<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1993
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File No 0-1743
THE ROUSE COMPANY
(Exact name of registrant as specified in its charter)
Maryland 52-0735512
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 992-6000
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value 1c per share)
-------------------------------------
(Title of Class)
Series A Convertible Preferred Stock (par value 1c per share)
-------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of his Form 10-K or any amendment to this
Form 10-K. __
As of March 11, 1994, there were outstanding 47,562,449 shares of the
registrant's common stock, par value 1c, which is the only class of common or
voting stock of the registrant. As of that date, the aggregate market value of
the shares of common stock held by non-affiliates of the registrant (based on
the closing price as reported in The Wall Street Journal, Eastern Edition) was
----------------------------------------
approximately $832,853,088.
Documents Incorporated by Reference
The specified portions of the Annual Report to Shareholders for the fiscal year
ended December 31, 1993 are incorporated by reference into Parts I, II and IV.
Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before
April 5, 1994 is incorporated by reference into Part III.
- --------------------------------------------------------------------------------
<PAGE>
PART I
------
Item 1. Business.
Item 1(a). General Development of Business.
The Rouse Company (the "Company") was incorporated as a business corporation
under the laws of the State of Maryland in 1956. Its principal offices are
located at The Rouse Company Building, Columbia, Maryland 21044. Its
telephone number is (410) 992-6000. The Company, through its subsidiaries
and affiliates, is engaged in (i) the ownership, management, acquisition and
development of income-producing and other real estate in the United States,
including retail centers, office buildings, mixed-use projects, community
retail centers and three hotels, and the management of one retail center in
Canada, and (ii) the development and sale of land to builders and other
developers, primarily around Columbia, Maryland, for residential, commercial
and industrial uses.
Item 1(b). Financial Information About Industry Segments.
Information required by Item 1(b) is incorporated herein by
reference to note 11 of the notes to consolidated financial statements
included in the 1993 Annual Report to Shareholders.
As noted in Item 1(a), the Company is a real estate company engaged in most
aspects of the real estate industry, including the management, acquisition
and development of income-producing and other properties, both retail and
commercial, community development and management, and land sales. These
business segments are further described below.
I-1
<PAGE>
Item 1. Business, continued.
Item 1(c). Narrative Description of Business.
Operating Properties:
--------------------
As set forth in Item 2, at December 31, 1993, the 70 regional retail centers
owned, in whole or in part, or operated by subsidiaries or affiliates of
the Company, aggregated 22,213,000 square feet of leasable space, including
982,000 square feet leased to department stores and 669,000 square feet of
office space. The activities involved in operating and managing retail
centers include: negotiating lease terms with present and prospective
tenants, identifying and attracting desirable new tenants, conducting local
market and consumer research, developing and implementing short- and long-
term merchandising and leasing programs, assisting tenants in the
presentation of their merchandise and the layout of their stores and
storefronts, and maintaining the buildings and common areas.
In conjunction with other partners or investors, the Company has a program of
acquiring completed retail centers, with the Company having management
responsibility and earning incentive fees including, in some instances,
equity interests in the centers. The Company also has a program of providing
management services for centers developed and owned by others under
management agreements that also provide for incentive fees and, in some
instances, equity interests in the centers. As of December 31, 1993, the
Company managed 21 such centers, which are included in the figures in the
preceding paragraph and aggregated 7,032,000 square feet of leasable space.
In addition to Columbia Mall, which is included in the figures in the second
preceding paragraph, The Howard Research And Development Corporation ("HRD")
and its subsidiaries own and/or manage 17 office and industrial buildings
and retail centers with 3,080,000 square feet of leasable office space, 8
village centers with 824,000 square feet of leasable retail space and other
properties and additional commercial space, including the 289-room Columbia
Inn in Columbia, Maryland.
Other subsidiaries of the Company own, in whole or in part, and operate 11
office buildings with a total of 2,673,000 square feet of leasable space and
the 148-room Cross Keys Inn located at The Village of Cross Keys in
Baltimore, Maryland. The Company also has a 5% interest in Rouse-Teachers
Properties, Inc., which owns 81 office/industrial buildings with 5,727,000
square feet of space and 454 acres of land. A wholly owned
I-2
<PAGE>
Item 1. Business, continued.
Item 1(c). Narrative Description of Business, continued:
affiliate of the Company is responsible for the operation, management and
development of all buildings and land owned by Rouse-Teachers Properties,
Inc.
Development:
-----------
The Company renovates and expands existing retail centers and develops
suburban and downtown retail centers and mixed-use projects, primarily for
ownership. In addition, the Company is capable of serving as the master
developer for certain mixed-use projects, with the Company generally owning
at least the retail component of such projects. The activities involved in
the development, renovation and expansion of retail centers and mixed-use
projects include: initial market and consumer research, evaluating and
acquiring land sites, obtaining necessary public approvals, engaging
architectural and engineering firms to design the project, estimating
development costs, developing and testing pro forma operating statements,
selecting a general contractor, arranging construction and permanent
financing, identifying and obtaining department stores and other tenants,
negotiating lease terms, negotiating partnership and joint venture
agreements and promoting new, renovated or expanded retail centers and
mixed-use projects.
The Company also develops retail centers for others, with the Company earning
incentive fees and, in some instances, equity interests in the centers.
The Company and certain subsidiaries or affiliates are in the construction or
development stage of announced projects, primarily expansions of existing
centers, that will add 283,000 square feet of leasable space.
Land Sales:
----------
HRD is the developing entity of Columbia, Maryland, which is located in the
Baltimore-Washington corridor. HRD owns approximately 2,097 saleable acres
of land in and around Columbia, and, through its subsidiaries and
affiliates, develops and sells this land to builders and other developers
for residential, commercial and industrial uses. The Company, through its
subsidiaries and affiliates, also is presently involved in community
development and related land sales elsewhere in Maryland and is developing
and selling a parcel of land in California.
I-3
<PAGE>
Item 1. Business, continued.
Item 1(c). Narrative Description of Business, continued:
In all aspects of the Company's business pertaining to the ownership,
management, acquisition or development of income-producing and other real
estate, the Company operates in highly competitive markets. With respect to
the leasing and operation or management of developed properties, each
project faces market competition from existing and future developments in
its geographical market area. The Company competes with developers and other
buyers with respect to the acquisition of development sites or centers and
for financing opportunities in the money markets. The Company also faces
competition in and around Columbia, Maryland with respect to the development
and sale of land for residential, commercial and industrial uses.
Neither the Company's business, taken as a whole, nor any of its industry
segments, is seasonal in nature.
Federal, state and local statutes and regulations relating to the protection
of the environment have previously had no material effect on the Company's
business. Future development opportunities of the Company may involve
additional capital and other expenditures in order to comply with such
statutes and regulations. It is impossible at this time to predict with any
certainty the magnitude of any such expenditures or the long-range effect,
if any, on the Company's operations. Compliance with such laws has had no
material adverse effect on the earnings or competitive position of the
Company in the past; the Company anticipates that they will have no material
adverse effect on its future earnings or its competitive position in the
industry.
None of the Company's industry segments depends upon a single customer or a
few customers, the loss of which would have a materially adverse effect on
the segment. No customer accounts for 10 percent or more of the consolidated
revenues of the Company.
The Company and its subsidiaries had 5,085 full- and part- time employees at
December 31, 1993.
I-4
<PAGE>
Item 2. Properties.
The Company leases its headquarters building (approximately 127,000 square
feet) in Columbia, Maryland for an initial term of 30 years which expires in
2003 with options for two 15-year renewal periods. The lease on the
headquarters building is accounted for as a capital lease.
Information respecting the Company's operating properties is incorporated
herein by reference to the "Projects of The Rouse Company" table on pages 56
through 60 of the Annual Report to Shareholders for 1993 that is an Exhibit to
this Form 10-K. The ownership of virtually all properties is subject to
mortgage financing. The table of projects includes retail centers managed by
the Company for a fee as identified in notes (c) and (d) to the table.
Excluding such managed centers, certain of the remaining properties are
subject to leases which provide an option to purchase (or repurchase) the
property and/or to renew the leases for one or more renewal periods. The
years of expiration indicated below assume all options to extend the terms of
the leases are exercised. The properties subject to such leases in whole or
in part are as follows:
<TABLE>
<CAPTION>
Year of
Nature of expiration
Property interest of lease
-------- -------- --------
<S> <C> <C>
Arizona Center Leasehold Various dates
from 2017 to 2050
Augusta Mall Leasehold by joint venture 2068
Bayside Marketplace Leasehold by joint venture 2062
Columbia Mall, Inc. -
American City Building Leasehold and fee 2000
Columbia Mall, Inc. -
Columbia Cinema Leasehold and fee 2003
Columbia Mall, Inc. -
Exhibit Building Leasehold and fee 2012
Columbia Mall, Inc. -
Oakland Building Leasehold 2064
Echelon Mall Leasehold 2008
Faneuil Hall Marketplace Leasehold 2074
First National Bank Plaza Leasehold 2013
</TABLE>
I-5
<PAGE>
Item 2. Properties, continued.
<TABLE>
<CAPTION>
Year of
Nature of expiration
Property interest of lease
-------- -------- --------
<S> <C> <C>
Franklin Park Leasehold and fee by
joint venture 2024
The Gallery at Market East Leasehold 2082
Governor's Square Leasehold by joint venture 2054
Greengate Mall Leasehold 2070
Harborplace Leasehold 2054
Harundale Mall Leasehold and fee owned
jointly with others 2059
Highland Mall Leasehold and fee by
joint venture 2070
The Jacksonville Landing Leasehold 2057
Mall St. Matthews Leasehold 2053
Midtown Square Leasehold 2055
Pioneer Place Leasehold 2076
Plymouth Meeting Leasehold and fee 2063
Riverwalk Leasehold by joint venture 2076
St. Louis Union Station Leasehold 2060
South Street Seaport Leasehold 2031
Tampa Bay Center Leasehold and fee 2047
Westlake Center Leasehold by joint venture 2043
Woodbridge Center Leasehold 2020
</TABLE>
I-6
<PAGE>
Item 3. Legal Proceedings.
On November 6, 1990, Robert P. Guastella Equities, Inc. ("Plaintiff"),a former
tenant at the Riverwalk Shopping Center in New Orleans, Louisiana
("Riverwalk"), which is owned and operated by New Orleans Riverwalk
Associates, an affiliate of the Company ("NORA"), filed suit in the Civil
District Court of Orleans Parish, Louisiana against NORA, the Company, two
Company affiliates - Rouse-New Orleans, Inc. and New Orleans Riverwalk Limited
Partnership - and Connecticut General Life Insurance Company, which is a
general partner of NORA (collectively, "Defendants"). Plaintiff alleges that
Defendants breached Plaintiff's lease agreement with NORA for the operation of
a restaurant at Riverwalk by (i) failing to prevent the leased premises from
flooding, (ii) refusing to permit entertainment on the leased premises, (iii)
interfering with the operation of air conditioning equipment on the leased
premises and (iv) failing to provide adequate security. Plaintiff claims that
as a result of these breaches it suffered losses and could not pay the rentals
due under the lease agreement, as a result of which the lease and its tenancy
were terminated by NORA. Plaintiff sought damages of approximately $600,000
for these alleged breaches. In addition, on September 3, 1992, Plaintiff
claimed $33,000,000 for alleged lost future profits which it claimed it would
have earned had its lease not been terminated. All Defendants filed answers
denying the claims of Plaintiff and asserting other defenses. NORA also
asserted a counterclaim against Plaintiff and its guarantors, Robert Guastella
and Charles Kovacs, for past due rentals and other charges in the approximate
amount of $300,000 plus interest and attorneys' fees as provided for in the
lease agreement. The case was tried before a jury and, on October 28, 1993,
the jury returned a verdict against Defendants upon which judgment was entered
by the trial court on January 7, 1994, in the total net amount of
approximately $9,128,000 (which included a net award for lost future profits
of approximately $8,640,000) plus interest and attorneys' fees. Defendants
believe that the verdict and judgment as entered to date are contrary to the
facts and applicable law. Following entry of judgment, Defendants filed with
the trial court Motions for Judgment Notwithstanding the Verdict, Remittitur
and/or New Trial. These motions seek, in the alternative, (i) the dismissal of
all claims of Plaintiff against Defendants, (ii) a significant reduction of
the award to Plaintiff, including elimination of the entire award for lost
future profits or (iii) a new trial. The hearing on the post-trial motions was
held on February 28, 1994, and the matter is under consideration by the trial
court. To the extent that these post-trial motions are not successful,
Defendants intend to vigorously pursue their rights of appeal.
I-7
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
None.
I-8
<PAGE>
Directors and Executive Officers.
The executive officers of the Company as of March 31, 1994 are:
<TABLE>
<CAPTION>
Present office and Date of election Business or professional
position with the or appointment to experience during the past
Executive Officer Age Company present office five years
- -------------------- --- ------------------------ ----------------- --------------------------
<S> <C> <C> <C> <C>
Bruce D. Alexander 50 Senior Vice-President 11/16/78 Senior Vice-President and
and Director of New 8/17/93 Director of New Business of
Business the Company; formerly Senior
Vice-President and Director of
the Commercial Development
Division of the Company
Anthony W. Deering 49 President and Chief 2/25/93 President and Chief Operating
Operating Officer Officer of the Company;
formerly Executive Vice
President - Finance and
Administration and Chief
Financial Officer of the
Company, and Senior Vice-
President and Chief Financial
Officer of the Company
Mathias J. DeVito 63 Chairman of the Board 5/24/84 Chairman of the Board and
and Chief Executive 5/23/79 Chief Executive Officer of the
Officer Company; formerly Chairman of
the Board, President and Chief
Executive Officer of the
Company, and Chairman of the
Board and Chief Executive
Officer of the Company
Jeffrey H. Donahue 47 Senior Vice-President, 9/23/93 Senior Vice-President and
Chief Financial Officer 9/23/93 Chief Financial Officer of the
and Director of the 8/17/93 Company and Director of the
Finance Division Finance Division; formerly
Vice-President and Treasurer
of the Company
</TABLE>
I-9
<PAGE>
<TABLE>
<CAPTION>
Present office and Date of election Business or professional
position with the or appointment to experience during the past
Executive Officer Age Company present office five years
- -------------------- --- ------------------------ ----------------- --------------------------
<S> <C> <C> <C> <C>
Duke S. Kassolis 42 Senior Vice-President 9/23/93 Senior Vice-President and
and Director of Office 8/17/93 Director of Office and Mixed-
and Mixed-Use Operations Use Operations of the Company;
formerly Vice-President and
Director of Office and
Commercial Properties of the
Company
Paul I. Latta, Jr. 50 Senior Vice-President 9/23/93 Senior Vice-President and
and Director of Retail 8/17/93 Director of Retail Operations,
Operations of the Company; formerly Vice-
President and Associate
Division Director, Operating
Properties Division of the
Company
Richard G. McCauley 53 Senior Vice-President, 1/22/75 Senior Vice-President, General
General Counsel and 12/1/71 Counsel and Secretary of the
Secretary 4/24/75 Company
Douglas A. McGregor 51 Executive Vice-President 11/5/90 Executive Vice-President for
for Development and 8/17/93 Development and Operations of
Operations the Company; formerly
Executive Vice-President -
Development and Director of
the Office and Community
Development Division
Robert Minutoli 43 Senior Vice-President 9/23/93 Senior Vice-President and
and Director of 8/17/93 Director of Acquisitions of
Acquisitions the Company; formerly Vice-
President for Development of
the Company
Robert D. Riedy 48 Senior Vice-President 9/23/93 Senior Vice-President and
and Director of Retail 8/17/93 Director of Retail Leasing of
Leasing the Company; formerly Vice-
President for Development of
the Company
</TABLE>
I-10
<PAGE>
<TABLE>
<CAPTION>
Present office and Date of election Business or professional
position with the or appointment to experience during the past
Executive Officer Age Company present office five years
- -------------------- --- ------------------------ ----------------- --------------------------
<S> <C> <C> <C> <C>
Alton J. Scavo 47 Senior Vice-President, 9/23/93 Senior Vice-President,
Director of the 8/17/93 Director of the Community
Community Development Development Division of the
Division and General Company and General Manager of
Manager of Columbia Columbia; formerly Vice-
President and Associate
Director of the Community
Development Division of the
Company
Jerome D. Smalley 44 Senior Vice-President 9/23/93 Senior Vice-President and
and Director of the 8/17/93 Director of the Commercial and
Commercial and Office Office Development Division of
Development Division the Company; formerly Vice-
President for Development
Larry M. Wolf 58 Senior Vice-President 11/16/78 Senior Vice-President and
and Director of 8/17/93 Director of Merchandising of
Merchandising the Company; formerly Senior
Vice-President and Director of
Retail Leasing of the Company
George L. Yungmann 51 Senior Vice-President, 9/23/93 Senior Vice-President and
Controller and 7/26/72 Controller of the Company and
Director of the 8/17/93 Director of the Controller's
Controller's Division Division; formerly Vice-
President and Controller
</TABLE>
The term of office of each officer is until election of a successor or otherwise
at the pleasure of the Board of Directors.
There is no arrangement or understanding between any of the above-listed
officers and any other person pursuant to which any such officer was elected as
an officer.
None of the above-listed officers has any family relationship with any director
or other executive officer.
I-11
<PAGE>
Part II
-------
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
Information required by Item 5 is incorporated herein by
reference to page 51 of the 1993 Annual Report to Shareholders.
Item 6. Selected Financial Data.
Information required by Item 6 is incorporated herein by
reference to page 51 of the 1993 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Information required by Item 7 is incorporated herein
by reference to pages 45 through 50 of the 1993 Annual Report to
Shareholders.
Item 8. Financial Statements and Supplementary Data.
Financial Statements required by Item 8 are set forth in the
Index to Financial Statements and Schedules on page IV-2.
Supplementary data required by Item 8 are incorporated herein
by reference to page 51 of the 1993 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
II-1
<PAGE>
Part III
--------
The information required by Items 10, 11, 12 and 13 (except that information
regarding executive officers called for by Item 10 that is contained in Part
I) is incorporated herein by reference from the definitive proxy statement
that the Company intends to file pursuant to Regulation 14A on or before
April 5, 1994.
III-1
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1 and 2. Financial Statements and Schedules:
Reference is made to the Index to Financial Statements
and Schedules on page IV-2.
3. Exhibits: Reference is made to the Exhibit Index.
(b) Reports on Form 8-K:
None.
IV-1
<PAGE>
THE ROUSE COMPANY AND SUBSIDIARIES
Index to Financial Statements and Schedules
Page
----
Independent Auditors' Report IV-3
Report of Independent Real Estate Consultants included on
page 21 of the 1993 Annual Report to Shareholders
incorporated herein by reference
Financial Statements:
The Rouse Company and Subsidiaries included on pages 22
through 44 of the 1993 Annual Report to Shareholders,
incorporated herein by reference:
Consolidated Cost Basis and Current Value Basis
Balance Sheets at December 31, 1993 and 1992
Consolidated Cost Basis Statements of Operations for
the Years Ended December 31, 1993, 1992 and 1991
Consolidated Cost Basis Statements of Shareholders'
Equity for the Years Ended December 31, 1993,
1992 and 1991
Consolidated Cost Basis Statements of Cash Flows for
the Years Ended December 31, 1993, 1992 and 1991
Consolidated Current Value Basis Statements of Changes
in Revaluation Equity for the Years Ended December 31,
1993, 1992 and 1991
Notes to Consolidated Financial Statements
Schedules:
The Rouse Company and Subsidiaries as of December 31, 1993
or for the years ended December 31, 1993, 1992 and 1991:
Schedule II Amounts Receivable from Related Parties
and Underwriters, Promoters and
Employees Other Than Related Parties IV-4
Schedule VIII Valuation and Qualifying Accounts IV-14
Schedule IX Short-Term Borrowings IV-15
Schedule X Supplementary Income Statement Information IV-16
Schedule XI Real Estate and Accumulated Depreciation IV-17
All other schedules have been omitted as not applicable, or not required,
or because the required information is included in the consolidated
financial statements or notes thereto.
IV-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
The Rouse Company:
We have audited the consolidated cost basis financial statements and the related
financial statement schedules of The Rouse Company and subsidiaries as listed in
the accompanying index. We have also audited the supplemental consolidated
current value basis financial statements listed in the index. These
consolidated financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated cost basis financial statements referred to
above present fairly, in all material respects, the financial position of The
Rouse Company and subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedules,
when considered in relation to the basic consolidated cost basis financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in notes 2 and 12 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1991 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
As more fully described in note 1 to the consolidated financial statements, the
supplemental consolidated current value basis financial statements referred to
above have been prepared by management to present relevant financial information
about The Rouse Company and its subsidiaries which is not provided by the cost
basis financial statements and are not intended to be a presentation in
conformity with generally accepted accounting principles. In addition, as more
fully described in note 1, the supplemental consolidated current value basis
financial statements do not purport to present the net realizable, liquidation
or market value of the Company as a whole. Furthermore, amounts ultimately
realized by the Company from the disposal of properties may vary from the
current values presented.
In our opinion, the supplemental consolidated current value basis financial
statements referred to above present fairly, in all material respects, the
information set forth therein on the basis of accounting described in note 1 to
the consolidated financial statements.
KPMG PEAT MARWICK
Baltimore, Maryland
February 23, 1994
IV-3
<PAGE>
Schedule II
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
----
Officers:
Anthony W. Deering, President
and Chief Operating Officer $ 200 $ 628 $ - $ 50 $ 176 $ 602
Jeffrey H. Donahue, Senior Vice
President and Chief Financial
Officer - 93 - - - 93
Duke S. Kassolis, Senior Vice President
and Director, Office and Mixed-Use
Operations 36 138 - 8 12 154
Paul I. Latta, Jr., Senior Vice President
and Director, Retail Operations - 93 - - - 93
Douglas A. McGregor, Executive Vice
President, Development and
Operations 200 - - 50 50 100
John G. McLauglin, Vice President and
Group Director 39 20 - 9 13 37
Robert Minutoli, Senior Vice President
and Director, Acquisition/Management 119 196 - 34 40 241
Robert D. Riedy, Senior Vice President
and Director, Retail Leasing 18 133 - 5 13 133
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-4
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
----
Officers:
Alton J. Scavo, Senior Vice President
and Director, Community Development - 122 - - - 122
and General Manager of Columbia
Jerome D. Smalley, Senior Vice President
and Director, Commercial and Office
Development 117 48 - 35 39 91
George L. Yungmann, Senior Vice
President and Controller - 119 - - - 119
Officer loans less than $100,000 97 51 - 20 32 96
------ ------ ------ ------ ------ ------
$ 826 $1,641 $ - $ 211 $ 375 $1,881
====== ====== ====== ====== ====== ======
</TABLE>
Note:
Reference is made to Note 15 to the Consolidated Financial Statements for
additional information concerning these balances.
IV-5
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
----
Officers:
Mathias J. DeVito, Chairman of the Board
and Chief Executive Officer $ 170 $ - $ - $ 170 $ - $ -
Bruce D. Alexander, Senior Vice President,
Development 68 - - 68 - -
R. Bruce Armiger, Vice President
and Director, Construction and
Engineering 22 - - 22 - -
Laurin B. Askew, Jr., Vice President
and Director, Design 12 - - 12 - -
R. Harwood Beville, Executive Vice
President, Operations 80 - - 80 - -
David C. Creighton, Vice President
and Group Director 11 - - 11 - -
Anthony W. Deering, President
and Chief Operating Officer 318 - - 118 50 150
Jeffrey H. Donahue, Vice President and
Treasurer 24 - - 24 - -
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-6
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
----
Officers:
Richard R. Goldberg, Vice President,
Associate General Counsel and
Division Counsel 12 - - 12 - -
Duke S. Kassolis, Vice President and
Director, Office and Commercial
Properties 29 18 - 11 8 28
W. Wallace Lanahan, III, Vice President
and Senior Leasing Manager 13 - - 13 - -
James D. Lano, Vice President, Associate
General Counsel and Division Counsel 12 - - 12 - -
Paul I. Latta, Jr., Vice President,
Eastern Region and Associate
Division Director 23 - - 23 - -
John S. Mastin, Vice President and
Assistant Director, Retail Leasing 23 - - 23 - -
Richard G. McCauley, Senior Vice
President, General Counsel and
Secretary 68 - - 68 - -
Douglas A. McGregor, Executive
Vice President, Development 318 - - 118 50 150
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-7
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
----
Officers:
John G. McLaughlin, Vice President
and Group Director 25 19 - 5 9 30
Robert Minutoli, Vice President,
Development 132 27 - 40 34 85
Perry C. Page, Vice President 26 - - 26 - -
Robert D. Riedy, Vice President 23 - - 5 5 13
Alton J. Scavo, Vice President and
Associate Director 11 - - 11 - -
Jerome D. Smalley, Vice President,
Development 132 25 - 40 33 84
John W. Steele, III, Vice President,
Associate General Counsel and
Division Counsel 12 - - 12 - -
John J. Szymanski, Vice President and
Director, Taxes and Tax Legislation 12 - - 12 - -
R. Edwards Taylor, Vice President and
Assistant Director, Retail Leasing 23 - - 23 - -
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-8
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
---
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
----
Officers:
Ronald C. Wickwire, Vice President,
Western Region and Associate
Division Director 12 - - 12 - -
Larry M. Wolf, Senior Vice President
and Director, Retail Leasing 68 - - 68 - -
Officer loans less than $100,000 101 45 - 49 22 75
------ ------ ------ ------ ------ ------
$1,780 $ 134 $ - $1,088 $ 211 $ 615
====== ====== ====== ====== ====== ======
</TABLE>
Note:
Reference is made to Note 15 to the Consolidated Financial Statements for
additional information concerning these balances.
IV-9
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
----
Officers:
Mathias J. DeVito, Chairman of the Board,
President and Chief Executive Officer $ 440 $ - $ - $ 270 $ 170 $ -
Bruce D. Alexander, Senior Vice President,
Development 186 - - 118 68 -
R. Bruce Armiger, Vice President and
Director, Construction and Engineering 45 - - 23 22 -
Laurin B. Askew, Jr., Vice President and
Director, Design 23 - - 11 12 -
R. Harwood Beville, Executive Vice
President, Operations 223 - - 143 80 -
David C. Creighton, Vice President and
Group Director 35 - - 24 11 -
Anthony W. Deering, Executive Vice
President, Finance and Administration
and Chief Financial Officer 436 - - 118 118 200
Jeffrey H. Donahue, Vice President and
Treasurer 47 - - 23 24 -
Frederick O. Evans, Jr., Former Vice
President, Western Region and
Associate Division Director 23 - 12 11 - -
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-10
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
----
Officers:
Richard R. Goldberg, Vice President,
Associate General Counsel and
Division Counsel 23 - - 11 12 -
W. Wallace Lanahan, III, Vice President
and Senior Leasing Manager 36 - - 23 13 -
James D. Lano, Vice President, Associate
General Counsel and Division Counsel 23 - - 11 12 -
Paul I. Latta, Jr., Vice President Eastern
Region and Associate Division Director 46 - - 23 23 -
John S. Mastin, Vice President and
Assistant Director, Retail Leasing 59 - - 36 23 -
Richard G. McCauley, Senior Vice
President, General Counsel and Secretary 186 - - 118 68 -
Douglas A. McGregor, Executive Vice
President, Development 436 - - 118 118 200
Robert Minutoli, Vice President,
Development 134 32 - 34 40 92
Perry C. Page, Vice President 52 - - 26 26 -
Robert D. Riedy, Vice President - 23 - - 5 18
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-11
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
----
Officers:
Alton J. Scavo, Vice President and
Associate Director 35 - - 24 11 -
Jerome D. Smalley, Vice President
Development 134 32 - 34 40 92
John W. Steele, III, Vice President,
Associate General Counsel and Division
Counsel 23 - - 11 12 -
John J. Szymanski, Vice President and
Director, Taxes and Tax Legislation 23 - - 11 12 -
R. Edwards Taylor, Vice President and
Assistant Director, Retail Leasing 58 - - 35 23 -
Ronald C. Wickwire, Vice President
Western Region and Associate Division
Director 23 - - 11 12 -
Larry M. Wolf, Senior Vice President
and Director, Retail Leasing 186 - - 118 68 -
George L. Yungmann, Vice President and
Controller 19 - - 19 - -
====== ====== ====== ====== ====== ======
</TABLE>
(continued)
IV-12
<PAGE>
Schedule II (continued)
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties
Years ended December 31, 1993, 1992, and 1991
----
<TABLE>
<CAPTION>
Balance at end
Deductions of year
----------------------- ---------------------
Balance at
beginning of Amounts Amounts
Name of debtor year Additions collected written off Current Not current
-------------- ------------ --------- --------- ----------- ------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
----
Officers:
Officer loans less than $100,000 100 111 - 56 65 90
------ ------ ------ ------ ------ ------
$3,054 $ 198 $ 12 $1,460 $1,088 $ 692
====== ====== ====== ====== ====== ======
</TABLE>
Note:
Reference is made to Note 15 to the Consolidated Financial Statements for
additional information concerning these balances.
IV-13
<PAGE>
Schedule VIII
-------------
THE ROUSE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1993, 1992 and 1991
----
<TABLE>
<CAPTION> Additions
------------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Descriptions of year expenses accounts Deductions year
------------ ---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful receivables $23,129 $ 4,741 $ - $ 3,834 /(1)/ $24,036
======= ======= ======= ======= =======
Pre-construction reserve $11,127 $ 2,900 $ - $ 1,205 /(2)/ $12,822
======= ======= ======= ======= =======
Year ended December 31, 1992:
Allowance for doubtful receivables $18,514 $ 6,297 $ - $ 1,682 /(1)/ $23,129
======= ======= ======= ======= =======
Pre-construction reserve $ 7,844 $ 3,050 $ 350 /(4)/ $ 117 /(2)/ $11,127
======= ======= ======= ======= =======
Year ended December 31, 1991:
Allowance for doubtful receivables $21,363 $ 7,345 $ - $10,194 /(1)/ $18,514
======= ======= ======= ======= =======
Pre-construction reserve $12,551 $ 3,983 $ - $ 8,690 /(3)/ $ 7,844
======= ======= ======= ======= =======
</TABLE>
Notes:
(1) Balances written off as uncollectible.
(2) Costs of unsuccessful projects written off.
(3) Costs of unsuccessful projects written off
of $6,679 and transfers to property held for
development and sale of $2,011.
(4) Reclassification of pre-construction reserve
related to a project in which the Company
has an equity investment.
IV-14
<PAGE>
Schedule IX
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Short-Term Borrowings
Years ended December 31, 1993, 1992 and 1991
---
<TABLE>
<CAPTION>
Balance at Weighted Maximum amount Average amount Weighted average
Category of aggregate end of average outstanding outstanding interest rate
short-term borrowings year interest rate during the year during the year during the year
- --------------------- ---------- ------------- --------------- --------------- ----------------
(in thousands) (in thousands) (note 2) (note 2)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993
Unsecured bank loans (note 1) $ -- 0.00% $77,655 $ 5,915 4.25%
======= ===== ======= ======= =====
Year ended December 31, 1992:
Unsecured bank loans $75,071 5.08% $80,000 $71,409 4.25%
======= ===== ======= ======= =====
Year ended December 31, 1991:
Unsecured bank loans $38,144 5.39% $68,344 $55,089 6.36%
======= ===== ======= ======= =====
</TABLE>
Notes:
(1) The unsecured bank loans consist of two revolving lines of credit which
provide for maximum borrowings of $20,000,000 and $60,000,000, respectively.
Under the terms of the loan agreement relating to the $20,000,000 line of
credit, advances supported by compensating balances bear interest at 2% for
1993 and 1% for 1992 and 1991 and the remaining outstanding balance bears
interest at a variable rate based on specific market indices. This credit
facility expired in January 1994.
Under the terms of the loan agreement relating to the $60,000,000 facility,
advances bear interest at a variable rate based on specific market indices.
This credit facility expired during 1993.
(2) The average amount outstanding and the weighted average interest rate
during the year were computed based on the average daily outstanding
balances.
(3) Reference is made to note 10 to the consolidated financial statements for
information relating to lines of credit available at December 31, 1993.
IV-15
<PAGE>
Schedule X
----------
THE ROUSE COMPANY AND SUBSIDIARIES
Supplementary Income Statement Information
Years ended December 31, 1993, 1992 and 1991
---
<TABLE>
<CAPTION>
Charged to
costs and expenses
---------------------------------
(in thousands)
Item 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs $50,223 $48,030 $44,217
Depreciation of property and equipment 55,508 51,834 49,520
Amortization of deferred costs of projects:
Leasehold acquisition costs 467 544 632
Long-term debt expenses 2,801 3,571 3,173
Pre-operating expenses 1,957 2,465 2,864
Deferred leasing costs 6,582 6,680 6,502
Management contract acquisition costs 2,885 3,069 3,044
Taxes, other than payroll and income taxes:
Franchise and other 1,111 881 957
Property 46,649 43,000 41,327
Advertising costs 6,998 7,125 7,601
</TABLE>
There were no royalties paid during any of the three years presented.
IV-16
<PAGE>
Schedule XI
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1993
<TABLE>
<CAPTION>
Cost capitalized
Initial cost to subsequent to Gross amount at which carried
Company acquisition at December 31, 1993
---------------- --------------------- ---------------------------------
Buildings
Buildings and
Encum- and Carrying Improve-
brances Improve- Improve- costs ments
Description (note 4) Land ments ments (note 2) Land (note 3) Total
- ----------- -------- ---- --------- -------- -------- ---- --------- -----
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Properties:
South Street Seaport
Retail Center
New York, New York $ 89,500 $ - $ - $ 142,010 $ - $ - $ 142,010 $ 142,010
Other operating properties
and related investments,
each less than 5% of total 1,793,933 155,580 - 2,523,713 - 155,580 2,523,713 2,679,293
---------- -------- ---- ---------- ----- -------- ---------- ----------
Total operating
properties 1,883,433 155,580 - 2,665,723 - 155,580 2,665,723 2,821,303
---------- -------- ---- ---------- ----- -------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Life on
which
Accumu- depre-
lated ciation
depre- Date of in latest
ciation comple- income
and tion of state-
amorti- construc- Date ment is
Description zation tion acquired computed
- ----------- ------- --------- -------- ---------
<S> <C> <C> <C> <C>
Operating Properties:
South Street Seaport
Retail Center
New York, New York $ 17,794 7/83 N/A Note 8
Other operating properties
and related investments,
each less than 5% of total 411,276 Various Various Note 8
--------
Total operating
properties 429,070
--------
</TABLE>
IV-17
<PAGE>
Schedule XI, continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1993
<TABLE>
<CAPTION>
Cost capitalized
Initial cost to subsequent to Gross amount at which carried
Company acquisition at December 31, 1993
--------------------- -------------------- -----------------------------------
Buildings
Buildings and
Encum- and Carrying Improve-
brances Improve- Improve- costs ments
Description (note 4) Land ments ments (note 2) Land (note 3) Total
- ----------- -------- ---- --------- -------- --------- ---- --------- -----
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Properties in Development:
Construction and
development in
progress individually
less than 5% of total 40,358 12,521 - 38,893 - 12,521 38,893 51,414
Pre-construction costs - - - 18,473 - - 18,473 18,473
Pre-construction reserve - - - (12,822) - - (12,822) (12,822)
---------- -------- ---------- -------- ------ ------- --------- -------
Total Properties
in Development 40,358 12,521 - 44,544 - 12,521 44,544 57,065
---------- -------- ---------- -------- ------ ------- --------- -------
Properties held for
development and
sale - 131,827 - - - 131,827 - 131,827
---------- -------- ---------- ---------- ------- -------- --------- ----------
Total $1,923,791 $299,928 $ - $2,710,267 $ - $299,928 $2,710,267 $3,010,195
========== ======== ========== ========== ======= ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Life on
which
Accumu- depre-
lated ciation
depre- Date of in latest
ciation comple- income
and tion of state-
amorti- construc- Date ment is
zation tion acquired computed
------- --------- --------- ----------
Description
- -----------
<S> <C> <C> <C> <C>
Properties in Development:
Construction and
development in
progress individually
less than 5% of total - N/A N/A N/A
Pre-construction costs - N/A N/A N/A
Pre-construction reserve - N/A N/A N/A
--------
Total Properties
in Development -
--------
Properties held for
development and
sale - N/A Various N/A
--------
Total $429,070
========
</TABLE>
IV-18
<PAGE>
Schedule XI, continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1993
Notes:
(1) Reference is made to notes 2, 3, 4, 5, 6, 10, 13 and 16 to the consolidated
financial statements. Land was generally acquired one to three years
before completion of construction.
(2) The determination of these amounts is not practicable and, accordingly,
they are included in improvements.
(3) Buildings and improvements include deferred costs of $122,762,000 at
December 31, 1993.
(4) Encumbrances on office buildings are included in operating property
encumbrances.
(5) The changes in total cost of properties for the years ended December 31,
1993, 1992 and 1991 are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $2,827,379 $2,718,536 $2,616,476
Additions, at cost 88,973 107,305 127,552
Cost of properties acquired 106,048 36,761 34,411
Additions to properties held for
development and sale 21,388 19,793 18,724
Cost of land sales (16,270) (12,953) (9,283)
Retirements, sales and other
dispositions (21,307) (40,382) (69,280)
Additions to pre-construction
reserve (2,900) (3,050) (3,983)
Net increase in receivables under
finance leases 8,061 44 1,440
Investments in unconsolidated real
estate ventures, net 4,255 1,325 2,479
Provision for loss on investment in
an operating property (5,432) - -
---------- ---------- ----------
Balance at end of year $3,010,195 $2,827,379 $2,718,536
========== ========== ==========
</TABLE>
(continued)
IV-19
<PAGE>
Schedule XI, continued
----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1993
Notes, continued:
(6) The changes in accumulated depreciation and amortization for the years
ended December 31, 1992, 1991 and 1990 are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year $375,903 $331,312 $287,365
Depreciation and amortization charged to
operations 70,200 68,163 65,283
Retirements, sales and other, net (17,033) (23,572) (21,336)
-------- -------- --------
Balance at end of year $429,070 $375,903 $331,312
======== ======== ========
</TABLE>
(7) The aggregate cost of properties for Federal income tax purposes is
approximately $2,764,666,000 at December 31, 1993.
(8) Reference is made to note 2(c) to the consolidated financial statements for
information related to depreciation.
IV-20
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
Principal Executive Officers:
/s/Mathias J. DeVito
--------------------------------------
Mathias J. DeVito March 31, 1994
Chairman of the Board and Chief
Executive Officer
/s/Anthony W. Deering
-------------------------------------
Anthony W. Deering March 31, 1994
President and Chief Operating Officer
Principal Financial Officer:
/s/Jeffrey H. Donahue
-------------------------------------
Jeffrey H. Donahue March 31, 1994
Senior Vice President and
Chief Financial Officer
Principal Accounting Officer:
/s/George L. Yungmann
-------------------------------------
George L. Yungmann March 31, 1994
Senior Vice-President and Controller
Board of Directors:
David H. Benson, Jeremiah E. Casey, Anthony W. Deering, Rohit M. Desai,
Mathias J. DeVito, Juanita T. James, Hanne M. Merriman, Thomas J. McHugh, Roger
W. Schipke and Alexander B. Trowbridge.
By: /s/Mathias J. DeVito
--------------------------------
Mathias J. DeVito March 31, 1994
For Himself and as
Attorney-in-fact
IV-21
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
The Board of Directors
The Rouse Company:
We consent to the incorporation by reference in the Registration Statements of
The Rouse Company on Form S-8 (Registration No. 2-83612) and Form S-3
(Registration Nos. 2-78898, 2-95596, 33-52458, 33-56646 and 33-57584) of our
report dated February 23, 1994, relating to the consolidated financial
statements and related schedules of The Rouse Company and subsidiaries as of
December 31, 1993 and 1992 and for each of the years in the three-year period
ended December 31, 1993, which report appears in the Annual Report on Form 10-K
of The Rouse Company for the year ended December 31, 1993.
KPMG PEAT MARWICK
Baltimore, Maryland
March 31, 1994
IV-22
<PAGE>
CONSENT OF INDEPENDENT REAL ESTATE CONSULTANTS
----------------------------------------------
The Board of Directors
The Rouse Company:
We consent to the incorporation by reference in the Registration
Statements of The Rouse Company (the "Company") on Form S-8 (Registration
No. 2-83612) and Form S-3 (Registration Nos. 2-78898, 2-95596, 33-52458, 33-
56646 and 33-57584) of our report dated February 23, 1994 on our concurrence
with the Company's estimates of the total current value of its equity and other
interests in certain real property owned and/or managed by the Company and its
subsidiaries as of December 31, 1993 and 1992, which report appears in the 1993
Annual Report to Shareholders which is incorporated by reference in the Annual
Report on Form 10-K of the Company for the year ended December 31, 1993.
LANDAUER ASSOCIATES, INC.
Deborah A. Jackson
Senior Vice President
Director of Retail Valuation
New York, New York
March 31, 1994
IV-23
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C>
3 Articles of Incorporation and Bylaws
10 Material Contracts
11 Statement re computation of per share earnings
13 Annual report to security holders
22 Subsidiaries of the Registrant
24 Power of Attorney
28 Additional Exhibits:
Form 11-K Annual Report of The Rouse Company
Savings Plan for the year ended December 31, 1993
</TABLE>
<PAGE>
Exhibit 3. Articles of Incorporation and Bylaws.
The Amendments to the Articles of Incorporation of The Rouse
Company adopted May 26, 1988 and the Amended and Restated Articles of
Incorporation of The Rouse Company, dated May 27, 1988, are incorporated by
reference from the Exhibits to the Company's Form 10-K Annual Report for the
fiscal year ended December 31, 1988.
The Articles of Amendment to the Amended and Restated Articles
of Incorporation of The Rouse Company, which Articles of Amendment were
effective January 10, 1991, are incorporated by reference from the Exhibits
to the Company's Form 10-K Annual Report for the fiscal year ended December
31, 1990.
The Articles Supplementary to the Charter of The Rouse Company,
dated February 17, 1993, are incorporated by reference from the Exhibits
to the Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1992.
All documents referred to above may be found in Commission file
number 0-1743.
The following documents are attached:
A. Amendments to the Bylaws of The Rouse Company adopted
March 4, 1994; and
B. Bylaws of The Rouse Company as amended March 4, 1994.
<PAGE>
THE ROUSE COMPANY
Amendments to Bylaws adopted March 4, 1994
1. ARTICLE I, SECTION 1 is amended to read as follows:
"The Annual Meeting of Stockholders of the Corporation shall be held in
each year on such date during the month of May as may be fixed as by the Board
of Directors."
2. ARTICLE XII is amended by deleting the last sentence, such that ARTICLE
XII, as amended, reads as follows:
"Except as otherwise provided by law or by the charter, these By-Laws may
be altered, amended, or added to by the Board of Directors at any regular
meeting of the Board of Directors, or at any special meeting thereof called for
the purpose, provided, in each instance, ten days written notice of the proposed
alteration, amendment,or addition is given."
<PAGE>
As amended March 4, 1994
BYLAWS
OF
THE ROUSE COMPANY
ARTICLE I
Stockholders
------------
SECTION 1. The Annual Meeting of Stockholders of the Corporation shall be
held in each year on such date during the month of May as may be fixed by the
Board of Directors.
SECTION 2. At any time in the interval between annual meetings, special
meetings of stockholders may be called by the Chief Executive Officer or by a
majority of the Board of Directors, upon ten days' written or printed notice,
stating the place, day and hour of such meeting and the business proposed to be
transacted thereat. Such notice shall be given in the manner provided in
Section 1 of Article X. No business shall be transacted at any special meeting
except that named in the notice.
SECTION 3. Upon the request in writing, delivered to the Chief Executive
Officer or Secretary, by the holders of not less than twenty-five per cent of
all shares outstanding and entitled to vote, it shall be the duty of such Chief
Executive Officer or Secretary to call forthwith a special meeting of the
Stockholders.
SECTION 4. At any special meeting of the stockholders called in the manner
provided for by this Article, any director or directors may by a vote of a
majority of all shares of stock outstanding and entitled to vote be removed from
office, and another or others appointed in his or their places to serve for the
remainder of his or their terms.
SECTION 5. At all meetings of stockholders any stockholder shall be
entitled to vote by proxy. Such proxy shall be in writing and dated but need
not be sealed, witnessed or acknowledged.
SECTION 6. If at any annual or special meeting of stockholders a quorum
shall fail to attend, a majority in interest attending in person or by proxy may
adjourn the meeting from time to time, not exceeding sixty days in all, and
thereupon
<PAGE>
any business may be transacted which might have been transacted at the meeting
originally called had the same been held at the time so called.
SECTION 7. At all meetings of stockholders, the proxies shall be filed
with and be verified by the Secretary of the Corporation, of if the meeting
shall so decide, by the Secretary of the meeting.
SECTION 8. All meetings of the stockholders may be held within or without
the State of Maryland at any office of the Corporation, or at such other lawful
place as may be designated in the notice of the meeting.
SECTION 9. ORDER OF BUSINESS. At all meetings of stockholders, any
stockholder present and entitled to vote in person or by proxy shall be entitled
to require, by written request to the Chairman of the meeting, that the order of
business shall be as follows:
(1) Organization.
(2) Proof of notice of meeting or of waivers thereof. (The certificate of
the Secretary of the Corporation, or the affidavit of any other person who
mailed the notice, or caused the same to be mailed, being proof of service by
mail.)
(3) Submission by Secretary, or by Inspectors, of list of stockholders
entitled to vote, present in person or by proxy.
(4) If an annual meeting, or a meeting called for that purpose, reading of
minutes of preceding meetings, and action thereon.
(5) Reports.
(6) If an annual meeting, or a meeting called for that purpose, the
nomination and election of directors.
(7) Unfinished business.
(8) New business.
(9) Adjournment.
ARTICLE II
Directors
---------
SECTION 1. The Board of Directors shall have the control and management of
the affairs, business and properties of the Corporation. They shall have and
exercise in the name of the
2
<PAGE>
Corporation and on behalf of the Corporation, all the rights and privileges
legally exercisable by the Corporation, except as otherwise provided by law, by
the charter or by these by-laws. A director need not be a stockholder.
SECTION 2. The number of directors of the Corporation shall be 18;
provided, however, that such number may be increased or decreased from time to
time by vote of a majority of the entire Board of Directors to a number not
exceeding 25 and not less than 3. Directors of the Corporation shall hold
office until the next annual meeting of stockholders of the Corporation, or
until their successors are elected and qualify.
SECTION 3. If the office of a director becomes vacant, or if the number of
directors is increased, such vacancy may be filled by the Board by a vote of a
majority of directors then in office although such majority is less than a
quorum. The stockholders may, however, at any time during the terms of such
director, elect some other person to fill said vacancy and thereupon the
election by the Board shall be superseded and such election by the stockholders
shall be deemed a filling of the vacancy and not a removal and may be made at
any meeting called for that purpose.
If the entire Board of Directors becomes vacant, any stockholder may call a
special meeting in the same manner that the Chief Executive Officer may call
such meeting, and directors of the unexpired term may be elected at such special
meeting, in the manner provided for their election at annual meetings.
SECTION 4. The Board shall meet for the election of officers and any other
business as soon as practicable after the adjournment of the annual meeting of
the stockholders.
SECTION 5. Special meetings of the Board may be called by the Chief
Executive Officer or by a majority of the directors. At least twenty-four hours
notice shall be given of all special meetings; with the consent of the majority
of the directors, a shorter notice may be given.
SECTION 6. A majority of the Board of Directors shall constitute a quorum
for the transaction of business, but such number may be decreased and/or
increased at any time or from time to time by vote of a majority of the entire
Board to any number not less than two directors or not less than one-third of
the directors, whichever is greater.
SECTION 7. Regular or special meetings of the Board may be held within or
without the State of Maryland, as the Board may from time to time determine.
The time and place of meeting may be fixed by the party making the call.
3
<PAGE>
SECTION 8. The Board of Directors may adopt such rules and regulations for
the conduct of their meetings and the management of the affairs of the
Corporation, as they may deem proper and not inconsistent with the laws of the
State of Maryland or these By-Laws or the certificate of incorporation.
SECTION 9. Any action required or permitted to be taken at any meeting of
the Board of Directors or of any Committee thereof, may be taken without a
meeting, if a written consent to such action is signed by all members of the
Board, or of such Committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or Committee.
SECTION 10. The directors, as such, may receive a stated salary for their
services, and/or a fixe a sum and expenses of attendance may be allowed for
attendance at each regular or special meeting of the Board of Directors; such
stated salary and/or attendance fee shall be determined by resolution of the
Board unless the stockholders have adopted a resolution relating thereto,
provided that nothing herein contained shall be construed to preclude a director
from serving in any other capacity and receiving compensation therefor.
ARTICLE III
Executive Committee
-------------------
SECTION 1. The Board of Directors is authorized to appoint from its
members an Executive Committee consisting of not less than three directors. The
Executive Committee so designated
shall possess and exercise in the intervals between meetings of the Board of
Directors, any or all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, except the power to declare
dividends, to issue stocks, or to recommend to stockholders any action requiring
stockholders' approval. The Board of Directors may from time to time remove
members and elect from among its members additional members of this Committee to
serve for such periods of time as it shall designate. A majority of the
Committee as it may from time to time be constituted, shall constitute a quorum.
It shall fix its own rules and shall meet at the call of the Chairman of the
Board or any two members of the Committee.
SECTION 2. Other Committees. The Board of Directors shall have power to
appoint such other committees or subcommittees, with such membership and with
such duties and powers, to the extent permitted by law, as the Board may
4
<PAGE>
prescribe. The Board may from time to time suspend, alter and continue the
powers of any such committees.
ARTICLE IV
Officers
--------
SECTION 1. The officers of the Corporation shall consist of a Chairman of
the Board, Chief Executive Officer, President, a Secretary, a Treasurer and
whenever deemed advisable by the Board, one or more Vice-Presidents, Assistant
Secretaries, Assistant Treasurers and such other officers as shall be elected
from time to time by the Board of Directors. All such officers shall be chosen
by the Board of Directors, shall have such duties and responsibilities as the
Board of Directors may direct and shall hold office only during the pleasure of
the Board of Directors or until their successors are chosen and qualified. The
Chairman of the Board shall be chosen from among the directors. Any two or more
offices except those of President and Vice-President may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity when such instrument is required to be executed,
acknowledged or verified by any two or more officers. The Board of Directors
may from time to time appoint such other agents and employees, with such powers
and duties as they may deem proper.
SECTION 2. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the Board of Directors and shall perform such other duties as
the Board of Directors may direct from time to time. The office of the Chairman
of the Board may but need not be held by the President.
SECTION 3. Chief Executive Officer. The Chief Executive Officer shall
have general responsibility for the management and direction of the
Corporation's business, preside at all meetings of stockholders of the
Corporation and perform such other duties as the Board of Directors may direct
from time to time. The Chief Executive Officer shall be either the Chairman of
the Board or the President.
SECTION 4. President. The President shall, in the absence of the Chairman
of the Board, preside at meetings of the Board of Directors, and shall perform
such other duties as the Chief Executive Officer or Board of Directors may
direct from time to time. The office of President may but need not be held by
the Chairman of the Board.
SECTION 5. Vice-Presidents. The Vice-Presidents shall perform such duties
as the Chief Executive Officer or Board of Directors may direct.
5
<PAGE>
SECTION 6. Treasurer. The Treasurer shall be the chief financial officer
of the Corporation, and shall have general supervision over its finances. He
shall perform such other duties as may be assigned to him by the Board of
Directors.
He shall furnish bond, which may be a blanket bond, with such surety and in
such penalty for the faithful performance of his duties as the Board of
Directors may from time to time require, the cost of such bond to be defrayed by
the Corporation.
SECTION 7. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders and of the Board of Directors, and shall attend to
the giving and serving of all notices of the Corporation required by law or
these Bylaws. Be shall perform such other duties as may be assigned to him by
the Board of Directors.
SECTION 8. The Assistant Treasurers and Secretaries shall perform such
duties as may from time to time be assigned to them by the Board of Directors or
the President.
SECTION 9. The Board of Directors may from time to time in the absence of
any one of said officers, or, at any other time, designate any other person or
persons, on behalf of the Corporation, to sign any contracts, deeds, notes, or
other instruments in the place or stead of any of said officers, and may
designate any person to fill any one of said offices, temporarily or for any
particular purpose; and any instruments so signed in accordance with a
resolution of the Board shall be the valid act of this Corporation as fully as
if executed by any regular officer.
ARTICLE V
Resignation
-----------
Any director or officer may resign his office at any time; such resignation
shall be made in writing and shall take effect from the time of its receipt by
the Corporation, unless some time be fixed in the resignation, and then from
that time The acceptance of a resignation shall not be required to make it
effective.
ARTICLE VI
Commercial Paper, Etc.
---------------------
All bills, notes, checks, drafts and commercial paper of all kinds to be
executed by the Corporation as maker, acceptor, endorser, or otherwise, and all
assignments and
6
<PAGE>
transfers of stock, contracts or written obligations of the Corporation, and all
negotiable instruments shall be made in the name of the Corporation and shall be
signed by such person or persons as the Board of Directors may from time to time
designate.
ARTICLE VII
Fiscal Year
-----------
The fiscal year of the Corporation shall cover such period of twelve months
as the Board of Directors may determine.
ARTICLE VIII
Seal
----
The seal of the Corporation shall be a disc inscribed with the name of the
Corporation, the year, and the State in which it is incorporated.
ARTICLE IX
Issue, Transfer and Redemption of Stock
---------------------------------------
SECTION 1. All certificates of stock shall be signed by the Chief
Executive Officer or the President or any Vice-President, and by the Treasurer
or Assistant Treasurer or Secretary or Assistant Secretary, and sealed with the
seal of the Corporation. The signatures may be either manual or facsimile, and
the seal may be either facsimile or any other form of seal. In case any officer
who has signed any certificate ceases to be an officer of the Corporation before
the certificate is issued, the certificate may nevertheless be issued by the
Corporation with the same effect as if the officer had not ceased to be such
officer as of the date of its issue.
SECTION 2. No transfers of stock shall be recognized or binding upon the
Corporation until recorded on the books of the Corporation upon surrender and
cancellation of certificates for a like number of shares.
SECTION 3. The Board of Directors shall have power and authority to
determine the form of stock certificates (except insofar as prescribed by law),
and to make all such rules and regulations, as they may deem expedient
concerning the issue, transfer and registration of said certificates, and to
appoint
7
<PAGE>
one or more transfer agents and/or registrars to countersign and register the
same.
SECTION 4. The Board of Directors may fix a time not exceeding 20 days
preceding the date of any meeting of stockholders, any dividend payment date or
any date for the allotment of rights, during which the books of the Corporation
shall be closed against transfers of stock, or the Board of Directors may fix a
date not exceeding 90 days preceding the date of any meeting of Stockholders,
any dividend payment date or any date for the allotment of rights, as a record
date for the determination of the stockholders entitled to notice of, and to
vote at, such meeting, or entitled to receive such dividends or rights, as the
case may be, and only stockholders of record on such date shall be entitled to
notice of, and to vote at, such meeting or to receive such dividends or rights,
as the case may be.
SECTION 5. In case any certificate of stock is lost, mutilated, or
destroyed, the Board of Directors may issue a new certificate in place thereof,
upon indemnity to the Corporation against loss and upon such other terms and
conditions as the Board of Directors may deem advisable.
ARTICLE X
Notice
------
SECTION 1. Whenever by law or these By-Laws, notice is required to be
given to any stockholder, such notice may be given to each stockholder by
leaving the same with his or at his residence or usual place of business, or by
mailing it, postage prepaid, and addressed to him at his address as it appears
on the books of the Corporation; such leaving or mailing of notice shall be
deemed the time of giving such notice.
SECTION 2. Whenever by law or these By-Laws notice is required to be given
to any Director or officer, such notice may be given in any one of the following
ways: by personal notice to such director or officer, by telephone communication
with such director or officer personally, by wire, addressed to such director or
officer at his then address or at his address as it appears on the books of the
Corporation, or by depositing the same in writing in the post office or in a
letter box in a postpaid, sealed wrapper addressed to such director or officer
at his then address or at his address as it appears on the books of the
Corporation; and the time when such notice shall be mailed or consigned to a
telegraph company for delivery shall be deemed to be the time of the giving of
such notice.
8
<PAGE>
SECTION 3. Notice to any stockholder or director of the time, place
and/or purpose of any meeting of stockholders or directors required by these By-
Laws may be dispensed with if such Stockholder shall either attend in person or
by proxy, or if such director shall attend in person, or if such absent
stockholder or director, shall, in writing filed with the records of the meeting
either before or after the holding thereof, waive such notice.
ARTICLE XI
Voting of Stock in Other Corporations
-------------------------------------
Any stock in other corporations, which may from time to time be held by the
Corporation, may be represented and voted at any meeting of stockholders of such
other corporations by the Chief Executive Officer, the President or a Vice-
President or by proxy or proxies appointed by the Chief Executive Officer, the
President or a Vice-President; or otherwise pursuant to authorization given by a
resolution of the Board of Directors adopted by a vote of a majority of the
directors.
ARTICLE XII
Amendments
----------
Except as otherwise provided by law or by the charter, these By-Laws may be
altered, amended, or added to by the Board of Directors at any regular meeting
of the Board of Directors, or at any special meeting thereof called for the
purpose, provided, in each instance, ten days written notice of the proposed
alteration, amendment, or addition is given.
ARTICLE XIII
Indemnification
---------------
The Corporation shall provide indemnification as follows:
(a) Persons who are or were directors or officers of the Corporation shall
be indemnified by the Corporation to the fullest extent permitted by the general
laws of the State of Maryland, as now or hereafter in force, including the
advance of expenses under the procedures provided by such laws, in respect to
matters arising out of service in their capacities as direc-tors or officers of
the Corporation or arising out of service at the request of the Corporation in
any capacity (including, but not limited to, as directors, officers, partners,
trustees, agents or employees) of any other organization (including, but not
limited to a direct or indirect subsidiary or affiliate of
9
<PAGE>
the Corporation, another foreign or domestic corporation, part-nership, joint
venture, trust, other enterprise or employee benefit plan).
(b) In the sole discretion of the Corporation, persons who are or were
employees or agents of the Corporation may be indemnified by the Corporation to
any extent permitted by the general laws of the State of Maryland, as now or
hereafter in force, including the advance of expenses, in respect to matters
arising out of service in their capacities as employees or agents of the
Corporation or arising out of service at the request of the Corporation in any
capacity (including, but not limited to, as directors, officers, partners,
trustees, agents or employees) of any other organization (including, but not
limited to, a direct or indirect subsidiary or affiliate of the Corporation,
another foreign or domestic corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan).
(c) With respect to persons who are or were directors or officers of the
Corporation, to the extent that any deter-mination is required under applicable
law as to whether such person is entitled to indemnification under paragraph (a)
above, including the advance of expenses, such determination shall be made by
independent legal counsel retained by the Corporation and appointed by either
the Board of Directors or the Chief Executive Officer. Any determination by
such independent legal counsel to deny indemnification, including the advance of
expenses, shall be subject at the request of the person who is denied
indemnifica-tion, including the advance of expenses, to de novo review to the
fullest extent obtainable in any court that is appropriate under the general of
laws of the State of Maryland or other applicable statutory or decisional law,
as now or hereafter in force.
(d) With respect to persons who are or were employees or agents of the
Corporation, any determination by the Corpora-tion under paragraph (b) above
shall be made by:
(i) the Board of Directors or any committee designated by the Board of
Directors;
(ii) the Chief Executive Officer; or
(iii) at the request of the Board of Directors, any committee
designated by the Board of Directors or the Chief Executive Officer, by
independent legal counsel retained by the Corporation and appointed by the Board
of Directors, any committee designated by the Board of Directors or the Chief
Executive Officer.
The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or who,
while a director, officer,
10
<PAGE>
employee or agent of the Corporation, is or was serving at the request of the
Corporation in any capacity (including, but not limited to, as a director,
officer, partner, trustee, employee or agent) of any other organization
(including, but not limited to, a direct or indirect subsidiary or affiliate of
the Corporation, another foreign or domestic corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan) against any liability
asserted against or incurred by such person in any such capacity or arising out
of such person's position, whether or not the Corporation would have the power
to indemnify such person under the general laws of the State of Maryland or
other applicable statutory or decisional law, as now or hereafter in force. The
Corporation may provide similar protection, including a trust fund, letter of
credit or surety bond, not inconsistent with the general laws of the State of
Maryland or other applicable statutory or decisional law, as now or hereafter in
force.
No amendment of the Bylaws of the Corporation or repeal of any of its
provisions shall limit or eliminate the benefits provided to directors,
officers, employees or agents of the Corporation under this Article XIII with
respect to any act or omission that occurred prior to such amendment or repeal.
11
<PAGE>
Exhibit 10. Material Contracts.
The Company's 1985 Stock Option Plan and 1985 Stock Bonus Plan
are incorporated by reference from the Company's definitive proxy statement
filed pursuant to Regulation 14A on April 27, 1985.
The Rouse Company Deferred Compensation Plan for Outside
Directors, dated as of January 1, 1986, is incorporated by reference from
the Exhibits to the Company's Form 10-K Annual Report for the fiscal year
ended December 31, 1985.
The Company's 1990 Stock Option Plan and 1990 Stock Bonus Plan
are incorporated by reference from the Company's definitive proxy statement
filed pursuant to Regulation 14A on April 12, 1990.
The letter agreement, dated September 24, 1992, between the
Company and Mathias J. DeVito, Chairman of the Board and Chief Executive of
the Company, is incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-56646).
The Amended and Restated Supplemental Retirement Benefit Plan of The Rouse
Company, dated January 1, 1985; Amendment Number 1 to the Amended and
Restated Supplemental Retirement Benefit Plan of The Rouse Company, dated
September 24, 1992; and The Rouse Company Division Incentive Programs are
incorporated by reference from the Exhibits to the Company's Form 10-K
Annual Report for the fiscal year ended December 31, 1992.
All documents referred to above may be found in Commission file number 0-
1743.
<PAGE>
Exhibit 11. Statement re Computation of Per Share Earnings
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Fully Diluted Earnings (Loss) Per Share
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------
1993 1992 1991
-------- --------- --------
<S> <C> <C> <C>
Earnings (loss) before extraordinary loss
and cumulative effect of change in
accounting principle $(1,291) $(15,849) $ 2,424
Add after tax interest expense applicable to
convertible subordinated debentures 6,236 8,811 8,811
------- -------- -------
Earnings (loss) before extraordinary loss and
cumulative effect of change in
accounting principle, as adjusted 4,945 (7,038) 11,235
Extraordinary loss (8,051) (348) (90)
Cumulative effect at January 1, 1991
of change in accounting for income taxes - - 13,463
------- -------- -------
Net earnings (loss), as adjusted $(3,106) $ (7,386) $24,608
======= ======== =======
Shares:
- ------
Weighted average number of common shares
outstanding 47,411 47,994 48,157
Assuming conversion of convertible
Preferred stock 8,251 - -
Assuming conversion of convertible
subordinated debentures 5,917 8,351 8,351
Assuming exercise of options and warrants
reduced by the number of shares which
could have been purchased with the
proceeds from the exercise of such options 224 73 147
------- -------- -------
Weighted average number of shares outstanding
as adjusted 61,803 56,418 56,655
======= ======== =======
Earnings (loss) per common share assuming full
dilution:
Income (loss) before extraordinary loss and
cumulative effect of change in accounting
principle $ .08 $ (.12) $ .20
Extraordinary loss (.13) (.01) -
Cumulative effect of change in accounting
principle - - .23
------- -------- -------
Net earnings (loss) $ (.05) $ (.13) $ .43
======= ======== =======
</TABLE>
This calculation is submitted in accordance with Regulation S-K item 601 (b)
(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it
produces an anti-dilutive result.
<PAGE>
Exhibit 13. Annual report to security holders
The annual report to shareholders has not been completed as of this filing and
will be filed with the Securities and Exchange Commission in its entirety on or
before April 5, 1994.
The financial section of the annual report, which is incorporated by reference,
is final and is enclosed as Exhibit 13. This financial section includes all the
information incorporated by reference in Parts I, II and IV of this Form 10-K
Annual Report for the fiscal year ended December 31, 1993.
<PAGE>
REPORT OF INDEPENDENT REAL ESTATE CONSULTANTS
- --------------------------------------------------------------------------------
Landauer Associates, Inc.
335 Madison Avenue
New York, New York 10017
212-687-2323
Telex: 710-581-2012
[LOGO OF LANDAUER APPEARS HERE]
KPMG Peat Marwick and
The Board of Directors and Shareholders
The Rouse Company:
We have reviewed estimates of the market value of equity and other interests
in certain real property owned and/or managed by The Rouse Company (the Company)
and its subsidiaries as of December 31, 1993 and 1992. The properties reviewed
at December 31, 1993 include all the projects identified as "In Operation" on
the "Projects of The Rouse Company" table on pages 56 through 60 of the Annual
Report for 1993, properties held for development and sale, and certain parcels
of land in development. The properties reviewed at December 31, 1992 were the
same, except for the properties which were opened or disposed of during 1993.
The total values of its equity and other interests estimated by the Company
were $2,227,151,000 and $1,884,179,000 at December 31, 1993 and 1992,
respectively.
Based upon our review, we concur with the Company's estimates of
the total value of the property interests appraised. In our opinion, the
aggregate value estimated by the Company varies less than 10% from the aggregate
value we would estimate in a full and complete appraisal of the same interests.
A variation of less than 10% between appraisers implies substantial agreement as
to the most probable market value of such property interests.
The data used in our review were supplied to us in summary form by the
Company. We have relied upon the Company's interpretation and summaries of
leases, operating agreements, mortgages and partnership, joint venture and
management agreements. We have had complete and unrestricted access to all
underlying documents and have confirmed certain information by reference to such
documents. We have found no discrepancies in the data and, to the best of our
knowledge, believe all such data to be accurate and complete. The basic
assumptions used by the Company and the individual value estimates prepared by
the Company were, in our opinion, fair and reasonable. No assumption has been
made with respect to a bulk sale of the entire holdings or groups of property
interests. We have also physically inspected, within the past three years,
substantially all of the properties which were reviewed.
We certify that neither Landauer Associates, Inc. nor the undersigned have
any present or prospective interest in the Company's properties, and we have no
personal interest or bias with respect to the parties involved. To the best of
our knowledge and belief, the facts upon which the analysis and conclusions were
based are materially true and correct. No one, other than the undersigned
assisted by members of our staff, performed the analyses and reached the
conclusions resulting in the opinion expressed in this letter. Our fee for this
assignment was not contingent on any action or event resulting from the
analysis, opinions, or conclusions in, or the use of, this review. Our review
has been prepared in conformity with the Uniform Standards of Professional
Appraisal Practice.
Sincerely,
Landauer Associates, Inc.
/s/ James C. Kafes /s/ Deborah A. Jackson
James C. Kafes, MAI, CRE Deborah A. Jackson
Managing Director Senior Vice President
Director of Retail Valuation
February 23, 1994
1
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS AND
CURRENT VALUE BASIS BALANCE SHEETS
December 31, 1993 and 1992 (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992
---------------------------- --------------------------
Current Value Cost Current Value Cost
Basis (note 1) Basis Basis (note 1) Basis
-------------- --------- -------------- --------
<S> <C> <C> <C> <C>
Assets
Property (notes 4, 5, 6,
10 and 16):
Operating properties:
Property and deferred
costs of projects.............. $4,070,962 $2,821,303 $3,677,287 $2,607,794
Less accumulated depreciation
and amortization............... 429,070 375,903
---------- ---------- ---------- ----------
4,070,962 2,392,233 3,677,287 2,231,891
Properties in development........ 59,836 57,065 87,371 83,631
Properties held for development
and sale........................ 154,911 131,827 168,830 135,954
---------- ---------- ---------- ----------
Total property.................. 4,285,709 2,581,125 3,933,488 2,451,476
---------- ---------- ---------- ----------
Prepaid expenses, deferred charges
and other assets................ 117,042 107,972 110,163 100,637
Accounts and notes receivable
(note 7)........................ 77,926 77,926 76,174 76,174
Investments in marketable
securities...................... 34,403 34,403 18,209 18,209
Cash and cash equivalents......... 73,556 73,556 79,785 79,785
---------- ---------- ---------- ----------
Total............................ $4,588,636 $2,874,982 $4,217,819 $2,726,281
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992
---------------------------- --------------------------
Current Value Cost Current Value Cost
Basis (note 1) Basis Basis (note 1) Basis
-------------- --------- -------------- --------
<S> <C> <C> <C> <C>
Liabilities
Debt (note 10):
Property debt not carrying a
Parent Company guarantee of
repayment...................... $1,886,257 $1,886,257 $1,792,457 $1,792,457
---------- ---------- ---------- ----------
Parent Company debt and debt
carrying a Parent Company
guarantee of repayment:
Property debt................... 273,540 273,540 353,579 353,579
Convertible subordinated
debentures.................... 122,850 130,000 230,000 230,000
Other debt...................... 131,668 120,700 57,706 57,706
---------- ---------- ---------- ----------
528,058 524,240 641,285 641,285
---------- ---------- ---------- ----------
Total debt...................... 2,414,315 2,410,497 2,433,742 2,433,742
---------- ---------- ---------- ----------
Obligations under capital leases
(note 16)....................... 63,099 63,099 65,241 65,241
Accounts payable, accrued expenses
and other liabilities............. 209,256 209,256 182,499 182,499
Commitments and contingencies
(notes 16 and 17)
Deferred income taxes (note 12)... 376,360 78,979 347,441 79,647
Shareholders' equity
(notes 14, 15 and 18)
Series A Convertible Preferred
stock of 1c par value per share;
50,000,000 shares authorized;
issued 4,025,000 shares in 1993
with a liquidation preference
of $201,250...................... 40 40 -- --
Common stock of 1c par value per
share; 250,000,000 shares
authorized; issued 47,562,226
shares in 1993 and 47,292,433
shares in 1992................... 476 476 473 473
Additional paid-in capital........ 281,533 281,533 83,450 83,450
Accumulated deficit............... (168,898) (168,898) (118,771) (118,771)
Revaluation equity................ 1,412,455 -- 1,223,744 --
---------- ---------- ---------- ----------
Total shareholders' equity
(deficit)....................... 1,525,606 113,151 1,188,896 (34,848)
---------- ---------- ---------- ----------
Total........................... $4,588,636 $2,874,982 $4,217,819 $2,726,281
========== ========== ========== ==========
</TABLE>
3
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS STATEMENTS OF OPERATIONS
Years ended December 31, 1993, 1992 and 1991
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues.................................. $646,805 $597,105 $573,498
Operating expenses, exclusive of
provision for bad debts,depreciation
and amortization......................... 352,217 331,365 320,610
Interest expense (note 10)................ 210,806 206,809 198,295
Provision for bad debts................... 4,741 6,297 7,345
Depreciation and amortization (note 4).... 70,200 68,163 65,735
Gain (loss) on dispositions of assets and
other provisions, net (note 13).......... (5,769) (5,254) 23,732
-------- -------- --------
Earnings (loss) before income taxes,
extraordinary loss and cumulative
effect of change in accounting
principle............................... 3,072 (20,783) 5,245
-------- -------- --------
Income tax benefit (provision) (note 12):
Current--state........................... (760) (352) (428)
Deferred--primarily Federal.............. (3,603) 5,286 (2,393)
-------- -------- --------
(4,363) 4,934 (2,821)
-------- -------- --------
Earnings (loss) before extraordinary
loss and cumulative effect of change
in accounting principle................. (1,291) (15,849) 2,424
-------- -------- --------
Extraordinary loss from extinguishment of
debt,net of related income tax
benefit (note 10)........................ (8,051) (348) (90)
Cumulative effect at January 1, 1991 of
change in accounting for income taxes
(note 12)................................ -- -- 13,463
-------- -------- --------
Net earnings (loss)...................... $ (9,342) $(16,197) $ 15,797
======== ======== ========
Earnings (loss) per share of common stock
after provision for dividends on Preferred
stock (notes 14 and 18):
Earnings (loss) before extraordinary
loss and cumulative effect of change in
accounting principle.................... $ (.27) $ (.33) $ .05
Extraordinary loss....................... (.17) (.01) --
Cumulative effect of change in
accounting principle.................... -- -- .28
-------- -------- --------
Total................................... $ (.44) $ (.34) $ .33
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS STATEMENTS OF
SHAREHOLDERS' EQUITY
Years ended December 31, 1993, 1992 and 1991 (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Series A
Convertible Additional
Preferred Common paid-in Accumulated
stock stock capital deficit
------------ ------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1990.................. $-- $481 $ 85,521 $ (60,663)
Net earnings.................................. -- -- -- 15,797
Dividends on common stock -- $.60 per share... -- -- -- (28,893)
Proceeds from exercise of stock options, net.. -- 1 395 --
Amortization of restricted common stock....... -- -- 3,203 --
Cumulative effect at January 1, 1991 of
change in accounting for income taxes
(note 12).................................... -- -- 1,486 --
--- ---- -------- ---------
Balance at December 31, 1991.................. -- 482 90,605 (73,759)
Net loss...................................... -- -- -- (16,197)
Dividends on common stock -- $.60 per share... -- -- -- (28,815)
Proceeds from exercise of stock options, net.. -- 1 578 --
Amortization of restricted common stock....... -- -- 2,782 --
Repurchase of common stock (note 15).......... -- (10) (11,990) --
Issuance of warrants to purchase common stock
(note 15)................................... -- -- 1,475 --
--- ---- -------- ---------
Balance at December 31, 1992.................. -- 473 83,450 (118,771)
Net loss...................................... -- -- -- (9,342)
Dividends on common stock -- $.62 per share... -- -- -- (29,404)
Proceeds from exercise of stock options, net.. -- 3 446 --
Amortization of restricted common stock....... -- -- 2,068 --
Proceeds from issuance of Preferred
stock (note 14)............................ 40 -- 195,569 --
Dividends on Preferred stock -- $2.83 per
share........................................ -- -- -- (11,381)
--- ---- -------- ---------
Balance at December 31, 1993.................. $40 $476 $281,533 $(168,898)
=== ==== ======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS STATEMENTS OF CASH FLOWS
Years ended December 31, 1993, 1992 and 1991 (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Rents and other revenues received............. $ 600,594 $ 556,510 $ 541,968
Proceeds from land sales...................... 33,830 29,670 30,398
Interest received............................. 9,712 10,220 9,313
Land development expenditures................. (20,407) (19,988) (18,730)
Operating expenditures:
Operating properties........................ (309,130) (298,672) (283,461)
Land sales, development and corporate....... (9,034) (9,776) (16,057)
Interest paid:
Operating properties........................ (184,278) (179,140) (178,501)
Land sales, development and corporate....... (20,138) (22,194) (17,704)
--------- --------- ---------
Net cash provided by operating activities... 101,149 66,630 67,226
--------- --------- ---------
Cash flows from investing activities
Expenditures for properties in development
and improvements to existing properties
funded by debt............................... (87,243) (83,377) (92,888)
Expenditures for property acquisitions........ (34,967) (38,806) (1,187)
Expenditures for improvements to existing
properties funded by cash provided by
operating activities:
Tenant leasing and remerchandising......... (7,374) (10,468) (10,776)
Building and equipment..................... (5,967) (13,508) (9,497)
Proceeds from sales of operating properties... -- -- 11,661
Purchases of marketable securities............ (88,594) (21,421) (14,410)
Proceeds from redemptions or sales of
marketable securities........................ 72,400 28,217 28,663
Other......................................... (2,701) (5,473) (7,776)
--------- --------- ---------
Net cash used in investing activities...... (154,446) (144,836) (96,210)
--------- --------- ---------
Cash flows from financing activities
Proceeds from issuance of property debt....... 358,995 206,298 135,060
Repayments of property debt:
Scheduled principal payments............... (20,735) (17,907) (20,101)
Other payments............................. (405,772) (73,494) (62,343)
Proceeds from issuance of other debt.......... 120,329 16,033 10,000
Repayments of other debt...................... (160,657) (3,912) (16,626)
Proceeds from issuance of Preferred stock..... 195,609 -- --
Proceeds from exercise of stock options....... 449 579 396
Dividends paid................................ (41,150) (28,683) (29,115)
--------- --------- ---------
Net cash provided by financing activities.. 47,068 98,914 17,271
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents.................................. $ (6,229) $ 20,708 $ (11,713)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- --------
<S> <C> <C> <C>
Reconciliation of Net Earnings (Loss) to Net
Cash Provided by Operating Activities
Net earnings (loss)............................ $ (9,342) $(16,197) $ 15,797
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization................. 70,200 68,163 65,735
(Gain) loss of dispositions of assets and
other provisions, net........................ 5,769 5,254 (23,732)
Extraordinary loss from extinguishment of debt 8,051 348 90
Cumulative effect of change in accounting
principle.................................... -- -- (13,463)
Additions to pre-construction reserve......... 2,900 3,050 3,983
Provision for bad debts....................... 4,741 6,297 7,345
Decrease (increase) in:
Other assets................................. (770) (6,414) 4,346
Accounts and notes receivable................ (3,010) (7,273) 1,339
Increase in accounts payable, accrued
expenses and other liabilities............... 21,437 14,105 5,233
Deferred income taxes (benefit)............... 3,603 (5,286) 2,393
Other......................................... (2,430) 4,583 (1,840)
-------- -------- --------
Net cash provided by operating activities...... $101,149 $ 66,630 $ 67,226
======== ======== ========
- --------------------------------------------------------------------------------
1993 1992 1991
-------- -------- --------
Schedule of Non-Cash Investing and Financing
Activities
Mortgage and other debt assumed in connection
with acquisitions of interests in properties.. $ 71,995 $ -- $ 14,527
Termination of capital lease obligation on
disposition of an interest in a property...... -- 17,000 --
Debt issued in connection with purchase of
common stock of the Company................... -- 12,000 --
Reduction in a capital lease obligation due to
a modification of terms....................... -- 4,139 --
Value of non-cash consideration given in
connection with acquisitions of interests in
properties.................................... 13,416 -- 16,100
Mortgage debt assumed by others in connection
with the sale of an interest in a property.... -- -- 1,362
Capital lease obligations incurred............. 1,541 2,509 2,731
======== ======== ========
</TABLE>
7
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED CURRENT VALUE BASIS STATEMENTS
OF CHANGES IN REVALUATION EQUITY
Years ended December 31, 1993, 1992 and 1991 (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Revaluation equity at beginning of
year................................ $1,223,744 $1,256,742 $1,444,749
Revaluation equity attributable to
interests in operating
properties sold or disposed......... -- (4,929) (24,353)
---------- ---------- ----------
1,223,744 1,251,813 1,420,396
---------- ---------- ----------
Change in value of interests in
operating properties in operation
during entire year.................. 226,258 (57,990) (177,070)
Value of interests in operating
properties opened or acquired....... 7,075 20,494 --
Change in value of land in
development and properties
held for development and sale,
including effects of sales and
transfers to operating properties... (10,761) (2,330) (8,579)
---------- ---------- ----------
Change in value of interests in
operating properties,
land in development and properties
held for
development and sale............... 222,572 (39,826) (185,649)
Change in value of other property.... (456) (348) (633)
Change in value attributable to debt,
exclusive of operating property debt (3,818) -- --
Change in present value of potential
income taxes, net of cost
basis deferred income taxes......... (29,587) 12,105 22,628
---------- ---------- ----------
188,711 (28,069) (163,654)
---------- ---------- ----------
Revaluation equity at end of year.... $1,412,455 $1,223,744 $1,256,742
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
The Rouse Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992 and 1991
- --------------------------------------------------------------------------------
(1) Current value basis
financial statements
(a) Current value reporting
The Company's interests in operating properties, properties held for development
and sale and certain other assets have appreciated in value and, accordingly,
their current values exceed their cost basis net book values determined in
conformity with generally accepted accounting principles. These values are
reported in the current value basis financial statements. Management believes
that the current value basis financial statements more realistically reflect the
underlying financial strength of the Company.
The current values of the interests in operating properties, including
interests in unconsolidated real estate ventures, represent management's
estimates of the value of these assets primarily as investments. These values
will generally be realized through future cash flows generated by the operation
of these properties over their economic lives. The current values of properties
held for development and sale represent management's estimates of the value of
these assets under long-term development and sales programs.
The current value basis financial statements are not intended to present the
current liquidation values of individual assets or groups of assets or the
liquidation value of the Company or its net assets taken as a whole.
Shareholders' equity on a current value basis was $1,525,606,000 or $26.75
per share of common stock at December 31, 1993 and $1,188,896,000 or $25.50 per
share of common stock at December 31, 1992. The per share calculation at
December 31, 1993 assumes the conversion of the Preferred stock. The per share
calculation at December 31, 1992 assumes the conversion of the convertible
subordinated debentures. At December 31, 1993, the debentures were not assumed
to be converted because the market value of the debentures was included in the
current value basis financial statements. This change did not have a material
effect on the per share calculation at December 31, 1993.
(b) Bases of valuation
Interests in operating properties--The current value of the Company's interests
in operating properties is the Company's share (based on its underlying
ownership interest) of each property's equity value (i.e., the present value of
its forecasted net cash flow and residual value, if applicable, after deducting
payments on the debt specifically related to the property) plus the outstanding
balance of related debt. The current value of the Company's interests in
unconsolidated real estate ventures is the present value of the Company's share
of forecasted net cash flow, including incentive management fees, and residual
value of the respective real estate ventures.
The forecasts of net cash flow are based on an evaluation of the history and
future of each property and are supported by market studies, analyses of tenant
lease terms and projected sales performance and estimates of revenues and oper-
ating expenses over projection periods of generally eleven years.
The present values of forecasted net cash flows are determined using internal
rates of return which vary by project and between years as investor yield
requirements change. The resulting values recognize the considerable
differences between properties in terms of quality, age, outlook and risk as
well as the prevailing yield requirements of investors for income-producing
properties.
Properties in development--Properties in development are carried at the same
amounts as in the cost basis financial statements except that certain parcels of
land are carried at their estimated current values. Management believes that
properties in development have values in excess of stated costs, but has taken
the conservative position of not recognizing any value increment until these
properties are completed and operating.
9
<PAGE>
- -------------------------------------------------------------------------------
Properties held for development and sale--The current value of properties
held for development and sale is based on the present value of forecasted net
cash flows under development and sales programs. These programs set forth the
proposed timing and cost of all improvements necessary to bring the properties
to saleable condition, the pace and price of sales and the costs to administer
the programs and sell the properties.
Debt--Debt and obligations under capital leases specifically relating to
interests in operating properties are carried at the same amount as in the cost
basis balance sheets since the value of the Company's equity interest in each
property is based on net cash flow after payments on the debt or leases. The
current values of publicly-traded debt not specifically related to interests in
properties are determined using quoted market prices. The current values of
other debt and obligations under capital leases are carried at the same amount
as in the cost basis balance sheets since the difference between the stated and
estimated market interest rates for such obligations is not material. At
December 31, 1992, the current values of publicly-traded debt not specifically
related to interests in properties were carried at the same amount as in the
cost basis balance sheet since the market value of such debt was not materially
different from the recorded amount.
Deferred income taxes--Because the current value basis financial statements
presume that values will be realized over the long-term through operating cash
flows and not through liquidation, the deferred income tax obligation on a
current value basis represents an estimate of the present value of income tax
payments which may be made based on projections of taxable income through 2047.
The projections of taxable income reflect all allowable deductions permitted
under the Internal Revenue Code. The discount rates used to compute the present
value of income tax payments are based on the internal rates of return used to
compute the current values of assets, adjusted to reflect the Company's
assessment of the greater uncertainty with respect to the ultimate timing and
amounts of income tax payments.
Other assets and liabilities--Substantially all other assets and liabilities
are carried in the current value basis balance sheets at the lower of cost or
net realizable value--the same stated value as in the cost basis balance sheets.
The application of the foregoing methods for estimating current value,
including the potential income tax payments, represents the best judgment of
management based upon its evaluation of the current and future economy and
investor rates of return at the time such estimates were made. Judgments
regarding these factors are not subject to precise quantification or
verification and may change from time to time as economic and market factors,
and management's evaluation of them, change.
The current value basis financial statements have been and will continue to
be an integral part of the Company's annual report to shareholders but,
consistent with previous practice, current value information will not be
presented as part of the Company's quarterly reports to shareholders. The
extensive market research, financial analysis and testing of results required
to produce reliable current value information make it impractical to report this
information on an interim basis.
(c) Revaluation equity
The aggregate difference between the current value basis and cost basis of the
Company's assets and liabilities is reported as revaluation equity in the
shareholders' equity section of the consolidated current value basis balance
sheets. The components of revaluation equity at December 31, 1993 and 1992 are
as follows (in thousands):
10
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992
------------ -----------
<S> <C> <C>
Value of interests in operating properties:
Retail centers......................... $ 1,908,831 $ 1,608,792
Office, mixed-use and other............ 175,556 148,859
Value of properties held for development
and sale................................ 132,387 111,762
Value of land in development............. 10,377 14,766
------------ -----------
Total equity value..................... 2,227,151 1,884,179
Debt related to equity interests......... 2,111,279 2,073,964
------------ -----------
Total asset value...................... 4,338,430 3,958,143
Depreciated cost of interests in
operating properties and costs
of properties held for development
and sale, land in development and
certain other assets.................... (2,633,846) (2,476,131)
Present value of potential income taxes
related to revaluation equity, net of
cost basis deferred income taxes........ (297,381) (267,794)
Other, net............................... 5,252 9,526
------------ -----------
Total revaluation equity............... $ 1,412,455 $ 1,223,744
============ ===========
</TABLE>
(2) Summary of significant accounting policies
(a) Description of business
The Company is engaged in the acquisition, development and management of a
diversified portfolio of income-producing properties located across the United
States and in land development and sales, primarily in Columbia, Maryland. The
income-producing properties consist of retail centers, office buildings and
mixed-use and other properties. The retail centers are primarily regional and
urban shopping centers. Office properties are primarily suburban buildings or
components of mixed-use properties which also include retail and other uses.
(b) Principles of consolidation
The consolidated financial statements include the accounts of The Rouse Company,
all subsidiaries and partnerships in which it has a majority interest and
control and the Company's proportionate share of the assets, liabilities,
revenues and expenses of unincorporated real estate ventures in which it has
joint interest and control with other venturers. Investments in ventures which
represent less than a 20% interest are accounted for using the equity or cost
methods as appropriate in the circumstances. Significant intercompany balances
and transactions are eliminated in consolidation.
(c) Property
The Company capitalizes construction and development costs of projects and costs
of developing land and other property for sale. Certain other costs associated
with the financing, leasing and opening of projects are capitalized as deferred
costs of projects and are amortized over the periods benefited by the
expenditures.
The pre-construction stage of project development includes efforts and
related costs to secure land control and zoning and complete other initial tasks
which are essential to the development of a project. These costs are transferred
to construction and development in progress when the pre-construction tasks are
completed. The Company provides for the costs of potentially unsuccessful pre-
construction efforts by charges to operations.
Depreciation is computed by the straight-line method. The annual rate of
depreciation for most of the Company's retail centers is based on a 55 year
composite life and a salvage value of approximately 10%, producing an effective
annual rate of depreciation for new properties of 1.8% of depreciable cost. The
other retail centers, all office buildings and other properties are generally
depreciated using composite lives ranging primarily from 40 years to 50 years,
producing effective annual rates of depreciation for such properties ranging
from 2.5% to 2.0%.
Maintenance and repair costs are expensed against operations as incurred,
while significant improvements, replacements and major renovations are
capitalized.
11
<PAGE>
- --------------------------------------------------------------------------------
(d) Sales of property
Gains from sales of operating properties and revenues from land sales are
recognized using the full accrual method provided that various criteria relating
to the terms of the transactions and any subsequent involvement by the Company
with the properties sold are met. Gains or revenues relating to transactions
which do not meet the established criteria are deferred and recognized when the
criteria are met or using the installment or cost recovery methods, as
appropriate in the circumstances. For land sale transactions under terms of
which the Company is required to perform additional services and incur
significant costs after title has passed, revenues and costs of sales are
recognized proportionately on a percentage of completion basis.
Cost of land sales is generally determined as a specified percentage of land
sales recognized for each land development project. The cost percentages used
are based on estimates of development costs and sales revenues to completion of
each project and are revised periodically for changes in estimates or in
development plans. The specific identification method is used to determine cost
of sales of certain parcels of land.
(e) Accounting for leases
Leases which transfer substantially all the risks and benefits of ownership to
tenants are considered finance leases and the present values of the minimum
lease payments thereunder, less the estimated residual values of the leased
properties, are accounted for as receivables. Leases which transfer
substantially all the risks and benefits of ownership to the Company are
considered capital leases and the present values of the minimum lease payments
are accounted for as property and debt. Direct costs of negotiating and
consummating the leasing of tenant spaces are deferred and expensed over the
terms of the related leases.
In general, minimum rent revenues are recognized when due from tenants;
however, the straight-line basis, which averages annual minimum rents over the
terms of leases, is used to recognize estimated collectible minimum rent
revenues under leases which provide for varying rents over their terms.
(f) Income taxes
Effective January 1, 1991, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires, among other
things, a change from the deferred method to the asset and liability method of
accounting for deferred income taxes. The cumulative effect of this change as of
January 1, 1991 is reported in the 1991 consolidated cost basis statements of
operations and shareholders' equity.
Under the asset and liability method, deferred income taxes are recognized
for temporary differences between the financial reporting bases of assets and
liabilities and their respective tax bases and for operating loss and tax credit
carryforwards based on enacted tax rates expected to be in effect when such
amounts are realized or settled. However, deferred tax assets are recognized
only to the extent that it is more likely than not that they will be realized
based on consideration of available evidence, including tax planning strategies
and other factors. The effects of changes in tax laws or rates on deferred tax
assets and liabilities are recognized in the period that includes the enactment
date.
(g) Investments in marketable securities and cash and cash equivalents
Investments with maturities at dates of purchase in excess of three months are
classified as marketable securities. Short-term investments with maturities at
dates of purchase of three months or less are classified as cash equivalents,
except that any such investments purchased with the proceeds of loans which may
be expended only for specified purposes are classified as investments in
marketable securities. At December 31, 1993 and 1992, investments in marketable
securities, carried at cost which approximates market value, consist primarily
of U.S. government and agency obligations and include $4,422,000 and
$12,378,000, respectively, which are restricted for use in the development of
certain properties.
12
<PAGE>
- --------------------------------------------------------------------------------
(3) Real estate ventures
The Company has joint interest and control with other venturers in various
operating properties which are accounted for using the proportionate share
method. These projects are managed by the Company. The consolidated financial
statements include the Company's proportionate share of its historical cost of
these projects and depreciation based on the Company's depreciation policies
which differ, in certain cases, from those of the joint ventures.
The condensed, combined balance sheets of these ventures and the Company's
proportionate share of their assets, liabilities and equity at December 31, 1993
and 1992 and the condensed, combined statements of earnings of these ventures
and the Company's proportionate share of their revenues and expenses for 1993,
1992 and 1991 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Combined Proportionate Share
------------------------ -------------------------
1993 1992 1993 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total assets, primarily property.................. $426,826 $552,114 $194,253 $274,486
======== ======== ======== ========
Liabilities, primarily long-term debt............. $368,198 $484,406 $171,142 $242,355
Venturers' equity.................................. 58,628 67,708 23,111 32,131
-------- -------- -------- --------
Total liabilities and venturers' equity........... $426,826 $552,114 $194,253 $274,486
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Combined Proportionate Share
----------------------------------------- --------------------------------------
1993 1992 1991 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................... $144,564 $163,414 $162,633 $66,432 $76,233 $78,891
Operating and interest
expenses.................. 87,290 112,858 108,627 40,689 53,098 53,117
Depreciation and
amortization.............. 12,396 13,983 13,241 3,833 4,925 3,821
-------- -------- -------- -------- -------- --------
Net earnings............... $44,878 $36,573 $40,765 $21,910 $18,210 $21,953
======== ======== ======== ======== ======== ========
</TABLE>
The Company holds minority interests in certain real estate ventures which
are accounted for using the equity or cost methods, as appropriate. These
projects are managed by the Company and the agreements relating to them
generally provide for preference returns to the Company when operating results
or sale or refinancing proceeds exceed specified levels. The condensed, combined
balance sheets of these ventures at December 31, 1993 and 1992 and their
condensed combined statements of earnings for 1993, 1992 and 1991 are summarized
as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Total assets, primarily property................. $1,307,611 $1,303,730
========== ==========
Liabilities, primarily long-term debt............ $ 468,352 $ 440,615
Venturers' equity................................ 839,259 863,115
---------- ----------
Total liabilities and venturers' equity.......... $1,307,611 $1,303,730
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues................................ $197,333 $193,111 $193,756
Operating and interest expenses......... 142,740 141,184 139,358
Depreciation and amortization........... 36,768 34,897 34,688
-------- -------- --------
Net earnings............................ $ 17,825 $ 17,030 $ 19,710
======== ======== ========
</TABLE>
13
<PAGE>
- -------------------------------------------------------------------------------
(4) Operating Properties
Property and deferred costs of projects at December 31, 1993 and 1992 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Buildings and improvements........................... $2,346,074 $2,164,504
Land . . . .......................................... 155,580 133,566
Deferred costs....................................... 122,762 123,084
Investments in unconsolidated real estate ventures... 80,512 76,257
Furniture and equipment.............................. 34,335 36,404
Receivables under finance leases..................... 82,040 73,979
---------- ----------
Total............................................ $2,821,303 $2,607,794
========== ==========
</TABLE>
Depreciation expense for 1993, 1992 and 1991 was $55,508,000, $51,834,000 and
$49,520,000, respectively. Amortization expense for 1993, 1992 and 1991 was
$14,692,000, $16,329,000 and $16,215,000, respectively.
(5) Properties in development
Properties in development include construction and development in progress and
pre-construction costs, net. The construction and development in progress
accounts include land and land improvements of $12,521,000 at December 31, 1993
and $22,501,000 at December 31, 1992.
Changes in pre-construction costs, net, for 1993 and 1992 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Balance at beginning of year, before
pre-construction reserve.......................... $17,741 $22,578
Costs incurred...................................... 12,024 7,293
Costs transferred to construction and development
in progress....................................... (6,603) (12,013)
Costs transferred to operating properties........... (3,484) --
Costs of unsuccessful projects written off.......... (1,205) (117)
------- -------
18,473 17,741
Less pre-construction reserve....................... 12,822 11,127
------- -------
Balance at end of year, net......................... $ 5,651 $ 6,614
======= =======
</TABLE>
(6) Properties held for development and sale
Properties held for development and sale include land and, in 1992, an
industrial building acquired in connection with a land purchase. The building
was transferred to operating properties during 1993.
Properties held for development and sale at December 31, 1993 and 1992 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Finished land..................................... $ 11,410 $ 15,283
Land under development............................ 70,027 92,394
Other land........................................ 50,390 18,223
Building.......................................... -- 10,054
-------- --------
Total......................................... $131,827 $135,954
======== ========
</TABLE>
14
<PAGE>
- -------------------------------------------------------------------------------
(7) Accounts and notes receivable
Accounts and notes receivable at December 31, 1993 and 1992 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Accounts receivable, primarily accrued rents and income
under tenant leases.................................... $ 80,126 $ 79,583
Notes receivable, including secured notes of $11,285 in
1993 and $9,111 in 1992................................ 21,836 19,720
-------- --------
101,962 99,303
Less allowance for doubtful receivables.................. 24,036 23,129
-------- --------
Total.................................................. $ 77,926 $ 76,174
======== ========
</TABLE>
Accounts and notes receivable due after one year were $59,226,000 and
$51,438,000 at December 31, 1993 and 1992, respectively.
(8) Pension plans
The Company has a defined benefit pension plan (the "funded plan") covering
substantially all employees. The Company's policy is to fund current service
costs and amortization of unfunded accrued liabilities subject to the limits of
the Internal Revenue Code. In addition, the Company has a non-qualified unfunded
retirement plan (the "unfunded plan") covering employees whose defined benefits
exceed the limits of the funded plan. Benefits under both pension plans are
based on the participants' years of service and compensation over the terms of
their employment.
The net pension cost for the Company's pension plans includes the following
components (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost................................. $ 2,191 $ 2,058 $ 2,389
Interest cost on projected benefit
obligations................................. 2,991 2,977 2,739
Actual return on funded plan assets.......... (1,790) (1,551) (4,427)
Other, net................................... 897 (123) 3,394
-------- -------- --------
Net pension cost........................... $ 4,289 $ 3,361 $ 4,095
======== ======== ========
</TABLE>
The funded status of the Company's pension plans at December 31, 1993 and
1992 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Accumulated benefit obligations:
Vested................................................. $ 33,905 $ 31,631
Nonvested.............................................. 4,073 3,560
-------- --------
Total.................................................. $ 37,978 $ 35,191
======== ========
Projected benefit obligations............................ $ 41,980 $ 38,395
Funded plan assets at fair value......................... (24,310) (22,212)
-------- --------
Excess of projected benefit obligations over
funded plan assets...................................... 17,670 16,183
Unamortized prior service cost........................... (5,821) (6,545)
Unrecognized net loss.................................... (6,643) (3,731)
Unrecognized net obligation at January 1, 1987,
net of amortization..................................... (1,877) (2,079)
Additional minimum liability............................. 10,339 9,151
-------- --------
Accrued pension cost included in
accrued expenses........................................ $ 13,668 $ 12,979
======== ========
</TABLE>
15
<PAGE>
- -------------------------------------------------------------------------------
The projected benefit obligations for both plans were determined using
discount rates of 7.5%, 8.25% and 8.375% in 1993, 1992 and 1991, respectively.
The rates of compensation increases assumed were 4.5% for 1993 and 1992 and 5%
for 1991. The expected long-term rate of return on plan assets of the funded
plan was 11% in 1993, 1992 and 1991. The assets of the funded plan consist
primarily of marketable securities and pooled separate accounts managed by an
insurance company.
(9) Other Postretirement and Postemployment Benefits
The Company has a retiree benefits plan that provides postretirement medical and
life insurance benefits to full-time employees who meet minimum age and service
requirements. The Company pays the full cost of participants' life insurance
coverage and makes contributions based on years of service to the cost of
participants' medical insurance coverage, subject to a maximum annual
contribution (except for employees who retired before 1991).
Prior to 1993, the Company accounted for postretirement benefit costs on the
cash basis, and the cost of these benefits was not material in 1992 and 1991.
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires that postretirement benefit costs be recognized on the
accrual basis as employees render the services required to be eligible for
benefits. This change in accounting did not have a material effect on the
financial position or results of operations of the Company, after considering
recoveries of employee benefit costs under tenant leases.
The postretirement benefit cost for 1993 includes the following components
(in thousands):
<TABLE>
<S> <C>
Service cost.......................................................... $ 603
Interest cost on accumulated postretirement benefit obligation........ 785
Amortization of transition obligation at January 1, 1993.............. 484
------
Net postretirement benefit cost.................................... $1,872
======
</TABLE>
The status of the Company's postretirement benefit plan at December 31, 1993,
is summarized as follows (in thousands):
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees........................................................ $ 3,130
Other fully eligible participants............................... 2,016
Other active participants....................................... 6,428
--------
11,574
Unrecognized net loss.............................................. (1,142)
Unrecognized transition obligation................................. (9,204)
--------
Accrued postretirement benefit cost included in accrued expenses... $ 1,228
========
</TABLE>
The weighted average discount rate used to determine the accumulated
postretirement benefit obligation was 7.5% at December 31, 1993. The transition
obligation at January 1, 1993 is being amortized to postretirement benefit cost
over 20 years.
Effective January 1, 1993, the Company also adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This change in accounting did not have a material effect on the
financial position or results of operations of the Company, after considering
recoveries of employee benefit costs under tenant leases.
(10) Debt
In recognition of the various characteristics of real estate financing, debt is
classified as follows:
(a) "Property debt not carrying a Parent Company guarantee of repayment" which
is subsidiary company debt having no express written obligation which
would require the Company to repay the principal amount of such debt
during the full term of the loan (nonrecourse loans); and
16
<PAGE>
- -------------------------------------------------------------------------------
(b) "Parent Company debt and debt carrying a Parent Company guarantee of
repayment" which is debt of the Company and subsidiary company debt with an
express written obligation of the Company to repay the principal amount of
such debt during the full term of the loan (Company and recourse loans).
With respect to property debt not carrying a Parent Company guarantee of
repayment, the Company has in the past and may in the future, under some
circumstances, support those subsidiary companies whose annual obligations,
including debt service, exceed operating revenues. At December 31, 1993 and
1992, property debt not carrying a Parent Company guarantee of repayment
includes $643,191,000 and $695,482,000, respectively, of mortgages and
bonds relating to operating properties of subsidiary companies which are
subject to agreements with lenders requiring the Company to provide support
for operating and debt service costs, where necessary, for defined periods
or until specified conditions relating to the operating results of the
properties are met.
Debt at December 31, 1993 and 1992 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Mortgages and bonds.................................. $1,923,791 $1,869,196
Convertible subordinated debentures.................. 130,000 230,000
Other loans.......................................... 356,706 334,546
---------- ----------
Total............................................. $2,410,497 $2,433,742
========== ==========
</TABLE>
Mortgages and bonds are secured by deeds of trust or mortgages on real estate
projects and general assignments of rents. This debt matures in installments
through 2034 and, at December 31, 1993, bears interest at effective rates,
including lender participations, ranging from 4.38% to 13.00%. At December 31,
1993, approximately $766,429,000 of this debt is subject to payment of
additional interest based on the operating results of the related properties in
excess of stated levels. In addition, certain of such debt provides for payments
to lenders of shares of the related properties' residual values, if any, upon
sale or refinancing.
The convertible subordinated debentures outstanding at December 31, 1993, are
unsecured, bear interest at 5.75% and mature in 2002. The debentures are
convertible into one share of common stock for each $28.63 of par value. A
$100,000,000 issue of unsecured debentures, which carried interest of 5.875% and
was convertible into one share of common stock for each $26.25 of par value, was
redeemed in 1993.
Other loans include $120,000,000 of 8.5% unsecured notes, issued in 1993
and due in 2003, various property acquisition and land loans, credit line
advances and certain other borrowings. These loans include aggregate unsecured
borrowings of $268,178,000 and $231,737,000 at December 31, 1993 and 1992,
respectively, and at December 31, 1993, bear interest at rates ranging from
4.5% to 12.75%.
The annual maturities of debt as of December 31, 1993 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Company and Nonrecourse
Recourse Loans Loans Total
---------------- ------------- -----------
<S> <C> <C> <C>
1994.................................. $ 27,649 $ 28,839 $ 56,488
1995.................................. 35,338 94,625 129,963
1996.................................. 42,174 39,448 81,622
1997.................................. 18,519 113,983 132,502
1998.................................. 14,913 63,214 78,127
Subsequent to 1998.................... 385,647 1,546,148 1,931,795
-------- ---------- ----------
Total.............................. $524,240 $1,886,257 $2,410,497
======== ========== ==========
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
The Company uses interest rate exchange agreements, including interest rate
caps and swaps, to manage interest rate risk associated with variable rate debt.
These agreements generally involve the exchange of fixed and floating rate
interest payment obligations without the exchange of the underlying principal
amounts. Parties to these agreements are subject to market risk for changes in
interest rates and risk of credit loss in the event of nonperformance by the
counterparty. Notional principal amounts are used to express the volume of these
transactions, but the amounts potentially subject to credit risk and the cash
requirements are substantially less.
At December 31, 1993, the Company had entered into interest rate cap
agreements which expire in December 1995 and April 1997. These agreements limit
the average interest rate on $56,250,000 of mortgages to 7.7% through April 1995
and to 9.14% from May 1995 through April 1997 and limit the interest rate on
advances of up to $51,000,000 under a line of credit to 10% through December
1995.
Total interest costs were $219,705,000 in 1993, $221,907,000 in 1992 and
$219,538,000 in 1991 of which $8,899,000, $15,098,000 and $21,243,000 were
capitalized, respectively.
During 1993, 1992, and 1991, the Company extinguished approximately
$228,867,000, $41,958,000 and $4,200,000, respectively, of its debt prior to
scheduled maturity, which resulted in extraordinary losses of $8,051,000,
$348,000 and $90,000, respectively, net of related deferred income tax benefits
of $4,271,000, $182,000 and $47,000, respectively. Proceeds from the Company's
refinancings of the related properties, and in 1993, from the issuances of the
8.5% unsecured notes and Preferred stock were used to retire the debt
extinguished and to fund the prepayment penalties.
At December 31, 1993, the Company had available unused lines of credit
totalling $135,000,000. The agreements relating to certain of the lines of
credit, the 8.5% unsecured notes and certain other loans impose limitations on
the Company. The most restrictive of these limit the Company's ability to incur
certain types of additional debt if the Company does not maintain specified debt
service coverage ratios. The agreements also impose restrictions on sale, lease
and certain other transactions, subject to various exclusions and limitations.
In accordance with the Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the estimated fair
value of debt is determined based on quoted market prices for publicly-traded
debt and on the discounted estimated future cash payments to be made for other
debt. The discount rates used approximate current market rates for loans or
groups of loans with similar maturities and credit quality. The estimated future
payments include scheduled principal and interest payments, cash flows under
interest rate exchange agreements, where applicable, and lenders' participations
in operating results and residual values of the related properties, where
applicable. The carrying amount and estimated fair value of the Company's debt
at December 31, 1993 and December 31, 1992 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992
----------------------- -------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Fixed rate debt.......... $2,089,384 $ 2,142,022 $1,996,339 $ 2,040,512
Variable rate debt....... 321,113 321,113 437,403 437,403
---------- ----------- ---------- ------------
$2,410,497 $ 2,463,135 $2,433,742 $ 2,477,915
========== =========== ========== ============
</TABLE>
Fair value estimates are made at a specific point in time, are subjective in
nature and involve uncertainties and matters of significant judgment. Settlement
of the Company's debt obligations at fair value may not be possible and may not
be a prudent management decision. The potential loss on extinguishment at
December 31, 1993, does not take into consideration expenses that would be
incurred to settle the debt obligations at fair value or the related potential
income tax benefits.
18
<PAGE>
- -------------------------------------------------------------------------------
(11) Operating results and assets by line of business
Operating results before gain (loss) on dispositions of assets and other
provisions, net, income taxes, extraordinary loss and cumulative effect of
change in accounting principle are summarized by line of business as follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Operating properties:
Revenues...................................... $607,630 $565,117 $547,209
Operating expenses, exclusive of provision
for bad debts, depreciation and amortization. 322,793 304,687 295,618
Interest expense.............................. 189,805 184,943 181,317
Provision for bad debts....................... 4,741 6,297 7,241
Depreciation and amortization................. 70,200 68,163 65,735
-------- -------- --------
20,091 1,027 (2,702)
-------- -------- --------
Land sales:
Revenues...................................... 35,313 29,137 24,111
Operating costs and expenses.................. 19,387 16,330 12,744
Interest expense.............................. 4,093 2,959 2,728
Provision for bad debts....................... -- -- 104
-------- -------- --------
11,833 9,848 8,535
-------- -------- --------
Development:
Revenues...................................... -- -- 375
Operating costs and expenses.................. 3,853 4,421 5,681
Interest expense.............................. 495 495 495
-------- -------- --------
(4,348) (4,916) (5,801)
-------- -------- --------
Corporate:
Interest income............................... 3,862 2,851 1,803
Interest expense.............................. 16,413 18,412 13,755
Other expenses................................ 6,184 5,927 6,567
-------- -------- --------
(18,735) (21,488) (18,519)
-------- -------- --------
Operating income (loss)......................... $ 8,841 $(15,529) $(18,487)
======== ======== ========
</TABLE>
The assets by line of business at December 31, 1993, 1992 and 1991 are as
follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Operating properties............ $2,556,237 $2,396,900 $2,311,035
Land sales...................... 140,673 140,227 162,490
Development..................... 63,656 96,570 70,087
Corporate....................... 114,416 92,584 93,840
---------- ---------- ----------
Total........................ $2,874,982 $2,726,281 $2,637,452
========== ========== ==========
</TABLE>
(12) Income taxes
As discussed in note 2, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," as of January 1, 1991. The
cumulative effect at January 1, 1991 of this change in accounting for income
taxes was to reduce the net deferred tax obligation by $14,949,000, increase net
income for 1991 by $13,463,000, or $.28 per share, and increase additional paid-
in capital by $1,486,000 for income tax benefits relating to certain employees'
stock compensation plans. The effect of this change on earnings before
extraordinary loss and net earnings for 1991, excluding the cumulative effect of
adoption, was not material.
19
<PAGE>
- -------------------------------------------------------------------------------
Income tax expense (benefit) is reconciled to the amount computed by applying
the Federal corporate tax rate as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------ ------- ------
<S> <C> <C> <C>
Tax (benefit) at statutory rate on earnings (loss) before
income taxes, extraordinary loss and cumulative
effect of change in accounting principle.................... $1,075 $(7,066) $1,783
State income taxes, net of Federal income tax benefit......... 1,398 1,374 1,038
Effect of increase in Federal tax rate........................ 1,890 -- --
Costs incurred in connection with a private placement
of common stock of the Company.............................. -- 758 --
------ ------- -----
Income tax expense (benefit).................................. $4,363 $(4,934) $2,821
====== ======= =====
Effective rate................................................ 142.0% 23.7% 53.8%
====== ======= =====
</TABLE>
The net deferred tax obligations at December 31, 1993 and 1992 consist of
total deferred tax assets of approximately $191,071,000 and $168,478,000,
respectively, and total deferred tax liabilities of approximately $270,050,000
and $248,125,000, respectively. The tax effects of temporary differences between
the financial reporting and income tax bases of assets and liabilities that are
included in the net deferred tax obligations at December 31, 1993 and 1992
relate to the following (in thousands):
<TABLE>
<CAPTION>
1993 1992
--------- ----------
<S> <C> <C>
Property, primarily differences in depreciation and
amortization and treatment of interest and certain other
costs.................................................... $ 245,642 $ 225,016
Accounts and notes receivable, primarily differences in
timing of recognition of rent revenues and doubtful
receivables.............................................. 4,243 3,546
Accrued expenses, primarily differences in timing of
recognition of interest, compensation and pension
expenses................................................. (460) (918)
Effect of operating loss and tax credit carryforwards..... (170,446) (147,997)
--------- ---------
Total.................................................... $ 78,979 $ 79,647
========= =========
</TABLE>
The net operating losses carried forward from December 31, 1993 for Federal
income tax purposes aggregate approximately $474,000,000. The loss carryforward
will begin to expire in 1998.
As indicated above, the deferred tax liabilities relate primarily to
differences in depreciation and amortization of property and treatment of
interest and certain other property related costs for financial reporting and
income tax purposes and the deferred tax assets relate primarily to the tax
effects of operating loss carryforwards. The ultimate realization of these
assets is dependent upon the generation of sufficient future taxable income to
use the operating loss carryforwards before they expire. Based on the scheduled
reversal of the deferred tax liabilities and projections of future taxable
income over the operating loss carryforward period, management believes it is
more likely than not that the Company will realize the benefits of the operating
loss carryforwards at December 31, 1993.
20
<PAGE>
- -------------------------------------------------------------------------------
(13) Gain (loss) on dispositions of assets and other provisions, net
Gain (loss) on dispositions of assets and other provisions, net, is summarized
as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Provision for loss on investment in an operating
property........................................... $(5,432) $ -- $ --
Sale of interest in an operating property............ -- -- 23,078
Costs incurred in connection with a private placement
of common stock of the Company..................... -- (2,231) --
Provision for loss on certain investments............ -- (4,156) --
Other, net........................................... (337) 1,133 654
------- ------- -------
Total.............................................. $(5,769) $(5,254) $23,732
======= ======= =======
</TABLE>
The provision for loss on investment in an operating property in 1993 was
recognized based on management's determination that the Company would not
continue to support the project (which is financed by nonrecourse loans) under
the existing arrangements with lenders, public authorities and others involved
and that it was unlikely that the Company would recover all of its investment in
the project based on forecasts of future cash flows.
The costs incurred in connection with a private placement of common stock of
the Company in 1992 relate to the purchase by the Company and seven
institutional investors of 9,500,000 shares of common stock previously owned by
Trizec Investments Corporation as discussed in note 15.
The provision for loss on certain investments in 1992 was recognized based on
management's determination that declines in the market or fair values of an
investment in an equity security and certain other investments were other than
temporary.
(14) Series A Convertible Preferred stock
The shares of Series A Convertible Preferred stock have a liquidation preference
of $50 per share and earn dividends at an annual rate of 6.5% of the liquidation
preference. At the option of the holders, each share of Preferred stock is
convertible into shares of the Company's common stock at a conversion rate of
approximately 2.35 shares of common stock for each share of Preferred stock,
subject to adjustment in certain circumstances. In addition, beginning March 1,
1996, the shares of Preferred stock are redeemable for shares of common stock at
the option of the Company, subject to certain conditions.
(15) Common stock
At December 31, 1993, shares of authorized and unissued common stock are
reserved as follows: (a) 2,153,482 shares for issuance under the Company's stock
option and stock bonus plans; (b) 4,540,692 shares for conversion of the
convertible subordinated debentures; and (c) 9,470,588 shares for the conversion
of the Preferred stock; and (d) 500,000 shares for exercise of the warrants
issued to Trizec Investments Corporation discussed below.
The Company's stock option plans provide for the grant of options and stock
appreciation rights to officers and employees. A summary of changes in the
outstanding stock options under the stock option plans is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year..... 1,438,542 1,288,152 1,414,948
Options granted.................. 350,000 285,000 --
Options exercised:
$ 5.33 per share............ -- (91,410) (58,746)
$ 11.17 per share............ (41,340) (7,800) (900)
$ 11.83 per share............ (2,400) (600) (600)
$ 15.33 per share............ (9,500) (6,000) (14,750)
Options cancelled................ (26,000) (28,800) (51,800)
--------- --------- ---------
Balance at end of year........... 1,709,302 1,438,542 1,288,152
========= ========= =========
</TABLE>
21
<PAGE>
- -------------------------------------------------------------------------------
The options outstanding at December 31, 1993 are exercisable as follows:
115,500 shares at $27.00; 653,000 shares at $23.75; 22,500 shares at $21.33;
350,000 shares at $19.75; 177,602 shares at $15.33; 285,000 shares at $14.75;
100,000 shares at $13.50; and 5,700 shares at $11.83.
Under the Company's stock bonus plans, shares of common stock may be awarded
to certain officers and employees. Shares awarded under the plans may be subject
to forfeiture restrictions which lapse at defined annual rates. In connection
with the stock bonus plan awards, the Company may make loans to the recipients
for the payment of related income taxes, which loans may be forgiven subject to
the recipients' continued employment. The Company recognizes any forgiven loan
installments, amortization of the fair value of the stock awarded and certain
related costs as compensation costs over the terms of the awards. Such costs
amounted to $2,415,000 in 1993, $2,078,000 in 1992 and $3,580,000 in 1991.
In September 1992, seven investors acquired 8,500,000 shares of the Company's
common stock in a private placement from Trizec Investments Corporation
(Trizec). In addition, the Company acquired 1,000,000 shares of its common stock
from Trizec for a note payable of $12,000,000, which was due and paid in 1993.
Stock warrants allowing Trizec to purchase 500,000 shares of common stock at a
price of $18 per share until September 1997 were issued by the Company to
facilitate the transaction. The Company's share of the costs incurred in this
transaction, including the value of the warrants issued, is included in gain
(loss) on dispositions of assets and other provisions, net.
(16) Leases
The Company, as lessee, has entered into operating leases expiring at various
dates through 2082. Rents under such leases aggregated $17,483,000 in 1993,
$16,397,000 in 1992 and $16,967,000 in 1991, including contingent rents, based
on the performance of the related properties, of $10,006,000, $8,106,000 and
$8,458,000, respectively. In addition, real estate taxes, insurance and
maintenance expenses are obligations of the Company. The minimum rent payments
due under operating leases in effect at December 31, 1993 are summarized as
follows (in thousands):
<TABLE>
<S> <C>
1994................................................................ $ 7,389
1995................................................................ 7,070
1996................................................................ 7,041
1997................................................................ 7,031
1998................................................................ 7,023
Subsequent to 1998.................................................. 268,503
--------
Total............................................................ $304,057
========
</TABLE>
Obligations under capital leases relate to the Company's headquarters
building and certain operating properties and equipment. The property and other
asset accounts include costs of $73,054,000 and $73,709,000 and accumulated
depreciation of $20,010,000 and $18,265,000 at December 31, 1993 and 1992,
respectively, related to these leases. Minimum rent payments under the capital
leases are $10,985,000 in 1994, $10,248,000 in 1995, $8,728,000 in 1996,
$8,325,000 in 1997, $7,540,000 in 1998 and $208,951,000 for subsequent years
through 2039. In addition, real estate taxes, insurance and maintenance expenses
are obligations of the Company. The minimum rent payments due aggregate
$254,777,000 at December 31, 1993; the amount outstanding is the present value
of these aggregate payments discounted at rates ranging from 5.6% to 13%.
Space in the Company's operating properties is leased to approximately 6,600
tenants. In addition to minimum rents, the majority of the retail center leases
provide for percentage rents when the tenants' sales volumes exceed stated
amounts, and the majority of the retail center and office leases provide for
other rents which reimburse
22
<PAGE>
- --------------------------------------------------------------------------------
the Company for certain of its operating expenses. Rents from tenants are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Minimum rents................................... $289,422 $267,381 $258,581
Percentage rents................................ 19,133 19,830 21,608
Other rents..................................... 219,168 203,223 191,082
-------- -------- --------
Total........................................... $527,723 $490,434 $471,271
======== ======== ========
</TABLE>
The minimum rents to be received from tenants under operating leases in
effect at December 31, 1993 are summarized as follows (in thousands):
<TABLE>
<S> <C>
1994................................................................ 278,515
1995................................................................ 261,255
1996................................................................ 238,021
1997................................................................ 211,567
1998................................................................ 179,283
Subsequent to 1998.................................................. 807,134
----------
Total............................................................ $1,975,775
==========
</TABLE>
Certain of the Company's tenant leases are accounted for as finance leases
since the terms of the leases transfer substantially all of the risks and
benefits of ownership to the tenants. Rents under such leases aggregated
$6,601,000 in 1993, $7,912,000 in 1992 and $7,885,000 in 1991. The minimum rent
payments to be received from tenants under finance leases in each of the next
five years are approximately $7,900,000.
The net investment in finance leases at December 31, 1993 and 1992 is
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Total minimum rent payments to be received over lease terms.$ 184,120 $ 218,586
Estimated residual values of leased properties.............. 3,123 123
Unearned income............................................. (105,203) (144,730)
--------- ---------
Net investment............................................$ 82,040 $ 73,979
========= =========
</TABLE>
(17) Other commitments and contingencies
Commitments for the construction and development of properties in the ordinary
course of business and other commitments not set forth elsewhere amount to
approximately $15,000,000 at December 31, 1993.
At December 31, 1993, subsidiaries of the Company have contingent liabilities
of approximately $42,332,000 with respect to future minimum rents under long-
term lease obligations of certain joint ventures and approximately $4,300,000
with respect to bank letters of credit issued to secure their obligations under
certain agreements. In addition, the Company had contingent liabilities with
respect to debt of certain joint ventures aggregating approximately $36,369,000.
On November 6, 1990, Robert P. Guastella Equities, Inc. ("Plaintiff"), a
former tenant at the Riverwalk Shopping Center in New Orleans, Louisiana
("Riverwalk"), which is owned and operated by New Orleans Riverwalk Associates,
an affiliate of the Company ("NORA"), filed suit in the Civil District Court of
Orleans Parish, Louisiana against NORA, the Company, two Company affiliates, and
a partner of NORA (collectively, "Defendants"). Plaintiff alleges that
Defendants breached Plaintiff's lease agreement with NORA for the operation of a
restaurant at Riverwalk and that as a result of these breaches it suffered
losses and could not pay the rentals due under the lease agreement, as a result
of which the lease and its tenancy were terminated by NORA. Plaintiff sought
damages of approximately $600,000 for these alleged breaches. In addition, on
September 3, 1992, Plaintiff claimed $33,000,000 for alleged lost future profits
which it claimed it would have earned had its lease not been terminated. The
Defendants filed answers denying the claims of Plaintiff and asserting other
defenses. NORA
23
<PAGE>
- --------------------------------------------------------------------------------
also asserted a counterclaim against Plaintiff and its individual guarantors for
past due rentals and other charges in the approximate amount of $300,000 plus
interest and attorneys' fees as provided for in the lease agreement. The case
was tried before a jury and, on October 28, 1993, the jury returned a verdict
against Defendants upon which judgment was entered by the trial court on January
7, 1994, in the total net amount of approximately $9,128,000 (including a net
award for lost future profits of approximately $8,640,000) plus interest and
attorneys' fees. Defendants believe that the verdict and judgment as entered to
date are contrary to the facts and applicable law. Following entry of judgment,
Defendants filed with the trial court motions seeking in the alternative, (i)
the dismissal of all claims of Plaintiff against Defendants, (ii) a significant
reduction of the award to Plaintiff, including elimination of the entire award
for lost future profits or (iii) a new trial. To the extent that these post-
trial motions are not successful, Defendants intend to vigorously pursue their
rights of appeal.
The Company and certain of its subsidiaries are defendants in various other
litigation matters arising in the ordinary course of business, some of which
involve claims for damages that are substantial in amount. Some of these
litigation matters are covered by insurance. In the opinion of management,
adequate provision has been made for losses with respect to all litigation
matters, where appropriate, and the ultimate resolution of all such litigation
matters is not likely to have a material effect on the consolidated financial
position of the Company. Due to the Company's modest and fluctuating net
earnings (loss) it is not possible to predict whether the resolution of these
matters is likely to have a material effect on the Company's consolidated net
earnings (loss) and it is, therefore, possible that the resolution of these
matters could have such a material effect in any future quarter or annual fiscal
period.
(18) Earnings (loss) per share of common stock
Earnings (loss) per share of common stock is computed by dividing net earnings
(loss), after deducting dividends on Preferred stock, by the weighted average
number of shares of common stock outstanding during the year. The numbers of
shares used in the computations were 47,411,000 for 1993, 47,994,000 for 1992
and 48,157,000 for 1991. Common stock equivalents have not been used in
computing earnings (loss) per common share because their effects are not
material or are anti-dilutive.
24
<PAGE>
The Rouse Company and Subsidiaries
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
General
The Company's primary business is the acquisition, development and management of
income-producing real estate projects. The Company operates a diversified
portfolio of real estate properties located across the United States. In
addition, the Company develops and sells land, primarily in Columbia, Maryland.
Management believes that the Company's financial position is sound and that
its liquidity and capital resources are adequate. As shown in the supplemental
current value basis financial statements, current value shareholders' equity,
which is an important indication of the Company's financial strength, was
$1.53 billion at December 31, 1993, up from $1.19 billion at December 31,
1992. In addition, as discussed in greater detail below, the Company completed
public offerings of debt and Preferred stock early in 1993 and paid off,
refinanced or extended the due dates of approximately $550 million of property
and other debt that was scheduled to mature during the 1993-1997 period. These
transactions were completed on favorable terms and significantly strengthened
the Company's short and intermediate term liquidity position.
The economic recession and generally difficult conditions in the real
estate and retail industries have affected the Company's operating results
during the last four years. The effects of the recession began to moderate
somewhat in the second half of 1992, and the gradual, general improvement in
the overall economy (which resulted in improvements in consumer confidence,
tenant sales and leasing conditions) and continued low interest rates during
1993 were significant factors in the improvement in the Company's operating
results for the year. If the gradual improvements in the overall economy and
consumer confidence continue during 1994, the Company's operating results
should continue to improve. In the difficult economic and market conditions of
the last several years, the Company has limited its development efforts to
expansions of existing retail centers, projects in Columbia and special
situations that did not involve significant capital risk. Conditions for
development of new regional shopping centers became more favorable in 1993,
particularly with respect to department store interest and availability of
financing. The Company is pursuing a variety of opportunities and hopes to
commence new regional shopping center development during 1994.
Operating Results
This discussion and analysis of operating results covers each of the Company's
four business segments as management believes that a segment analysis provides
the most effective means of understanding the Company's business. Note 11 to
the consolidated financial statements and the elements of revenues and expenses
set forth in the Five Year Summary of Earnings Before Depreciation and Deferred
Taxes from Operations and Net Earnings (Loss) on page 52 should be referred to
when reading this discussion.
Operating Properties: The Company reports the results of its operating
properties in two categories: retail centers ("retail" properties) and office,
mixed-use and other properties ("office/mixed-use" properties).
The Company's tenant leases provide the foundation for the performance of its
retail and office/mixed-use properties. In addition to minimum rents, the
majority of retail and office tenant leases provide for other rents which
reimburse the Company for most of its operating expenses. Substantially all of
the Company's retail leases also provide for additional rent based on tenant
sales (percentage rent) in excess of stated levels. As leases expire, space is
released, minimum rents are generally adjusted to market rates, expense
reimbursement provisions are updated and new percentage rent levels are
established for retail leases.
Most of the Company's operating properties are financed with long term, fixed
rate, nonrecourse debt and, therefore, are not directly affected by changes in
interest rates. Although the interest rates on this debt do not fluctuate,
certain loans provide for additional payments to the Company's lenders based on
operating results and, in some instances, a share of a property's residual value
upon sale or refinancing. Certain lenders' rights to participation in residual
value expire upon maturity of the related loans.
25
<PAGE>
- --------------------------------------------------------------------------------
Revenues from retail properties increased $35,118,000 in 1993 and $12,279,000
in 1992. A substantial portion of the increase in 1993 was attributable to
changes in the composition of the Company's portfolio of retail properties
during the year, including acquisitions of interests in retail centers in the
first and second quarters and the openings of expansions in the first and third
quarters, and to a full year of operations for properties opened or acquired
during 1992. The increase in revenues also reflects higher average occupancy
levels, increased rents from temporary and seasonal tenants, re-leasing of space
at higher effective rents and improved recoveries of operating expenses from
tenants at certain properties. The increase in revenues in 1992 was due
primarily to increases in rents from temporary and seasonal tenants and improved
recoveries of operating expenses from tenants at certain retail properties.
Changes in the Company's portfolio of retail properties during 1992 and 1991
partially offset these increases. These changes included acquisitions of
interests in retail centers in the fourth quarter of 1991 and the second quarter
of 1992, the opening of the Company's seventh village center in Columbia in the
second quarter of 1992 and dispositions of interests in retail centers in the
fourth quarter of 1991 and the first quarter of 1992. Average occupancy for
retail properties increased slightly in 1993 and 1992, and tenant sales
increased 2.1% and 2.9%, respectively, when compared to the preceding years.
Total operating and interest expenses for retail properties increased by
$19,959,000 in 1993 and $8,157,000 in 1992, including increased depreciation and
amortization of $1,508,000 and $2,591,000, respectively. The increase in 1993
was attributable primarily to the changes in the Company's portfolio of retail
properties described above, partially offset by reductions in interest expense
due to debt reductions, lower interest rates on floating rate debt and
refinancings at certain properties. The increase in 1992 was due primarily to
higher common area and other expenses at certain retail centers and depreciation
and amortization of costs of recently opened or acquired properties and costs of
capital improvement programs (primarily renovations and remerchandisings of
existing properties). These increases were partially offset by a slight net
decrease in expenses due to the changes in the Company's portfolio of retail
properties described above and a modification in the terms of a master lease
relating to a retail center.
Revenues from office/mixed-use properties increased $7,395,000 in 1993 and
$5,629,000 in 1992. Total operating and interest expenses for office/mixed-use
properties increased $3,490,000 in 1993, including increased depreciation and
amortization of $529,000, and $6,022,000 in 1992, net of reduced depreciation
and amortization of $163,000. The increases in both years were due principally
to the operations of recently opened properties, including two industrial
buildings in Columbia in 1993 and an office building in Columbia in 1992, and
increased occupancies at existing properties. The increase in expenses in 1993
was mitigated by a reduction in interest expense due to debt reductions, lower
interest rates on floating rate debt and the expiration of certain interest rate
exchange agreements. The increase in expenses in 1992 was partially offset by a
decrease in bad debts of $981,000 and a modification in the terms of a mortgage
on an office property.
Land Sales: The Company's land sales operations relate primarily to the city of
Columbia. Generally, revenues and operating income from land sales are affected
by such factors as the availability to purchasers of construction and permanent
mortgage financing at acceptable interest rates, consumer and business
confidence, availability of saleable land for particular uses and management's
decisions to sell, develop or retain land.
Land sales revenues were $35,313,000 in 1993, $29,137,000 in 1992 and
$24,111,000 in 1991. The increases in revenues in 1993 and 1992 were
attributable primarily to sales of land for multi-family residential uses, and
to a lesser extent, commercial land for retail and other uses.
Land sales costs and expenses were $23,480,000 in 1993, $19,289,000 in 1992
and $15,576,000 in 1991. The increases in costs and expenses in 1993 and 1992
were attributable primarily to the costs associated with higher land sales and,
in 1993, higher interest expense due to lower levels of land development
activity on projects other than Columbia.
26
<PAGE>
- --------------------------------------------------------------------------------
Development: Net development expenses were $4,348,000 in 1993, $4,916,000 in
1992 and $5,801,000 in 1991. These costs consist primarily of additions to the
pre-construction reserve and new business costs, net of development fees earned
from managing construction projects for third parties.
The pre-construction reserve is maintained to provide for costs of possible
projects, including retail center renovation and expansion opportunities, which
may not go forward to completion. Additions to the pre-construction reserve
were $2,900,000 in 1993, $3,050,000 in 1992 and $3,983,000 in 1991. New
business costs relate primarily to the initial evaluation of acquisition and
development opportunities. New business costs were $953,000 in 1993, $1,371,000
in 1992 and $1,698,000 in 1991. The decreases in additions to the pre-
construction reserve and new business costs in 1993 and 1992 were consistent
with the Company's strategy during these years to evaluate and undertake new
projects on a limited risk basis. These costs are expected to increase in 1994
and subsequent years as the Company pursues new development and acquisition
opportunities more aggressively.
Corporate: Corporate results consist of interest income earned on temporary
investments (including investments of unused proceeds from refinancings of
certain properties), corporate interest expense (primarily on the convertible
subordinated debentures, unused proceeds from refinancings of certain properties
and, in 1993, a portion of the unsecured 8.5% notes), net of capitalized
interest on corporate funds temporarily invested in projects under development,
and general and administrative costs.
Corporate interest income was $3,862,000 in 1993, $2,851,000 in 1992 and
$1,803,000 in 1991. The increases in 1993 and 1992 were attributable to higher
average investment balances as a result of proceeds from the offerings of the
8.5% unsecured notes and Preferred stock in 1993 and refinancings of certain
retail properties in 1992. The effect of the higher investment balances was
partially offset by lower interest rates on short term, high quality investments
(primarily U.S. government and agency obligations in both years).
Corporate interest costs were $18,571,000 in 1993, $20,396,000 in 1992 and
$17,009,000 in 1991. Of such amounts, $2,158,000, $1,984,000 and $3,254,000
were capitalized in 1993, 1992 and 1991, respectively, on funds invested in
development projects. The decrease in interest costs in 1993 was due to a
decrease in the average corporate debt outstanding during the year. A portion
of the proceeds of the Preferred stock offering was used to redeem a
$100,000,000 issue of convertible subordinated debentures in May 1993. This
decrease was partially offset by issuance of the 8.5% unsecured notes; however,
a portion of the proceeds of the unsecured notes and the proceeds from
refinancings of certain retail properties completed prior to 1993 were used to
refinance certain land and operating property debt and to finance improvements
to a number of operating properties during 1993. The interest costs on loan
proceeds used for other segments are included in the operating results of those
segments. The increase in interest costs in 1992 was attributable to unused
proceeds of refinancings of certain projects. The lower levels of interest
capitalized in 1993 and 1992, when compared to 1991, reflect lower levels of
corporate funds invested in development projects consistent with the Company's
strategy in these years to undertake new projects on a limited risk basis.
Gain (Loss) on Dispositions of Assets and Other Provisions, Net: The loss on
dispositions of assets and other provisions, net, for 1993 consists primarily of
a provision for loss on investment in an operating property recorded in the
fourth quarter. This loss was recognized based on management's determination
that the Company would not continue to support the project (which is financed by
nonrecourse loans) under the existing arrangements with lenders, public
authorities and others involved and that it was unlikely that the Company would
recover all of its investment in the project based on forecasts of future cash
flows.
The loss on dispositions of assets and other provisions, net, for 1992
consists primarily of costs incurred in connection with a private placement with
the Company and seven institutional investors of 9.5 million shares of common
stock of the Company previously owned by Trizec Investments Corporation
($2,231,000) and provisions for losses on an investment in a
27
<PAGE>
- --------------------------------------------------------------------------------
marketable equity security and certain other investments based on management's
determination that declines in their market or fair values were other than
temporary ($4,156,000).
The gain on dispositions of assets and other provisions, net, for 1991
consists primarily of a gain of $23,078,000 on sale of a partial interest in an
operating property during the fourth quarter.
Net Earnings (Loss): The Company had net losses of $9,342,000 in 1993 and
$16,197,000 in 1992 and net earnings of $15,797,000 in 1991. The Company's
operating income (after depreciation and amortization) was $8,841,000 in 1993
and its operating losses were $15,529,000 in 1992 and $18,487,000 in 1991. The
improvements in operating income in 1993 and 1992 were due primarily to the
factors described above. Net earnings (loss) for each year was affected by
unusual and/or nonrecurring items. The most significant of these are the items
included in gain (loss) on dispositions of assets and other provisions, net,
described above, extraordinary losses from extinguishment of debt, including a
net loss of $8,051,000 in 1993, and the cumulative effect of a change in
accounting for income taxes of $13,463,000 in 1991.
Earnings Before Depreciation and Deferred Taxes: The Company uses a
supplemental performance measure along with net earnings (loss) to report its
operating results. This measure, referred to as Earnings Before Depreciation
and Deferred Taxes (EBDT), is not an operating measure defined by generally
accepted accounting principles. However, the Company believes that EBDT
provides relevant information about its operations and is necessary, along with
net earnings (loss), for an understanding of its operating results.
Depreciation and amortization are excluded from EBDT because, based on the
Company's current value basis reporting, its operating properties are worth
substantially more than their undepreciated historical cost. Deferred income
taxes are excluded from EBDT because the payment of Federal income taxes, on a
current basis, has not had, and is not anticipated in the near term to have, a
substantive impact on the operating results of the Company. Current Federal
income taxes will reduce EBDT if and when Federal income tax payments are
required. The Company has paid and will continue to pay state income taxes
which reduce EBDT. Gain (loss) on dispositions of assets and other provisions,
net, extraordinary losses, net of related income tax benefits, and the
cumulative effect of a change in accounting for income taxes represent unusual
and/or nonrecurring items and are therefore excluded from EBDT. EBDT is
reconciled to net earnings (loss) in the Five Year Summary of Earnings Before
Depreciation and Deferred Taxes from Operations and Net Earnings (Loss) on page
53.
EBDT was $78,281,000 in 1993, $52,282,000 in 1992 and $46,820,000 in 1991.
The significant changes in various revenue and expense elements comprising EBDT
by segment are described above. The increase in EBDT in 1993 was due to
improved results from each of the Company's business segments, particularly
retail properties. The increase in EBDT in 1992 was due primarily to increases
in EBDT from retail properties and land sales, partially offset by an increase
in corporate expenses.
EBDT from retail properties was $87,248,000 in 1993, $70,966,000 in 1992 and
$64,097,000 in 1991. EBDT from retail properties increased at rates of 22.9%
and 10.7%, in 1993 and 1992, respectively. The growth rate for 1993 reflects
the gradual improvement in the economy since the second half of 1992, higher
average occupancy levels, re-leasing of space at higher effective rents,
improved recoveries of operating expenses and debt reductions and refinancings
at certain properties. The growth rate for 1992 was somewhat lower than the
historical growth rate for retail properties, reflecting the lingering effects
of the economic recession.
Office/mixed-use properties had EBDT of $2,283,000 in 1993 and incurred losses
before depreciation and deferred taxes of $2,127,000 in 1992 and $1,591,000 in
1991. The growth in EBDT in 1993 was attributable primarily to improved
occupancy at several Columbia office properties and urban mixed-use projects and
lower interest expense due to debt reductions, lower interest rates on floating
rate debt and the expiration of certain interest
28
<PAGE>
- --------------------------------------------------------------------------------
rate exchange agreements. The increase in the loss incurred in 1992 was
attributable primarily to increased losses at certain urban mixed-use properties
and higher vacancies in Columbia office properties due to tenant failures and
the downsizing of certain major tenants, partially offset by a modification in
the terms of a mortgage on an office building.
Financial Condition, Liquidity and Capital Resources
Management believes that the current values of the Company's assets and
liabilities are the most realistic indicators of the Company's financial
strength and future profitability. Current values of the Company's interests in
operating properties, including interests in unconsolidated real estate ventures
and properties held for development and sale, represent the present values of
forecasted net operating cash flows from these properties--the Company's most
significant assets. Since 1976, revaluation equity, the aggregate increment of
current value over cost basis net book value of the Company's assets and
liabilities, has increased at a compound annual rate of 15.5%. The majority of
the Company's revaluation equity relates to prime regional shopping centers.
After declines in each of the past three years, revaluation equity increased
$189 million or 15.4% to $1.41 billion at December 31, 1993. The increase is
primarily due to higher levels of rents and occupancy used in the forecasts of
cash flows from retail properties. These increases are consistent with the
Company's operating results for 1993 and reflect the effects of the gradual
improvements in consumer confidence and in the economy during the past year. In
addition, refinancings and other changes in financial arrangements at certain
projects increased forecasted cash flows from operating properties. Prime
regional retail centers continue to be a favored real estate investment and
required investor yields in 1993 remained relatively unchanged from 1992.
Cost basis shareholders' equity increased to $113,151,000 at December 31, 1993
from a deficit of $34,848,000 at December 31, 1992. The increase was due
primarily to issuance of the Preferred stock, partially offset by the payment of
regular quarterly dividends on the common and Preferred stocks and the net loss
for the year. The existence of an accumulated deficit ($168,898,000 at December
31, 1993) has not had an effect, legally or otherwise, on the Company's ability
to pay dividends, to obtain additional financing or to conduct its business in
the ordinary course.
The Company had cash and cash equivalents and investments in marketable
securities totalling $107,959,000 and $97,994,000 at December 31, 1993 and 1992,
respectively, including $4,422,000 and $12,378,000, respectively, restricted for
use in the development of certain properties.
Net cash provided by operating activities was $101,149,000, $66,630,000 and
$67,226,000 in 1993, 1992 and 1991, respectively. The changes in cash provided
by operating activities were due primarily to the factors described in the
discussion and analysis of operating results. In addition, the level of net cash
provided by operating activities is affected by the timing of receipt of
revenues (including land sales proceeds) and the payment of operating and
interest expenses and land development costs.
In 1993 and 1992, over 75% of the Company's debt was represented by mortgages
and bonds collateralized by operating properties. Scheduled principal payments
on property debt were $20,735,000, $17,907,000 and $20,101,000 in 1993, 1992 and
1991, respectively, including $20,109,000, $17,596,000 and $17,046,000 related
to operating properties debt. The annual maturities of debt for the next five
years include balloon payments of $9,600,000 in 1994, $81,396,000 in 1995,
$34,601,000 in 1996, $86,042,000 in 1997 and $38,274,000 in 1998. The Company is
confident that it will be able to make these payments or arrange to refinance or
extend these maturities prior to their scheduled repayment dates. During 1993,
the Company completed numerous financing and refinancing transactions. These
included public offerings of unsecured debt and Preferred stock of $120,000,000
and $201,250,000, respectively, repayment of a line of credit of $60,000,000
used to finance various property improvements, redemption of an issue of
convertible subordinated debentures of $100,000,000 and refinancing of debt
related to various retail and office/mixed-use properties. In addition, the
Company obtained commitments to refinance or extend the maturity dates of other
project related debt. As a result of these transactions
29
<PAGE>
- --------------------------------------------------------------------------------
and the scheduled principal payments, the Company reduced the total amount of
debt maturing during the 1993-1997 period by approximately $549,846,000,
including $301,440,000 scheduled to mature in 1993 and $93,460,000 scheduled to
mature in 1994. The Company is continually evaluating sources of capital, and
management believes there are reasonable and satisfactory sources available for
all requirements without necessitating property sales.
Cash expenditures for properties in development and improvements to existing
properties funded by debt were $87,243,000, $83,377,000 and $92,888,000 in 1993,
1992 and 1991, respectively. A substantial portion of the costs of properties in
development is financed with construction or similar loans. Typically, long term
fixed rate debt financing is arranged concurrently with the construction
financing prior to the commencement of construction. Management anticipates that
acceptable methods of financing development projects with fixed rate,
nonrecourse debt will continue to be available. Improvements to existing
properties funded by debt consist primarily of costs of renovation and
remerchandising programs and other capital improvement costs. The Company's
share of these costs has been financed primarily from proceeds of refinancings
of the related properties or other properties, credit line borrowings and a
portion of the proceeds of the 8.5% unsecured notes issued in January 1993. The
interest costs on these financings are included in the operating results of the
operating properties segment.
Cash expenditures for acquisitions of interests in properties were $34,967,000
in 1993, $38,806,000 in 1992 and $1,187,000 in 1991. A substantial portion of
these costs has been financed using nonrecourse debt. The acquisitions in 1993
and 1992 consist primarily of purchases of partners' interests in retail
properties.
Cash expenditures for improvements to existing properties funded by cash
provided by operating activities were $13,341,000, $23,976,000 and $20,273,000
in 1993, 1992 and 1991, respectively. These expenditures are generally
discretionary in nature and increase the appeal of the operating properties,
thereby enhancing the merchants' sales prospects.
The Company has available sources of capital in addition to those discussed
above. The Company's equity interests in its operating properties and properties
held for development and sale (principally Columbia land) and land in
development represent a source of funds either through sales or refinancings.
The aggregate equity value of these interests as of December 31, 1993 was
approximately $2,227,000,000. The Company also has lines of credit available
totalling $135,000,000 which can be used to fund property acquisition costs,
finance other corporate needs, repay existing indebtedness or provide corporate
liquidity, subject to approval by the lenders. The agreements relating to
certain of the lines of credit, the 8.5% unsecured notes and certain other loans
impose limitations on the Company. The most restrictive of these limit the
Company's ability to incur certain types of additional debt if the Company does
not maintain specified debt service coverage ratios. The agreements also impose
restrictions on sale, lease and certain other transactions, subject to various
exclusions and limitations.
Impact of Inflation
The major portion of the Company's operating properties, its retail centers, is
substantially protected from declines in the purchasing power of the dollar.
Retail leases generally provide for minimum rents plus percentage rents based on
sales over a minimum base. Generally, increases in tenant sales (whether due to
increased unit sales or increased prices from demand or general inflation) will
result in increased rental revenue to the Company. A substantial portion of the
tenant leases (office and retail) also provide for other rents which reimburse
the Company for certain of its operating expenses; consequently, increases in
these costs do not have a significant impact on the Company's operations. The
Company has a significant amount of debt which, in a period of inflation, will
result in a holding gain since debt will be paid off with dollars having less
purchasing power.
30
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Five Year Comparison of Selected Financial Data
- ---------------------------------------------------------------------------------------------------------------------------------
Year ended December 31 (in thousands, except per share data)
1993 1992 1991 1990 1989
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Operating results:
Revenues from continuing operations..................... $ 646,805 $ 597,105 $ 573,498 $ 529,570 $ 498,100
Earnings (loss) from continuing operations.............. (1,291) (15,849) 2,424 (1,165) 10,361
Earnings (loss) from continuing operations per share
of common stock....................................... (.27) (.33) .05 (.07) .16
Earnings before depreciation and deferred taxes from
operations............................................ 78,281 52,282 46,820 50,290 57,084
Total assets-cost basis.................................. 2,874,982 2,726,281 2,637,452 2,614,877 2,299,615
Total assets-current value basis......................... 4,588,636 4,217,819 4,174,093 4,362,153 4,129,645
Debt, capital leases and Redeemable Preferred stock...... 2,473,596 2,498,983 2,374,527 2,344,095 1,995,769
Shareholders' equity (deficit):
Historical cost basis................................... 113,151 (34,848) 17,328 25,339 52,951
Current value basis..................................... 1,525,606 1,188,896 1,274,070 1,470,088 1,730,075
Shareholders' equity (deficit) per share of
common stock:
Historical cost basis................................... (1.50) (.74) .36 .53 1.10
Current value basis..................................... 26.75 25.50 26.60 30.10 34.80
Dividends per share of common stock...................... .62 .60 .60 .60 .56
Dividends per share of convertible Preferred Stock....... 2.83 -- -- -- --
Weighted average common shares outstanding............... 47,411 47,994 48,157 48,019 47,910
Market price per share of common stock at year end....... 17.75 18.00 18.25 14.50 26.00
Market price per share of convertible Preferred stock at
year end.............................................. 53.75 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Intermin Financial Information (Unaudited)
Interim consolidated results of operations are summarized as follows (in thousands, except per share data):
- ---------------------------------------------------------------------------------------------------------------------------------
Quarter ended
----------------------------------------------------------------------------------------
December September June March December September June March
31, 1993 30, 1993 30, 1993 31, 1993 31, 1992 30, 1992 30, 1992 31, 1992
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues....................... $ 173,842 $ 165,880 $ 154,341 $ 152,742 $ 164,992 $ 150,981 $ 140,688 $ 140,444
Operating income (loss)........ 7,053 2,118 975 (1,305) 1,583 (3,512) (8,666) (4,934)
Earnings (loss) before
extraordinary loss............ 740 (924) 436 (1,543) (1,044) (6,214) (6,061) (2,530)
Net earnings (loss)............ (515) (4,414) (1,912) (2,501) (1,255) (6,284) (6,128) (2,530)
========= ========= ========= ========= ========= ========= ========= =========
Earnings (loss) per
common share:
Earnings (loss) before
extraordinary loss............ $ (.05) $ (.09) $ (.06) $ (.07) $ (.02) $ (.13) $ (.13) $ (.05)
Extraordinary loss............. (.03) (.07) (.05) (.02) (.01) -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total......................... $ (.08) $ (.16) $ (.11) $ (.09) $ (.03) $ (.13) $ (.13) $ (.05)
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
Note - Net loss for the quarter ended December 31, 1993 includes a provision for
loss on investment in an operating property of $3,531,000 ($.07 per share).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price of Common Stock and Dividends
The Company's common stock is traded over the counter. The bid prices and dividends per share were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter ended
--------------------------------------------------------------------------------
December September June March December September June March
31, 1993 30, 1993 30, 1993 31, 1993 31, 1992 30, 1992 30, 1992 31, 1992
-------- --------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High bid price................................. 21 20 1/2 18 3/4 19 18 15 1/4 15 1/4 18 1/2
Low bid price.................................. 17 3/4 15 16 15 3/4 13 1/4 11 1/4 12 3/4 14 1/4
Dividends...................................... .17 .15 .15 .15 .15 .15 .15 .15
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Number of Holders of Common Stock
The number of holders of record of the Company's common stock as of
March 1, 1994 was 2,755.
31
<PAGE>
The Rouse Company and Subsidiaries
FIVE YEAR SUMMARY OF EARNINGS BEFORE DEPRECIATION AND
DEFERRED TAXES FROM OPERATIONS AND NET EARNINGS (LOSS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Operating properties:
Retail centers:
Minimum and percentage rents $227,140 $210,909 $208,560 $196,612 $184,651
Other rents and other
revenues................... 236,458 217,571 207,641 189,491 176,249
Office, mixed-use and other:
Minimum and percentage rents 81,415 76,302 71,629 56,176 42,943
Other rents and other
revenues................... 62,617 60,335 59,379 60,406 50,510
-------- -------- -------- -------- --------
607,630 565,117 547,209 502,685 454,353
Land sales.................... 35,313 29,137 24,111 22,991 35,359
Development fees.............. -- -- 375 -- 644
Corporate interest income..... 3,862 2,851 1,803 3,894 7,744
-------- -------- -------- -------- --------
646,805 597,105 573,498 529,570 498,100
-------- -------- -------- -------- --------
Operating expenses, exclusive
of depreciation and
amortization:
Operating properties:
Retail centers............... 251,386 241,395 233,730 218,168 205,451
Office, mixed-use and other.. 76,148 69,589 69,129 60,944 48,980
-------- -------- -------- -------- --------
327,534 310,984 302,859 279,112 254,431
Land sales.................... 19,387 16,330 12,848 13,629 18,503
Development................... 3,853 4,421 5,681 6,775 4,445
Corporate..................... 6,184 5,927 6,567 6,667 8,164
-------- -------- -------- -------- --------
356,958 337,662 327,955 306,183 285,543
-------- -------- -------- -------- --------
Interest expense:
Operating properties:
Retail centers............... 124,204 115,744 117,843 105,441 99,041
Office, mixed-use and other.. 65,601 69,199 63,474 51,581 40,241
-------- -------- -------- -------- --------
189,805 184,943 181,317 157,022 139,282
Land sales.................... 4,093 2,959 2,728 2,917 4,674
Development................... 495 495 495 495 --
Corporate..................... 16,413 18,412 13,755 10,088 8,501
-------- -------- -------- -------- --------
210,806 206,809 198,295 170,522 152,457
-------- -------- -------- -------- --------
Preferred stock dividends
(Note)....................... -- -- -- 2,273 2,593
State income taxes--current... 760 352 428 302 423
-------- -------- -------- -------- --------
568,524 544,823 526,678 479,280 441,016
-------- -------- -------- -------- --------
Earnings before depreciation
and deferred taxes from
operations................... $ 78,281 $ 52,282 $ 46,820 $ 50,290 $ 57,084
======== ======== ======== ======== ========
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Earnings before depreciation and deferred
taxes from operations by segment:
Operating properties:
Retail centers...................................... $ 87,248 $ 70,966 $ 64,097 $ 61,999 $ 56,006
Office, mixed-use and other......................... 2,283 (2,127) (1,591) 4,051 4,199
-------- -------- -------- -------- --------
89,531 68,839 62,506 66,050 60,205
Land sales............................................ 11,833 9,847 8,634 6,644 12,194
Development........................................... (4,348) (4,916) (5,801) (7,270) (3,801)
Corporate (Note)..................................... (18,735) (21,488) (18,519) (15,134) (11,514)
-------- -------- -------- -------- --------
Earnings before depreciation and
deferred taxes from operations.................... $ 78,281 $ 52,282 $ 46,820 $ 50,290 $ 57,084
======== ======== ======== ======== ========
Reconciliation to net earnings (loss):
Earnings before depreciation and deferred
taxes from operations............................... $ 78,281 $ 52,282 $ 46,820 $ 50,290 $ 57,084
Depreciation and amortization......................... (70,200) (68,163) (65,735) (55,360) (47,646)
Deferred income taxes applicable to operations........ (3,603) 5,286 (2,393) (1,120) (7,047)
Preferred stock dividends (Note)...................... -- -- -- 2,273 2,593
Gain (loss) on dispositions of assets and other
provisions, net..................................... (5,769) (5,254) 23,732 2,752 5,377
Extraordinary loss, net of related income tax
benefit............................................. (8,051) (348) (90) (651) (628)
Cumulative effect of change in accounting
principle............................................ -- -- 13,463 -- --
-------- -------- -------- -------- --------
Net earnings (loss)................................... $ (9,342) $(16,197) $ 15,797 $ (1,816) $ 9,733
======== ======== ======== ======== ========
</TABLE>
Note--Preferred stock dividends paid in 1989 and 1990 are included as additional
corporate expenses because the stock was subject to mandatory redemption
requirements for cash. The Redeemable Preferred stock was repurchased in
1990. The convertible Preferred stock issued in 1993 is redeemable only
for shares of common stock and, accordingly, related dividends are not
deducted from EBDT.
33
<PAGE>
[OMITTED PAGE 34]
34
<PAGE>
PROJECTS OF THE ROUSE COMPANY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Date of Opening Retail Square Footage
Retail Centers in Operation or Acquisition Department Stores Total Center Mall Only
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Almeda Mall, Houston, TX(a) 10/68 Foley's; JCPenney 794,000 294,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Shops at Arizona Center, Phoenix, AZ(a) 11/90 -- 151,000 151,000
- ------------------------------------------------------------------------------------------------------------------------------------
Augusta Mall, Augusta, GA(b) 8/78 Rich's; R. H. Macy; JCPenney; Sears 902,000 313,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bayside Marketplace, Miami, FL(b) 4/87 -- 223,000 223,000
- ------------------------------------------------------------------------------------------------------------------------------------
Beachwood Place, Cleveland, OH(b) 8/78 Saks Fifth Avenue; Dillard's 453,000 228,000
- ------------------------------------------------------------------------------------------------------------------------------------
Burlington Center, Burlington, NJ(d) 8/82 Strawbridge & Clothier; Sears 567,000 246,000
- ------------------------------------------------------------------------------------------------------------------------------------
Carillon, Houston, TX(b) 8/80 -- 182,000 182,000
- ------------------------------------------------------------------------------------------------------------------------------------
Chapel Square, New Haven, CT(a) 4/83 -- 151,000 151,000
- ------------------------------------------------------------------------------------------------------------------------------------
Cherry Hill, Cherry Hill, NJ(a) 10/61 Strawbridge & Clothier, R.H. 1,285,000 544,000
Macy; JCPenney
- ------------------------------------------------------------------------------------------------------------------------------------
The Citadel, Colorado Springs, CO(d) 8/80 Mervyn's; JCPenny; May D&F 935,000 460,000
- ------------------------------------------------------------------------------------------------------------------------------------
College Square, Cedar Falls, IA(d) 8/80 Petersen; Younkers; Wal-Mart 560,000 313,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Mall in Columbia, Columbia, MD(a) 8/71 Woodward & Lothrop; Hecht's; Sears 876,000 421,000
- ------------------------------------------------------------------------------------------------------------------------------------
Columbus Square, Columbus, GA(d) 9/88 Sears, JCPenney; Kirvens 631,000 254,000
- ------------------------------------------------------------------------------------------------------------------------------------
Eastfield Mall, Springfield, MA(a) 4/68 Sears; Steiger's; JCPenney 656,000 217,000
- ------------------------------------------------------------------------------------------------------------------------------------
Echelon Mall, Voorhees, NJ(a) 9/70 Strawbridge & Clothier; JCPenney; 1,053,000 485,000
Boscov's
- ------------------------------------------------------------------------------------------------------------------------------------
Exton Square, Exton, PA(a) 3/73 Strawbridge & Clothier 434,000 253,000
- ------------------------------------------------------------------------------------------------------------------------------------
Faneuil Hall Marketplace, Boston, MA(a) 8/76 -- 215,000 215,000
- ------------------------------------------------------------------------------------------------------------------------------------
Fashion Island, Newport Beach, CA(c) 8/90 The Broadway; I. Magnin; 1,209,000 588,000
Robinson's--May; Neiman Marcus
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Park, Toledo, OH(b) 7/71 Hudson's; JCPenney; Jacobson's; Lion 1,082,000 313,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Gallery at Harborplace, Baltimore, MD(a) 9/87 -- 139,000 139,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Gallery at Market East, Philadelphia, PA(a)(b) 8/77 Strawbridge & Clothier; JCPenney 1,316,000 359,000
- ------------------------------------------------------------------------------------------------------------------------------------
Governor's Square, Tallahassee, FL(b) 8/79 Burdine's; Sears; JCPenney; Dillard's 1,031,000 340,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Grand Avenue, Milwaukee, WI(a) 8/82 Marshall Field; The Boston Store 842,000 242,000
- ------------------------------------------------------------------------------------------------------------------------------------
Greengate Mall, Greensburg, PA(a) 8/65 Joseph Horne; JCPenney; Montgomery Ward 612,000 233,000
- ------------------------------------------------------------------------------------------------------------------------------------
Harborplace, Baltimore, MD(a) 7/80 -- 136,000 136,000
- ------------------------------------------------------------------------------------------------------------------------------------
Harundale Mall, Glen Burnie, MD(b) 10/58 Value City 325,000 248,000
- ------------------------------------------------------------------------------------------------------------------------------------
Highland Mall, Austin, TX(b) 8/71 Dillard's; JCPenney; Foley's 1,082,000 364,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hulen Mall, Ft. Worth, TX(a) 8/77 Foley's; Montgomery Ward 566,000 200,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Jacksonville Landing, Jacksonville, FL(a) 6/87 -- 128,000 128,000
- ------------------------------------------------------------------------------------------------------------------------------------
Mall St. Matthews, St. Matthews, KY(a) 3/62 JCPenney; Bacon's 675,000 255,000
- ------------------------------------------------------------------------------------------------------------------------------------
Marshall Town Center, Marshalltown, IA(d) 8/80 JCPenney; Younkers; Menard's 340,000 153,000
- ------------------------------------------------------------------------------------------------------------------------------------
Midtown Square, Charlotte, NC(a) 10/59 Burlington Coat Factory 235,000 190,000
- ------------------------------------------------------------------------------------------------------------------------------------
Military Circle, Norfolk, VA(d) 1/86 JCPenney; Leggetts; Thalhimers 940,000 426,000
- ------------------------------------------------------------------------------------------------------------------------------------
Mondawmin(a)/Metro Plaza(b), Baltimore, MD 1/78; 12/82 -- 496,000 496,000
- ------------------------------------------------------------------------------------------------------------------------------------
Muscatine Mall, Muscatine, IA(d) 8/80 JCPenney; Petersen; Wal-Mart 347,000 186,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Date of Opening Retail Square Footage
Retail Centers in Operation or Acquisition Department Stores Total Center Mall Only
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Shops at National Place, Washington, D.C (a) 5/84 -- 125,000 125,000
- ------------------------------------------------------------------------------------------------------------------------------------
North Grand, Ames, IA(d) 8/80 JCPenney; Sears; Younkers 350,000 157,000
- ------------------------------------------------------------------------------------------------------------------------------------
North Star, San Antonio, TX(b) 9/60 Dillard's; Foley's; Saks Fifth 1,288,000 487,000
Avenue; Marshall Field; Mervyn's
- ------------------------------------------------------------------------------------------------------------------------------------
Northwest Arkansas Mall, Fayetteville, AR(d) 8/80 JCPenney; Sears; Dillard's 569,000 257,000
- ------------------------------------------------------------------------------------------------------------------------------------
Northwest Mall, Houston, TX(a) 10/68 Foley's; JCPenney 800,000 292,000
- ------------------------------------------------------------------------------------------------------------------------------------
Oakwood Center, Gretna, LA(a) 10/82 Sears; Dillard's; Mervyn's 721,000 282,000
- ------------------------------------------------------------------------------------------------------------------------------------
Outlet Square, Atlanta, GA(a) 7/83 Burlington Coat Factory; Marshalls 326,000 183,000
- ------------------------------------------------------------------------------------------------------------------------------------
Owings Mills, Baltimore County, MD(a) 7/86 R.H. Macy; Hecht's; Saks Fifth 809,000 325,000
Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
Paramus Park, Paramus, NJ(b) 3/74 Abraham & Straus; Sears 737,000 277,000
- ------------------------------------------------------------------------------------------------------------------------------------
Perimeter Mall, Atlanta, GA(b) 8/71 Rich's; JCPenney; R.H. Macy 1,222,000 442,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Place, Portland, OR(a) 3/90 Saks Fifth Avenue 220,000 160,000
- ------------------------------------------------------------------------------------------------------------------------------------
Plymouth Meeting, Montgomery County, PA(a) 2/66 Strawbridge & Clothier; Hess 784,000 442,000
- ------------------------------------------------------------------------------------------------------------------------------------
Randhurst, Mt. Prospect, IL(d) 7/81 Carson, Pirie, Scott; JCPenney; 1,263,000 530,000
Montgomery Ward; Kohls
- ------------------------------------------------------------------------------------------------------------------------------------
Ridgedale Center, Minnetonka, MN(d) 1/89 Carson, Pirie, Scott; Dayton's; 1,039,000 334,000
JCPenney; Sears
- ------------------------------------------------------------------------------------------------------------------------------------
Riverwalk, New Orleans, LA(a) 8/86 -- 179,000 179,000
- ------------------------------------------------------------------------------------------------------------------------------------
St. Louis Union Station, St. Louis, MO(a) 8/85 -- 170,000 170,000
- ------------------------------------------------------------------------------------------------------------------------------------
Salem Centre, Salem, OR(d) 6/90 Meier & Frank; JCPenney; 657,000 219,000
Mervyn's; Nordstrom
- ------------------------------------------------------------------------------------------------------------------------------------
Salem Mall, Dayton, OH(a) 10/66 Lazarus; Sears; JCPenney 817,000 312,000
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Monica Place, Santa Monica, CA(b) 10/80 The Broadway; Robinson's--May 564,000 281,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sherway Gardens, Toronto, ONT(c) 12/78 Eaton's; Brettons; The Bay 968,000 520,000
- ------------------------------------------------------------------------------------------------------------------------------------
South DeKalb, Decatur, GA(a) 7/78 Rich's; JCPenney 691,000 329,000
- ------------------------------------------------------------------------------------------------------------------------------------
Southland, Taylor, MI(d) 1/89 Hudson's; Mervyn's; JCPenney 903,000 320,000
- ------------------------------------------------------------------------------------------------------------------------------------
South Street Seaport, New York, NY(a) 7/83 -- 252,000 252,000
- ------------------------------------------------------------------------------------------------------------------------------------
Staten Island Mall, Staten Island, NY(d) 11/80 Sears; R.H. Macy; JCPenney 1,224,000 615,000
- ------------------------------------------------------------------------------------------------------------------------------------
Mall St. Vincent, Shreveport, LA(c) 8/80 Sears; Dillard's 556,000 200,000
- ------------------------------------------------------------------------------------------------------------------------------------
Talbotttown, Easton, MD(a) 3/57 JCPenney 90,000 71,000
- ------------------------------------------------------------------------------------------------------------------------------------
Tampa Bay Center, Tampa, FL(b) 8/76 Burdine's; Sears; Montgomery Ward 883,000 325,000
- ------------------------------------------------------------------------------------------------------------------------------------
Town and Country Center, Miami, FL(c) 2/88 Sears; Marshalls; Mervyn's 645,000 543,000
- ------------------------------------------------------------------------------------------------------------------------------------
Underground Atlanta, Atlanta, GA(c) 6/89 -- 219,000 219,000
- ------------------------------------------------------------------------------------------------------------------------------------
Village of Cross Keys, Baltimore, MD(a) 9/65 -- 68,000 68,000
- ------------------------------------------------------------------------------------------------------------------------------------
Westlake Center, Seattle, WA(b) 10/88 Nordstrom; Bon Marche 723,000 118,000
- ------------------------------------------------------------------------------------------------------------------------------------
Westland Mall, West Burlington, IA(d) 8/80 JCPenney; Younkers 344,000 175,000
- ------------------------------------------------------------------------------------------------------------------------------------
White Marsh, Baltimore County, MD(a) 8/81 R.H. Macy; JCPenney; Hecht's; 1,181,000 362,000
Sears; Woodward & Lothrop
- ------------------------------------------------------------------------------------------------------------------------------------
Willowbrook, Wayne NJ(b) 9/69 R.H. Macy; Steinbach's; Stern's; Sears 1,491,000 485,000
- ------------------------------------------------------------------------------------------------------------------------------------
Woodbridge Center, Woodbridge, NJ(a) 3/71 Abraham & Strauss; JCPenney; 1,530,000 560,000
Stern's; Steinbach's; Fortunoff
- ------------------------------------------------------------------------------------------------------------------------------------
Total Retail Centers in Operation 45,977,000 20,562,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Retail Centers Under Construction Retail Square Footage
or in Development Department Stores Total Center Mall Only
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oakwood Center Expansion, Gretna, LA Maison Blanche 223,000 63,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hulen Mall Expansion, Ft. Worth, TX Dillard's 360,000 130,000
- ------------------------------------------------------------------------------------------------------------------------------------
Mall St. Matthews Expansion, St. Matthews, KY Dillard's 320,000 90,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Retail Centers Under Construction or
in Development 903,000 283,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Office Projects in Operation Location Square Feet
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
300 East Lombard(c) Baltimore, MD 233,000
- ------------------------------------------------------------------------------------------------------------------------------------
Quadrangle at Cross Keys(a) Baltimore, MD 106,000
- ------------------------------------------------------------------------------------------------------------------------------------
Village Square at Cross Keys(a) Baltimore, MD 79,000
- ------------------------------------------------------------------------------------------------------------------------------------
Legg Mason Tower(a) Baltimore, MD 265,000
- ------------------------------------------------------------------------------------------------------------------------------------
Schilling Center(a) Hunt Valley, MD 55,000
- ------------------------------------------------------------------------------------------------------------------------------------
Alexander & Alexander Building(b) Owings Mills, MD 143,000
- ------------------------------------------------------------------------------------------------------------------------------------
Alexander & Alexander Building II(b) Owings Mills, MD 198,000
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Cross & Blue Shield Buiding I(b) Owings Mills, MD 270,000
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Cross & Blue Shield Building II(b) Owings Mills, MD 117,000
- ------------------------------------------------------------------------------------------------------------------------------------
One Arizona Center(a) Phoenix, AZ 322,000
- ------------------------------------------------------------------------------------------------------------------------------------
Two Arizona Center(a) Phoenix, AZ 444,000
- ------------------------------------------------------------------------------------------------------------------------------------
Chapel Square(a) New Haven, CT 136,000
- ------------------------------------------------------------------------------------------------------------------------------------
First National Bank Plaza(a) Mt. Prospect, IL 66,000
- ------------------------------------------------------------------------------------------------------------------------------------
Faneuil Hall Marketplace(a) Boston, MA 147,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Place(a) Portland, OR 284,000
- ------------------------------------------------------------------------------------------------------------------------------------
Military Circle(d) Norfolk, VA 135,000
- ------------------------------------------------------------------------------------------------------------------------------------
Westlake Center(b) Seattle, WA 342,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Office Projects in Operation 3,342,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Hotel Projects in Operation Location Rooms
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cross Keys Inn(a) Baltimore, MD 148
- ------------------------------------------------------------------------------------------------------------------------------------
Military Circle(d) Norfolk, VA 208
- ------------------------------------------------------------------------------------------------------------------------------------
Stouffer Harborplace Hotel Baltimore, MD 622
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Columbia Properties in Operation Type of Project Square Feet
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Mall in Columbia*(a) Retail 873,000
- ------------------------------------------------------------------------------------------------------------------------------------
Gateway Plaza(a) Retail 24,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dobbin Center(b) Community Retail 219,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dorsey's Search Village Center(a) Community Retail 86,000
- ------------------------------------------------------------------------------------------------------------------------------------
Harper's Choice Village Center(a) Community Retail 81,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hickory Ridge Village Center(a) Community Retail 97,000
- ------------------------------------------------------------------------------------------------------------------------------------
King's Contrivance Village Center(a) Community Retail 107,000
- ------------------------------------------------------------------------------------------------------------------------------------
Long Reach Village Center(a) Community Retail 77,000
- ------------------------------------------------------------------------------------------------------------------------------------
Oakland Mills Village Center(a) Community Retail 62,000
- ------------------------------------------------------------------------------------------------------------------------------------
Wilde Lake Village Center(a) Community Retail 95,000
- ------------------------------------------------------------------------------------------------------------------------------------
10 Corporate Center(a) Office 89,000
- ------------------------------------------------------------------------------------------------------------------------------------
20 Corporate Center(a) Office 105,000
- ------------------------------------------------------------------------------------------------------------------------------------
American City Building(a) Office 111,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dorsey's Search Office Building(a) Office 20,000
- ------------------------------------------------------------------------------------------------------------------------------------
Exhibit Building(a) Office 20,000
- ------------------------------------------------------------------------------------------------------------------------------------
PaineWebber Building(a) Office 134,000
- ------------------------------------------------------------------------------------------------------------------------------------
Parkside(a) Office 112,000
- ------------------------------------------------------------------------------------------------------------------------------------
Park View(a) Office 137,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ridgely Building(a) Office 39,000
- ------------------------------------------------------------------------------------------------------------------------------------
The Ryland Group Headquarters(a) Office 167,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sterrett Building(a) Office 38,000
- ------------------------------------------------------------------------------------------------------------------------------------
Columbia Center Building(a) Office 44,000
- ------------------------------------------------------------------------------------------------------------------------------------
Oakland Building(a) R&D/Industrial 145,000
- ------------------------------------------------------------------------------------------------------------------------------------
Gateway Commerce Center 1, 2 & 20 Industrial 1,895,000
- ------------------------------------------------------------------------------------------------------------------------------------
Columbia Inn(a) Hotel 289 rooms
- ------------------------------------------------------------------------------------------------------------------------------------
Total Columbia Properties in Operation 4,777,000
- ------------------------------------------------------------------------------------------------------------------------------------
*Also listed in previous table of Retail Centers in Operation
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Projects are wholly-owned subsidiaries of the Company.
(b) Projects are owned by joint ventures or partnerships and, except for
Carillon, are managed by subsidiaries of the Company for a fee. The
Company's ownership interest, through its subsidiaries, is at least 50%
(except Carillon in which the Company has a 20% interest and North Star and
Willowbrook in which the Company has 37 1/2% interests).
(c) Projects are managed by subsidiaries of the Company for a fee plus a share
of cash flow.
(d) Projects are owned by partnerships or wholly-owned (Staten Island Mall,
Randhurst Center, Military Circle and Burlington Center) by subsidiaries of
the Company and are managed by subsidiaries of the Company for a fee plus a
share of cash flow and a share of proceeds from sales or refinancings. The
Company's ownership interest in the partnerships is determined based upon
the results of operations.
38
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Office Projects Owned by Rouse-Teachers Properties, Inc. Location Square Feet
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Baltimore Freeport Centre Baltimore, MD 58,000
- ------------------------------------------------------------------------------------------------------------------------------------
Triangle Business Center Baltimore, MD 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Owen Brown I & II Columbia, MD 122,000
- ------------------------------------------------------------------------------------------------------------------------------------
RiversPark I & II Columbia, MD 306,000
- ------------------------------------------------------------------------------------------------------------------------------------
Center Pointe Hunt Valley, MD 130,000
- ------------------------------------------------------------------------------------------------------------------------------------
201 International Circle Hunt Valley, MD 79,000
- ------------------------------------------------------------------------------------------------------------------------------------
Loveton Center 9 Hunt Valley, MD 53,000
- ------------------------------------------------------------------------------------------------------------------------------------
11011 McCormick Road Hunt Valley, MD 57,000
- ------------------------------------------------------------------------------------------------------------------------------------
Schilling Plaza North Hunt Valley, MD 96,000
- ------------------------------------------------------------------------------------------------------------------------------------
Schilling Plaza South Hunt Valley, MD 108,000
- ------------------------------------------------------------------------------------------------------------------------------------
Westinghouse Building Hunt Valley, MD 225,000
- ------------------------------------------------------------------------------------------------------------------------------------
Inglewood Office Centres 1, 2 Prince George's County, MD 222,000
- ------------------------------------------------------------------------------------------------------------------------------------
Inglewood Tech Centers I, II, III, IV & V Prince George's County, MD 316,000
- ------------------------------------------------------------------------------------------------------------------------------------
Silver Spring Metro Plaza Silver Spring, MD 692,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ambassador Center Woodlawn, MD 83,000
- ------------------------------------------------------------------------------------------------------------------------------------
15-17 Governor's Court Woodlawn, MD 29,000
- ------------------------------------------------------------------------------------------------------------------------------------
21 Governor's Court Woodlawn, MD 56,000
- ------------------------------------------------------------------------------------------------------------------------------------
Parkview Center Woodlawn, MD 58,000
- ------------------------------------------------------------------------------------------------------------------------------------
Harbourside Tampa, FL 147,000
- ------------------------------------------------------------------------------------------------------------------------------------
One & Two Prestige Place Tampa, FL 144,000
- ------------------------------------------------------------------------------------------------------------------------------------
McCormick Centre I, II & III Tampa, FL 202,000
- ------------------------------------------------------------------------------------------------------------------------------------
Gateway Centers I & II Raleigh, NC 116,000
- ------------------------------------------------------------------------------------------------------------------------------------
One Springfield Center Raleigh, NC 37,000
- ------------------------------------------------------------------------------------------------------------------------------------
Senate Plaza Camp Hill, PA 231,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Office Projects Owned by 3,642,000
Rouse-Teachers Properties, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Projects Owned by Rouse-Teachers Properties, Inc. Location Square Feet
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pulaski Industrial Park Essex, MD 215,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hunt Valley Business Community Hunt Valley, MD 1,298,000
- ------------------------------------------------------------------------------------------------------------------------------------
Rutherford Business Center Woodlawn, MD 572,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Industrial Projects Owned 2,085,000
by Rouse-Teachers Properties, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
Exhibit 22. Subsidiaries of the Registrant
The Registrant had no parent at December 31, 1993.
As of December 31, 1993, the Registrant owned 100% of the
voting securities of the following domestic and foreign subsidiaries
included in the consolidated financial statements:
<TABLE>
<CAPTION>
State of
Subsidiary Incorporation
---------- -------------
<S> <C>
Domestic subsidiaries:
American City Corporation, The Maryland
Baltimore Center, Inc. Maryland
Charlottetown, Inc. Maryland
Charlottetown North, Inc. Maryland
Clover Square of Pennsylvania, Inc. Maryland
Community Research and Development, Inc. Maryland
Exton Square, Inc. Pennsylvania
Four Owings Mills Corporate Center, Inc. Maryland
Gallery Maintenance, Inc. (Note 1) Maryland
Gallery II Trustee, Inc. Maryland
Harbor Overlook Investments, Inc. Maryland
Harborplace, Inc. Maryland
Harborplace Management Corporation Maryland
Harundale Mall, Inc. Maryland
Hermes Incorporated Maryland
Howard Research And Development
Corporation, The (Note 2) Maryland
Huntington Properties, Inc. Maryland
It's Showtime of Maryland, Inc. Maryland
Kalimba Marketplace, Inc. Maryland
Louisville Shopping Center, Inc. Kentucky
Mondawmin Corporation Maryland
O. M. Guaranty, Inc. Maryland
O. M. Land Development, Inc. Maryland
O. M. Mall Corporation Maryland
O. M. Management Company, Inc. Maryland
One Owings Mills Corporate Center, Inc. Maryland
Plymouth Meeting Mall, Inc. Pennsylvania
PT Funding, Inc. Maryland
Rouse-Brandywood, Inc. Maryland
Rouse-Columbus, Inc. Maryland
Rouse-Commerce, Inc. Maryland
Rouse Company at Owings Mills, The Maryland
Rouse Company Financial Services, Inc., The Maryland
Rouse Company of Alabama, Inc., The Alabama
Rouse Company of Arkansas, Inc., The Maryland
Rouse Company of California, Inc., The (Note 3) Maryland
Rouse Company of Colorado, Inc., The (Note 4) Maryland
Rouse Company of Connecticut, Inc., The (Note 5) Connecticut
Rouse Company of Florida, Inc., The (Note 6) Florida
</TABLE>
<PAGE>
2.
<TABLE>
<S> <C>
Rouse Company of Georgia, Inc., The (Note 7) Georgia
Rouse Company of Illinois, Inc., The Maryland
Rouse Company of Iowa, Inc., The (Note 8) Maryland
Rouse Company of Kentucky, Inc., The Maryland
Rouse Company of Louisiana, The (Note 9) Maryland
Rouse Company of Massachusetts, Inc., The
(Note 10) Maryland
Rouse Company of Michigan, Inc., The (Note 11) Maryland
Rouse Company of Minnesota, Inc., The (Note 12) Maryland
Rouse Company of New Hampshire, Inc., The Maryland
Rouse Company of New Jersey, Inc., The (Note 13) New Jersey
Rouse Company of New York, Inc., The (Note 14) New York
Rouse Company of North Carolina, Inc.,
The (Note 15) Maryland
Rouse Company of Ohio, Inc., The (Note 16) Ohio
Rouse Company of Oklahoma, Inc., The Maryland
Rouse Company of Oregon, Inc., The (Note 17) Maryland
Rouse Company of Pennsylvania,
Inc., The (Note 18) Pennsylvania
Rouse Company of South Carolina,
Inc., The (Note 19) Maryland
Rouse Company of Tennessee, Inc., The Maryland
Rouse Company of Texas, Inc., The (Note 20) Texas
Rouse Company of the District of Columbia, The Maryland
Rouse Company of Virginia, Inc., The (Note 21) Maryland
Rouse Company of Washington, Inc., The (Note 22) Maryland
Rouse Company of Wisconsin, Inc., The Maryland
Rouse-Consulting, Inc. Maryland
Rouse Credit Corporation Maryland
Rouse Development Company of California, Inc.,
The Maryland
Rouse Event Marketing, Inc. Maryland
Rouse-Fairwood Development Corporation Maryland
Rouse Fashion Island Management Company, Inc. Maryland
Rouse Gallery II Management, Inc. Maryland
Rouse Holding Company, The Maryland
Rouse Holding Company of Arizona, Inc., The
(Note 23) Maryland
Rouse-Inglewood, Inc. Maryland
Rouse Investing Company (Note 24) Maryland
Rouse Management, Inc. Maryland
Rouse Management Services Corporation Maryland
Rouse Management Services Corporation of
Arkansas, Inc. Maryland
Rouse Management Services Corporation
of Louisiana, Inc. Maryland
Rouse Metro Plaza, Inc. Maryland
Rouse-Metro Shopping Center, Inc. Maryland
Rouse-Milwaukee, Inc. Maryland
Rouse-Milwaukee Garage
Maintenance, Inc. Maryland
Rouse Missouri Holding Company
(Note 25) Maryland
Rouse-Oakwood Shopping Center, Inc. Maryland
</TABLE>
<PAGE>
3.
<TABLE>
<S> <C>
Rouse-Oakwood Two, Inc. Maryland
Rouse Office Management, Inc. Maryland
Rouse Office Management of Pennsylvania, Inc. Maryland
Rouse Philadelphia, Inc. Maryland
Rouse Philadelphia Three, Inc. Maryland
Rouse-Randhurst Shopping Center, Inc. Maryland
Rouse-Santa Monica, Inc. Delaware
Rouse Service Company, The Maryland
Rouse SI Shopping Center, Inc. Maryland
Rouse Tristate Venture, Inc. Texas
Rouse Venture Capital, Inc. Maryland
Rouse-Wates, Incorporated (Note 26) Delaware
RREF Holding, Inc. (Note 27) Texas
Salem Mall, Incorporated Maryland
Saratoga Equipment Corporation, The Maryland
Six Owings Mills Corporate Center, Inc. Maryland
SMPL Management, Inc. Maryland
Three Owings Mills Corporate Center, Inc. Maryland
TRC Central, Inc. Maryland
TRCD, Inc. (Note 28) Delaware
TRC Holding Company of Washington, D.C.(Note 29) Maryland
TRC Property Management, Inc. Maryland
Two Owings Mills Corporate Center, Inc. Maryland
Village of Cross Keys, Incorporated,
The (Note 30) Maryland
White Marsh Equities Corporation Maryland
White Marsh Mall, Inc. Maryland
Foreign subsidiaries:
Rouse Service (Canada) Limited Canada
Sherway Mall Hotel Limited Canada
</TABLE>
Notes:
1. Gallery Maintenance, Inc. owns all of the outstanding
capital stock of Rouse Gallery Management, Inc.
2. The Howard Research And Development Corporation owns all of
the outstanding capital stock of the following Maryland corporations:
Columbia Development Corporation, The
Columbia Gateway, Inc.
Columbia Management, Inc.
Dorsey's Search Village Center, Inc.
ExecuCentre, Inc., The
Fifty Columbia Corporate Center, Inc.
Forty Columbia Corporate Center, Inc.
Gateway Retail Center, Inc.
GEAPE II, Inc.
<PAGE>
4.
Hickory Ridge Village Center, Inc.
HRD Parking, Inc.
King's Contrivance Village Center, Inc.
Lakefront North Parking, Inc.
Oakland Ridge Commercial, Inc.
Oakland Ridge Industrial Development Corporation
Pointer's Run Buildings Group, Inc.
Rouse-River Hill Village Center, Inc.
The Columbia Development Corporation owns all of the outstanding capital
stock of each of the following Maryland corporations:
Columbia Mall, Inc.
Dobbin Road Commercial, Inc.
Guilford Industrial Center, Inc.
Rouse Hotel Management, Inc.
Columbia Mall, Inc. owns all of the outstanding capital stock of Seventy
Columbia Corporate Center, Inc., a Maryland corporation.
GEAPE II, Inc. owns all of the outstanding capital stock of GEAPE III, Inc.,
a Maryland corporation.
3. The Rouse Company of California, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Rouse-Canyon Springs, Inc., a Maryland corporation
Rouse-Irvine, Inc., a Maryland corporation
Rouse-Oakland, Inc., a Maryland corporation
4. The Rouse Company of Colorado, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Rouse Management Services Corporation of Colorado, Inc.
Rouse-Tabor Center, Inc.
5. The Rouse Company of Connecticut, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Rouse Chapel Square, Inc.
Rouse Chapel Square Finance, Inc.
Rouse New Haven Parking Management, Inc.
Rouse New Haven Shopping Center, Inc.
6. The Rouse Company of Florida, Inc. owns all of the
outstanding capital stock of each of the following corporations:
Bayside Entertainment Company, a Maryland corporation
<PAGE>
5.
Governor's Square, Inc., a Florida corporation
Howard Retail Investment Corporation, a Maryland
corporation
New River Center, Inc., a Florida corporation
Rouse-Bayside, Inc., a Maryland corporation
Rouse-Jacksonville, Inc., a Maryland corporation
Rouse Kendall Management Corporation, a Maryland
corporation
Rouse-Marina, Inc., a Maryland corporation
Rouse-Miami, Inc., a Maryland corporation
Rouse Office Management of Florida, Inc., a Maryland
corporation
Rouse-Orlando, Inc., a Maryland corporation
Rouse Retail Management - Bayside, Inc., a Maryland
corporation
Rouse-Tampa, Inc., a Florida corporation
7. The Rouse Company of Georgia, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Augusta Mall, Inc.
Outlet Square of Atlanta, Inc.
Perimeter Center, Inc.
Perimeter Mall, Inc.
Perimeter Mall Management Corporation
Rouse-Atlanta, Inc.
Rouse Columbus Square, Inc.
Rouse Columbus Square Management Corporation
Rouse South DeKalb, Inc.
South DeKalb Mall Management Corporation
8. The Rouse Company of Iowa, Inc. owns all of the outstanding
capital stock of each of the following Maryland corpora-tions:
Rouse Management Services Corporation of Iowa, Inc.
Rouse Management Services Corporation Two of Iowa, Inc.
9. The Rouse Company of Louisiana owns all of the outstanding
capital stock of each of the following Maryland corpora-tions:
Riverwalk Operating Company, Inc.
Rouse-New Orleans, Inc.
10. The Rouse Company of Massachusetts, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Eastfield Mall, Incorporated
Faneuil Hall Marketplace, Inc.
Marketplace Grasshopper, Inc.
<PAGE>
6.
11. The Rouse Company of Michigan, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Rouse Southland, Inc.
Rouse Southland Management Corporation
Southland Security, Inc.
Southland Shopping Center, Inc.
12. The Rouse Company of Minnesota, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Ridgedale Shopping Center, Inc.
Rouse-Maple Grove, Inc.
Rouse Ridgedale, Inc.
Rouse Ridgedale Management Corporation
13. The Rouse Company of New Jersey, Inc. owns all of the out-
standing capital stock of each of the following Maryland corporations:
Cherry Hill Center, Inc.
Clover Square of New Jersey, Inc.
Echelon Mall, Inc.
Echelon Urban Center, Inc.
Paramus Mall Management Company, Inc.
Paramus Park, Inc.
Rouse-Atlantic Gateway, Inc.
Rouse-Burlington, Inc.
Rouse-Echelon, Inc.
The Willowbrook Corporation
Willowbrook Management Corporation
Woodbridge Center, Inc.
14. The Rouse Company of New York, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
DM Shopping Center, Inc.
Rouse-Seaport Retail Venture, Inc.
Rouse SI Shopping Management, Inc.
Seaport Marketplace, Inc.
Seaport Marketplace Theatre, Inc.
Seaport Theatre Management Corporation
15. The Rouse Company of North Carolina, Inc. owns all of Rouse
Office Management of North Carolina, Inc.
16. The Rouse Company of Ohio, Inc. owns all of the outstanding
capital stock of each of the following corporations:
Beachwood Place, Inc., a Maryland corporation
Franklin Park Mall, Inc., a Maryland corporation
<PAGE>
7.
Franklin Park Mall Management Corporation, a
Maryland corporation
Plaza Holding Corporation, an Ohio corporation
17. The Rouse Company of Oregon, Inc. owns all of the outstanding capital stock
of each of the following Maryland corporations:
Rouse Office Management of Oregon, Inc.
Rouse-Portland, Inc.
Rouse Salem Centre, Inc.
Rouse Salem Centre Management Corporation
18. The Rouse Company of Pennsylvania, Inc. owns all of the
outstanding capital stock of Whiteland I, Inc. and Whiteland II, Inc.
19. The Rouse Company of South Carolina, Inc. owns all of the outstanding
capital stock of Rouse-Spartanburg, Inc.
20. The Rouse Company of Texas, Inc. owns all of the outstanding
capital stock of each of the following corporations:
Almeda Mall, Inc., a Maryland corporation
AM Management Corporation, a Texas corporation
AU Management Corporation, a Texas corporation
Austin Mall, Inc., a Maryland corporation
DK Management Corporation, a Texas corporation
DK Shopping Center, Inc., a Texas corporation
Greengate Mall, Inc., a Pennsylvania corporation
NC Shopping Center, Inc., a Maryland corporation
North Star Mall, Inc., a Texas corporation
Northwest Mall, Inc., a Maryland corporation
NS Management Corporation, a Texas corporation
NW Management Corporation, a Texas corporation
Paramus Equities, Inc., a Texas corporation
Rouse-Air Cargo, Inc., a Maryland corporation
Rouse-Almeda, Inc., a Maryland corporation
Rouse-Carillon Management Company, Inc., a Maryland
corporation
Rouse-Carillon Shopping Center, Inc., a Maryland
corporation
Rouse Central Park Shopping Center, Inc., a Maryland
corporation
Rouse Fort Worth, Inc., a Maryland corporation
Rouse Holding Company of Texas, Inc., a Texas
corporation
Rouse Management Services Corporation of Texas, Inc.,
a Maryland corporation
Rouse-Northwest, Inc., a Maryland corporation
SDK Mall, Inc., a Texas corporation
South DeKalb Mall, Inc., a Texas corporation
<PAGE>
8.
21. The Rouse Company of Virginia, Inc. owns all of the out-
standing capital stock of each of the following Maryland corporations:
Rouse Airport Retail, Inc.
Rouse-Military Circle, Inc.
Rouse-Richmond, Inc.
Rouse-Military Circle, Inc. owns all of the outstanding capital stock of
Rouse Hotel Management of Virginia, Inc., a Maryland corporation
22. The Rouse Company of Washington, Inc. owns all of the
outstanding capital stock of Rouse-Seattle, Inc., a Maryland corporation.
23. The Rouse Holding Company of Arizona, Inc. owns all of the
outstanding capital stock of each of the following Maryland corporations:
Rouse-Arizona Center, Inc.
Rouse Office Management of Arizona, Inc.
Rouse-Phoenix Development Corporation
Rouse-Phoenix Parking, Inc.
Rouse-Phoenix Parking Two, Inc.
Rouse-Phoenix Two Corporate Center, Inc.
24. Rouse Investing Company owns all of the outstanding capital
stock of each of the following corporations:
Deerfield Homes, Inc., a Florida corporation
306 Corporation, a Texas corporation
Wilmington Homes, Inc., a North Carolina corporation
Wilmington Homes, Inc. owns all of the outstanding capital stock of Echo
Farms Golf and Country Club, Inc., a North Carolina corporation.
25. Rouse Missouri Holding Company owns all of the outstanding
capital stock of each of the following Maryland corporations:
The Rouse Company of Missouri, Inc.
Rouse Missouri Management Corporation
St. Louis Union Station Beergarten, Inc.
The Rouse Company of Missouri, Inc. owns all of the outstanding capital
stock of The Rouse Company of St. Louis, Inc., a Maryland Corporation.
26. Rouse-Wates, Incorporated (Rouse-Wates) and its consolidated
subsidiaries are accounted for as a discontinued operation in the
consolidated financial statements. Rouse-Wates owns all of the outstanding
capital stock of each of the
<PAGE>
9.
following corporations:
Norbury Construction Company, a Delaware corporation
Owen Brown B Development Company, a Maryland
corporation
27. RREF Holding, Inc. owns all of the outstanding capital stock of RII
Holding, Inc., a Texas corporation.
28. TRCD, Inc. owns all of the outstanding capital stock of the following
Delaware corporations:
Austin Mall Corporation
Echelon Holding Company, Inc.
The Franklin Park Corporation
Mall St. Matthews Corporation
North Star Mall Corporation
One Franklin Park Corporation
One Gallery Corporation
One Willow Corporation
Rouse Funding Corporation
Rouse Funding Two, Inc.
TRCDE, Inc.
TRCDE Two, Inc.
Two Franklin Park Corporation
Two Gallery Corporation
Two Willow Corporation
Willowbrook Mall, Inc.
The Franklin Park Corporation owns 50% of the outstanding capital stock of
Franklin Park Finance, Inc., a Delaware corporation. Rodamco U.S.A., Inc.
owns the remaining 50%.
One Gallery Corporation and Two Gallery Corporation each own 50% of the
outstanding shares of Philadelphia Gallery II, a Pennsylvania business
trust.
Willowbrook Mall, Inc. owns 37.5% of the outstanding capital stock of
Willowbroook Finance Corporation, a Delaware corporation. Rodamco U.S.A.,
Inc. owns the remaining 62.5%.
29. TRC Holding Company of Washington, D.C. owns all of the
outstanding capital stock of Rouse-National Press Management, Inc.
30. The Village of Cross Keys, Incorporated owns all of the
outstanding capital stock of The Roost, Inc., a Maryland corporation.
<PAGE>
Exhibit 24. Power of Attorney.
The Power of Attorney, dated March 8, 1988, is incorporated by
reference from the Exhibits to the Company's Form 10-K Annual Report for the
fiscal year ended December 31, 1987, which may be found in Commission file
number 0-1743.
The Powers of Attorney, dated December 3, 1992 and March 16, 1993,
respectively, are incorporated by reference from the Exhibits to the
Company's Form 10-K Annual Report for the fiscal year ended December 31,
1992.
<PAGE>
Exhibit 28. Additional Exhibits.
Form 11-K Annual Report to The Rouse Company Savings Plan for the year ended
December 31, 1993.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended December 31, 1993 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the transition period from to
Commission File Number 0-1743
A. Full title of the plan and address of the plan:
The Rouse Company Savings Plan
c/o Personnel Division
The Rouse Company Building
10275 Little Patuxent Parkway
Columbia, Maryland 21044
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive offices:
The Rouse Company
The Rouse Company Building
10275 Little Patuxent Parkway
Columbia, Maryland 21044
<PAGE>
REQUIRED INFORMATION
Since The Rouse Company Savings Plan (the "Plan") is subject to the
Employee Retirement Income Security Act of 1974, the Plan financial statements
for the fiscal year ending December 31, 1993 will be filed on or before July 1,
1994.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned hereunto duly authorized.
THE ROUSE COMPANY SAVINGS PLAN
Date: March 31, 1994 By /s/ William D. Boden
William D. Boden, Administrator
and
Date: March 31, 1994 By /s/ George L. Yungmann
George L. Yungmann, Trustee
