Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 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 Identification No.)
incorporation or organization)
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of the issuer's common stock as
of August 8, 1997:
Common Stock, $0.01 par value 66,661,992
Title of Class Number of Shares
Part I. Financial Information
Item 1. Financial Statements:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Six Months Ended June 30, 1997 and 1996
(Unaudited, in thousands except per share amounts, note 1)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Revenues:
Operating properties:
Retail centers $121,022 $122,966 $240,585 $241,756
Office, mixed-use and other 55,582 40,579 108,377 76,447
176,604 163,545 348,962 318,203
Land sales 64,395 14,802 101,989 32,463
Corporate interest income 1,730 703 2,819 1,532
242,729 179,050 453,770 352,198
Operating expenses, exclusive of
provision for bad debts,
depreciation and amortization:
Operating properties:
Retail centers 60,290 62,533 120,130 123,415
Office, mixed-use and other 27,163 19,011 53,780 36,278
87,453 81,544 173,910 159,693
Land sales 50,347 12,206 78,223 21,650
Development 1,329 482 2,452 1,697
Corporate 3,907 2,098 7,200 4,124
143,036 96,330 261,785 187,164
Interest expense:
Operating properties:
Retail centers 31,225 31,312 62,883 62,544
Office, mixed-use and other 20,246 17,195 40,818 34,266
51,471 48,507 103,701 96,810
Land sales 977 237 1,908 487
Development -- 95 -- 170
Corporate 198 3,519 1,359 7,142
52,646 52,358 106,968 104,609
Provision for bad debts 681 501 1,578 1,122
Depreciation and amortization 20,949 18,800 41,734 37,084
217,312 167,989 412,065 329,979
Gain (loss) on disposition of
assets and other provisions,
net (note 5) (12,582) (295) (12,582) (295)
The accompanying notes are an integral part of these statements.
1
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations, continued
Three and Six Months Ended June 30, 1997 and 1996
(Unaudited, in thousands except per share amounts, note 1)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Earnings before income
taxes and extraordinary losses $12,835 $10,766 $ 29,123 $ 21,924
Income taxes
Current 951 171 1,106 350
Deferred 8,759 4,287 16,482 8,523
9,710 4,458 17,588 8,873
Earnings before
extraordinary losses 3,125 6,308 11,535 13,051
Extraordinary losses from
extinguishments of debt, net
of related income tax benefits
(note 6) (10,086) -- (12,215) (1,315)
Net earnings (loss) $(6,961) $ 6,308 $ (680) $ 11,736
Net earnings (loss) applicable
to common shareholders $(9,999) $ 2,647 $ (4,918) $ 4,415
EARNINGS PER SHARE OF
COMMON STOCK AFTER PROVISION
FOR DIVIDENDS ON PREFERRED
STOCK:
Earnings before
extraordinary losses $ -- $ .05 $ .11 $ .11
Extraordinary losses (.15) -- (.18) (.02)
$ (.15) $ .05 $ (.07) $ .09
DIVIDENDS PER SHARE:
Common stock $ .25 $ .22 $ .50 $ .44
Preferred stock $ .75 $ .81 $ 1.05 $ 1.62
The accompanying notes are an integral part of these statments.
2
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
(Unaudited, in thousands, note 1)
June 30, December 31,
1997 1996
Assets:
Property (note 2):
Operating properties:
Property and deferred costs
of projects $3,429,785 $3,374,976
Less accumulated depreciation
and amortization 567,129 552,201
2,862,656 2,822,775
Properties in development 213,028 176,060
Properties held for sale 60,595 73,080
Investment land and land held for
development and sale 263,677 244,117
Total property 3,399,956 3,316,032
Prepaid expenses, deferred charges
and other assets 185,946 187,689
Accounts and notes receivable 90,193 92,369
Investments in marketable securities 9,117 3,596
Cash and cash equivalents 30,447 43,766
Total $3,715,659 $3,643,452
The accompanying notes are an integral part of these statements.
3
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets, continued
June 30, 1997 and December 31, 1996
(Unaudited, in thousands, note 1)
June 30, December 31,
1997 1996
Liabilities:
Debt (note 3):
Property debt not carrying a Parent
Company guarantee of repayment $2,217,111 $2,290,406
Parent Company debt and debt carrying a
Parent Company guarantee of repayment:
Property debt 149,821 179,540
Convertible subordinated debentures 130,000 130,000
Other debt 243,568 235,300
523,389 544,840
Total debt 2,740,500 2,835,246
Obligations under capital leases 55,832 60,201
Accounts payable, accrued expenses
and other liabilities 294,240 298,562
Deferred income taxes 149,138 134,794
Company-obligated mandatorily redeemable
preferred securities of a trust holding
solely Parent Company subordinated debt
securities 137,500 137,500
Shareholders' equity:
Series B Convertible Preferred stock
with a liquidation preference of
$202,500 in 1997 (note 4) 41 --
Common stock of 1 cent par value per share;
250,000,000 shares authorized; 66,754,091
shares issued in 1997 and 66,742,871
shares issued in 1996 668 667
Additional paid-in capital 688,427 488,849
Accumulated deficit (350,687) (312,367)
Total shareholders' equity 338,449 177,149
Total $3,715,659 $3,643,452
The accompanying notes are an integral part of these statements.
4
Part 1. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996
(Unaudited, in thousands, note 1)
1997 1996
Cash flows from operating activities:
Rents and other revenues received $347,423 $315,046
Proceeds from land sales 79,901 30,221
Interest received 7,050 5,643
Land development expenditures (63,293) (8,455)
Operating expenditures:
Operating properties (177,391) (156,628)
Land sales, development and corporate (6,926) (12,206)
Interest paid:
Operating properties (110,256) (101,159)
Land sales, development and corporate (744) (3,332)
Net cash provided by operating activities 75,764 69,130
Cash flows from investing activities:
Expenditures for properties in development
and improvements to existing properties
funded by debt (112,690) (32,065)
Expenditures for acquisition of The Hughes
Corporation (net of acquired cash) -- (29,731)
Expenditures for improvements to existing
properties funded by cash provided by
operating activities:
Tenant leasing and remerchandising (4,960) (3,809)
Building and equipment (18,271) (3,994)
Proceeds from sales of operating properties 5,770 6,388
Other (629) (23)
Net cash used in investing activities (130,780) (63,234)
Cash flows from financing activities:
Proceeds from issuance of property debt 274,259 80,802
Repayments of property debt:
Scheduled principal payments (23,097) (17,378)
Other payments (329,629) (141,070)
Proceeds from issuance of other debt 15,000 52,400
Repayments of other debt (39,200) (16,057)
Proceeds from issuance of preferred stock 196,898 --
Purchase of common stock (16,079) --
Proceeds from exercise of stock options 1,488 112
Dividends paid (37,641) (30,381)
Other (302) (2,152)
Net cash provided by (used in) financing
activities 41,697 (73,724)
Net decrease in cash and cash equivalents (13,319) (67,828)
Cash and cash equivalents at beginning of period 43,766 94,922
Cash and cash equivalents at end of period $ 30,447 $ 27,094
The accompanying notes are an integral part of these statements.
5
Part 1. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows, continued
Six Months Ended June 30, 1997 and 1996
(Unaudited, in thousands, note 1)
1997 1996
Reconciliation of net earnings (loss) to net cash
provided by operating activities:
Net earnings (loss) $ (680) $ 11,736
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 41,734 37,084
(Gain) loss on dispositions of assets
and other provisions, net 12,582 295
Deferred income taxes 16,482 8,523
Extraordinary losses, net of related income
tax benefits 12,215 1,315
Additions to preconstruction reserve 1,200 1,000
Provision for bad debts 1,578 1,122
Decrease (increase) in operating assets and
liabilities, net (9,347) 8,055
Net cash provided by operating activities $ 75,764 $ 69,130
Schedule of Non Cash Investing and Financing
Activities:
Common stock issued pursuant to Contingent
Stock Agreement $ 17,313 $ --
Common stock issued in acquisition of
The Hughes Corporation -- 178,086
Debt assumed by purchasers of land 10,953 --
Notes received from sales of operating properties -- 8,440
Debt and other liabilities assumed in acquisition
The Hughes Corporation, net -- 334,155
The accompanying notes are an integral part of these statements.
6
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1997
(1) Principles of statement presentation
The unaudited consolidated financial statements include all
adjustments which are necessary, in the opinion of management, to
fairly reflect the Company's financial position and results of
operations. All such adjustments are of a normal recurring nature.
The statements have been prepared using the accounting policies
described in the 1996 Annual Report to Shareholders.
In its annual reports, the Company has included certain supplementary
current value basis financial statements with the historical cost
basis financial statements. The current value basis financial
statements are not presented as part of the Company's quarterly
reports to shareholders. Therefore, all of the financial information
contained herein is based on the historical cost basis as required by
generally accepted accounting principles.
(2) Property
Properties in development include construction and development in
progress and preconstruction costs, net. The construction and
development in progress accounts include land and land improvements of
$46,524,000 at June 30, 1997.
Changes in preconstruction costs, net, for the six months ended
June 30, 1997 are summarized as follows (in thousands):
Balance at beginning of period, before
preconstruction reserve $22,158
Costs incurred 12,892
Costs transferred to construction and development
in progress (1,779)
Costs transferred to operating properties (3,894)
Costs of unsuccessful projects written off (75)
29,302
Less preconstruction reserve 17,442
Balance at end of period, net $11,860
7
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(3) Debt
Debt at June 30, 1997 and December 31, 1996 is summarized as
follows (in thousands):
June 30, 1997 December 31, 1996
Due in Due in
Total one year Total one year
Mortgages and bonds $2,213,919 $ 77,287 $2,279,971 $114,831
Convertible subordi-
nated debentures 130,000 - 130,000 -
Medium-term notes 110,300 12,800 115,300 5,000
Credit line borrowings 50,000 - 64,000 -
Other loans 236,281 15,413 245,975 4,694
Total $2,740,500 $105,500 $2,835,246 $124,525
The amounts due in one year reflect the terms of existing loan
agreements except where refinancing commitments from outside lenders
have been obtained. In these instances, maturities are determined
based on the terms of the refinancing commitments.
(4) Series B Convertible Preferred stock
The Company has registered to sell up to an aggregate of
$500,000,000 (based on the public offering price) of common stock,
Preferred stock and debt securities. The stock and debt may be
issued from time to time at prices, in amounts and on terms to be
determined at the time of offering. In the first quarter of 1997,
the Company issued 4,050,000 shares of the Series B Convertible
Preferred stock pursuant to this registration.
(5) Gain (loss) on dispositions of assets and other provisions, net
The loss in 1997 relates primarily to additional provisions for losses
on several retail centers the Company is holding for sale. These
additional provisions were recognized based upon the updated
estimated fair values of the properties less costs to sell. These
losses were partially offset by gains on dispositions of two office
buildings ($1,209,000).
The loss in 1996 relates primarily to a provision for costs related to
a litigation matter which was settled in the third quarter of 1996.
(6) Extraordinary losses, net of related income tax benefits
During the three and six months ended June 30, 1997 and six months
ended June 30, 1996, the Company incurred extraordinary losses
related to extinguishments of debt prior to scheduled maturity of
$15,517,000, $18,792,000 and $2,023,000, respectively, net of related
income tax benefits of $5,431,000, $6,577,000 and $708,000,
respectively.
8
Part I. Financial Information, continued
Item 1. Financial Statements, continued:
THE ROUSE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited), continued
(7) Contingencies
The Company and certain of its subsidiaries are defendants in various
litigation matters arising in the ordinary course of business, some of
which involve claims for damages that are substantial in amount. Some
of these litigation matters are covered by insurance. In the opinion
of management, adequate provision has been made for losses with
respect to all litigation matters, where appropriate, and the ultimate
resolution of all such litigation matters is not likely to have a
material effect on the consolidated financial position of the Company.
Due to the Company's modest and fluctuating net earnings, 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,
and it is, therefore, possible that resolution of these matters could
have a material effect in any future quarter or year.
9
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
THE ROUSE COMPANY AND SUBSIDIARIES
The following discussion and analysis covers any material changes in
financial condition since December 31, 1996 and any material changes in
the results of operations for the three and six months ended June 30, 1997
as compared to the same periods in 1996. This discussion and analysis
should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in the 1996
Annual Report to Shareholders.
General
On June 12, 1996, the Company purchased all of the outstanding equity
interests in The Hughes Corporation and its affiliated partnership, Howard
Hughes Properties, Limited Partnership (together, Hughes). The assets of
Hughes consist primarily of a regional shopping center and a large-scale,
master-planned community (Summerlin) in Las Vegas, Nevada, and four large-
scale, master-planned business parks and various other properties in
Nevada and Southern California.
Management is continually reviewing and evaluating the portfolio of
properties to identify expansion, renovation and/or remerchandising
opportunities and properties that may not have future prospects consistent
with the Company's long term objectives. The Company will continue to
dispose of properties that are not meeting and/or are not considered to
have the potential to meet its long term objectives, particularly smaller
properties in smaller market areas. While disposition decisions may cause
the Company to recognize gains or losses that could have material effects
on reported net earnings (loss) in future quarters or fiscal years, they
are not anticipated to have a material effect on the overall consolidated
financial position of the Company.
Operating Results:
Operating Properties:
Revenues from retail centers decreased $1,944,000 and $1,171,000 for the
three and six months ended June 30, 1997, while total operating and
interest expenses decreased $1,943,000 and $1,615,000, as compared to the
same periods in 1996. The decreases in revenues and expenses for the
periods were attributable primarily to the effects of lower average
occupancy, (as a result of ongoing retail center renovations and
expansions and high vacancy rates at centers in the process of
disposition), dispositions of interests in properties (two in the first
quarter of 1996 and one in the fourth quarter of 1996) and lower tenant
lease termination payments. These decreases were partially offset by
increases in revenues and expenses attributable primarily to acquisitions
of interests in two properties, (one in connection with the acquisition of
Hughes in the second quarter of 1996 and one in the third quarter of
1996).
10
Part I. Financial information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, (continued):
Operating Properties (continued):
Revenues from office, mixed-use and other properties increased $15,003,000
and $31,930,000 and total operating and interest expenses increased
$13,134,000 and $27,616,000 for the three and six months ended June 30,
1997, as compared to the same periods in 1996. The increases in revenues
and expenses were attributable primarily to the acquisition of Hughes and
higher occupancy levels, especially at certain hotel properties. The
increases in expenses were partially offset by lower bad debts due to the
recovery of a note receivable (approximately $800,000) previously reserved
and the sale of an unoccupied industrial building in the second quarter of
1996.
Land sales:
Revenues from land sales increased $49,593,000 and $69,526,000 and related
costs and expenses increased $38,889,000 and $58,226,000 for the three and
six months ended June 30, 1997, as compared to the same periods in 1996.
The increases in revenues and costs and expenses are attributable
primarily to the acquisition of Hughes. Revenues from sales of land
acquired in the purchase of Hughes increased $49,407,000 and $77,676,000
and related costs and expenses increased $39,208,000 and $62,202,000 for
the three and six months ended June 30, 1997, respectively, as compared to
the same periods in 1996. These increases were partially offset in the
six month period by decreases in revenues and costs and expenses related
to land sales in Columbia of $8,150,000 and $3,976,000, respectively, due
to lower levels of sales for both residential and commercial uses.
Development:
Development expenses consist primarily of additions to the preconstruction
reserve and new business costs. The preconstruction reserve is maintained
to provide for costs of projects which may not go forward to completion.
New business costs relate primarily to the initial evaluation of potential
acquisition and development opportunities. These costs increased $752,000
and $585,000 for the three and six months ended June 30, 1997 as compared
to the same periods in 1996. These increases were attributable to
increases in both the additions to the preconstruction reserve and new
business costs as the Company more actively pursues retail center
development opportunities and possible acquisitions.
Corporate:
Corporate expenses consist of certain interest and operating expenses
reduced by costs capitalized or allocated to other segments. Interest is
capitalized on corporate funds invested in projects under development, and
interest on the proceeds of corporate borrowings and distributions on the
Company-obligated mandatorily redeemable preferred securities which are
used for other segments are allocated to those segments. Accordingly,
corporate interest expense consists primarily of interest on the
convertible subordinated debentures, the unsecured 8.5% notes, the medium
term notes, and unallocated proceeds from refinancings of certain
properties, net of interest capitalized on development projects or
allocated to other segments, and corporate operating expenses consist
11
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued):
Corporate (continued):
primarily of general and administrative costs and distributions on the
redeemable preferred securities, net of distributions allocated to other
segments. These costs decreased $1,509,000 and $2,726,000 for the three
and six months ended June 30, 1997, respectively, as compared to the same
periods in 1996. The decreases in these costs are attributable primarily
to higher levels of corporate funds invested in development projects.
Gain (loss) on dispositions of assets and other provisions, net
The loss in 1997 relates primarily to additional provisions for losses on
several retail centers the Company is holding for sale. These additional
provisions were recognized based upon the updated estimated fair values of
the properties less costs to sell. These losses were partially offset by
gains on dispositions of two office buildings ($1,209,000).
The loss in 1996 relates primarily to a provision for costs related to a
litigation matter which was settled in the third quarter of 1996.
Extraordinary losses, net of related income tax benefits
During the three and six months ended June 30, 1997 and six months ended
June 30, 1996, the Company incurred extraordinary losses related to
extinguishments of debt prior to scheduled maturity of $15,517,000,
$18,792,000 and $2,023,000, respectively, net of related income tax
benefits of $5,431,000,$6,577,000 and $708,000, respectively.
Net Earnings (Loss)
Net earnings (loss) for the three and six months ended June 30, 1997 and
1996 were 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. Net earnings (loss) was also affected
by income taxes. The Company's effective tax rates (based on earnings
before income taxes and extraordinary losses) were 76% and 60%,
respectively, for the three and six months ended June 30, 1997, and 41%
and 40%, respectively, for the three and six months ended June 30, 1996.
The effective rates are higher in 1997 primarily because a portion of the
distributions payable to the former Hughes owners (or their successors)
under the Contingent Stock Agreement is not deductible for income tax
purposes.
Financial Condition and Liquidity:
Shareholders' equity increased by $161,300,000 from $177,149,000 at
December 31, 1996 to $338,449,000 at June 30, 1997. The increase was
primarily attributable to the issuance of the Series B Convertible
Preferred Stock as discussed in note 4 to the consolidated financial
statements. This increase was partially offset by the net loss for the
six months ended June 30, 1997 and the payment of regular quarterly
dividends on the Company's common and Preferred stocks.
12
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, (continued)
Financial Information and Liquidity (continued):
The Company had cash and cash equivalents and investments in marketable
securities totaling $39,564,000 and $47,362,000 at June 30, 1997 and
December 31, 1996, respectively, including $4,117,000 and $3,596,000 of
investments, respectively, held for restricted uses.
The Company and certain of its subsidiaries have available lines of credit
from banks and other lenders aggregating $248,120,000, including
outstanding borrowings of $50,000,000 at June 30, 1997. These credit
lines may be used for various purposes, including land and project
development costs, property acquisitions, liquidity and other corporate
needs, subject to specific use limitations and/or lender approvals in
certain cases. They may also be utilized to pay some portion of existing
debt, including maturities in 1997 and 1998. As of June 30, 1997, debt
due in one year was $105,500,000 including balloon maturities of
$59,147,000. The Company is continually evaluating sources of capital,
and management believes there are satisfactory sources available for all
requirements without necessitating property sales.
Net cash provided by operating activities was $75,764,000 and $69,130,000
for the six months ended June 30, 1997 and 1996, respectively. The
increase in net cash provided of $6,634,000 was due primarily to the
factors discussed previously under the operating results of the four major
business segments.
Net cash used in investing activities was $130,780,000 and $63,234,000 for
the six months ended June 30, 1997 and 1996, respectively. The increase
in net cash used of $67,546,000 was due primarily to increases in
expenditures for properties under development.
Net cash provided by financing activities was $41,697,000 and net cash used
in financing activities was $73,724,000 for the six months ended June 30,
1997 and 1996, respectively. Cash flows from financing activities for
1997 included the proceeds from the public offering of Series B
Convertible Preferred stock. There was no similar transaction in the 1996
period. The effect of the issuance of the Series B Convertible Preferred
stock was offset partially by increased repayments of property and other
debt, a purchase of common stock and increased dividends.
13
Part I. Financial Information, continued
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, (continued)
Information relating to forward-looking statements:
This report on Form 10-Q of the Company includes forward-looking statements
which reflect the Company's current views with respect to future events
and financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including those identified below,
which could cause actual results to differ materially from historical
results or those anticipated. The words "believe," "expect," "anticipate"
and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of their dates. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise. The following
factors could cause actual results to differ materially from historical
results or those anticipated: (1) real estate investment risks; (2)
development risks; (3) illiquidity of real estate investments; (4)
dependence on rental income from real property; (5) effect of uninsured
loss; (6) lack of geographical diversification; (7) possible environmental
liabilities; (8) difficulties of compliance with the Americans with
Disabilities Act; (9) competition; (10) changes in the economic climate
and (11) certain matters relating to Nevada properties. For a more
detailed discussion of these factors, see Exhibit 99.2 of the Company's
Form 10-K for the fiscal year ended December 31, 1996.
14
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of The Rouse Company was held
on May 15, 1997. The only matter voted upon at the meeting was
the election of Directors. The vote was as follows:
NOMINEE FOR WITHHELD
David H. Benson 60,396,729 772,563
Jeremiah E. Casey 60,396,187 773,105
Anthony W. Deering 60,998,728 170,564
Rohit M. Desai 60,567,651 772,205
Mathias J. DeVito 60,354,863 814,429
Juanita T. James 60,977,860 191,432
William R. Lummis 60,997,538 191,754
Thomas J. McHugh 60,997,388 191,904
Hanne M. Merriman 60,999,875 169,417
Roger W. Schipke 60,980,424 188,868
Alexander R. Trowbridge 60,970,606 198,686
Gerald J. M. Vlak 60,999,326 169,966
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Reference is made to the Exhibit Index.
(b) Reports on Form 8-K
None
15
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE ROUSE COMPANY
Principal Financial Officer:
Date: August 14,1997 By /s/Jeffrey H. Donahue
Jeffrey H. Donahue
Senior Vice President and
Chief Financial Officer
Principal Accounting Officer:
Date: August 14,1997 By /s/George L. Yungmann
George L. Yungmann
Senior Vice President and
Controller
16
Exhibit Index
Exhibit Number Description
11 Statement re Computation of per
share earnings (loss)
27 Financial Data Schedule
17
Exhibit 11
THE ROUSE COMPANY AND SUBSIDIARIES
Computation of Fully Diluted Earnings (Loss) Per Share
(Unaudited, in thousands except per share amounts)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Earnings before
extraordinary losses $ 3,125 $ 6,308 $11,535 $13,051
Add after-tax interest expense
applicable to convertible
subordinated debentures 1,215 1,215 2,430 2,430
Earnings before extra-
ordinary losses, as adjusted 4,340 7,523 13,965 15,481
Extraordinary losses (10,086) -- (12,215) (1,315)
Net earnings (loss), as adjusted $(5,746) $ 7,523 $ 1,750 $14,166
Shares:
Weighted average number of
common shares outstanding 66,785 49,869 66,604 48,801
Assuming conversion of
convertible Preferred stock 5,310 10,528 3,696 10,564
Assuming conversion of convertible
subordinated debentures 4,541 4,541 4,541 4,541
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 990 799 990 799
Weighted average number of shares
outstanding, as adjusted 77,626 65,737 75,831 64,705
Earnings per common share
assuming full dilution:
Earnings before extraordinary
losses, as adjusted $ .06 $ .11 $ .18 $ .24
Extraordinary losses (.13) -- (.16) (.02)
Net earnings, adjusted $ (.07) $ .11 $ .02 $ .22
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.
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This financial data schedule is included to comply with the requirements of
Item 601 (c) (2) of Regulations S-K and S-B. This schedule contains summary
financial information extracted from Form 10-Q for the quarterly period ended
June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> $ 30,447
<SECURITIES> $ 9,117
<RECEIVABLES> $ 110,551
<ALLOWANCES> $ (20,358)
<INVENTORY> 0
<CURRENT-ASSETS> $ 139,844<F1>
<PP&E> $ 3,967,085
<DEPRECIATION> $ (567,129)
<TOTAL-ASSETS> $ 3,715,659
<CURRENT-LIABILITIES> $ 400,053<F2>
<BONDS> $ 2,740,500
<COMMON> $ 668
0
$ 41
<OTHER-SE> $337,740
<TOTAL-LIABILITY-AND-EQUITY> $ 3,715,659
<SALES> $ 453,770
<TOTAL-REVENUES> $ 453,770
<CGS> 0
<TOTAL-COSTS> $ 303,519
<OTHER-EXPENSES> 0
<LOSS-PROVISION> $ 1,578
<INTEREST-EXPENSE> $ 106,968
<INCOME-PRETAX> $29,123
<INCOME-TAX> $17,588
<INCOME-CONTINUING> $11,535
<DISCONTINUED> $(12,582)
<EXTRAORDINARY> $(12,215)
<CHANGES> 0
<NET-INCOME> $ (680)
<EPS-PRIMARY> $ .07
<EPS-DILUTED> $ .02
<FN>
<F1>Current assets include cash, unrestricted marketable securities, current
portion of accounts and notes receivable and prepaid expenses and deposits.
<F2>Current liabilities include the current portion of long-term debt and accounts
payable, accrued expenses and other liabilities.
</FN>
</TABLE>
