- the voluntary termination of your employment (which termination shall
be effective upon ten days' prior notice),
- the third anniversary of the date on which written notice is received
by you from the Company stating that this Agreement shall terminate on
the third anniversary of such receipt of notice, or
- the termination of your employment by the Company for Cause (as
defined in the attached Schedule 1).
During the term of this Agreement, you shall not, without the prior
express written consent of the Board, buy, sell, lease, invest in, take an
option on or otherwise directly or indirectly become involved with real property
for your own account, except with respect to your personal residence and/or
vacation home, nor shall you act as a principal, whether disclosed or
undisclosed, in connection with any transaction that involves the Company.
In consideration of your agreement to be employed by the Company under
the terms and provisions of this Agreement, the Company agrees, during the term
of this Agreement, to provide you with the compensation arrangements listed on
the attached Schedule 1. In addition, upon the consummation of a Change in
Control (as defined in the attached Schedule 1), you shall receive a cash bonus
in the amount of $75,000; PROVIDED that (i) you remain employed by the Company
through the date on which the Change in Control is consummated and (ii) in the
reasonable judgment of the Board, you assisted the Company in consummating such
Change in Control.
In further consideration of your agreement to be employed hereunder,
the Company agrees that if, during the term of the Agreement, (i) your
employment is terminated by the Company other than pursuant to the three-year
notice described above (other than for Cause) or (ii) you voluntarily terminate
your employment within 90 days after the occurrence of a Change in Opportunity
(as defined in the attached Schedule 1), you shall be entitled, in lieu of any
other compensation of any kind from the Company (under this Agreement or
otherwise), to the following benefits:
- Annual base salary for the period (the "Severance Period") commencing
on the date of such termination and ending on the third anniversary of
the date of termination, payable monthly in arrears, equal to your
annual base salary in effect on the date of termination (or, if
greater, the rate in effect on the date of any applicable Change in
Opportunity), PROVIDED that in the event that the termination occurs
following a Change in Control (as defined in the attached Schedule 1),
such payment shall be made in the form of a lump sum payment in an
amount equal to the present value as of the date of payment
(determined on
<PAGE>
3
such basis as the Board shall, in good faith, consider to be
reasonable) as soon as practicable following the date of termination;
- To the extent permitted by applicable law and the terms of the benefit
plans, coverage during the Severance Period under the terms of the
Company welfare benefit plans set forth on Schedule 1 in which you are
participating at the time of such termination, as if you continued as
an active employee during the Severance Period (or the economic
equivalent thereof if the Company is not permitted for any reason to
provide such coverage to you or the Company elects not to provide such
coverage to you); PROVIDED, HOWEVER, that the Company shall not have
an obligation to continue to maintain at any time any benefit plan
solely as a result of the provisions of this Agreement;
- To the extent permitted by applicable law and the terms of the benefit
plans, coverage during the Severance Period under the terms of the
Company retirement benefit plans set forth on Schedule 1 in which you
are participating at the time of such termination, as if you continued
as an active employee during the Severance Period; PROVIDED, HOWEVER,
that the Company shall not have an obligation to continue to maintain
at any time any benefit plan solely as a result of the provisions of
this Agreement; and PROVIDED, FURTHER, that if the Company is not
permitted for any reason to provide such coverage to you under the
retirement plans during the Severance Period or the Company elects not
to provide such coverage to you, the Company shall provide you with
the economic equivalent thereof by way of a supplemental retirement
benefit, payable in a single lump sum in cash as soon as practicable
following your termination of employment, equal to the sum of (a) and
(b) where
(a) is equal to the difference between your retirement benefit
payable in the straight life annuity form from the Retirement
Income Plan for Salaried Employees and an amount equal to the
retirement benefit that would have been payable in the straight
life annuity form from the Retirement Income Plan for Salaried
Employees determined as if you had continued as a covered
employee and a participant in such Plan during the Severance
Period (counting both additional service and compensation during
such period), and
(b) is equal to the amount that would have been allocated to your
account in the Incentive Savings Plan as a Company contribution
during the Severance Period if you had continued as a covered
employee and participant in such Plan and had made the maximum
employee contributions to such Plan during the Severance Period,
and
<PAGE>
4
- Professional outplacement assistance with a firm reasonably acceptable
to the Company and continued office and secretarial support and other
perquisites for a period up to the expiration of the Severance Period.
Notwithstanding anything in this Agreement to the contrary, if any
amounts due to you under this Agreement and any other plan or program of the
Company constitute a "parachute payment" (as defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the "Code")), then the aggregate
of the amounts constituting the parachute payment shall be reduced to an amount
that will equal three times your "base amount" (as defined in Section 280G(b)(3)
of the Code) less $1.00. The determination to be made with respect to this
paragraph shall be made by an accounting firm jointly selected by the Company
and you and paid by the Company, and which may be the Company's independent
auditors.
You will be reimbursed for up to $10,000 per year of entertainment and
similar business expenses, subject to your filing with the Company expense
reports in such detail as the auditors of the Company shall approve as in
accordance with customary practice.
You acknowledge that you now have and will have access to and become
acquainted with proprietary and confidential information regarding the Company
and other persons with whom the Company has business relationships that is not
available to the public. You agree that you will not, at any time, directly or
indirectly, (i) use or disclose such information, except as is necessary and
appropriate in connection with the rendering by you of services to the Company
under this Agreement, or (ii) make, or cause to be made, any statement or
publication about or concerning the Company or its shareholders (or any
fiduciary or beneficiary of any shareholder that is a trust or an estate),
unless you reasonably believe it to be in the best interests of, or necessary
for the proper conduct of the business of, the Company (or any fiduciary or
beneficiary of any shareholder that is a trust or an estate), other than
statements or publications that you reasonably believe to be necessary to
protect and enforce your rights under this Agreement.
You confirm that all confidential information is and shall remain the
exclusive property of the Company. All business records, papers and documents
kept or made by you relating to the business of the Company shall be and remain
the property of the Company.
You further agree that you will not, at any time, communicate or
disclose to any person, news organization or other entity, either directly or
indirectly, any information relating to transactions which the Company is
actively pursuing with other parties or which the Company has at any time
considered unless you have first obtained the consent of the Company to such
communications or disclosures.
<PAGE>
5
You agree that you shall be reasonably available to assist the Company
in any investigations or litigation matters engaged in by the Company.
No provision in this Agreement may be amended or waived unless such
amendment or waiver is agreed to in writing, signed by you and by a duly
authorized officer of the Company. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York without regard
to the principles of conflict of law and it contains the entire agreement and
understanding between the parties, superseding any and all other prior
agreements between you and the Company. The Company may withhold from any
amounts payable to you hereunder any amounts which are required to be withheld
for federal, state or local taxes. The respective rights and obligations of you
and the Company under this Agreement shall survive the termination or expiration
of this Agreement to the extent necessary to the intended preservation of such
rights and obligations. This Agreement cannot be assigned by you.
Without intending to limit the remedies available to the Company, you
acknowledge that a breach of any of the provisions of this Agreement may result
in material and irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
will be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining you from engaging in activities prohibited by
this Agreement or such other relief as may be required specifically to enforce
any of the covenants in this Agreement.
All notices or communications under this Agreement shall be in
writing, addressed as follows:
To the Company:
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attention: Chairman of the Board
To the Employee:
Richard M. Scarlata
Address
<PAGE>
6
Any such notice or communication shall be delivered in person, or by
certified or registered mail, return receipt requested, addressed as above (or
to such other address as such party may designate in writing from time to time),
and the actual date of receipt, as shown by the receipt therefor, will determine
the time at which notice was given.
Any disputes between the parties to this Agreement shall be settled by
arbitration in New York, New York under the auspices of, and in accordance with
the rules of, the American Arbitration Association. The decision in such
arbitration shall be final and conclusive on the parties and judgment upon such
decision may be entered in any court having jurisdiction thereof. Pending
resolution of any dispute, any amounts payable pursuant to the terms of the
Agreement shall be set aside by the Company in an escrow account. Upon
resolution of the dispute, such amounts held in the escrow account shall be paid
to the appropriate party.
If a court of competent jurisdiction determines that any term or
provision of this Agreement is invalid or unenforceable, (i) the remaining terms
and provisions hereof shall be unimpaired and (ii) such court shall have the
authority to replace such invalid or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
If you are in agreement with the foregoing, and the attached Schedule
1, please sign, date and return one copy of this Agreement, along with the
Schedule 1 attachment, whereupon this letter will be an agreement between you
and the Company, effective as of May 5, 1995.
Sincerely,
ROCKEFELLER CENTER PROPERTIES, INC.
By: /s/ Peter D. Linneman
----------------------------------
Title: Chairman of the Board
Agreed to and Accepted:
/s/ Richard M. Scarlata
---------------------------
Richard M. Scarlata Dated:
--------------------------------
<PAGE>
SCHEDULE 1
ANNUAL BASE SALARY (payable semimonthly in arrears) $250,000
BENEFIT PLANS - Participation in the following Company plans as in
effect from time to time, in accordance with the terms of such plans and subject
to any underwriting restrictions imposed upon the insurance carriers: (i) Life
Insurance Plan, Long-term Disability Plan, (ii) Health and Dental Insurance
Plans, (iii) Retirement Plan and (iv) Savings Plan.
PERQUISITES - Selection of perquisites from among those generally
available to senior executives of the Company, and an additional amount of cash
representing any taxes assessed thereon, subject to such perquisite selections
(i) not being unlawful, or (ii) as a result of a change in any law or the
application thereof, not resulting in or having an adverse effect on the
Company. The aggregate cost of such perquisites shall not exceed 5% of your
annual base salary. You shall also be entitled to an annual $3,000 tax return
preparation fee allowance and a one-time $3,000 estate planning consultation
fee.
These compensation arrangements will be reviewed and updated, in the
sole discretion of the Board, on an annual basis on or about October 1 of each
year commencing October 1, 1995.
"CAUSE" means your dishonesty, fraud or wilful misrepresentation to
the Company or any third person; your willful refusal or failure to comply with
the terms of this Agreement or the substantive policies, rules or regulations of
the Company; your willful gross misconduct or gross negligence that results in
material harm to the Company; or your commission of an act or acts involving
moral turpitude or a felony crime.
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred
if the shareholders of the Company approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's assets, or a plan of
partial or complete liquidation.
"CHANGE IN OPPORTUNITY" means, without your express written consent,
(i) the assignment to you of any duties materially inconsistent with your
position, authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company which results in a material
diminution in such position, authority, duties or responsibilities, PROVIDED,
however, that your replacement as President and CEO of the Company following any
Change in Control shall not be deemed a Change in Opportunity so long as your
position, authority, duties or responsibilities shall be at least equivalent to
those of a Senior Vice President - Finance, (ii) the failure of the Company to
provide you with a total compensation package that is substantially equivalent
in opportunity to that compensation (excluding benefit plans and perquisites)
set forth in this Schedule 1 or (iii) following a Change in Control, the
Company's
<PAGE>
2
requiring you to relocate to an office or location more than 50 miles from your
principal employment location immediately prior to such Change in Control.
"DISABILITY" means a physical or mental disability which causes you to
be unable to render the services contemplated in this Agreement for a period of
three consecutive months, or for shorter periods aggregating three months during
any twelve-month period.
<PAGE>
Exhibit 10.2
PERSONAL AND CONFIDENTIAL
as of May 5, 1995
Stephanie Leggett Young
Address
Dear Stephanie:
The Board of Directors (the "Board") of Rockefeller Center Properties, Inc. (the
"Company") has determined that it is in the best interests of the Company and
its shareholders to retain your services as an officer of the Company under the
terms and provisions set forth below in this letter agreement (this
"Agreement").
During the term of this Agreement, the Company agrees to employ you, and you
agree to be employed by the Company, as a Vice President and Secretary. As
such, you agree that you shall use your best efforts and devote your entire
business time to diligently furthering the interests of the Company. In that
regard, you agree to perform such duties and services, and to have such
responsibilities, as may from time to time be assigned to you by the President
and Chief Executive Officer of the Company, including, without limitation, at
all times maintaining and improving, to the best of your ability, the
relationship between the Company and its shareholders.
The term of this Agreement shall commence as of May 5, 1995, and shall terminate
on the earlier to occur of
- your death or Disability (as defined in the attached Schedule 1),
- the voluntary termination of your employment (which termination
shall be effective upon ten days prior notice),
- the second anniversary of the date on which written notice is
received by you from the Company stating that this Agreement
shall terminate on the second anniversary of such receipt of
notice, or
- the termination of your employment by the Company for Cause (as
defined in the attached Schedule 1).
<PAGE>
2
During the term of this Agreement, you shall not, without the prior express
written consent of the Board, buy, sell, lease, invest in, take an option on or
otherwise directly or indirectly become involved with real property for your own
account, except with respect to your personal residence and/or vacation home,
nor shall you act as a principal, whether disclosed or undisclosed, in
connection with any transaction that involves the Company.
In consideration of your agreement to be employed by the Company under the terms
and provisions of this Agreement, the Company agrees, during the term of this
Agreement, to provide you with the compensation arrangements listed on the
attached Schedule 1. In addition, upon the consummation of a Change in Control
(as defined in the attached Schedule 1), you shall receive a cash bonus in the
amount of $20,000; PROVIDED that (i) you remain employed by the Company through
the date on which the Change in Control is consummated and (ii) in the
reasonable judgment of the Board, you assisted the Company in consummating such
Change in Control.
In further consideration of your agreement to be employed hereunder, the Company
agrees that if, during the term of the Agreement, (i) your employment is
terminated by the Company other than pursuant to the two-year notice described
on the preceding page (other than for Cause) or other than due to your death or
Disability, or (ii) you voluntarily terminate your employment within 90 days
after the occurrence of a Change in Opportunity (as defined on the attached
Schedule 1), you shall be entitled, in lieu of any other compensation of any
kind (under this Agreement or otherwise), to the following benefits:
- Annual base salary for two years from the date of such
termination, payable monthly in arrears, equal to your annual
base salary in effect on the date of termination (or, if greater,
the rate in effect on the date of any applicable Change in
Opportunity), PROVIDED that in the event that the termination
occurs following a Change in Control (as defined in the attached
Schedule 1), such payment shall be made in the form of a lump sum
payment in an amount equal to the present value as of the date of
payment (determined on such basis as the Board shall, in good
faith, consider to be reasonable) as soon as practicable
following the date of termination;
- To the extent permitted by applicable law and the terms of the
benefit plans, coverage for two years from the date of such
termination under the terms of the Company welfare benefit plans
set forth on Schedule 1 in which you are participating at the
time of such termination, as if you continued as an active
employee for such two-year period (or the economic equivalent
thereof if the Company is not permitted for any reason to
provide such coverage to you or the Company elects not to
<PAGE>
3
provide such coverage to you); PROVIDED, HOWEVER, that the
Company shall not have an obligation to continue to maintain at
any time any benefit plan solely as a result of the provisions of
this Agreement;
- To the extent permitted by applicable law and the terms of the
benefit plans, coverage for two years from the date of such
termination under the terms of the Company retirement benefit
plans set forth on Schedule 1 in which you are participating at
the time of such termination, as if you continued as an active
employee for such two-year period; PROVIDED, HOWEVER, that the
Company shall not have an obligation to continue to maintain at
any time any benefit plan solely as a result of the provisions of
this Agreement, and PROVIDED, FURTHER, that if the Company is not
permitted for any reason to provide such coverage to you under
the retirement plans during such two-year period or the Company
elects not to provide such coverage to you, the Company shall
provide you with the economic equivalent thereof by way of a
supplemental retirement benefit, payable in a single lump sum in
cash as soon as practicable following your termination of
employment, equal to the sum of (a) and (b) where
(a) is equal to the difference between your retirement benefit
payable in the straight life annuity form from the
Retirement Income Plan for Salaried Employees and an amount
equal to the retirement benefit that would have been payable
in the straight life annuity form from the Retirement Income
Plan for Salaried Employees determined as if you had
continued as a covered employee and a participant in such
Plan for the two-year period following your termination
(counting both additional service and compensation during
such period), and
(b) is equal to the amount that would have been allocated to
your account in the Incentive Savings Plan as a Company
contribution over the two-year period following your
termination if you had continued as a covered employee and
participant in such Plan and had made the maximum employee
contributions to such Plan during such period, and
- Professional outplacement assistance with a firm reasonably
acceptable to the Company and continued office and secretarial
support for up to two years from the date of such termination.
<PAGE>
4
Notwithstanding anything in this Agreement to the contrary, if any amounts due
to you under this Agreement and any other plan or program of the Company
constitute a "parachute payment" (as defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code")), then the aggregate of
the amounts constituting the parachute payment shall be reduced to an amount
that will equal three times your "base amount" (as defined in Section 280G(b)(3)
of the Code) less $1.00. The determination to be made with respect to this
paragraph shall be made by an accounting firm jointly selected by the Company
and you and paid by the Company, and which may be the Company's independent
auditors.
You will be reimbursed by the Company for travel and business expenses
reasonably incurred by you in performing your duties under this Agreement in
accordance with the usual policies of the Company.
You acknowledge that you now have and will have access to and become acquainted
with proprietary and confidential information regarding the Company and other
persons with whom the Company has business relationships that is not available
to the public. You agree that you will not, at any time, directly or
indirectly, (i) use or disclose such information, except as is necessary and
appropriate in connection with the rendering by you of services to the Company
under this Agreement, or (ii) make, or cause to be made, any statement or
publication about or concerning the Company or its shareholders (or any
fiduciary or beneficiary of any shareholder that is a trust or an estate), which
you reasonably believe not to be in the best interests of, or necessary for the
proper conduct of the business of, the Company (or any fiduciary or beneficiary
of any shareholder that is a trust or an estate), other than statements or
publications that you reasonably believe to be necessary to protect and enforce
your rights under this Agreement.
You confirm that all confidential information is and shall remain the exclusive
property of the Company. All business records, papers and documents kept or
made by you relating to the business of the Company shall be and remain the
property of the Company.
You agree that you shall be reasonably available to assist the Company in any
investigations or litigation matters engaged in by the Company.
No provision in this Agreement may be amended or waived unless such amendment or
waiver is agreed to in writing, signed by you and by a duly authorized officer
of the Company. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York without regard to the principles
of conflict of law and it contains the entire agreement and understanding
between the parties, superseding any and all other prior agreements between you
and the Company. The Company may withhold from any amounts payable to you
hereunder any amounts which are required to be withheld for federal, state or
<PAGE>
5
local taxes. The respective rights and obligations of you and the Company under
this Agreement shall survive the termination or expiration of this Agreement to
the extent necessary to the intended preservation of such rights and
obligations. This Agreement cannot be assigned by you.
Without intending to limit the remedies available to the Company, you
acknowledge that a breach of any of the provisions of this Agreement may result
in material and irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
will be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining you from engaging in activities prohibited by
this Agreement or such other relief as may be required specifically to enforce
any of the covenants in this Agreement.
All notices or communications under this Agreement shall be in writing,
addressed as follows:
To the Company:
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attention: Chairman of the Board
To the Employee:
Stephanie Leggett Young
Address
Any such notice or communication shall be delivered in person, or by certified
or registered mail, return receipt requested, addressed as above (or to such
other address as such party may designate in writing from time to time), and the
actual date of receipt, as shown by the receipt therefor, will determine the
time at which notice was given.
Any disputes between the parties to this Agreement shall be settled by
arbitration in New York, New York under the auspices of, and in accordance with
the rules of, the American Arbitration Association. The decision in such
arbitration shall be final and conclusive on the parties and judgment upon such
decision may be entered in any court having jurisdiction thereof. Pending
resolution of any dispute, any amounts payable pursuant to the terms of the
Agreement shall be set aside by the Company in an escrow account. Upon
resolution of the dispute, such amounts held in the escrow account shall be paid
to the appropriate party.
<PAGE>
6
If a court of competent jurisdiction determines that any term or provision of
this Agreement is invalid or unenforceable, (i) the remaining terms and
provisions hereof shall be unimpaired and (ii) such court shall have the
authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
If you are in agreement with the foregoing, and the attached Schedule 1, please
sign, date and return one copy of this Agreement, along with the Schedule 1
attachment, whereupon this letter will be an agreement between you and the
Company, effective as of May 5, 1995.
Sincerely,
ROCKEFELLER CENTER PROPERTIES, INC.
By:/s/ Richard M. Scarlata
----------------------------------
Title: President
Agreed to and Accepted:
/s/ Stephanie Leggett Young Dated:
----------------------------- ---------------------------
Stephanie Leggett Young
<PAGE>
SCHEDULE 1
ANNUAL BASE SALARY (payable semi-monthly in arrears) $100,000
BENEFIT PLANS - Participation in the following Company plans as in
effect from time to time, in accordance with the terms of such plans and subject
to any underwriting restrictions imposed upon the insurance carriers: (i) Life
Insurance Plan, Long-term Disability Plan, (ii) Health and Dental Insurance
Plans, (iii) Retirement Plan and (iv) Savings Plan.
These compensation arrangements will be reviewed and updated, in the
sole discretion of the Board, on an annual basis on or about December 1 of each
year commencing December 1, 1995.
"CAUSE" means your dishonesty, fraud or willful misrepresentation to
the Company or any third person; your willful refusal or failure to comply with
the terms of this Agreement or the substantive policies, rules or regulations of
the Company; your willful gross misconduct or gross negligence that results in
material harm to the Company; or your commission of an act or acts involving
moral turpitude or a felony crime.
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred
if the shareholders of the Company approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's assets, or a plan of
partial or complete liquidation.
"CHANGE IN OPPORTUNITY" means, without your express written consent,
(i) the assignment to you of any duties materially inconsistent with your
position, authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company which results in a material
diminution in such position, authority, duties or responsibilities, (ii) the
failure of the Company to provide you with a total compensation package that is
substantially equivalent in opportunity to that compensation (excluding benefit
plans) set forth in this Schedule 1 or (iii) following a Change in Control, the
Company's requiring you to relocate to an office or location more than 50 miles
from your principal employment location immediately prior to such Change in
Control.
"DISABILITY" means a physical or mental disability (other than as a
result of pregnancy where you intend to return to work as soon as medically
capable) which causes you to be unable to render the services contemplated in
this Agreement for a period of three consecutive months, or for shorter periods
aggregating three months during any twelve-month period.
<PAGE>
Exhibit 10.3
PERSONAL AND CONFIDENTIAL
as of May 5, 1995
Janet P. King
Address
Dear Janet:
The Board of Directors (the "Board") of Rockefeller Center Properties,
Inc. (the "Company") has determined that it is in the best interests of the
Company and its shareholders to retain your services as an officer of the
Company under the terms and provisions set forth below in this letter agreement
(this "Agreement").
During the term of this Agreement, the Company agrees to employ you,
and you agree to be employed by the Company, as a Vice President and Treasurer.
As such, you agree that you shall use your best efforts and devote your entire
business time to diligently furthering the interests of the Company. In that
regard, you agree to perform such duties and services, and to have such
responsibilities, as may from time to time be assigned to you by the President
and Chief Executive Officer of the Company, including, without limitation, at
all times maintaining and improving, to the best of your ability, the
relationship between the Company and its shareholders.
The term of this Agreement shall commence as of May 5, 1995, and shall
terminate on the earlier to occur of
- your death or Disability (as defined in the attached Schedule 1),
- the voluntary termination of your employment (which termination
shall be effective upon ten days prior notice),
- the first anniversary of the date on which written notice is
received by you from the Company stating that this Agreement
shall terminate on the first anniversary of such receipt of
notice, or
- the termination of your employment by the Company for Cause (as
defined in the attached Schedule 1).
<PAGE>
2
During the term of this Agreement, you shall not, without the prior
express written consent of the Company's Board of Directors, buy, sell, lease,
invest in, take an option on or otherwise directly or indirectly become involved
with real property for your own account, except with respect to your personal
residence and/or vacation home, nor shall you act as a principal, whether
disclosed or undisclosed, in connection with any transaction that involves the
Company.
In consideration of your agreement to be employed by the Company under
the terms and provisions of this Agreement, the Company agrees, during the term
of this Agreement, to provide you with the compensation arrangements listed on
the attached Schedule 1. In addition, upon the consummation of a Change in
Control (as defined in the attached Schedule 1), you shall receive a cash bonus
in the amount of $20,000; PROVIDED that (i) you remain employed by the Company
through the date on which the Change in Control is consummated and (ii) in the
reasonable judgment of the Board, you assisted the Company in consummating such
Change in Control.
In further consideration of your agreement to be employed hereunder,
the Company agrees that if, during the term of the Agreement, (i) your
employment is terminated by the Company other than pursuant to the one-year
notice described on the preceding page (other than for Cause) or other than due
to your death or Disability, or (ii) you voluntarily terminate your employment
within 90 days after the occurrence of a Change in Opportunity (as defined on
the attached Schedule 1), you shall be entitled, in lieu of any other
compensation of any kind (under this Agreement or otherwise), to the following
benefits:
- Annual base salary for one year from the date of such
termination, payable monthly in arrears, equal to your annual
base salary in effect on the date of termination (or, if greater,
the rate in effect on the date of any applicable Change in
Opportunity), PROVIDED that in the event that the termination
occurs following a Change in Control (as defined in the attached
Schedule 1), such payment shall be made in the form of a lump sum
payment in an amount equal to the present value as of the date of
payment (determined on such basis as the Board shall, in good
faith, consider to be reasonable) as soon as practicable
following the date of termination;
- To the extent permitted by applicable law and the terms of the
benefit plans, coverage for one year from the date of such
termination under the terms of the Company welfare benefit plans
set forth on Schedule 1 in which you are participating at the
time of such termination, as if you continued as an active
employee for such one-year period (or the economic equivalent
thereof if the Company is not permitted for any
<PAGE>
3
reason to provide such coverage to you or the Company elects not
to provide such coverage to you); PROVIDED, HOWEVER, that the
Company shall not have an obligation to continue to maintain at
any time any benefit plan solely as a result of the provisions
of this Agreement;
- To the extent permitted by applicable law and the terms of the
benefit plans, coverage for one year from the date of such
termination under the terms of the Company retirement benefit
plans set forth on Schedule 1 in which you are participating at
the time of such termination, as if you continued as an active
employee for such one-year period; PROVIDED, HOWEVER, that the
Company shall not have an obligation to continue to maintain at
any time any benefit plan solely as a result of the provisions of
this Agreement, and PROVIDED, FURTHER, that if the Company is not
permitted for any reason to provide such coverage to you under
the retirement plans during such one-year period or the Company
elects not to provide such coverage to you, the Company shall
provide you with the economic equivalent thereof by way of a
supplemental retirement benefit, payable in a single lump sum in
cash as soon as practicable following your termination of
employment, equal to the sum of (a) and (b) where
(a) is equal to the difference between your retirement benefit
payable in the straight life annuity form from the
Retirement Income Plan for Salaried Employees and an amount
equal to the retirement benefit that would have been payable
in the straight life annuity form from the Retirement Income
Plan for Salaried Employees determined as if you had
continued as a covered employee and a participant in such
Plan for the one-year period following your termination
(counting both additional service and compensation during
such period), and
(b) is equal to the amount that would have been allocated to
your account in the Incentive Savings Plan as a Company
contribution over the one-year period following your
termination if you had continued as a covered employee and
participant in such Plan and had made the maximum employee
contributions to such Plan during such period, and
- Professional outplacement assistance with a firm reasonably
acceptable to the Company and continued office and secretarial
support for up to one year from the date of such termination.
<PAGE>
4
Notwithstanding anything in this Agreement to the contrary, if any
amounts due to you under this Agreement and any other plan or program of the
Company constitute a "parachute payment" (as defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the "Code")), then the aggregate
of the amounts constituting the parachute payment shall be reduced to an amount
that will equal three times your "base amount" (as defined in Section 280G(b)(3)
of the Code) less $1.00. The determination to be made with respect to this
paragraph shall be made by an accounting firm jointly selected by the Company
and you and paid by the Company, and which may be the Company's independent
auditors.
You will be reimbursed by the Company for travel and business expenses
reasonably incurred by you in performing your duties under this Agreement in
accordance with the usual policies of the Company.
You acknowledge that you now have and will have access to and become
acquainted with proprietary and confidential information regarding the Company
and other persons with whom the Company has business relationships that is not
available to the public. You agree that you will not, at any time, directly or
indirectly, (i) use or disclose such information, except as is necessary and
appropriate in connection with the rendering by you of services to the Company
under this Agreement, or (ii) make, or cause to be made, any statement or
publication about or concerning the Company or its shareholders (or any
fiduciary or beneficiary of any shareholder that is a trust or an estate), which
you reasonably believe not to be in the best interests of, or necessary for the
proper conduct of the business of, the Company (or any fiduciary or beneficiary
of any shareholder that is a trust or an estate), other than statements or
publications that you reasonably believe to be necessary to protect and enforce
your rights under this Agreement.
You confirm that all confidential information is and shall remain the
exclusive property of the Company. All business records, papers and documents
kept or made by you relating to the business of the Company shall be and remain
the property of the Company.
You agree that you shall be reasonably available to assist the Company
in any investigations or litigation matters engaged in by the Company.
No provision in this Agreement may be amended or waived unless such
amendment or waiver is agreed to in writing, signed by you and by a duly
authorized officer of the Company. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York without regard
to the principles of conflict of law and it contains the entire agreement and
understanding between the parties, superseding any and all other prior
agreements between you and the Company. The Company may withhold from any
amounts payable to you hereunder any amounts which are required to be withheld
for federal,
<PAGE>
5
state or local taxes. The respective rights and obligations of you and the
Company under this Agreement shall survive the termination or expiration of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations. This Agreement cannot be assigned by you.
Without intending to limit the remedies available to the Company, you
acknowledge that a breach of any of the provisions of this Agreement may result
in material and irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
will be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining you from engaging in activities prohibited by
this Agreement or such other relief as may be required specifically to enforce
any of the covenants in this Agreement.
All notices or communications under this Agreement shall be in
writing, addressed as follows:
To the Company:
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attention: Chairman of the Board
To the Employee:
Janet P. King
Address
Any such notice or communication shall be delivered in person, or by
certified or registered mail, return receipt requested, addressed as above (or
to such other address as such party may designate in writing from time to time),
and the actual date of receipt, as shown by the receipt therefor, will determine
the time at which notice was given.
Any disputes between the parties to this Agreement shall be settled by
arbitration in New York, New York under the auspices of, and in accordance with
the rules of, the American Arbitration Association. The decision in such
arbitration shall be final and conclusive on the parties and judgment upon such
decision may be entered in any court having jurisdiction thereof. Pending
resolution of any dispute, any amounts payable pursuant to the terms of the
Agreement shall be set aside by the Company in an escrow account. Upon
<PAGE>
6
resolution of the dispute, such amounts held in the escrow account shall be
paid to the appropriate party.
If a court of competent jurisdiction determines that any term or
provision of this Agreement is invalid or unenforceable, (i) the remaining terms
and provisions hereof shall be unimpaired and (ii) such court shall have the
authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
If you are in agreement with the foregoing, and the attached Schedule
1, please sign, date and return one copy of this Agreement, along with the
Schedule 1 attachment, whereupon this letter will be an agreement between you
and the Company, effective as of May 5, 1995.
Sincerely,
ROCKEFELLER CENTER PROPERTIES, INC.
By: /s/ Richard M. Scarlata
---------------------------------------
Title: President
Agreed to and Accepted:
/s/ Janet P. King Dated:
------------------------------ ------------------
Janet P. King
<PAGE>
SCHEDULE 1
ANNUAL BASE SALARY (payable semi-monthly in arrears) $ 100,000
BENEFIT PLANS - Participation in the following Company plans as in
effect from time to time, in accordance with the terms of such plans and subject
to any underwriting restrictions imposed upon the insurance carriers: (i) Life
Insurance Plan, Long-term Disability Plan, (ii) Health and Dental Insurance
Plans, (iii) Retirement Plan and (iv) Savings Plan.
These compensation arrangements will be reviewed and updated, in the
sole discretion of the Board, on an annual basis on or about March 1 of each
year commencing March 1, 1996.
"CAUSE" means your dishonesty, fraud or willful misrepresentation to
the Company or any third person; your willful refusal or failure to comply with
the terms of this Agreement or the substantive policies, rules or regulations of
the Company; your willful gross misconduct or gross negligence that results in
material harm to the Company; or your commission of an act or acts involving
moral turpitude or a felony crime.
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred
if the shareholders of the Company approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's assets, or a plan of
partial or complete liquidation.
"CHANGE IN OPPORTUNITY" means, without your express written consent,
(i) the assignment to you of any duties materially inconsistent with your
position, authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company which results in a material
diminution in such position, authority, duties or responsibilities, (ii) the
failure of the Company to provide you with a total compensation package that is
substantially equivalent in opportunity to that compensation (excluding benefit
plans) set forth in this Schedule 1 or (iii) following a Change in Control, the
Company's requiring you to relocate to an office or location more than 50 miles
from your principal employment location immediately prior to such Change in
Control.
"DISABILITY" means a physical or mental disability (other than as a
result of pregnancy where you intend to return to work as soon as medically
capable) which causes you to be unable to render the services contemplated in
this Agreement for a period of three consecutive months, or for shorter periods
aggregating three months during any twelve-month period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 17,518
<SECURITIES> 0
<RECEIVABLES> 1,300,226
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,333,958
<CURRENT-LIABILITIES> 0
<BONDS> 768,636
<COMMON> 383
0
0
<OTHER-SE> 503,867
<TOTAL-LIABILITY-AND-EQUITY> 1,333,958
<SALES> 0
<TOTAL-REVENUES> 20,446
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,710
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,214
<INCOME-PRETAX> (7,478)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,478)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,478)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0<F1><F2>
<FN>
<F1>15, Classified Balance Sheet is not presented.
<F2>19, Classified Balance Sheet is not presented.
</FN>
</TABLE>
