<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, 1994
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 this Form 10-K or any amendment to this
Form 10-K. x
---
As of March 10, 1995, there were outstanding 47,797,546 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 $926,077,454.
Documents Incorporated by Reference
The specified portions of the Annual Report to Shareholders for the fiscal year
ended December 31, 1994 are incorporated by reference into Parts I, II and IV.
Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before
April 7, 1995 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 two 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 1994
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, 1994, the 67 regional retail centers
owned, in whole or in part, or operated by subsidiaries or affiliates of the
Company, aggregated 21,345,000 square feet of leasable space, including
982,000 square feet leased to department stores and 534,000 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, 1994,
the Company managed 18 such centers, which are included in the figures in
the preceding paragraph and aggregated 5,959,000 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",
a wholly owned subsidiary of the Company) 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 78 office/industrial buildings with 5,284,000
square feet of space and 454 acres of land. A wholly owned affiliate of the
Company is responsible for the operation, management and development of all
buildings and land owned by Rouse-Teachers Properties, Inc.
I-2
<PAGE>
Item 1. Business, continued.
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, including two new regional retail
centers and several expansions of existing centers.
Land Sales:
----------
HRD is the developing entity of Columbia, Maryland, which is located in the
Baltimore-Washington corridor. HRD owns approximately 1,953 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 4,695 full- and part-time employees at
December 31, 1994.
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 54
through 58 of the Annual Report to Shareholders for 1994 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
</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 seeks damages of approximately $600,000
for these alleged breaches and $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, asserting other
defenses and raising a counterclaim. 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 from the date the suit was
filed and attorneys' fees in an amount to be determined. On May 6, 1994, the
trial court denied all post-trial motions of both Plaintiff and Defendants and
entered an amended judgment in which it awarded Plaintiff $450,000 in
attorneys' fees and awarded Defendants $25,000 in attorneys' fees. Defendants
believe that the verdict and judgment as entered to date are contrary to the
facts and applicable law. On May 23, 1994, Defendants appealed this judgment
to the Louisiana Court of Appeals, Fourth District. Defendants intend to
vigorously pursue their rights of appeal. Oral argument was held on March 8,
1995. For additional information about this suit, see Note 17 - Other
Commitments and Contingencies to the Consolidated Financial Statements.
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, 1995 are:
<TABLE>
<CAPTION>
Date of
Present office election or
and position appointment
with the to present Business or professional experience
Executive Officer Age Company office during the past five years
----------------- --- ---------------- ----------- -----------------------------------
<S> <C> <C> <C> <C>
Bruce D. Alexander 51 Senior 11/16/78 Senior Vice-President and Director of New Business of the
Vice-President 8/17/93 Company; formerly Senior Vice-President and Director of
and Director of the Commercial Development Division of the Company
New Business
Anthony W. Deering 50 President and 2/25/93 President and Chief Executive Officer of the Company;
Chief Executive 2/23/95 formerly President and Chief Operating Officer of
Officer the Company; Executive Vice President - Finance and
Administration and Chief Financial Officer of the Company;
and Senior Vice-President and Chief Financial Officer of the
Company
Jeffrey H. Donahue 48 Senior 9/23/93 Senior Vice-President and Chief Financial Officer of the
Vice-President, 9/23/93 Company and Director of the Finance Division; formerly
Chief Financial 8/17/93 Vice-President and Treasurer of the Company
Officer and
Director of the
Finance Division
Duke S. Kassolis 43 Senior 9/23/93 Senior Vice-President and Director of Office and Mixed-Use
Vice-President 8/17/93 Operations of the Company; formerly Vice-President and Director
and Director of of Office and Commercial Properties of the Company
Office and
Mixed-Use
Operations
</TABLE>
I-9
<PAGE>
<TABLE>
<CAPTION>
Date of
Present office election or
and position appointment
with the to present Business or professional experience
Executive Officer Age Company office during the past five years
----------------- --- ---------------- ----------- -----------------------------------
<S> <C> <C> <C> <C>
Paul I. Latta, Jr. 51 Senior 9/23/93 Senior Vice-President and Director of
Vice-President 8/17/93 Retail Operations of the Company; formerly
and Director of Vice-President and Associate Division Director,
Retail Operations Operating Properties Division of the Company
Richard G. McCauley 54 Senior 1/22/75 Senior Vice-President, General Counsel
Vice-President, 12/1/71 and Secretary of the Company
General Counsel 4/24/75
and Secretary
Douglas A. McGregor 52 Executive 8/17/93 Executive Vice-President for Development
Vice-President and Operations of the Company; formerly
for Development Executive Vice-President - Development and
and Operations Director of the Office and Community
Development Division of the Company; and
Senior Vice-President and Director of the
Office and Community Development Division of the
Company
Robert Minutoli 44 Senior 9/23/93 Senior Vice-President and Director of
Vice-President 8/17/93 Acquisitions of the Company; formerly
and Director of Vice-President for Development of the Company
Acquisitions
Robert D. Riedy 49 Senior 9/23/93 Senior Vice-President and Director of Retail
Vice-President 8/17/93 Leasing of the Company; formerly Vice-President
and Director of for Development of the Company
Retail Leasing
</TABLE>
I-10
<PAGE>
<TABLE>
<CAPTION>
Date of
Present office election or
and position appointment
with the to present Business or professional experience
Executive Officer Age Company office during the past five years
----------------- --- ---------------- ----------- -----------------------------------
<S> <C> <C> <C> <C>
Alton J. Scavo 48 Senior 9/23/93 Senior Vice-President and Director of the
Vice-President, 8/17/93 Community Development Division of the
Director of the Company and General Manager of Columbia;
Community formerly Vice-President and Associate Director
Development of the Community Development Division of
Division and the Company
General Manager
of Columbia
Jerome D. Smalley 45 Senior 9/23/93 Senior Vice-President and Director of
Vice-President 8/17/93 the Commercial and Office Development
and Director of Division of the Company; formerly
the Commercial Vice-President for Development
and Office
Development
Division
Larry M. Wolf 59 Senior 11/16/78 Senior Vice-President and Director of
Vice-President 8/17/93 Merchandising of the Company; formerly
and Director of Senior Vice-President and Director of
Merchandising Retail Leasing of the Company
George L. Yungmann 52 Senior 9/23/93 Senior Vice-President and Controller
Vice-President, 7/26/72 of the Company and Director of
Controller and 7/26/72 the Controller's Division; formerly
Director of the Vice-President, Controller and Director of
Controller's the Controller's Division
Division
</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 43
of the 1994 Annual Report to Shareholders.
Item 6. Selected Financial Data.
Information required by Item 6 is incorporated herein by reference to page 43
of the 1994 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 44
through 49 of the 1994 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 43 of the 1994 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 7, 1995.
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 19 of
the 1994 Annual Report to Shareholders incorporated herein by
reference
Financial Statements:
The Rouse Company and Subsidiaries included on pages 20 through 42
of the 1994 Annual Report to Shareholders, incorporated herein by
reference:
Consolidated Cost Basis and Current Value Basis Balance Sheets
at December 31, 1994 and 1993
Consolidated Cost Basis Statements of Operations for the Years
Ended December 31, 1994, 1993 and 1992
Consolidated Cost Basis Statements of Shareholders' Equity for
the Years Ended December 31, 1994, 1993 and 1992
Consolidated Cost Basis Statements of Cash Flows for the
Years Ended December 31, 1994, 1993 and 1992
Consolidated Current Value Basis Statements of Changes in
Revaluation Equity for the Years Ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
Schedules:
The Rouse Company and Subsidiaries as of December 31, 1994 or for
the years ended December 31, 1994, 1993 and 1992:
Schedule II Valuation and Qualifying Accounts IV-4
Schedule III Real Estate and Accumulated Depreciation IV-5
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 as of December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, 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 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 LLP
Baltimore, Maryland
February 21, 1995
IV-3
<PAGE>
Schedule II
-----------
THE ROUSE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1994, 1993 and 1992
---
<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, 1994:
Allowance for doubtful receivables $24,036 $5,185 $ - $4,097 /(1)/ $25,124
======= ====== ===== ====== =======
Pre-construction reserve $12,822 $3,400 $ - $2,113 /(2)/ $14,109
======= ====== ===== ====== =======
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 /(3)/ $ 117 /(2)/ $11,127
======= ====== ===== ====== =======
</TABLE>
Notes:
(1) Balances written off as uncollectible.
(2) Costs of unsuccessful projects written off.
(3) Reclassification of pre-construction reserve
related to a project in which the Company
has an equity investment.
IV-4
<PAGE>
Schedule III
------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1994
<TABLE>
<CAPTION>
Cost capitalized
Initial cost to subsequent to Gross amount at which carried
Company acquisition at December 31, 1994
------------------ -------------------- -----------------------------
Buildings
Buildings and
Encum- and Carrying Improve-
brances improve- Improve- costs ments
Description (note 4) Land ments ments (note 2) Land (note 3) Total
----------- -------- ---- --------- -------- --------- ---- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Properties:
South Street Seaport
Retail Center
New York, NY $ 52,000 $ - $ - $ 141,192 $ - $ - $ 141,192 $ 141,192
Woodbridge Center
Retail Center
Woodbridge, NJ 137,055 - - 115,444 - 26,301 115,444 141,745
Other operating properties
and related investments,
each less than 5% of total 1,854,838 181,169 - 2,499,760 - 154,868 2,499,760 2,654,628
----------- -------- -------- ----------- ------- -------- ----------- -----------
Total operating
properties 2,043,893 181,169 - 2,756,396 - 181,169 2,756,396 2,937,565
----------- -------- -------- ----------- ------- -------- ----------- -----------
<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, NY $ 20,328 7/83 N/A Note 8
Woodbridge Center
Retail Center
Woodbridge, NJ 16,722 3/71 N/A Note 8
Other operating properties
and related investments,
each less than 5% of total 453,108 Various Various Note 8
---------
Total operating 490,158
properties ---------
</TABLE>
(Continued)
IV-5
<PAGE>
Schedule III, continued
-----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1994
<TABLE>
<CAPTION>
Cost capitalized
Initial cost to subsequent to Gross amount at which carried
Company acquisition at December 31, 1994
------------------ -------------------- -----------------------------
Buildings
Buildings and
Encum- and Carrying Improve-
brances improve- Improve- costs ments
Description (note 4) Land ments ments (note 2) Land (note 3) Total
----------- -------- ---- --------- -------- --------- ---- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Properties in Development:
Construction and
development in
progress individually
less than 5% of total 20,085 11,216 - 47,608 - 11,216 47,608 58,824
Pre-construction costs - - - 20,633 - - 20,663 20,663
Pre-construction reserve - - - (14,109) - - (14,109) (14,109)
---------- --------- --------- ---------- ------ -------- ---------- ----------
Total Properties
in Development 20,085 11,216 - 54,132 - 11,216 54,132 65,348
---------- --------- --------- ---------- ------ -------- ---------- ----------
Properties held for
development and
sale - 132,293 - 8,809 - 132,293 8,809 141,102
---------- --------- --------- ---------- ------ -------- ---------- ----------
Total $2,063,978 $324,678 $ - $2,819,337 $ - $324,678 $2,819,337 $3,144,015
========== ======== ========= ========== ====== ======== ========== ==========
<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>
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 $490,158
========
</TABLE>
(Continued)
IV-6
<PAGE>
Schedule III, continued
-----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1994
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 $124,643,000 at
December 31, 1994.
(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,
1994, 1993 and 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $3,010,195 $2,827,379 $2,718,536
Additions, at cost 88,260 88,973 107,305
Cost of properties acquired 93,705 106,048 36,761
Additions to properties held for
development and sale 16,270 21,388 19,793
Cost of land sales (15,804) (16,270) (12,953)
Retirements, sales and other
dispositions (30,050) (21,307) (40,382)
Additions to pre-construction reserve (3,400) (2,900) (3,050)
Receivables under finance leases, net (632) 8,061 44
Investments in unconsolidated real
estate ventures, net (12,317) 4,255 1,325
Provision for loss on investment in
an operating property (2,212) (5,432) -
---------- ---------- ----------
Balance at end of year $3,144,015 $3,010,195 $2,827,379
========== ========== ==========
</TABLE>
(Continued)
IV-7
<PAGE>
Schedule III, continued
-----------------------
THE ROUSE COMPANY AND SUBSIDIARIES
Real Estate and Accumulated Depreciation (note 1)
December 31, 1994
Notes, continued:
(6) The changes in accumulated depreciation and amortization for the years ended
December 31, 1994, 1993 and 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year $429,070 $375,903 $331,312
Depreciation and amortization
charged to operations 74,186 70,200 68,163
Retirements, sales and other, net (13,098) (17,033) (23,572)
-------- -------- --------
Balance at end of year $490,158 $429,070 $375,903
======== ======== ========
</TABLE>
(7) The aggregate cost of properties for Federal income tax purposes is
approximately $2,895,656,000 at December 31, 1994.
(8) Reference is made to note 2(c) to the consolidated financial statements for
information related to depreciation.
(9) The provision for loss on investment in an operating property in 1993
relates to a retail center and was recognized based on management's
determination that the Company would not continue to support the project
(which is financed by non-recourse 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.
(10) The provision for loss on investment in an operating property in 1994
relates to an industrial building which is subject to a contract for sale.
IV-8
<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 Officer:
/s/Anthony W. Deering
-------------------------------------
Anthony W. Deering March 31, 1995
President and Chief Executive Officer
Principal Financial Officer:
/s/Jeffrey H. Donahue
-------------------------------------
Jeffrey H. Donahue March 31, 1995
Senior Vice President and
Chief Financial Officer
Principal Accounting Officer:
/s/George L. Yungmann
-------------------------------------
George L. Yungmann March 31, 1995
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/Anthony W. Deering
--------------------------------
Anthony W. Deering March 31, 1995
For Himself and as
Attorney-in-fact
IV-9
<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 Nos. 2-68258, 2-83612, 33-56231, 33-
56233 and 33-56235) and Form S-3 (Registration Nos. 2-78898, 2-95596, 33-52458,
33-56646, 33-57347, 33-57584 and 33-57707) of our report dated February 21,
1995, relating to the consolidated financial statements and related schedules of
The Rouse Company and subsidiaries as of December 31, 1994 and 1993 and for each
of the years in the three-year period ended December 31, 1994, which report
appears in the Annual Report on Form 10-K of The Rouse Company for the year
ended December 31, 1994.
KPMG PEAT MARWICK LLP
Baltimore, Maryland
March 31, 1995
IV-10
<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 Nos.
2-68258, 2-83612, 33-56231, 33-56233 and 33-56235) and Form S-3 (Registration
Nos. 2-78898, 2-95596, 33-52458, 33-56646, 33-57347, 33-57584 and 33-57707) of
our report dated February 21, 1995 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, 1994 and 1993, which report appears in the 1994 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, 1994.
LANDAUER ASSOCIATES, INC.
/s/ Deborah A. Jackson
Deborah A. Jackson
Senior Vice President
Director of Retail Valuation
New York, New York
March 31, 1995
IV-11
<PAGE>
Exhibit Index
Exhibit No.
-----------
3 Articles of Incorporation and Bylaws
10 Material Contracts
11 Statement re computation of per share earnings
13 Annual report to security holders
21 Subsidiaries of the Registrant
24 Power of Attorney
27 Financial Data Schedule
99 Additional Exhibits:
Form 11-K Annual Report of The Rouse Company
Savings Plan for the year ended December 31, 1994
The Company agrees to furnish to the Commission upon request a copy of all
constituent instruments defining the rights of holders of long-term debt of the
Company and all its subsidiaries for which consolidated or unconsolidated
financial statements are required to be filed under which instruments the total
amount of securities authorized does not exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis.
<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.
The Articles Supplementary to the Charter of The Rouse Company, dated
September 26, 1994, are incorporated by reference from the Exhibits to the
Company's Form S-3 Registration Statement (No. 33-57707).
The Articles Supplementary to the Charter of The Rouse Company, dated December
27, 1994, are incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-57707).
The Bylaws of The Rouse Company, as amended September 22, 1994, are
incorporated by reference from the Exhibits to the Company's Form 10-Q
Quarterly Report for the quarter ended September 30, 1994.
All documents referred to above may be found in Commission file number 0-1743.
<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, and the Amendment to The
Rouse Company 1985 Stock Option Plan, effective as of May 12, 1994, is
attached.
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, and the Amendment to The
Rouse Company 1990 Stock Option Plan, effective as of May 12, 1994, is
attached.
The Company's 1994 Stock Incentive Plan is incorporated by reference from the
Company's definitive proxy statement filed pursuant to Regulation 14A on
April 5, 1994.
The letter agreement, dated September 24, 1992, between the Company and
Mathias J. DeVito, then 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.
The Retirement Agreement, dated November 30, 1994, between the Company and
Mathias J. DeVito, then Chairman of the Board and Chief Executive Officer of
the Company, is incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-57707).
All documents referred to above may be found in Commission file number 0-1743.
<PAGE>
AMENDMENT TO
THE ROUSE COMPANY 1985 STOCK OPTION PLAN
Effective as of the approval of The Rouse Company 1994 Stock Incentive
Plan by the shareholders of The Rouse Company on May 12, 1994, Article I(a) of
The Rouse Company 1985 Stock Option Plan is amended by deleting "or in any other
plan that entitled participants to acquire stock, stock options, or stock
appreci-ation rights ("Rights") of the Company" from the fourth sentence of such
Article I(a).
IN WITNESS WHEREOF, this Amendment has been executed on behalf of
The Rouse Company by its Senior Vice-President.
ATTEST: THE ROUSE COMPANY
/s/ David R. Schwiesow By: /s/ Richard G. McCauley
---------------------------- -----------------------------
David R. Schwiesow Richard G. McCauley
Assistant Secretary Senior Vice-President
<PAGE>
AMENDMENT TO
THE ROUSE COMPANY 1990 STOCK OPTION PLAN
Effective as of the approval of The Rouse Company 1994 Stock Incentive
Plan by the shareholders of The Rouse Company on May 12, 1994, Article I(a) of
The Rouse Company 1990 Stock Option Plan is amended by deleting "or in any other
plan that entitled participants to acquire stock, stock options or stock
appreci-ation rights ("Rights") of the Company" from the fourth sentence of such
Article I(a).
IN WITNESS WHEREOF, this Amendment has been executed on behalf of
The Rouse Company by its Senior Vice-President.
ATTEST: THE ROUSE COMPANY
/s/ David R. Schwiesow By: /s/ Richard G. McCauley
---------------------------- -----------------------------
David R. Schwiesow Richard G. McCauley
Assistant Secretary Senior Vice-President
<PAGE>
Exhibit 11
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,
----------------------------
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Earnings (loss) before extraordinary losses $ 6,606 $(1,291) $(15,849)
Add after tax interest expense applicable to
convertible subordinated debentures 4,859 6,236 8,811
------- ------- --------
Earnings (loss) before extraordinary losses,
as adjusted 11,465 4,945 (7,038)
Extraordinary losses, net of related income
tax benefits (4,447) (8,051) (348)
------- ------- --------
Net earnings (loss), as adjusted $ 7,018 $(3,106) $ (7,386)
======= ======= ========
Shares:
------
Weighted average number of common shares
outstanding 47,565 47,411 47,994
Assuming conversion of convertible
Preferred stock 10,600 8,251 -
Assuming conversion of convertible
subordinated debentures 4,541 5,917 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 175 224 73
------- ------- --------
Weighted average number of shares outstanding
as adjusted 62,881 61,803 56,418
======= ======= ========
Earnings (loss) per common share assuming
full dilution:
Earnings (loss) before extraordinary losses $ .18 $ .08 $ (.12)
Extraordinary losses (.07) (.13) (.01)
------- ------- --------
Net earnings (loss) $ .11 $ (.05) $ (.13)
======= ======= ========
</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
Exhibit 13. Annual report to security holders
The financial section of the annual report to security holders, which is
incorporated by reference, 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, 1994.
<PAGE>
Exhibit 13
REPORT OF INDEPENDENT REAL ESTATE CONSULTANTS
--------------------------------------------------------------------------------
Landauer Associates, Inc.
666 Fifth Avenue
New York, New York 10103
212-621-9500
KPMG Peat Marwick LLP 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, 1994 and 1993. The
properties reviewed at December 31, 1994 include all the projects identified
as "In Operation" on the "Projects of The Rouse Company" table on pages 54
through 58 of the Annual Report for 1994, properties held for development and
sale, and certain parcels of land in development. The properties reviewed at
December 31, 1993 were the same, except for the properties which were
disposed of during 1994.
The total values of its equity and other interests estimated by the Company
were $2,338,624,000 and $2,227,151,000 as of December 31, 1994 and 1993,
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 21, 1995
1
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS AND
CURRENT VALUE BASIS BALANCE SHEETS
December 31, 1994 and 1993 (in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993
------------------------------- -------------------------------
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.................................... $4,232,913 $2,937,565 $4,070,962 $2,821,303
Less accumulated depreciation
and amortization................................ 490,158 429,070
---------- ---------- ---------- ----------
4,232,913 2,447,407 4,070,962 2,392,233
Properties in development.......................... 70,866 65,348 59,836 57,065
Properties held for development
and sale......................................... 162,446 141,102 154,911 131,827
---------- ---------- ---------- ----------
Total property................................... 4,466,225 2,653,857 4,285,709 2,581,125
---------- ---------- ---------- ----------
Prepaid expenses, deferred charges and
other assets....................................... 112,987 104,254 117,042 107,972
Accounts and notes receivable (note 7)............... 78,202 78,202 77,926 77,926
Investments in marketable securities................. 30,149 30,149 34,403 34,403
Cash and cash equivalents............................ 49,398 49,398 73,556 73,556
---------- ---------- ---------- ----------
Total.............................................. $4,736,961 $2,915,860 $4,588,636 $2,874,982
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993
------------------------------- -------------------------------
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........................... $1,998,445 $1,998,445 $1,886,257 $1,886,257
---------- ---------- ---------- ----------
Parent Company debt and debt carrying a
Parent Company guarantee of repayment:
Property debt.................................... 223,731 223,731 273,540 273,540
Convertible subordinated debentures.............. 105,950 130,000 122,850 130,000
Other debt....................................... 116,500 120,700 131,668 120,700
---------- ---------- ---------- ----------
446,181 474,431 528,058 524,240
---------- ---------- ---------- ----------
Total debt....................................... 2,444,626 2,472,876 2,414,315 2,410,497
---------- ---------- ---------- ----------
Obligations under capital leases (note 16)........... 60,044 60,044 63,099 63,099
Accounts payable, accrued expenses
and other liabilities.............................. 205,317 205,317 209,256 209,256
Deferred income taxes (note 12)...................... 412,729 82,597 376,360 78,979
Shareholders' equity (notes 14, 15 and 18)
Series A Convertible Preferred stock with
a liquidation preference of $225,252 in 1994
and $201,250 in 1993............................... 45 45 40 40
Common stock of 1c par value per share;
250,000,000 shares authorized; issued
47,571,046 shares in 1994 and
47,562,226 shares in 1993.......................... 476 476 476 476
Additional paid-in capital........................... 306,674 306,674 281,533 281,533
Accumulated deficit.................................. (212,169) (212,169) (168,898) (168,898)
Revaluation equity................................... 1,519,219 -- 1,412,455 --
---------- ---------- ---------- ----------
Total shareholders' equity......................... 1,614,245 95,026 1,525,606 113,151
---------- ---------- ---------- ----------
Commitments and contingencies (notes 16 and 17)
Total.............................................. $4,736,961 $2,915,860 $4,588,636 $2,874,982
========== ========== ========== ==========
</TABLE>
3
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED COST BASIS STATEMENTS OF OPERATIONS
Years ended December 31, 1994, 1993 and 1992
(in thousands, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Revenues................................................................... $671,171 $646,805 $597,105
Operating expenses, exclusive of provision for bad debts,
depreciation and amortization............................................ 356,958 352,217 331,365
Interest expense (note 10)................................................. 213,583 210,806 206,809
Provision for bad debts.................................................... 5,185 4,741 6,297
Depreciation and amortization (note 4)..................................... 74,186 70,200 68,163
Gain (loss) on dispositions of assets and other provisions, net (note 13).. (7,923) (5,769) (5,254)
-------- -------- --------
Earnings (loss) before income taxes and extraordinary losses............. 13,336 3,072 (20,783)
-------- -------- --------
Income tax benefit (provision) (note 12):
Current--primarily state................................................. (735) (760) (352)
Deferred--primarily Federal.............................................. (5,995) (3,603) 5,286
-------- -------- --------
(6,730) (4,363) 4,934
-------- -------- --------
Earnings (loss) before extraordinary losses.............................. 6,606 (1,291) (15,849)
-------- -------- --------
Extraordinary losses, net of related income tax benefits (note 10)......... (4,447) (8,051) (348)
-------- -------- --------
Net earnings (loss)...................................................... $ 2,159 $ (9,342) $(16,197)
======== ======== ========
Net loss applicable to common shareholders............................... $(10,922) $(20,723) $(16,197)
======== ======== ========
Loss per share of common stock after provision for
dividends on Preferred stock (notes 14 and 18):
Loss before extraordinary losses......................................... $ (.14) $ (.27) $ (.33)
Extraordinary losses..................................................... (.09) (.17) (.01)
-------- -------- --------
Total.................................................................... $ (.23) $ (.44) $ (.34)
======== ======== ========
</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, 1994, 1993 and 1992 (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, 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 --
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)
Net earnings.................................................. -- -- -- 2,159
Dividends on common stock -- $.68 per share................... -- -- -- (32,349)
Proceeds from exercise of stock options, net.................. -- -- 108 --
Amortization of restricted common stock....................... -- -- 2,225 --
Issuance of Preferred stock (note 14)......................... 5 -- 22,808 --
Dividends on Preferred stock -- $3.25 per share............... -- -- -- (13,081)
---- ---- -------- ---------
Balance at December 31, 1994.................................. $ 45 $476 $306,674 $(212,169)
==== ==== ======== =========
</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, 1994, 1993 and 1992 (in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Rents and other revenues received................................. $ 622,033 $ 600,594 $ 556,510
Proceeds from land sales.......................................... 37,482 33,830 29,670
Interest received................................................. 10,297 9,712 10,220
Land development expenditures..................................... (16,760) (20,407) (19,988)
Operating expenditures:
Operating properties............................................ (315,607) (309,130) (298,672)
Land sales, development and corporate........................... (11,880) (9,034) (9,776)
Interest paid:
Operating properties............................................ (195,751) (184,278) (179,140)
Land sales, development and corporate........................... (16,039) (20,138) (22,194)
--------- --------- ---------
Net cash provided by operating activities....................... 113,775 101,149 66,630
--------- --------- ---------
Cash flows from investing activities
Expenditures for properties in development and improvements to
existing properties funded by debt.............................. (78,628) (87,243) (83,377)
Expenditures for property acquisitions............................ (94,113) (34,967) (38,806)
Expenditures for improvements to existing properties funded
by cash provided by operating activities:
Tenant leasing and remerchandising............................ (8,121) (7,374) (10,468)
Building and equipment........................................ (5,155) (5,967) (13,508)
Purchases of marketable securities................................ (70,189) (88,594) (21,421)
Proceeds from redemptions or sales of marketable securities....... 74,443 72,400 28,217
Other............................................................. 3,212 (2,701) (5,473)
--------- --------- ---------
Net cash used in investing activities........................... (178,551) (154,446) (144,836)
--------- --------- ---------
Cash flows from financing activities
Proceeds from issuance of property debt........................... 446,628 358,995 206,298
Repayments of property debt:
Scheduled principal payments.................................... (46,750) (20,735) (17,907)
Other payments.................................................. (304,977) (405,772) (73,494)
Proceeds from issuance of other debt.............................. -- 120,329 16,033
Repayments of other debt.......................................... (8,968) (160,657) (3,912)
Proceeds from issuance of Preferred stock......................... -- 195,609 --
Proceeds from exercise of stock options........................... 108 449 579
Dividends paid.................................................... (45,423) (41,150) (28,683)
--------- --------- ---------
Net cash provided by financing activities....................... 40,618 47,068 98,914
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.............. (24,158) (6,229) 20,708
Cash and cash equivalents at beginning of year.................... 73,556 79,785 59,077
--------- --------- ---------
Cash and cash equivalents at end of year.......................... $ 49,398 $ 73,556 $ 79,785
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Reconciliation of Net Earnings (Loss) to Net Cash
Provided by Operating Activities
Net earnings (loss)........................................................ $ 2,159 $ (9,342) $(16,197)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization............................................ 74,186 70,200 68,163
(Gain) loss of dispositions of assets and other provisions, net.......... 7,923 5,769 5,254
Extraordinary losses, net of related income tax benefits................. 4,447 8,051 348
Additions to pre-construction reserve.................................... 3,400 2,900 3,050
Provision for bad debts.................................................. 5,185 4,741 6,297
Decrease (increase) in:
Accounts and notes receivable............................................ (5,209) (3,010) (7,273)
Other assets............................................................. 7,382 (770) (6,414)
Increase in accounts payable, accrued expenses and
other liabilities...................................................... 5,754 21,437 14,105
Deferred income taxes (benefit).......................................... 5,995 3,603 (5,286)
Other.................................................................... 2,553 (2,430) 4,583
-------- -------- --------
Net cash provided by operating activities.................................. $113,775 $101,149 $ 66,630
======== ======== ========
--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Schedule of Non-Cash Investing and Financing Activities
Series A Convertible Preferred stock issued in
satisfaction of mortgage debt............................................ $ 23,000 $ -- $ --
Mortgage debt extinguished on disposition
of an interest in a property............................................. 15,681 -- --
Capital lease obligations incurred......................................... 613 1,541 2,509
Value of non-cash consideration given in connection with
acquisitions of interests in properties.................................. 1,129 13,416 --
Mortgage and other debt assumed in connection with
acquisitions of interests in properties.................................. -- 71,995 --
Capital lease obligation terminated 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
======== ======== ========
</TABLE>
7
<PAGE>
The Rouse Company and Subsidiaries
CONSOLIDATED CURRENT VALUE BASIS STATEMENTS OF CHANGES IN REVALUATION EQUITY
Years ended December 31, 1994, 1993 and 1992 (in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Revaluation equity at beginning of year.................................. $1,412,455 $1,223,744 $1,256,742
Revaluation equity attributable to interests in operating
properties sold or disposed............................................ 5,609 -- (4,929)
---------- ---------- ----------
1,418,064 1,223,744 1,251,813
---------- ---------- ----------
Change in value of interests in operating properties
in operation during entire year........................................ 101,168 226,258 (57,990)
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...................................... 1,007 (10,761) (2,330)
---------- ---------- ----------
Change in value of interests in operating properties,
land in development and properties held for
development and sale............................................... 102,175 222,572 (39,826)
Change in value of other property........................................ (337) (456) (348)
Change in value attributable to debt, exclusive of operating
property debt.......................................................... 32,068 (3,818) --
Change in present value of potential income taxes, net of cost
basis deferred income taxes............................................ (32,751) (29,587) 12,105
---------- ---------- ----------
101,155 188,711 (28,069)
---------- ---------- ----------
Revaluation equity at end of year........................................ $1,519,219 $1,412,455 $1,223,744
========== ========== ==========
</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, 1994, 1993 and 1992
--------------------------------------------------------------------------------
(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 aggregate current value substantially exceeds their aggregate cost basis
net book value determined in conformity with generally accepted accounting
principles. The current value basis financial statements present information
about the current values to the Company of its assets and liabilities and the
changes in such values. The current value basis financial statements are not
intended to present the current liquidation values of assets or liabilities of
the Company or its net assets taken as a whole.
Management believes that the current value basis financial statements more
realistically reflect the underlying financial strength of the Company. The
current values of the Company's 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.
Shareholders' equity on a current value basis was $1,614,245,000 or $27.75 per
share of common stock at December 31, 1994 and $1,525,606,000 or $26.75 per
share of common stock at December 31, 1993. The per share calculations at
December 31, 1994 and 1993 assume the conversion of the Preferred stock.
The process for estimating the current values of the Company's assets and
liabilities requires significant estimates and judgments by management. These
estimates and judgments are made based on information and assumptions considered
by management to be adequate and appropriate in the circumstances; however, they
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.
(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 generally cover periods of eleven years, 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 detailed estimates of revenues and operating expenses.
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
followed a practice 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 related 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.
Deferred income taxes--Because the current value basis financial statements
presume that values will generally 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.
(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, 1994 and 1993
are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Value of interests in operating properties:
Retail centers................................. $1,981,731 $1,908,831
Office, mixed-use and other.................... 202,450 175,556
Value of properties held for development
and sale..................................... 143,919 132,387
Value of land in development................... 10,524 10,377
---------- ----------
Total equity value............................. 2,338,624 2,227,151
Debt related to equity interests............... 2,142,510 2,088,787
---------- ----------
Total asset value.............................. 4,481,134 4,315,938
Depreciated cost of interests in operating
properties and costs of properties
held for development and sale, land in
development and certain other assets......... (2,668,766) (2,611,354)
Present value of potential income taxes
related to revaluation equity, net of cost
basis deferred income taxes.................. (330,132) (297,381)
Other, net..................................... 36,983 5,252
---------- ----------
Total revaluation equity....................... $1,519,219 $1,412,455
========== ==========
</TABLE>
10
<PAGE>
(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) Basis of presentation
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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and judgments
that affect the reported amounts of assets and liabilities and disclosures of
contingencies at the date of the financial statements and revenues and
expenses recognized during the reporting period. Actual results could differ
from those estimates.
(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 costs of significant improvements, replacements and major renovations are
capitalized.
(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.
11
<PAGE>
(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 and the estimated residual values of the leased
properties, if any, 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 tenant leases are deferred and amortized 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
Deferred income taxes are accounted for using the asset and liability method.
Under this 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
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." This change in accounting did not have a material effect
on the financial position or results of operations of the Company.
Investments with maturities at dates of purchase in excess of three months
are classified as marketable securities and carried at amortized cost as it
is the Company's intention to hold these investments until maturity.
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, 1994 and 1993, investments in marketable securities consist primarily of
U.S. government and agency obligations with maturities of less than one year
and include $2,001,000 and $4,422,000, respectively, which are held for
restricted uses.
(h) Interest rate exchange agreements
The Company makes limited use of interest rate exchange agreements, including
interest rate caps and swaps, primarily to manage interest rate risk
associated with variable rate debt. Under interest rate cap agreements, the
Company makes initial premium payments to the counterparties in exchange for
the right to receive payments from them if interest rates on the related
variable rate debt exceed specified levels during the agreement period.
Premiums paid are amortized to interest expense over the terms of the
agreements using the interest method and payments receivable from the
counterparties are accrued as reductions of interest expense. Under interest
rate swap agreements, the Company and the counterparties agree to exchange the
difference between fixed rate and variable rate interest amounts calculated by
reference to specified notional principal amounts during the agreement period.
Notional principal amounts are used to express the volume of these transactions,
but the cash requirements and amounts subject to credit risk are substantially
less. Amounts receivable or payable under swap agreements are accounted for as
adjustments to interest expense on the related debt.
Parties to interest rate exchange agreements are subject to market risk for
changes in interest rates and risk of credit loss in the event of nonperformance
by the counterparty. The Company deals only with highly rated financial
institution counterparties (which, in certain cases, are also the lenders on the
related debt) and does not expect that any counterparties will fail to meet
their obligations.
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, 1994
and 1993 and the condensed, combined statements of earnings of these ventures
and the Company's proportionate share of their revenues and expenses for 1994,
1993 and 1992 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Combined Proportionate Share
------------------- ---------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total assets, primarily property......... $389,987 $426,826 $179,868 $194,253
======== ======== ======== ========
Liabilities, primarily long-term debt.... $325,309 $368,198 $153,238 $171,142
Venturers' equity........................ 64,678 58,628 26,630 23,111
-------- -------- -------- --------
Total liabilities and venturers' equity.. $389,987 $426,826 $179,868 $194,253
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Combined Proportionate Share
---------------------------- -------------------------
1994 1993 1992 1994 1993 1992
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $143,573 $144,564 $163,414 $65,650 $66,432 $76,233
Operating and interest expenses.... 83,492 87,290 112,858 38,592 40,689 53,098
Depreciation and amortization...... 13,281 12,396 13,983 3,680 3,833 4,925
-------- -------- -------- ------- ------- -------
Net earnings....................... $ 46,800 $ 44,878 $ 36,573 $23,378 $21,910 $18,210
======== ======== ======== ======= ======= =======
</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, 1994 and 1993 and their condensed
combined statements of earnings for 1994, 1993 and 1992 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Total assets, primarily property............... $1,200,252 $1,307,611
========== ==========
Liabilities, primarily long-term debt.......... $ 373,303 $ 468,352
Venturers' equity.............................. 826,949 839,259
---------- ----------
Total liabilities and venturers' equity........ $1,200,252 $1,307,611
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues............................ $200,728 $197,333 $193,111
Operating and interest expenses..... 133,470 142,740 141,184
Depreciation and amortization....... 37,701 36,768 34,897
Loss on disposition................. 25,722 -- --
-------- -------- --------
Net earnings........................ $ 3,835 $ 17,825 $ 17,030
======== ======== ========
</TABLE>
The Company's share of net earnings of these ventures was $1,856,000 in 1994,
$723,000 in 1993 and $456,000 in 1992.
13
<PAGE>
(4) Opertaing properties
Property and deferred costs of projects at December 31, 1994 and 1993 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Buildings and improvements....................... $2,457,926 $2,346,074
Land............................................. 181,169 155,580
Deferred costs................................... 124,643 122,762
Receivables under finance leases................. 81,408 82,040
Investments in unconsolidated real estate
ventures....................................... 68,195 80,512
Furniture and equipment.......................... 24,224 34,335
---------- ----------
Total.......................................... $2,937,565 $2,821,303
========== ==========
</TABLE>
Depreciation expense for 1994, 1993 and 1992 was $59,914,000, $55,508,000 and
$51,834,000, respectively. Amortization expense for 1994, 1993 and 1992 was
$14,272,000, $14,692,000 and $16,329,000, 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 $11,216,000 at
December 31, 1994 and $12,521,000 at December 31, 1993.
Changes in pre-construction costs, net, for 1994 and 1993 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Balance at beginning of year, before
pre-construction reserve............................ $18,473 $17,741
Costs incurred........................................ 10,337 12,024
Costs transferred to construction and development
in progress......................................... (3,663) (6,603)
Costs transferred to operating properties............. (2,401) (3,484)
Costs of unsuccessful projects written off............ (2,113) (1,205)
------- -------
20,633 18,473
Less pre-construction reserve......................... 14,109 12,822
------- -------
Balance at end of year, net........................... $ 6,524 $ 5,651
======= =======
</TABLE>
(6) Properties held for development and sale
Properties held for development and sale at December 31, 1994 and 1993 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Land under development.............................. $ 84,872 $ 70,027
Other land.......................................... 42,794 50,390
Finished land....................................... 4,627 11,410
Industrial building subject to a contract for sale.. 8,809 --
-------- --------
Total............................................. $141,102 $131,827
======== ========
</TABLE>
14
<PAGE>
(7) Accounts and notes receivable
Accounts and notes receivable at December 31, 1994 and 1993 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Accounts receivable, primarily accrued rents and
income under tenant leases............................. $ 82,318 $ 80,126
Notes receivable, including secured notes of
$9,488 in 1994 and $11,285 in 1993..................... 21,008 21,836
-------- --------
103,326 101,962
Less allowance for doubtful receivables................ 25,124 24,036
-------- --------
Total.................................................. $ 78,202 $ 77,926
======== ========
</TABLE>
Accounts and notes receivable due after one year were $62,437,000 and
$59,226,000 at December 31, 1994 and 1993, 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, at a minimum,
current service costs and amortization of unfunded accrued liabilities
subject to the limits of the Internal Revenue Code. In addition, the Company
has separate, non-qualified unfunded retirement plans (the "unfunded plans")
covering directors and employees whose defined benefits exceed the limits of
the funded plan. Benefits under the pension plans are based on the
participants' years of service and compensation.
The net pension cost for the Company's pension plans includes the following
components (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service cost................................... $ 2,904 $ 2,191 $ 2,058
Interest cost on projected benefit obligations. 3,425 2,991 2,977
Actual return on funded plan assets............ (1,930) (1,790) (1,551)
Other, net..................................... 927 897 (123)
------- ------- -------
Net pension cost............................... $ 5,326 $ 4,289 $ 3,361
======= ======= =======
</TABLE>
The funded status of the Company's pension plans at December 31, 1994 and
1993 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
Funded Unfunded Funded Unfunded
Plan Plans Plan Plans
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulated benefit obligations:
Vested.................................. $ 24,059 $ 9,380 $ 26,667 $ 7,238
Nonvested............................... 3,040 338 3,783 290
-------- -------- -------- --------
Total................................... $ 27,099 $ 9,718 $ 30,450 $ 7,528
======== ======== ======== ========
Projected benefit obligations............. $ 30,173 $10,746 $ 34,295 $ 7,685
Plan assets at fair value................. (27,465) -- (24,310) --
-------- -------- -------- --------
Excess of projected benefit
obligations over plan assets............ 2,708 10,746 9,985 7,685
Unamortized prior service cost............ (2,359) (3,559) (3,241) (2,580)
Unrecognized net gain (loss).............. (3,836) 391 (7,612) 969
Unrecognized net obligation at
January 1, 1987, net of amortization.... (730) (945) (797) (1,080)
Additional minimum liability.............. -- 3,085 7,805 2,534
-------- -------- -------- --------
Accrued (prepaid) pension cost included
in accrued expenses..................... $ (4,217) $ 9,718 $ 6,140 $ 7,528
======== ======== ======== ========
</TABLE>
15
<PAGE>
The projected benefit obligations for the plans were determined using
discount rates of 8.875%, 7.5% and 8.25% in 1994, 1993 and 1992,
respectively. The rate of compensation increases assumed was 4.5% for 1994,
1993 and 1992. The expected long-term rate of return on plan assets of the
funded plan was 11% in 1994, 1993 and 1992. The assets of the funded plan
consist primarily of pooled separate accounts with an insurance company and
marketable securities.
(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.
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. 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 includes the following components (in
thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Service cost.................................... $ 741 $ 603
Interest cost on accumulated postretirement
benefit obligation............................ 823 785
Amortization of transition obligation at
January 1, 1993............................... 485 484
------ ------
Net postretirement benefit cost............... $2,049 $1,872
====== ======
</TABLE>
The status of the Company's postretirement benefit plan at December 31, 1994
and 1993 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees...................................... $ 2,964 $ 3,130
Other fully eligible participants............. 1,637 2,016
Other active participants..................... 5,748 6,428
------- -------
10,349 11,574
Unrecognized net gain (loss).................... 1,028 (1,142)
Unrecognized transition obligation.............. (8,719) (9,204)
------- -------
Accrued postretirement benefit cost included in
accrued expenses.............................. $ 2,658 $ 1,228
======= =======
</TABLE>
The weighted average discount rates used to determine the accumulated
postretirement benefit obligation were 8.875% and 7.5% at December 31, 1994
and 1993, respectively. The transition obligation at January 1, 1993 is being
amortized to postretirement benefit cost over 20 years. Because the Company's
contributions are fixed, health care cost trend rates do not affect the
accumulated postretirement benefit obligation.
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.
16
<PAGE>
(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
(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, 1994 and
1993, property debt not carrying a Parent Company guarantee of repayment
includes $660,614,000 and $643,191,000, 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, 1994 and 1993 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Mortgages and bonds................... $2,063,978 $1,923,791
Convertible subordinated debentures... 130,000 130,000
Other loans........................... 278,898 356,706
---------- ----------
Total............................... $2,472,876 $2,410,497
========== ==========
</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 2025 and, at December 31, 1994, bears interest at a weighted average
effective interest rate of 8.74%, including lender participations. At December
31, 1994, approximately $691,682,000 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 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.
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 $259,751,000 and $268,178,000 at December 31, 1994 and 1993, respectively,
and at December 31, 1994, bear interest at a weighted average effective interest
rate of 8.62%.
The annual maturities of debt as of December 31, 1994 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Company and Nonrecourse
Recourse Loans Loans Total
-------------- ------------ ----------
<S> <C> <C> <C>
1995..................... $ 28,851 $ 99,404 $ 128,255
1996..................... 39,941 45,398 85,339
1997..................... 19,764 118,888 138,652
1998..................... 16,414 63,385 79,799
1999..................... 26,046 115,460 141,506
Subsequent to 1999....... 343,415 1,555,910 1,899,325
-------- ---------- ----------
Total.................. $474,431 $1,998,445 $2,472,876
======== ========== ==========
</TABLE>
Approximately $56,337,000 of the debt maturing in 1995 relates to a retail
center mortgage due in December. The Company expects to refinance this mortgage
on a long-term basis at or prior to its scheduled maturity.
17
<PAGE>
At December 31, 1994, the Company had entered into interest rate cap
agreements which expire in December 1996 and April 1997. These agreements limit
the average interest rate on $58,250,000 of mortgages to 8.19% through April
1995 and to 9.86% from May 1995 through April 1997 and limit the interest rate
on advances up to $55,000,000 under a line of credit to 11.55% through December
1996. The interest rate swap agreements outstanding at December 31, 1994 were
not material. Interest rate exchange agreements did not have a material effect
on the weighted average effective interest rates on debt at December 31, 1994
and 1993 or interest expense for the years ended December 31, 1994, 1993 and
1992.
Total interest costs were $220,971,000 in 1994, $219,705,000 in 1993 and
$221,907,000 in 1992 of which $7,388,000, $8,899,000 and $15,098,000 were
capitalized, respectively.
During 1994, 1993, and 1992, the Company incurred extraordinary losses,
related to extinguishments of debt prior to scheduled maturity or required
partial early redemptions of debt, of $4,447,000, $8,051,000 and $348,000,
respectively, net of related deferred income tax benefits of $2,377,000,
$4,271,000 and $182,000, 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, where applicable.
In January 1995, the Company extinguished approximately $96,800,000 of
property debt prior to its scheduled maturity. In connection with this
transaction, the Company incurred an extraordinary loss of approximately
$7,100,000, net of related deferred income tax benefits of $3,800,000. Proceeds
from a loan of $96,800,000 obtained in January 1995 and available cash were used
to retire the debt and fund the prepayment penalty. The loan is secured by the
property, due in February 1996, and bears interest at a variable rate. The
Company expects to refinance this loan on a long-term basis at or prior to its
scheduled maturity.
At December 31, 1994, the Company had available unused lines of credit
totalling $159,720,000. In February 1995, the Company registered $150,000,000 of
unsecured notes for issuance to the public from time to time through February
1997. The notes can be issued, subject to market conditions, for varying terms
(nine months to 30 years) at fixed or floating rates based upon market indices
at the time of issuance. The agreements relating to certain of the lines of
credit, the 8.5% unsecured notes, the unsecured notes registered in February
1995, 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. These restrictions
have not limited the Company's normal business activities.
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, 1994 and 1993 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Fixed rate debt........ $2,152,270 $2,105,794 $2,110,163 $2,162,801
Variable rate debt..... 320,606 320,606 300,334 300,334
---------- ---------- ---------- ----------
$2,472,876 $2,426,400 $2,410,497 $2,463,135
========== ========== ========== ==========
</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.
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 and extraordinary losses are summarized by line
of business as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Operating properties:
Revenues............................... $633,047 $607,630 $565,117
Operating expenses, exclusive of
provision for bad debts,
depreciation and amortization....... 322,278 322,793 304,687
Interest expense....................... 196,690 189,805 184,943
Provision for bad debts................ 5,185 4,741 6,297
Depreciation and amortization.......... 74,186 70,200 68,163
-------- -------- --------
34,708 20,091 1,027
-------- -------- --------
Land sales:
Revenues............................... 35,232 35,313 29,137
Operating costs and expenses........... 19,877 19,387 16,330
Interest expense....................... 5,028 4,093 2,959
-------- -------- --------
10,327 11,833 9,848
-------- -------- --------
Development:
Operating costs and expenses........... 6,494 3,853 4,421
Interest expense....................... 495 495 495
-------- -------- --------
(6,989) (4,348) (4,916)
-------- -------- --------
Corporate:
Interest income........................ 2,892 3,862 2,851
Interest expense....................... 11,370 16,413 18,412
Other expenses......................... 8,309 6,184 5,927
-------- -------- --------
(16,787) (18,735) (21,488)
-------- -------- --------
Operating income (loss).................. $ 21,259 $ 8,841 $(15,529)
======== ======== ========
</TABLE>
The assets by line of business at December 31, 1994, 1993 and 1992 are as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Operating properties.................. $2,617,045 $2,556,237 $2,396,900
Land sales............................ 136,986 140,673 140,227
Development........................... 68,863 63,656 96,570
Corporate............................. 92,966 114,416 92,584
---------- ---------- ----------
Total............................... $2,915,860 $2,874,982 $2,726,281
========== ========== ==========
</TABLE>
19
<PAGE>
(12) Income taxes
Income tax expense (benefit) is reconciled to the amount computed by applying
the Federal corporate tax rate as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
<S> <C> <C> <C>
Tax (benefit) at statutory rate on earnings
(loss) before income taxes and extraordinary
losses........................................ $4,668 $1,075 $(7,066)
State income taxes, net of Federal
income tax benefit............................ 2,062 1,398 1,374
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).................... $6,730 $4,363 $(4,934)
====== ====== =======
Effective rate.................................. 50.5% 142.0% 23.7%
====== ====== =======
</TABLE>
The net deferred tax obligations at December 31, 1994 and 1993 consist of
total deferred tax assets of approximately $203,116,000 and $191,071,000,
respectively, and total deferred tax liabilities of approximately $285,713,000
and $270,050,000, 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, 1994 and 1993
relate to the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Property, primarily differences in depreciation
and amortization and treatment of interest
and certain other costs............................. $ 260,457 $ 245,642
Accounts and notes receivable, primarily
differences in timing of recognition of rent
revenues and doubtful receivables................... 5,070 4,243
Accrued expenses, primarily differences in timing of
recognition of interest, compensation and pension
expenses............................................ (58) (460)
Effect of operating loss and tax credit carryforwards. (182,872) (170,446)
--------- ---------
Total............................................... $ 82,597 $ 78,979
========= =========
</TABLE>
The net operating losses carried forward from December 31, 1994 for Federal
income tax purposes aggregate approximately $510,000,000. 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 and tax credit carryforwards at December 31, 1994.
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>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Dispositions of interests in properties........... $(5,284) $ -- $ --
Provisions for loss on investments in properties.. (2,212) (5,432) --
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........................................ (427) (337) 1,133
------- ------- -------
Total........................................... $(7,923) $(5,769) $(5,254)
======= ======= =======
</TABLE>
During 1994, the Company disposed of its interests in two retail centers, a
hotel and an office building and incurred losses of $8,045,000. These losses
were partially offset by a gain of $2,761,000 related to the disposition of an
interest in a retail center the Company continues to manage.
The provision for loss on investment in a property in 1994 relates to an
industrial building which is subject to a contract for sale. The provision for
loss on investment in a property in 1993 relates to a retail center property and
was recognized based on management's determination that the Company would not
continue to support the property (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 property 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 Company has authorized issuance of 50,000,000 shares of Preferred stock
of 1c par value per share of which 4,505,168 shares have been classified as
Series A Convertible Preferred. At December 31, 1994 and 1993, 4,505,041 and
4,025,000 shares, respectively were issued. The Company issued 480,168 shares
of the Series A Convertible Preferred stock valued at $23,000,000 in December
1994 in connection with a modification of terms of a debt agreement related
to a retail center. 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, 1994, shares of authorized and unissued common stock are
reserved as follows: (a) 2,672,282 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) 10,600,096 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.
21
<PAGE>
The Company's stock option plans provide for the grant of options and stock
appreciation rights to directors, officers and employees. A summary of
changes in the outstanding stock options under the stock option plans is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year..... 1,709,302 1,438,542 1,288,152
Options granted.................. 566,000 350,000 285,000
Options exercised:
$ 5.33 per share............... -- -- (91,410)
$11.17 per share............... -- (41,340) (7,800)
$11.83 per share............... (5,700) (2,400) (600)
$15.33 per share............... (3,000) (9,500) (6,000)
Options cancelled................ (38,500) (26,000) (28,800)
--------- --------- ---------
Balance at end of year........... 2,228,102 1,709,302 1,438,542
========= ========= =========
</TABLE>
The options outstanding at December 31, 1994 are exercisable, subject to, in
some instances, certain vesting requirements, as follows: 111,000 shares at
$27.00; 619,000 shares at $23.75; 22,500 shares at $21.33; 350,000 shares at
$19.75; 327,500 shares at $19.00; 8,000 shares at $18.87; 230,500 shares at
$18.00; 174,602 shares at $15.33; 285,000 shares at $14.75; and 100,000 shares
at $13.50.
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 total loans outstanding at December
31, 1994 and 1993 were $2,620,000 and $2,256,000, respectively. 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 $1,663,000 in 1994, $2,415,000 in 1993 and
$2,078,000 in 1992.
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 $11,927,000 in 1994,
$17,483,000 in 1993 and $16,397,000 in 1992, including contingent rents,
based on the operating performance of the related properties, of $6,232,000,
$10,006,000 and $8,106,000, 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,
1994 are summarized as follows (in thousands):
<TABLE>
<S> <C>
1995................................................................. $ 5,675
1996................................................................. 5,640
1997................................................................. 5,583
1998................................................................. 5,583
1999................................................................. 5,583
Subsequent to 1999................................................... 246,445
--------
Total.............................................................. $274,509
========
</TABLE>
22
<PAGE>
Obligations under capital leases relate to leases of the Company's
headquarters building and certain operating properties and equipment expiring
at various dates through 2039. The property and other asset accounts include
costs of $70,651,000 and $73,054,000 and accumulated depreciation of
$21,249,000 and $20,010,000 at December 31, 1994 and 1993, respectively,
related to these leases.The minimum rent payments due under capital leases
and their present value at December 31, 1994 are summarized as follows (in
thousands):
<TABLE>
<S> <C>
1995............................................................ $ 10,383
1996............................................................ 8,875
1997............................................................ 8,489
1998............................................................ 7,688
1999............................................................ 7,330
Subsequent to 1999.............................................. 201,771
---------
244,536
Imputed interest at rates ranging from 5.59% to 13.00%.......... (184,492)
---------
Obligations under capital leases, net........................... $ 60,044
=========
</TABLE>
Space in the Company's operating properties is leased to approximately 6,400
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 the Company for certain of its operating expenses.
Rents from tenants are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Minimum rents....................... $303,425 $289,422 $267,381
Percentage rents.................... 17,144 19,133 19,830
Other rents......................... 220,532 219,168 203,223
-------- -------- --------
Total............................. $541,101 $527,723 $490,434
======== ======== ========
</TABLE>
The minimum rents to be received from tenants under operating leases in
effect at December 31, 1994 are summarized as follows (in thousands):
<TABLE>
<S> <C>
1995.............................................................. $ 282,022
1996.............................................................. 260,096
1997.............................................................. 234,565
1998.............................................................. 202,844
1999.............................................................. 170,221
Subsequent to 1999................................................ 581,777
----------
Total........................................................... $1,731,525
==========
</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
$8,511,000 in 1994, $6,601,000 in 1993 and $7,912,000 in 1992. The minimum rent
payments to be received from tenants under finance leases in each of the next
five years are approximately $8,900,000. The net investment in finance leases at
December 31, 1994 and 1993 is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Total minimum rent payments to be received
over lease terms.................................. $175,609 $ 184,120
Estimated residual values of leased properties...... 3,123 3,123
Unearned income..................................... (97,324) (105,203)
-------- ---------
Net investment in finance leases.................. $ 81,408 $ 82,040
======== =========
</TABLE>
23
<PAGE>
(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 $13,000,000 at December 31, 1994.
At December 31, 1994, subsidiaries of the Company have contingent liabilities
of approximately $26,917,000 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 $37,682,000.
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 and $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, asserting other defenses and raising a counterclaim. 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
from the date the suit was filed and attorneys' fees in an amount to be
determined. On May 6, 1994, the trial court denied all post-trial motions of
both Plaintiffs and Defendants and entered an amended judgment in which it
awarded Plaintiff $450,000 in attorneys' fees and awarded Defendants $25,000 in
attorneys' fees. Defendants believe that the verdict and judgment as entered to
date are contrary to the facts and applicable law. On May 23, 1994, Defendants
appealed this judgment to the Louisiana Court of Appeal, Fourth District.
Defendants intend to vigorously pursue their rights of appeal. Oral argument is
scheduled for March 8, 1995. A decision is expected in the second or third
quarter of 1995. An estimate of the ultimate possible loss in the case cannot be
made at this time, although a reasonably possible range of loss could be as high
as the full amount of the damages awarded in the case, together with interest
accrued and attorneys' fees awarded.
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 provisions (less than $1,500,000 in the aggregate) have been made for
losses with respect to all litigation matters (including with respect to the
above-described suit), 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 47,565,000 for
1994, 47,411,000 for 1993 and 47,994,000 for 1992. 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>
--------------------------------------------------------------------------------
Five Year Comparison of Selected Financial Data
Year ended December 31 (in thousands, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating results:
Revenues from continuing operations................. $ 671,171 $ 646,805 $ 597,105 $ 573,498 $ 529,570
Earnings (loss) from continuing operations.......... 6,606 (1,291) (15,849) 2,424 (1,165)
Earnings (loss) from continuing operations per
share of common stock............................. (.14) (.27) (.33) .05 (.07)
Earnings before depreciation and
deferred taxes from operations...................... 94,710 78,281 52,282 46,820 50,290
Cash flows from:
Operating activities................................ 113,775 101,149 66,630 67,226 35,057
Investing activities................................ (178,551) (154,446) (144,836) (96,210) (248,532)
Financing activities................................ 40,618 47,068 98,914 17,271 246,968
Total assets-cost basis............................... 2,915,860 2,874,982 2,726,281 2,637,452 2,614,877
Total assets-current value basis...................... 4,736,961 4,588,636 4,217,819 4,174,093 4,362,153
Debt, capital leases and Redeemable Preferred stock... 2,532,920 2,473,596 2,498,983 2,374,527 2,344,095
Shareholders' equity (deficit):
Historical cost basis............................... 95,026 113,151 (34,848) 17,328 25,339
Current value basis................................. 1,614,245 1,525,606 1,188,896 1,274,070 1,470,088
Shareholders' equity (deficit)
per share of common stock:
Historical cost basis............................... 1.63 1.98 (.74) .36 .53
Current value basis................................. 27.75 26.75 25.50 26.60 30.10
Dividends per share of common stock................... .68 .62 .60 .60 .60
Dividends per share of convertible Preferred stock.... 3.25 2.83 -- -- --
Weighted average common shares outstanding............ 47,565 47,411 47,994 48,157 48,019
Market price per share of common stock at year end.... 19.25 17.75 18.00 18.25 14.50
Market price per share of convertible
Preferred stock at year end......................... 48.50 53.75 -- -- --
</TABLE>
Note--Historical cost basis shareholders' equity per share of common stock and
current value basis shareholders' equity per share of common stock assume
the conversion of the Series A Convertible Preferred stock.
--------------------------------------------------------------------------------
Interim Financial Information (Unaudited)
Interim consolidated results of operations are summarized as follows (in
thousands, except per share data):
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------------------------------------
December September June March December September June March
31, 1994 30, 1994 30, 1994 31, 1994 31, 1993 30, 1993 30, 1993 31, 1993
-------- --------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $172,325 $172,650 $163,662 $162,534 $173,842 $165,880 $154,341 $152,742
Operating income (loss)............ 9,922 7,314 1,853 2,170 7,053 2,118 975 (1,305)
Earnings (loss) before
extraordinary losses............... 4,161 4,146 549 (2,250) 740 (924) 436 (1,543)
Net earnings (loss)................ 2,767 4,146 (2,030) (2,724) (515) (4,414) (1,912) (2,501)
======== ======== ======== ======== ======== ======== ======== ========
Earnings (loss) per common share:
Earnings (loss) before
extraordinary losses............... $ .02 $ .02 $ (.06) $ (.12) $ (.05) $ (.09) $ (.06) $ (.07)
Extraordinary losses............... (.03) -- (.05) (.01) (.03) (.07) (.05) (.02)
-------- -------- -------- -------- -------- -------- -------- --------
Total.............................. $ (.01) $ .02 $ (.11) $ (.13) $ (.08) $ (.16) $ (.11) $ (.09)
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
Note--The net losses for the quarters ended December 31, 1994 and March 31, 1994
include provisions for losses on investments in operating properties of
$1,644,000 ($.03 per share) and $5,023,000 ($.11 per share), respectively.
The loss for the quarter ended March 31, 1994 was partially offset by a
gain related to the disposition of an interest in a retail center the
Company continues to manage of $1,908,000 ($.04 per share). The net loss
for the quarter ended December 31, 1993 includes a provision for loss on
investment in a retail center of $3,531,000 ($.07 per share).
--------------------------------------------------------------------------------
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:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------------------------------------
December September June March December September June March
31, 1994 30, 1994 30, 1994 31, 1994 31, 1993 30, 1993 30, 1993 31, 1993
-------- --------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High bid price..................... 19 1/2 20 20 19 21 20 1/2 18 3/4 19
Low bid price...................... 17 1/4 18 3/4 18 16 1/4 17 3/4 15 16 15 3/4
Dividends.......................... .17 .17 .17 .17 .17 .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,
1995 was 2,462.
25
<PAGE>
The Rouse Company and Subsidiaries
MANAGEMENT'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 $1.61
billion at December 31, 1994, up from $1.53 billion at December 31, 1993.
The Company has continued to achieve strong financial results in recent
periods, despite the generally difficult market conditions in the real estate
and retailing industries. Current value shareholders' equity per share increased
4% in 1994 and 5% 1993 after decreasing in each of the three preceding years.
Earnings before depreciation and deferred taxes (EBDT), which is defined and
discussed in more detail below, increased 21% in 1994 and 50% in 1993. These
results have been made possible by several factors, including the continued
strong performance of the Company's larger, major market retail centers and
Columbia land sales operations, refinancing of a significant amount of project-
related debt at lower interest rates, particularly in 1993 and the first half of
1994, and, to a lesser extent, dispositions or modifications of the terms of
agreements relating to properties which were performing below expectations.
Management believes that the Company's operating results should continue to
improve in 1995, although the rate of growth in EBDT is likely to slow. For the
longer term, management believes that the outlook for new development is better
than it has been in many years, and the Company is aggressively pursuing a
number of new regional shopping center development opportunities. The Company
also intends to continue to focus development efforts on expansion opportunities
at existing retail centers, projects in Columbia and special situations that do
not involve significant risk. Finally, management is actively reviewing and
evaluating the Company's portfolio of retail center properties to identify those
that may not have characteristics and opportunities consistent with the
Company's long-term objectives. While this process is still in progress and no
decisions have been reached, it is possible that the Company will decide to sell
selected properties, particularly smaller properties in smaller markets.
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 50 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.
Revenues from retail properties increased $22,877,000 in 1994 and $35,118,000
in 1993. The increase in 1994 was attributable to expansions opened in 1994, a
full year of operations of expansions opened and properties acquired in 1993 and
increases in effective
26
<PAGE>
rents due to re-leasing efforts. The increase was also due to higher occupancy
levels at the Company's larger, major market retail centers and increased lease
cancellation payments received as a result of tenant restructurings or
downsizings. These increases were partially offset by the disposition of a
retail center in the first quarter of 1994.
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.
Total operating and interest expenses for retail properties increased by
$8,965,000 in 1994 and $19,959,000 in 1993, including increased depreciation and
amortization of $2,662,000 and $1,508,000, respectively. The increase in 1994
was attributable to costs relating to expansions opened in 1994 and a full year
of operations of expansions opened and properties acquired in 1993, higher
occupancy levels at many of the Company's larger, major market retail centers
and higher interest costs related to floating rate debt. These increases were
partially mitigated by the effects of the disposition of a retail center in the
first quarter of 1994 and to lower effective interest expense on fixed rate
property debt due to debt repayments and refinancings at certain properties. 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.
Revenues from office/mixed-use properties increased $2,540,000 in 1994 and
$7,395,000 in 1993. Total operating and interest expenses for office/mixed-use
properties increased $1,835,000 in 1994 and $3,490,000 in 1993, including
increased depreciation and amortization of $1,324,000 and $529,000,
respectively. The increase in revenues in 1994 was attributable primarily to
higher occupancy levels at office and hotel properties and a full year of
operations of properties opened in 1993, partially offset by lower recoveries of
operating expenses at two office properties where the tenants began paying
certain operating expenses directly in 1994. The increase in expenses in 1994
was due principally to a full year of operations of properties opened in 1993
and higher occupancy levels at office and hotel properties, partially offset by
lower operating expenses at the two office properties referred to above. Also,
lower interest expense at certain properties due to debt reductions,
refinancings and the exercise, in the second quarter of 1994, of an option in a
loan agreement to reduce the effective interest rate on that loan, partially
mitigated the overall increase in interest and operating expenses in 1994.
The increases in revenues and expenses in 1993 were due principally to
operations of two industrial buildings in Columbia which opened in 1993 and an
office building in Columbia opened in 1992. The increase in expenses in 1993 was
partially offset 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.
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 $35,232,000 in 1994, $35,313,000 in 1993 and
$29,137,000 in 1992. The increase in revenues in 1993 was attributable primarily
to higher sales of land for residential uses, and to a lesser extent, commercial
land for retail and other uses.
Land sales costs and expenses were $24,905,000 in 1994, $23,480,000 in 1993
and $19,289,000 in 1992. The increases in costs and expenses in 1994 and 1993
were attributable primarily to higher operating and interest expenses due to
lower levels of land development activity on projects other than Columbia. The
increase in 1993 was also due to increased cost of sales due to higher sales
revenues.
27
<PAGE>
Development: Development expenses were $6,989,000 in 1994, $4,348,000 in
1993 and $4,916,000 in 1992. These costs consist primarily of additions to
the pre-construction reserve and new business costs.
The pre-construction reserve is maintained to provide for costs of projects in
the pre-construction phase of development, including retail center renovation
and expansion opportunities, which may not go forward to completion. Additions
to the pre-construction reserve were $3,400,000 in 1994, $2,900,000 in 1993 and
$3,050,000 in 1992. New business costs relate primarily to the initial
evaluation of acquisition and development opportunities. New business costs were
$3,094,000 in 1994, $953,000 in 1993 and $1,371,000 in 1992. The increases in
these costs in 1994 are due to the Company's more aggressive pursuit of new
development and acquisition opportunities.
Corporate: Corporate revenues consist of interest income earned on temporary
investments, including investments of unused proceeds from refinancings of
certain properties. Corporate interest expense relates primarily to interest
on the convertible subordinated debentures, unused proceeds from refinancings
of certain properties and a portion of the unsecured 8.5% notes, net of
capitalized interest on corporate funds temporarily invested in projects
under development. Corporate expenses also include general and administrative
costs.
Corporate interest income was $2,892,000 in 1994, $3,862,000 in 1993 and
$2,851,000 in 1992. The decrease in 1994 was attributable primarily to lower
average investment balances. The increase in 1993 was attributable to higher
average investment balances as a result of proceeds from the offerings of the
8.5% unsecured notes and Preferred stock and refinancings of certain retail
properties in 1992. The Company earned higher interest rates in 1994 and lower
interest rates in 1993 on its investment balances which consisted primarily of
short-term U. S. government and agency obligations in both years.
Corporate interest costs were $13,934,000 in 1994, $18,571,000 in 1993 and
$20,396,000 in 1992. Of such amounts, $2,564,000, $2,158,000 and $1,984,000 were
capitalized in 1994, 1993 and 1992, respectively, on funds invested in
development projects. The decreases in corporate interest costs in 1994 and 1993
are attributable primarily to the redemption of a $100,000,000 issue of
convertible subordinated debentures in May 1993. The decrease in 1993 was
partially offset by the issuance of the 8.5% unsecured notes. A portion of the
proceeds of the 8.5% unsecured notes and proceeds from refinancings of certain
retail properties completed in 1992 were used to refinance certain land and
operating property debt and to finance improvements to a number of operating
properties during 1994 and 1993. The interest costs on loan proceeds used for
other segments are included in the operating results of those segments, reducing
corporate interest costs. The higher level of interest capitalized in 1994, when
compared to 1993 and 1992, reflects higher levels of corporate funds invested in
development projects consistent with the Company's more aggressive pursuit of
development opportunities in 1994.
Gain (Loss) on Dispositions of Assets and Other Provisions, Net: The loss on
dispositions of assets and other provisions, net, for 1994 consists primarily of
losses totaling $8,045,000 incurred on dispositions of the Company's interests
in two retail centers, a hotel and an office building and a provision for loss
of $2,212,000 (recorded in the fourth quarter) on an investment in an industrial
building which is subject to a contract for sale. These losses were partially
offset by a gain of $2,761,000 related to the disposition of an interest in a
retail center the Company continues to manage.
The loss on dispositions of assets and other provisions, net, for 1993
consists primarily of a provision for loss on investment in a retail center
recorded in the fourth quarter. This loss was recognized based on management's
determination that the Company would not continue to support the property (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 property 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 a marketable equity security and
certain other investments based on management's determination that the declines
in their fair values were other than temporary ($4,156,000).
28
<PAGE>
Extraordinary Losses, Net of Related Income Tax Benefits: The extraordinary
losses in 1994, 1993 and 1992 result from early extinguishments or required
partial early redemptions of debt aggregating $6,824,000, $12,322,000 and
$530,000, respectively, net of deferred income tax benefits of $2,377,000,
$4,271,000 and $182,000, respectively.
Net Earnings (Loss): The Company had net earnings of $2,159,000 in 1994 and
net losses of $9,342,000 in 1993 and $16,197,000 in 1992. The Company's
operating income (after depreciation and amortization) was $21,259,000 in
1994 and $8,841,000 in 1993 and its operating loss was $15,529,000 in 1992.
The improvements in operating income in 1994 and 1993 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 discussed above in gain (loss) on dispositions of assets and other
provisions, net, and extraordinary losses, net of related income tax benefits.
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 a measure of operating results or cash
flows from operating activities as defined by generally accepted accounting
principles. Additionally, EBDT is not necessarily indicative of cash
available to fund cash needs and should not be considered as an alternative
to cash flows as a measure of liquidity. 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 payments of income taxes have not been and
are not anticipated in the near term to be, significant to the Company. Current
Federal and state income taxes are included as reductions of EBDT. Gain (loss)
on dispositions of assets and other provisions, net, and extraordinary losses,
net of related income tax benefits, 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 51.
EBDT was $94,710,000 in 1994, $78,281,000 in 1993 and $52,282,000 in 1992. The
significant changes in various revenue and expense elements comprising EBDT by
segment are described above. The increases in EBDT in 1994 and 1993 were due
primarily to improved results from the operating properties business segment,
particularly retail properties.
EBDT from retail properties was $103,978,000 in 1994, $87,248,000 in 1993 and
$70,966,000 in 1992 and increased at rates of 19.2% and 22.9%, in 1994 and 1993,
respectively. The increases in EBDT for 1994 and 1993 reflect the effects of re-
leasing of space at higher effective rents, the operating results of recently
expanded properties and debt reductions and refinancings at certain properties.
The increase for 1993 also reflects slightly higher average occupancy levels and
tenant sales. Average occupancy and tenant sales for the Company's portfolio of
retail properties decreased slightly in 1994 when compared to 1993; however,
occupancy and sales actually improved at many of the Company's larger, major
market retail centers, most of which are wholly-owned or at least 50% owned, and
sales of high-performing merchants (i.e. those paying percentage rents)
increased by 3.4%. These factors had a disproportionate effect on EBDT and more
than offset the effects of the overall decrease in occupancy and tenant sales.
Office/mixed-use properties had EBDT of $4,273,000 in 1994 and $2,283,000 in
1993 and incurred a loss before depreciation and deferred taxes of $2,127,000 in
1992. The growth in EBDT in 1994 was attributable primarily to improved average
occupancy levels at certain office and hotel properties, the operations of two
industrial buildings in Columbia opened in 1993 and lower interest expense due
to debt reductions, refinancings and the exercise, in the second quarter of
1994, of an option in a loan agreement to reduce the effective interest rate on
that loan. 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 rate exchange agreements.
29
<PAGE>
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%. The majority of the
Company's revaluation equity relates to prime regional shopping centers. Larger,
major market retail centers continue to be a favored real estate investment and
required investor yields in 1994 remained relatively unchanged from 1993.
Revaluation equity increased $107 million or 7.6% to $1.52 billion at December
31, 1994. The increase was due primarily to higher levels of rents used in the
forecasts of cash flows from retail properties and is consistent with the
Company's leasing activities and operating results for 1994. Refinancings and
other changes in financial arrangements at certain projects also increased
forecasted cash flows from operating properties. In addition, the current value
of publicly-traded debt not specifically related to interests in properties
decreased.
Cost basis shareholders' equity decreased to $95,026,000 at December 31, 1994
from $113,151,000 at December 31, 1993. The decrease was due primarily to the
payment of regular quarterly dividends on the common and Preferred stocks,
partially offset by the issuance of additional shares of Preferred stock.
The Company had cash and cash equivalents and investments in marketable
securities totalling $79,547,000 and $107,959,000 at December 31, 1994 and 1993,
respectively, including $2,001,000 and $4,422,000, respectively, held for
restricted uses.
Net cash provided by operating activities was $113,775,000, $101,149,000 and
$66,630,000 in 1994, 1993 and 1992, 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 1994 and 1993, over 80% of the Company's debt was represented by mortgages
and bonds collateralized by operating properties. Scheduled principal payments
on property debt were $46,750,000, $20,735,000 and $17,907,000 in 1994, 1993 and
1992, respectively. The increase in 1994 was due primarily to the effects of
refinancing certain office/mixed-use properties. The annual maturities of debt
for the next five years include balloon payments of $83,748,000 in 1995,
$33,585,000 in 1996, $87,507,000 in 1997, $38,682,000 in 1998 and $106,074,000
in 1999. The balloon payments for 1995 include $56,337,000 related to a retail
center mortgage which is due in December. The Company expects to refinance the
mortgage on a long term basis at or prior to its scheduled maturity. The Company
is confident that it will be able to make the other balloon payments or arrange
to refinance or extend their maturities at or prior to the scheduled repayment
dates. In January 1995, the Company extinguished approximately $96,800,000 of
fixed rate property debt prior to its scheduled maturity and incurred an
extraordinary loss of approximately $7,100,000, net of related deferred income
tax benefits. Proceeds from a variable rate loan of $96,800,000 obtained in
January 1995 and due in February 1996 and available cash were used to retire the
debt and fund the prepayment penalty. The Company is confident it will be able
to refinance this loan on a long term basis at or prior to its scheduled
maturity. 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 $78,628,000, $87,243,000 and $83,377,000 in 1994,
1993 and 1992, 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
30
<PAGE>
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 $94,113,000
in 1994, $34,967,000 in 1993 and $38,806,000 in 1992. A substantial portion of
these costs has been financed using nonrecourse debt. The acquisitions in 1994
consist primarily of the purchase of land underlying a retail center and the
related equity interest of the former lessor. The acquisitions in 1993 and 1992
consist primarily of purchases of partners' interests in retail properties.
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, 1994 was
approximately $2,339,000,000. The Company also has lines of credit available
totalling $159,720,000 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. In addition, in February 1995,
the Company registered $150,000,000 of unsecured notes for issuance to the
public from time to time through February 1997. The Company intends to use the
proceeds from these notes to repay existing recourse indebtedness.
The agreements relating to certain of the lines of credit, the 8.5% unsecured
notes, the unsecured notes registered in February 1995 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. These restrictions have not limited the Company's
normal business activities.
New Accounting Standard
Statement of Financial Accounting Standards No. 116, "Accounting for
Contributions Received and Contributions Made" (SFAS No. 116), was issued by the
Financial Accounting Standards Board in June 1993. SFAS No. 116 requires, among
other things, that contributions made, including unconditional promises to give,
be recognized as expenses at their fair value in the period made. The Company
will adopt SFAS No. 116 effective January 1, 1995. Based on an analysis
performed by the Company, the adoption of SFAS No. 116 will not have a material
effect on the financial position or results of operations of the Company.
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 (retail and office) 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.
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,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Operating properties:
Retail centers:
Minimum and percentage rents.............. $238,222 $227,140 $210,909 $208,560 $196,612
Other rents and other revenues............ 248,253 236,458 217,571 207,641 189,491
Office, mixed-use and other:
Minimum and percentage rents.............. 82,347 81,415 76,302 71,629 56,176
Other rents and other revenues............ 64,225 62,617 60,335 59,379 60,406
-------- -------- -------- -------- --------
633,047 607,630 565,117 547,209 502,685
Land sales.................................... 35,232 35,313 29,137 24,111 22,991
Development fees.............................. -- -- -- 375 --
Corporate interest income..................... 2,892 3,862 2,851 1,803 3,894
-------- -------- -------- -------- --------
671,171 646,805 597,105 573,498 529,570
-------- -------- -------- -------- --------
Operating expenses, exclusive of depreciation
and amortization:
Operating properties:
Retail centers.............................. 253,095 251,386 241,395 233,730 218,168
Office, mixed-use and other................. 74,368 76,148 69,589 69,129 60,944
-------- -------- -------- -------- --------
327,463 327,534 310,984 302,859 279,112
Land sales.................................... 19,877 19,387 16,330 12,848 13,629
Development................................... 6,494 3,853 4,421 5,681 6,775
Corporate..................................... 8,309 6,184 5,927 6,567 6,667
-------- -------- -------- -------- --------
362,143 356,958 337,662 327,955 306,183
-------- -------- -------- -------- --------
Interest expense:
Operating properties:
Retail centers.............................. 128,798 124,204 115,744 117,843 105,441
Office, mixed-use and other................. 67,892 65,601 69,199 63,474 51,581
-------- -------- -------- -------- --------
196,690 189,805 184,943 181,317 157,022
Land sales.................................... 5,028 4,093 2,959 2,728 2,917
Development................................... 495 495 495 495 495
Corporate..................................... 11,370 16,413 18,412 13,755 10,088
-------- -------- -------- -------- --------
213,583 210,806 206,809 198,295 170,522
-------- -------- -------- -------- --------
Preferred stock dividends (Note).............. -- -- -- -- 2,273
Current income taxes.......................... 735 760 352 428 302
-------- -------- -------- -------- --------
576,461 568,524 544,823 526,678 479,280
-------- -------- -------- -------- --------
Earnings before depreciation and deferred
taxes from operations....................... $ 94,710 $ 78,281 $ 52,282 $ 46,820 $ 50,290
======== ======== ======== ======== ========
</TABLE>
32
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Earnings before depreciation and deferred
taxes from operations by segment:
Operating properties:
Retail centers.............................. $103,978 $ 87,248 $ 70,966 $ 64,097 $ 61,999
Office, mixed-use and other................. 4,273 2,283 (2,127) (1,591) 4,051
-------- -------- -------- -------- --------
108,251 89,531 68,839 62,506 66,050
Land sales.................................... 10,330 11,833 9,847 8,634 6,644
Development................................... (6,989) (4,348) (4,916) (5,801) (7,270)
Corporate (Note).............................. (16,882) (18,735) (21,488) (18,519) (15,134)
-------- -------- -------- -------- --------
Earnings before depreciation and
deferred taxes from operations............ $ 94,710 $ 78,281 $ 52,282 $ 46,820 $ 50,290
======== ======== ======== ======== ========
Reconciliation to net earnings (loss):
Earnings before depreciation and deferred
taxes from operations....................... $ 94,710 $ 78,281 $ 52,282 $ 46,820 $ 50,290
Depreciation and amortization................. (74,186) (70,200) (68,163) (65,735) (55,360)
Deferred income taxes applicable to operations (5,995) (3,603) 5,286 (2,393) (1,120)
Preferred stock dividends (Note).............. -- -- -- -- 2,273
Gain (loss) on dispositions of assets and
other provisions, net....................... (7,923) (5,769) (5,254) 23,732 2,752
Extraordinary losses, net of related income
tax benefits................................ (4,447) (8,051) (348) (90) (651)
Cumulative effect of change in accounting
principle................................... -- -- -- 13,463 --
-------- -------- -------- -------- --------
Net earnings (loss)........................... $ 2,159 $ (9,342) $(16,197) $ 15,797 $ (1,816)
======== ======== ======== ======== ========
</TABLE>
Note--Preferred stock dividends paid in 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 is redeemable only for shares of
common stock and, accordingly, related dividends are not deducted from
EBDT.
33
<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 802,000 294,000
----------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------------------
Chapel Square, New Haven, CT (a) 4/83 -- 151,000 151,000
----------------------------------------------------------------------------------------------------------------------------------
Cherry Hill, Cherry Hill, NJ (a) 10/61 Strawbridge & Clothier; R. H. Macy; JCPenney 1,285,000 544,000
----------------------------------------------------------------------------------------------------------------------------------
The Citadel, Colorado Springs, CO (d) 8/80 Mervyn's; JCPenney; Foley's 917,000 460,000
----------------------------------------------------------------------------------------------------------------------------------
College Square, Cedar Falls, IA (d) 8/80 Von Maur; 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
----------------------------------------------------------------------------------------------------------------------------------
Eastfield Mall, Springfield, MA (a) 4/68 Sears; Filene's; JCPenney 674,000 217,000
----------------------------------------------------------------------------------------------------------------------------------
Echelon Mall, Voorhees, NJ (a) 9/70 Strawbridge & Clothier; JCPenney; Boscov's 1,065,000 481,000
----------------------------------------------------------------------------------------------------------------------------------
Exton Square, Exton, PA (a) 3/73 Strawbridge & Clothier 443,000 253,000
----------------------------------------------------------------------------------------------------------------------------------
Faneuil Hall Marketplace, Boston, MA (a) 8/76 -- 215,000 215,000
----------------------------------------------------------------------------------------------------------------------------------
Fashion Island, Newport Beach, CA(c) 8/90 The Broadway; I. Magnin; Robinson's--May; 1,215,000 593,000
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)(c) 8/77 Strawbridge & Clothier; JCPenney 1,320,000 360,000
----------------------------------------------------------------------------------------------------------------------------------
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 Lazarus; 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 309,000 232,000
----------------------------------------------------------------------------------------------------------------------------------
Highland Mall, Austin, TX (b) 8/71 Dillard's; JCPenney; Foley's 1,099,000 367,000
----------------------------------------------------------------------------------------------------------------------------------
Hulen Mall, Ft. Worth, TX (a) 8/77 Foley's; Montgomery Ward; Dillard's 924,000 327,000
----------------------------------------------------------------------------------------------------------------------------------
The Jacksonville Landing, Jacksonville, FL (a) 6/87 -- 128,000 128,000
----------------------------------------------------------------------------------------------------------------------------------
Mall St. Matthews, St. Matthews, KY (a) 3/62 JCPenney; Bacon's 645,000 255,000
----------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------------------
Mondawmin (a)/Metro Plaza (b), Baltimore, MD 1/78; 12/82 -- 496,000 496,000
----------------------------------------------------------------------------------------------------------------------------------
Muscatine Mall, Muscatine, IA (d) 8/80 JCPenney; Von Maur; Wal-Mart 347,000 186,000
----------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<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>
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 554,000 242,000
----------------------------------------------------------------------------------------------------------------------------------
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; Maison Blanche 960,000 362,000
----------------------------------------------------------------------------------------------------------------------------------
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 Avenue 809,000 325,000
----------------------------------------------------------------------------------------------------------------------------------
Paramus Park, Paramus, NJ (b) 3/74 Abraham & Straus; Sears 755,000 279,000
----------------------------------------------------------------------------------------------------------------------------------
Perimeter Mall, Atlanta, GA (b) 8/71 Rich's; JCPenney; R. H. Macy 1,224,000 444,000
----------------------------------------------------------------------------------------------------------------------------------
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; 1,324,000 591,000
Montgomery Ward; Kohls
----------------------------------------------------------------------------------------------------------------------------------
Ridgedale Center, Minnetonka, MN (d) 1/89 Carson, Pirie, Scott; Dayton's; JCPenney; Sears 1,039,000 334,000
----------------------------------------------------------------------------------------------------------------------------------
Riverwalk, New Orleans, LA (a) 8/86 -- 179,000 179,000
----------------------------------------------------------------------------------------------------------------------------------
St. Louis Union Station, St. Louis, MO (a) 8/85 -- 172,000 172,000
----------------------------------------------------------------------------------------------------------------------------------
Salem Centre, Salem, OR (d) 6/90 Meier & Frank; JCPenney; Mervyn's; Nordstrom 649,000 211,000
----------------------------------------------------------------------------------------------------------------------------------
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 570,000 287,000
----------------------------------------------------------------------------------------------------------------------------------
Sherway Gardens, Toronto, ONT (c) 12/78 Eaton's; The Bay 968,000 474,000
----------------------------------------------------------------------------------------------------------------------------------
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 -- 257,000 257,000
----------------------------------------------------------------------------------------------------------------------------------
Staten Island Mall, Staten Island, NY (d) 11/80 Sears; R. H. Macy; JCPenney 1,224,000 618,000
----------------------------------------------------------------------------------------------------------------------------------
Mall St. Vincent, Shreveport, LA (c) 8/80 Sears; Dillard's 557,000 200,000
----------------------------------------------------------------------------------------------------------------------------------
Talbottown, 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 645,000 467,000
----------------------------------------------------------------------------------------------------------------------------------
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; 1,178,000 359,000
Sears; Woodward & Lothrop
----------------------------------------------------------------------------------------------------------------------------------
Willowbrook, Wayne, NJ (b) 9/69 R. H. Macy; Steinbach's; Stern's; Sears 1,499,000 485,000
----------------------------------------------------------------------------------------------------------------------------------
Woodbridge Center, Woodbridge, NJ (a) 3/71 Abraham & Straus; JCPenney; 1,544,000 560,000
Stern's; Steinbach's; Fortunoff
----------------------------------------------------------------------------------------------------------------------------------
Total Retail Centers in Operation 44,922,000 19,829,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Retail Square Footage
Retail Centers Under Construction or in Development Department Stores Total Center Mall Only
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mall St. Matthews Expansion, St. Matthews, KY Dillard's 320,000 90,000
----------------------------------------------------------------------------------------------------------------------------------
Beachwood Place Expansion, Cleveland, OH Nordstrom 250,000 50,000
----------------------------------------------------------------------------------------------------------------------------------
Northwest Arkansas Mall Expansion, Fayetteville, AR JCPenney; Dillard's 310,000 70,000
----------------------------------------------------------------------------------------------------------------------------------
The Citadel Expansion, Colorado Springs, CO Dillard's 180,000 --
----------------------------------------------------------------------------------------------------------------------------------
Oakwood Center Expansion, Gretna, LA JCPenney 125,000 --
----------------------------------------------------------------------------------------------------------------------------------
Burlington Center Expansion, Burlington, NJ JCPenney 102,000 --
----------------------------------------------------------------------------------------------------------------------------------
Total Retail Centers Under Construction or 1,287,000 210,000
in Development
----------------------------------------------------------------------------------------------------------------------------------
<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 Building 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
----------------------------------------------------------------------------------------------------------------------------------
Westlake Center (b) Seattle, WA 342,000
----------------------------------------------------------------------------------------------------------------------------------
Total Office Projects in Operation 3,207,000
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Hotel Projects in Operation Location Rooms
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cross Keys Inn (a) Baltimore, MD 148
----------------------------------------------------------------------------------------------------------------------------------
Stouffer Harborplace Hotel Baltimore, MD 622
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<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
----------------------------------------------------------------------------------------------------------------------------------
Amdahl Building (a) Office 105,000
----------------------------------------------------------------------------------------------------------------------------------
American City Building (a) Office 111,000
----------------------------------------------------------------------------------------------------------------------------------
Columbia Center Building (a) Office 44,000
----------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------------------
RWD Building (a) Office 137,000
----------------------------------------------------------------------------------------------------------------------------------
Re/Max Building (a) Office 39,000
----------------------------------------------------------------------------------------------------------------------------------
Reliance Building (a) Office 38,000
----------------------------------------------------------------------------------------------------------------------------------
The Ryland Group Headquarters (a) Office 167,000
----------------------------------------------------------------------------------------------------------------------------------
Oakland Building (a) R&D/Industrial 145,000
----------------------------------------------------------------------------------------------------------------------------------
Gateway Commerce Center 1, 2 & 20 (a) 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 by subsidiaries of the Company.
(b) Projects are owned by joint ventures or partnerships and are managed by
subsidiaries of the Company for a fee. The Company's ownership interest,
through its subsidiaries, is at least 50% (except for 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 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.
37
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Office Projects Owned by Rouse-Teachers Properties, Inc. Location Square Feet
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Baltimore Freeport Centre Baltimore, MD 58,000
-----------------------------------------------------------------------------------------------------------------------------------
Triangle Business Center Baltimore, MD 75,000
-----------------------------------------------------------------------------------------------------------------------------------
Owen Brown I Columbia, MD 46,000
-----------------------------------------------------------------------------------------------------------------------------------
Sieling Tech Center Columbia, MD 76,000
-----------------------------------------------------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------------------------------------------------
One Hunt Valley 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
-----------------------------------------------------------------------------------------------------------------------------------
Senate Plaza Camp Hill, PA 231,000
-----------------------------------------------------------------------------------------------------------------------------------
Total Office Projects Owned by 3,605,000
Rouse-Teachers Properties, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Industrial Projects Owned by Rouse-Teachers Properties, Inc. Location Square Feet
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pulaski Industrial Park Essex, MD 157,000
-----------------------------------------------------------------------------------------------------------------------------------
Hunt Valley Business Community Hunt Valley, MD 950,000
-----------------------------------------------------------------------------------------------------------------------------------
Rutherford Business Center Woodlawn, MD 572,000
-----------------------------------------------------------------------------------------------------------------------------------
Total Industrial Projects Owned 1,679,000
by Rouse-Teachers Properties, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
Exhibit 21
Exhibit 21. Subsidiaries of the Registrant
The Registrant had no parent at December 31, 1994.
As of December 31, 1994, the Registrant owned 100% of the
voting securities of the following domestic and foreign subsidiaries
included in the consolidated financial statements:
State of
Subsidiary Incorporation
---------- -------------
Domestic subsidiaries:
American City Corporation, The Maryland
Baltimore Center, Inc. Maryland
Charlottetown, Inc. Maryland
Charlottetown North, 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. (Note 3) 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-Camden Warehouse, 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 Alaska, Inc., The Maryland
Rouse Company of Arkansas, Inc., The Maryland
Rouse Company of California, Inc., The (Note 4) Maryland
Rouse Company of Colorado, Inc., The (Note 5) Maryland
Rouse Company of Connecticut, Inc., The (Note 6) Connecticut
Rouse Company of Florida, Inc., The (Note 7) Florida
<PAGE>
2.
Rouse Company of Georgia, Inc., The (Note 8) Georgia
Rouse Company of Idaho, Inc., The Maryland
Rouse Company of Illinois, Inc., The Maryland
Rouse Company of Iowa, Inc., The (Note 9) Maryland
Rouse Company of Kentucky, Inc., The Maryland
Rouse Company of Louisiana, The (Note 10) Maryland
Rouse Company of Maine, Inc., The Maryland
Rouse Company of Massachusetts, Inc., The
(Note 11) Maryland
Rouse Company of Michigan, Inc., The (Note 12) Maryland
Rouse Company of Minnesota, Inc., The (Note 13) Maryland
Rouse Company of Mississippi, Inc., The Maryland
Rouse Company of Montana, Inc., The Maryland
Rouse Company of New Hampshire, Inc., The Maryland
Rouse Company of New Jersey, Inc., The (Note 14) New Jersey
Rouse Company of New Mexico, Inc., The Maryland
Rouse Company of New York, Inc., The (Note 15) New York
Rouse Company of North Carolina, Inc.,
The (Note 16) Maryland
Rouse Company of North Dakota, Inc., The Maryland
Rouse Company of Ohio, Inc., The (Note 17) Ohio
Rouse Company of Oklahoma, Inc., The Maryland
Rouse Company of Oregon, Inc., The (Note 18) Maryland
Rouse Company of Pennsylvania,
Inc., The (Note 19) Pennsylvania
Rouse Company of Rhode Island, Inc., The Maryland
Rouse Company of South Carolina,
Inc., The (Note 20) Maryland
Rouse Company of South Dakota, Inc., The Maryland
Rouse Company of Tennessee, Inc., The Maryland
Rouse Company of Texas, Inc., The (Note 21) Texas
Rouse Company of the District of Columbia, The Maryland
Rouse Company of Utah, Inc., The Maryland
Rouse Company of Vermont, Inc., The Maryland
Rouse Company of Virginia, Inc., The (Note 22) Maryland
Rouse Company of Washington, Inc., The (Note 23) Maryland
Rouse Company of West Virginia, Inc., The Maryland
Rouse Company of Wisconsin, Inc., The Maryland
Rouse Company of Wyoming, 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 24) Maryland
Rouse-Inglewood, Inc. Maryland
Rouse Investing Company (Note 25) Maryland
Rouse Management, Inc. Maryland
Rouse Management Services Corporation Maryland
<PAGE>
3.
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 26) Maryland
Rouse-Oakwood Shopping Center, Inc. Maryland
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 27) Delaware
RREF Holding, Inc. (Note 28) 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 29) Delaware
TRC Holding Company of Washington, D.C.(Note 30) Maryland
TRC Property Management, Inc. Maryland
Two Owings Mills Corporate Center, Inc. Maryland
Village of Cross Keys, Incorporated,
The (Note 31) Maryland
White Marsh Equities Corporation Maryland
White Marsh Mall, Inc. Maryland
Foreign subsidiaries:
--------------------
Rouse Service (Canada) Limited Canada
Sherway Mall Hotel Limited Canada
Notes:
-----
1. Gallery Maintenance, Inc. owns all of the outstanding capital stock of
Rouse Gallery Management, Inc., a Maryland corporation.
2. The Howard Research And Development Corporation owns all of
the outstanding capital stock of the following Maryland corporations:
<PAGE>
4.
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.
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. Huntington Properties, Inc. owns all of the outstanding capital stock of
Huntington Realty Interests, Ltd., a Maryland corporation.
Huntington Realty Interests, Ltd. owns all of the outstanding capital
stock of the following Maryland corporations:
HRIL, Inc.
Huntington Capital Investors, Ltd.
Regency-Huntington, Inc.
4. 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
<PAGE>
5.
5. 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.
6. 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.
7. 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
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
Rouse-West Dade, Inc., a Maryland corporation
8. 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
<PAGE>
6.
9. The Rouse Company of Iowa, Inc. owns all of the outstanding capital stock
of each of the following Maryland corporations:
Rouse Management Services Corporation of Iowa, Inc.
Rouse Management Services Corporation Two of Iowa, Inc.
10. The Rouse Company of Louisiana owns all of the outstanding capital stock
of each of the following Maryland corporations:
Riverwalk Operating Company, Inc.
Rouse-New Orleans, Inc.
11. 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.
12. 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.
13. 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
14. The Rouse Company of New Jersey, Inc. owns all of the outstanding capital
stock of each of the following Maryland corporations:
Cherry Hill Center, 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.
<PAGE>
7.
15. 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
16. The Rouse Company of North Carolina, Inc. owns all of the outstanding
capital stock of each of the following Maryland corporations:
Rouse-Charlotte, Inc.
Rouse Office Management of North Carolina, Inc.
17. 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
Franklin Park Mall Management Corporation, a
Maryland corporation
Plaza Holding Corporation, an Ohio corporation
18. 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
19. The Rouse Company of Pennsylvania, Inc. owns all of the outstanding
capital stock of Whiteland I, Inc. and Whiteland II, Inc., both Maryland
corporations.
20. The Rouse Company of South Carolina, Inc. owns all of the outstanding
capital stock of Rouse-Spartanburg, Inc., a Maryland corporation.
21. 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
<PAGE>
8.
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-Air Cargo (DFW), 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
Rouse-Southlake, Inc., a Maryland corporation
SDK Mall, Inc., a Texas corporation
South DeKalb Mall, Inc., a Texas corporation
22. The Rouse Company of Virginia, Inc. owns all of the outstanding 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.
23. The Rouse Company of Washington, Inc. owns all of the outstanding capital
stock of Rouse-Seattle, Inc., a Maryland corporation.
24. 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.
25. 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
<PAGE>
9.
Wilmington Homes, Inc. owns all of the outstanding capital stock of Echo
Farms Golf and Country Club, Inc., a North Carolina corporation.
26. 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.
27. 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 following corporations:
Norbury Construction Company, a Delaware corporation
Owen Brown B Development Company, a Maryland
corporation
28. RREF Holding, Inc. owns all of the outstanding capital stock of RII
Holding, Inc., a Texas corporation.
29. 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 Three, Inc.
Rouse Funding Two, Inc.
TRCDE, Inc.
TRCDE Two, Inc.
TRCDF, 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%.
<PAGE>
10.
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%.
30. TRC Holding Company of Washington, D.C. owns all of the outstanding
capital stock of Rouse-National Press Management, Inc., a Maryland
corporation.
31. 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, which may be found in Commission file number 0-1743.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This financial data schedule is submitted in accordance with Regulation S-K
item 601(c)(2). This schedule contains summary financial information extracted
from the consolidated financial statements of the Rouse Company and subsidiaries
included in Form 10-K for the annual period ended December 31, 1994 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> $49,398
<SECURITIES> 30,149
<RECEIVABLES> 103,326
<ALLOWANCES> (25,124)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,144,015
<DEPRECIATION> (490,158)
<TOTAL-ASSETS> 2,915,860
<CURRENT-LIABILITIES> 0
<BONDS> 2,472,876
<COMMON> 476
0
45
<OTHER-SE> 94,505
<TOTAL-LIABILITY-AND-EQUITY> 2,915,860
<SALES> 671,171
<TOTAL-REVENUES> 671,171
<CGS> 0
<TOTAL-COSTS> 431,144
<OTHER-EXPENSES> 7,923
<LOSS-PROVISION> 5,185
<INTEREST-EXPENSE> 213,583
<INCOME-PRETAX> 13,336
<INCOME-TAX> 6,730
<INCOME-CONTINUING> 6,606
<DISCONTINUED> 0
<EXTRAORDINARY> (4,447)
<CHANGES> 0
<NET-INCOME> 2,159
<EPS-PRIMARY> (.23)
<EPS-DILUTED> .11
</TABLE>
<PAGE>
Exhibit 99
Exhibit 99. Additional Exhibits.
Form 11-K Annual Report to The Rouse Company Savings Plan for the year ended
December 31, 1994.
<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, 1994 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, 1994 will be filed on or before July 1,
1995.
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, 1995 By /s/ William D. Boden
-------------- --------------------------------
William D. Boden, Administrator
and
Date: March 31, 1995 By /s/ George L. Yungmann
-------------- --------------------------------
George L. Yungmann, Trustee
