<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended December 31, 1998 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 Human Resources and Administrative Services 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>
THE ROUSE COMPANY SAVINGS PLAN
Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
December 31, 1998 and 1997
Index
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits -
December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for Plan
Benefits - Years ended December 31, 1998 and 1997 3
Notes to Financial Statements - December 31, 1998 and 1997 5
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998 10
Item 27d - Schedule of Reportable Transactions - Year ended
December 31, 1998 11
* * * * * * *
The other schedules required by Item 27 of Department of Labor Form 5500 are
inapplicable and are therefore omitted.
<PAGE>
Independent Auditors' Report
----------------------------
The Trustee
The Rouse Company Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of The Rouse Company Savings Plan as of December 31, 1998 and 1997 and
the related statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements 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 financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of The Rouse
Company Savings Plan as of December 31, 1998 and 1997, and the changes in net
assets available for plan benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. These supplemental schedules
are the responsibility of the Plan's management. The fund information in the
statements of net assets available for plan benefits and the statements of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and the changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG LLP
KPMG LLP
Baltimore, MD
June 23, 1999
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
The Rouse Company T. Rowe Price
------------------------ --------------------------------------------------------
Quarterly
Income Ariel Blended Equity Equity
Common Preferred Growth Balanced Stable Income Index 500
Stock Securities Fund Fund Value Fund Fund Fund
----------- ----------- ---------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Investments $21,890,700 609,598 640,698 2,763,094 3,800,124 627,922 5,709,633
Contributions receivable from:
The Rouse Company 47,395 763 321 517 488 475 1,726
Participants 16,762 801 3,239 5,929 15,374 1,885 17,864
----------- ----------- ---------- ------------- ------------- ------------ --------------
64,157 1,564 3,560 6,446 15,862 2,360 19,590
----------- ----------- ---------- ------------- ------------- ------------ --------------
Net assets available
for plan benefits $21,954,857 611,162 644,258 2,769,540 3,815,986 630,282 5,729,223
=========== =========== ========== ============= ============= ============ ==============
1997
Investments $26,829,506 626,521 411,620 2,405,026 1,583,269 -- 4,035,131
Contributions receivable from:
The Rouse Company 22,373 396 53 104 -- -- 323
Participants 7,311 72 776 2,431 -- 4,693
----------- ----------- ---------- ------------- ------------- ------------ --------------
29,684 468 829 2,535 -- -- 5,016
----------- ----------- ---------- ------------- ------------- ------------ --------------
Net assets available
for plan benefits $26,859,190 626,989 412,449 2,407,561 1,583,269 -- 4,040,147
=========== =========== ========== ============= ============= ============ ==============
<CAPTION>
T. Rowe Price
------------------------------------------------------------------------------------
New
International America New Prime Small Spectrum
Stock Growth Horizons Reserve Cap Value Growth
Fund Fund Fund Fund Fund Fund
--------------- ------------ ----------- ------------- ------------- ---------------
1998
Investments 3,971,990 6,319,179 6,934,560 4,481,519 2,776,623 5,682,719
Contributions receivable from:
The Rouse Company 518 557 387 502 602 451
Participants 9,410 16,028 23,009 6,503 10,690 13,390
--------------- ------------ ----------- ------------- ------------- ---------------
9,928 16,585 23,396 7,005 11,292 13,841
--------------- ------------ ----------- ------------- ------------- ---------------
Net assets available
for plan benefits 3,981,918 6,335,764 6,957,956 4,488,524 2,787,915 5,696,560
=============== ============ =========== ============= ============= ===============
1997
Investments 3,871,934 5,518,203 6,961,821 4,004,373 3,363,952 5,648,184
Contributions receivable from:
The Rouse Company 30 104 124 154 327 36
Participants 4,835 6,537 9,942 4,184 4,366 5,745
--------------- ------------ ----------- ------------- ------------- ---------------
4,865 6,641 10,066 4,338 4,693 5,781
--------------- ------------ ----------- ------------- ------------- ---------------
Net assets available
for plan benefits 3,876,799 5,524,844 6,971,887 4,008,711 3,368,645 5,653,965
=============== ============ =========== ============= ============= ===============
<CAPTION>
------------
Spectrum
Income Insurance Participant
Fund Contracts Loans Total
------------ ------------ ------------ --------------
1998
Investments 2,311,450 3,265,205 3,123,920 74,908,934
Contributions receivable from:
The Rouse Company 294 -- -- 54,996
Participants 6,050 -- -- 146,934
------------ ------------ ------------ --------------
6,344 -- -- 201,930
------------ ------------ ------------ --------------
Net assets available
for plan benefits 2,317,794 3,265,205 3,123,920 75,110,864
============ ============ ============ ==============
1997
Investments 1,994,570 5,789,962 3,195,490 76,239,562
Contributions receivable from:
The Rouse Company 47 28 -- 24,099
Participants 1,912 6,119 -- 58,923
------------ ------------ ------------ --------------
1,959 6,147 -- 83,022
------------ ------------ ------------ --------------
Net assets available
for plan benefits 1,996,529 5,796,109 3,195,490 76,322,584
============ ============ ============ ==============
</TABLE>
F-8
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
The Rouse Company T. Rowe Price
------------------------ ---------------------------------------------------------
Quarterly
Income Ariel Blended Equity Equity
Common Preferred Growth Balanced Stable Income Index 500
Stock Securities Fund Fund Value Fund Fund Fund
----------- ----------- ---------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Contributions from
The Rouse Company $1,408,870 24,083 8,943 8,559 8,408 6,643 26,067
Contributions from
participants 539,804 31,685 102,395 241,117 466,135 77,035 596,606
Investment income:
Dividends and interest 903,271 66,001 55,396 80,278 112,112 44,149 70,638
Net appreciation
(depreciation) in fair
values of investments (4,280,304) (28,892) 992 299,061 -- (7,675) 1,142,768
Interest on participant
loans -- -- -- -- -- -- --
------------- ----------- ---------- ------------ ------------ ----------- -----------
Total investment
income (loss) (3,377,033) 37,109 56,388 379,339 112,112 36,474 1,213,406
------------- ----------- ---------- ------------ ------------ ------------ -----------
Distributions to participants (2,990,837) (211,812) (114,776) (135,999) (916,175) (4,991) (832,200)
Participant loans repaid
as part of termination
distributions -- -- -- -- -- -- --
Interprogram transfers, net (485,137) 103,108 178,859 (131,037) 2,562,237 515,121 685,197
------------- ----------- ---------- ------------ ------------ ------------ -----------
Increase (decrease)
in net assets
available for
plan benefits (4,904,333) (15,827) 231,809 361,979 2,232,717 630,282 1,689,076
Net assets available for
plan benefits:
Beginning of year 26,859,190 626,989 412,449 2,407,561 1,583,269 -- 4,040,147
------------- ----------- ---------- ------------ ------------ ----------- -----------
End of year $21,954,857 611,162 644,258 2,769,540 3,815,986 630,282 5,729,223
============= =========== ========== ============ ============ =========== ===========
(continued)
<CAPTION>
T. Rowe Price
--------------------------------------------------------------------------------------------------
New
International America New Prime Small Spectrum Spectrum
Stock Growth Horizons Reserve Cap Value Growth Income
Fund Fund Fund Fund Fund Fund Fund
------------- ------------ ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Contributions from
The Rouse Company 6,824 11,484 10,426 9,837 15,519 6,603 4,340
Contributions from
participants 404,700 556,002 774,170 281,311 395,932 530,462 234,894
Investment income:
Dividends and interest 145,951 470,358 354,785 201,356 198,159 485,833 173,620
Net appreciation
(depreciation) in fair
values of investments 427,934 484,008 16,177 -- (658,265) 238,605 (36,596)
Interest on participant
loans -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total investment
income (loss) 573,885 954,366 370,962 201,356 (460,106) 724,438 137,024
---------- ---------- ---------- ---------- ---------- ---------- ----------
Distributions to participants (517,245) (654,237) (655,651) (355,877) (285,354) (504,516) (393,254)
Participant loans repaid
as part of termination
distributions -- -- -- -- -- -- --
Interprogram transfers, net (363,045) (56,695) (513,838) 343,186 (246,721) (714,392) 338,261
---------- ---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in net assets
available for
plan benefits 105,119 810,920 (13,931) 479,813 (580,730) 42,595 321,265
Net assets available for
plan benefits:
Beginning of year 3,876,799 5,524,844 6,971,887 4,008,711 3,368,645 5,653,965 1,996,529
---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year 3,981,918 6,335,764 6,957,956 4,488,524 2,787,915 5,696,560 2,317,794
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
Insurance Participant
Contracts Loans Total
-------------- ------------- -------------
<S> <C> <C> <C>
1998
Contributions from
The Rouse Company -- -- 1,556,606
Contributions from
participants -- -- 5,232,248
Investment income:
Dividends and interest 318,219 -- 3,680,126
Net appreciation
(depreciation) in fair
values of investments -- -- (2,402,187)
Interest on participant
loans -- 221,009 221,009
-------------- ------------- --------------
Total investment
income (loss) 318,219 221,009 1,498,948
-------------- ------------- --------------
Distributions to participants (521,213) -- (9,094,137)
Participant loans repaid
as part of termination
distributions -- (405,385) (405,385)
Interprogram transfers, net (2,327,910) 112,806 --
-------------- ------------- --------------
Increase (decrease)
in net assets
available for
plan benefits (2,530,904) (71,570) (1,211,720)
Net assets available for
plan benefits:
Beginning of year 5,796,109 3,195,490 76,322,584
-------------- ------------- --------------
End of year 3,265,205 3,123,920 75,110,864
============== ============= ==============
</TABLE>
F-9
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
The Rouse Company T. Rowe Price
--------------------------- -------------------------------------------------------
Quarterly
Income Ariel Blended Equity International
Common Preferred Growth Balanced Stable Index 500 Stock
Stock Securities Fund Fund Value Fund Fund Fund
--------------- ---------- ---------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997
Contributions from
The Rouse Company $1,604,614 28,105 1,841 2,691 -- 6,569 2,052
Contributions from
participants 638,497 29,798 56,388 186,670 -- 518,852 482,174
Investment income:
Dividends and interest 816,108 49,608 34,989 93,644 -- 78,694 204,968
Net appreciation
(depreciation) in fair
values of investments 650,840 13,940 37,292 296,995 -- 731,010 (124,650)
Interest on participant
loans -- -- -- -- -- -- --
--------------- ---------- ---------- -------------- -------------- ----------- ------------
Total investment
income 1,466,948 63,548 72,281 390,639 -- 809,704 80,318
--------------- ---------- ---------- -------------- -------------- ----------- ------------
Distributions to participants (2,058,517) (4,084) (20,464) (264,740) -- (263,875) (208,724)
Participant loans repaid
as part of termination
distributions -- -- -- -- -- -- --
Interprogram transfers, net (3,090,211) 276,468 259,954 94,345 1,583,269 1,135,573 118,889
--------------- ---------- ---------- -------------- -------------- ----------- ------------
Increase (decrease)
in net assets
available for
plan benefits (1,438,669) 393,835 370,000 409,605 1,583,269 2,206,823 474,709
Net assets available for plan benefits:
Beginning of year 28,297,859 233,154 42,449 1,997,956 -- 1,833,324 3,402,090
--------------- ---------- ---------- -------------- ------------- ------------ ------------
End of year $26,859,190 626,989 412,449 2,407,561 1,583,269 4,040,147 3,876,799
=============== ========== ========== ============== ============= ============ ============
<CAPTION>
T. Rowe Price
----------------------------------------------------------------------------------
New
America New Prime Small Spectrum Spectrum
Growth Horizons Reserve Cap Value Growth Income
Fund Fund Fund Fund Fund Fund
-------------- ------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1997
Contributions from
The Rouse Company 1,898 3,247 1,450 4,995 1,345 894
Contributions from
participants 684,223 896,601 373,729 419,922 568,970 217,554
Investment income:
Dividends and interest 260,477 168,457 196,963 212,445 570,468 134,990
Net appreciation
(depreciation) in fair
values of investments 662,976 454,870 -- 406,016 233,453 69,251
Interest on participant
loans -- -- -- -- -- --
-------------- ------------- -------------- ------------ ------------ ------------
Total investment
income 923,453 623,327 196,963 618,461 803,921 204,241
-------------- ------------- -------------- ------------ ------------ ------------
Distributions to participants (277,128) (602,441) (428,173) (64,141) (261,984) (153,840)
Participant loans repaid
as part of termination
distributions -- -- -- -- -- --
Interprogram transfers, net (390,706) 7,050 325,564 672,027 (159,586) 96,345
-------------- ------------- -------------- ------------ ------------ ------------
Increase (decrease)
in net assets
available for
plan benefits 941,740 927,784 469,533 1,651,264 952,666 365,194
Net assets available for plan benefits:
Beginning of year 4,583,104 6,044,103 3,539,178 1,717,381 4,701,299 1,631,335
-------------- ------------- ------------- ------------ ------------- ------------
End of year 5,524,844 6,971,887 4,008,711 3,368,645 5,653,965 1,996,529
============== ============= ============= ============ ============= ============
<CAPTION>
-------------------------------------------
Insurance Participant
Contracts Loans Total
-------------- ------------- ----------------
<S> <C> <C> <C>
1997
Contributions from
The Rouse Company 931 -- 1,660,632
Contributions from
participants 569,406 -- 5,642,784
Investment income:
Dividends and interest 429,016 -- 3,250,827
Net appreciation
(depreciation) in fair
values of investments -- -- 3,431,993
Interest on participant
loans -- 224,589 224,589
-------------- ------------- ----------------
Total investment
income 429,016 224,589 6,907,409
-------------- ------------- ----------------
Distributions to participants (923,557) -- (5,531,668)
Participant loans repaid
as part of termination
distributions -- (296,186) (296,186)
Interprogram transfers, net (1,539,407) 610,426 --
-------------- ------------- ----------------
Increase (decrease)
in net assets
available for
plan benefits (1,463,611) 538,829 8,382,971
Net assets available for plan benefits:
Beginning of year 7,259,720 2,656,661 67,939,613
------------- ------------- ----------------
End of year 5,796,109 3,195,490 76,322,584
============= ============= ================
</TABLE>
F-10
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of presentation
---------------------
The financial statements of The Rouse Company Savings Plan (the Plan)
have been prepared on the accrual basis and present the net assets
available for benefits and the changes in those net assets.
(b) Investments
-----------
Investments in the common stock and quarterly income preferred
securities of The Rouse Company and the T. Rowe Price and other mutual
funds are carried at fair values determined by quoted market prices.
The investment in the T. Rowe Price Blended Stable Value Fund, a
common trust fund, is carried at fair value as reported by the
trustee. Investments in the insurance contracts are carried at
contract value (representing contributions made plus interest credited
less distributions) as the insurance contracts held by the Plan are
"fully benefit-responsive," as defined in Statement of Position 94-4,
Reporting of Investment Contracts Held by Health and Welfare Benefit
Plans and Defined-Contribution Pension Plans. Loans to participants
are carried at cost, which approximates fair value. Security
transactions are recognized on a trade date basis. Unrealized
appreciation and depreciation in the fair values of investments are
recognized in the periods in which the changes occur.
(c) Administrative expenses
-----------------------
The Rouse Company pays all administrative expenses incurred on behalf
of the Plan. Terminated participants who have left their account
balances in the Plan are required to reimburse the Company for
administrative expenses relating to their accounts. Participants
requesting loans from the Plan are required to pay an administrative
fee to the Company for the processing of such loans.
(d) Use of estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan's management to make
estimates and judgments that affect the reported amounts of net assets
and disclosures of contingencies at the date of the financial
statements and changes in net assets recognized during the reporting
period. Actual results could differ from those estimates.
The following brief description of the Plan summarizes the principal
provisions of the Plan and is provided for general information purposes
only. Participants should refer to the Plan agreement for more complete
information.
5
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Notes to Financial Statements
(2) General Description of the Plan
-------------------------------
The Plan was established effective June 1, 1983 to provide employees of The
Rouse Company and certain of its subsidiaries and affiliates (the Company)
an incentive to save for retirement and for financial emergencies.
Generally, employees who are not covered under a collective bargaining
agreement, who are at least 21 years of age and who have completed 1,000
hours of service in one year are eligible to participate in the Plan.
Basic contributions to the Plan are made pursuant to salary reduction
agreements between the Company and participants. Participants may elect to
reduce their compensation, as defined in the Plan, by amounts ranging from
1% to 19% of such compensation, subject to an annual limitation. Employees
may also make supplemental contributions to the Plan in amounts up to 9% of
compensation, as defined. The supplemental contributions are not pursuant
to salary reduction agreements. Aggregate basic and supplemental
contributions may not exceed 19% of compensation, as defined. Participants
are able to defer payment of income taxes on their basic contributions to
the Plan, related contributions by the Company and all income realized on
accounts maintained under the Plan.
Participants' contributions to the Plan are allocated among the various
investment programs based on their instructions, subject to certain
limitations defined in the Plan. Participants may change their allocation
instructions and transfer accumulated savings between funds on a monthly
basis, subject to certain limitations defined in the Plan.
Matching contributions are made by the Company to each participant's
account in an amount equal to $1.00 for every $2.00 of a participant's
basic contribution up to 6% of such participant's base salary. Participants
may direct the Company's matching contributions to any of the investment
vehicles offered under the Plan. In addition, the Company may make
additional contributions to the Plan under certain circumstances. Such
additional contributions are distributed to accounts of participants
pursuant to guidelines set forth in the Plan. Participants who joined the
Plan prior to January 1, 1989 obtain an immediate and fully vested interest
in all contributions made by the Company. Participants who joined the Plan
on or after January 1, 1989 are required to complete two years of service,
as defined in the Plan, to become fully vested in the Company's
contributions. Forfeitures of nonvested Company contributions may be used
by the Company to satisfy future matching contribution requirements.
Participants or their beneficiaries are eligible for distributions upon
retirement, disability, termination of employment or death of the
participant. In addition, participants may make withdrawals from their
accounts upon attainment of age 59-1/2. Participants may also make
withdrawals of their basic contributions by reason of financial hardship,
under specific guidelines set forth in the Plan. Subject to certain
limitations, supplemental contributions may be withdrawn by participants
for any reason.
6
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Notes to Financial Statements
(2) General Description of the Plan, Continued
------------------------------------------
Generally, participants may borrow from the Plan up to the lesser of
$50,000 or 50% of their vested account balances. Interest on such
borrowings and repayment schedules are determined pursuant to guidelines in
the Plan. Generally, borrowings bear interest at the prime rate of a
designated commercial bank at the time of the loan application and must be
repaid to the Plan over a period not to exceed five years.
While the Company has not expressed any intent to terminate the Plan, it is
free to do so at any time. In the event of termination of the Plan, the
Plan's assets would be distributed to the participants in accordance with
the Plan agreement.
(3) Investments
-----------
Information relating to investments, including individual investments which
represent 5% or more of net assets available for plan benefits, is
summarized as follows at December 31:
<TABLE>
<CAPTION>
1998 1997
----------------------------- -----------------------------
Contract Contract
Number of or fair Number of or fair
shares value shares value
----------- ----------- ---------- -----------
The Rouse Company:
<S> <C> <C> <C> <C>
Common stock 796,025 $ 21,890,700 819,251 $ 26,829,506
Quarterly income
preferred securities 23,994 609,598 23,924 626,521
T. Rowe Price and other
mutual funds:
Equity Index 500 Fund 171,050 5,709,633 152,962 4,035,131
International Stock Fund 264,976 3,971,990 288,520 3,871,934
New America Growth Fund 132,228 6,319,179 124,874 5,518,203
New Horizons Fund 297,111 6,934,560 298,791 6,961,821
Prime Reserve Fund 4,481,519 4,481,519 4,004,373 4,004,373
Spectrum Growth Fund 345,454 5,682,719 354,563 5,648,184
Others 9,119,787 8,175,168
Common Trust Fund -
T. Rowe Price Blended
Stable Value Fund 3,800,124 3,800,124 1,583,269 1,583,269
========== ----------- ========== ----------
46,019,511 39,798,083
----------- ----------
Insurance contracts 3,265,205 5,789,962
Participant loans 3,123,920 3,195,490
----------- -----------
$ 74,908,934 $ 76,239,562
=========== ===========
</TABLE>
7
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Notes to Financial Statements
(3) Investments, Continued
----------------------
The investments in insurance contracts consist of guaranteed income
contracts offered by various insurance companies. The Plan deals only with
highly rated insurance companies and does not expect that any of them will
fail to meet their obligations under the contracts. The contracts in effect
at December 31, 1998, provide for interest at rates ranging from 6.20% to
7.40% and mature at various dates to 2001. The average yield on the
contracts was 6.24% in 1998 and 6.14% in 1997. The aggregate contract value
of the contracts in effect at December 31, 1998 approximates their
aggregate estimated fair value based on current market interest rates for
contracts with similar maturities and credit quality.
(4) Federal Income Tax Status
-------------------------
The Internal Revenue Service has determined and informed the Company by a
letter dated August 11, 1995 that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code (IRC)
and, accordingly, are tax-exempt. The Plan's management believes that the
Plan continues to qualify and to operate in accordance with applicable
provisions of the IRC.
(5) Reconciliation to Form 5500
---------------------------
Amounts due to terminated participants for benefits payable of $55,479 at
December 31, 1998 and $125,113 at December 31, 1997 are reported as
liabilities in the Plan's Annual Report on Department of Labor Form 5500,
but are included in net assets available for plan benefits in the financial
statements.
(6) Year 2000 Issue
---------------
The year 2000 issue relates to whether computer systems will properly
recognize date-sensitive information to allow accurate processing of
transactions and data relating to the year 2000 and beyond. Systems that do
not properly recognize such information could generate erroneous
information and fail.
The Plan depends on the computer systems of the Company and T. Rowe Price
Retirement Plan Services, Inc. (TRP) which provides recordkeeping and other
administrative services to the Plan. The Company has adopted a plan to
replace virtually all of its management information systems and accounting
systems. In accordance with this plan, all mission critical IT systems have
been or are being replaced with systems that are year 2000 compliant. TRP
has completed remediation plans and internal testing with respect to its
internal mission critical systems. TRP expects that testing of its non-
mission critical systems and point-to-point critical systems with vendors
will be completed around June 30, 1999. Testing of the point-to-point
system between the Company and TRP has been completed. Management of the
Company and the Plan do not believe that the year 2000 issue will pose
significant problems, or that resolution of any potential problems with
respect to these systems will have a material effect on the Plan's net
assets available for plan benefits.
8
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Notes to Financial Statements
(6) Year 2000 Issue, Continued
--------------------------
The Company and management of the Plan believe that its most likely worst-
case exposure is at the indirect level, involving its service provider and
vendors of its service provider. While it is not possible at this time to
determine the likely impact of these potential problems, the Company and
management of the Plan will continue to evaluate these areas and develop
contingency plans, as appropriate.
9
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Par value or
number of Current
Name of issuer and title of issue shares Cost (note 1) value
- --------------------------------- -------------- --------------- ----------
<S> <C> <C> <C>
The Rouse Company:
Common stock 796,025 $ 17,645,445 21,890,700
Quarterly income preferred securities 23,994 617,391 609,598
Ariel Growth Fund 16,033 622,442 640,698
T. Rowe Price Mutual Funds:
Balanced Fund 148,633 2,204,964 2,763,094
Equity Income Fund 23,857 628,767 627,922
Equity Index 500 Fund 171,050 3,795,445 5,709,633
International Stock Fund 264,976 3,491,502 3,971,990
New America Growth Fund 132,228 5,272,155 6,319,179
New Horizons Fund 297,111 5,799,422 6,934,560
Prime Reserve Fund 4,481,519 4,481,519 4,481,519
Small Cap Value Fund 146,369 2,840,258 2,776,623
Spectrum Growth Fund 345,454 5,010,014 5,682,719
Spectrum Income Fund 200,996 2,257,540 2,311,450
Common Trust Fund -
T. Rowe Price Blended
Stable Value Fund 3,800,124 3,800,124 3,800,124
============
Insurance Contracts:
Principal Mutual Life Insurance Company 901,784 901,784
Life of Georgia Life Insurance Company 1,050,921 1,050,921
American International Group Life
Insurance Company 1,312,500 1,312,500
Participant loans (note 3) 3,123,920 3,123,920
------------ ----------
Total investments $ 64,856,113 74,908,934
============ ==========
</TABLE>
Notes:
(1) Cost of the securities of The Rouse Company, the T. Rowe Price and
other mutual funds and the T. Rowe Price common trust fund includes
reinvested dividends or interest credited, as applicable. Cost of the
insurance contracts is equal to contract value, representing
contributions made plus interest credited less distributions.
(2) T. Rowe Price Retirement Plan Services, Inc. and The Rouse Company
represent parties in interest.
(3) Generally, participant loans bear interest at the prime rates of a
designated bank at the time of the loan application and must be repaid
to the Plan over a period not to exceed five years.
<PAGE>
THE ROUSE COMPANY SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions (Note 1)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Current
value of
Redemption asset on
Purchase or selling Cost of transaction
Description of assets price price asset dates Net gain
- --------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
The Rouse Company -
common stock $ 4,186,018 --- --- 4,186,018 ---
The Rouse Company -
common stock --- 4,844,520 3,707,435 4,844,520 1,137,085
</TABLE>
Notes:
(1) Reportable transactions are presented in accordance with Department of
Labor regulations relating to requirements for employee benefit plan
annual reports filed under the Employee Retirement Income Security Act
of 1974.
(2) The purchases and sales represent series of transactions; however, it is
not practical to determine the number of individual transactions
involved.
(3) The Rouse Company is a party in interest.
11
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE ROUSE COMPANY SAVINGS PLAN
Date: June 30, 1999 By /s/ JANICE A. FUCHS
--------------------
Janice A. Fuchs
Administrator
and
Date: June 30, 1999 By /s/ JEFFREY H. DONAHUE
----------------------
Jeffrey H. Donahue
Trustee
12
<PAGE>
Consent of Independent Certified Public Accountants
---------------------------------------------------
The Board of Directors
The Rouse Company:
We consent to the incorporation by reference in the Registration Statement (No.
2-83612) on Form S-8 of The Rouse Company of our report dated June 23, 1999,
relating to the statements of net assets available for plan benefits of The
Rouse Company Savings Plan as of December 31, 1998 and 1997, the related
statements of changes in net assets available for plan benefits for the years
then ended and the related schedules for the year ended December 31, 1998, which
report appears elsewhere in this Form 11-K/A.
/s/ KPMG LLP
KPMG LLP
Baltimore, Maryland
June 29, 1999
