<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 0-18694
CATELLUS DEVELOPMENT
CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2953477
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
201 MISSION STREET,
SAN FRANCISCO, CALIFORNIA 94105
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 974-4500
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
- ------------------- ------------------------------
Common Stock, $.01 par value per share New York, Pacific, Midwest Stock
Exchanges
$3.75 Series A Cumulative Convertible New York Stock Exchange
Preferred Stock
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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. Yes _____ No __X__
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $284,000,000 on March 15, 1994.
As of March 15, 1994, there were 72,967,236 issued and outstanding shares
of the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the 1994 Annual Meeting of
Stockholders are incorporated by reference in Part III.
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<PAGE>
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
Catellus Development Corporation is a major diversified real estate
company with property interests principally in California and in ten other
states in the West, Southwest and Midwest. The Company's real estate assets
consist of (i) an aggregate of 277 buildings, ground leases and joint ventures
(income producing properties), (ii) land with development potential (developable
land) and (iii) surplus land, agricultural land and mountain and desert
properties (surplus properties). At December 31, 1993, the Company's real
estate portfolio aggregated more than $1.7 billion (on a current value basis),
consisting of approximately $767 million of developable land, approximately $709
million of income producing properties and approximately $280 million of surplus
properties. At December 31, 1993, stockholders' equity on a current value basis
was approximately $1 billion.
The Company was organized in the state of Delaware in 1984 as an
indirect, wholly-owned subsidiary of Santa Fe Pacific Corporation (SFP) to
conduct the non-railroad real estate activities of Santa Fe Industries and
Southern Pacific Company. The Company changed its name from Santa Fe Pacific
Realty Corporation to Catellus Development Corporation in June 1990. Catellus'
principal office is located at 201 Mission Street, San Francisco, California,
94105; its telephone number is (415) 974-4500.
From 1984 to 1989, the Company focused on generating earnings through
property sales. In connection with SFP's recapitalization in January 1988 and
the related incurrence by SFP of $4.6 billion of debt, Catellus incurred
substantial indebtedness to pay dividends to SFP for repayment of part of such
debt. With SFP's recapitalization debt substantially repaid by late 1988,
Catellus initiated a strategic business plan focused on building stockholder
value by developing its land and holding its operating properties for the long
term. To facilitate the effective implementation of this strategy, SFP
subsequently decided to proceed with a plan to spin off its remaining interest
to its stockholders.
The Company's business includes asset management, development and
property sales. The asset management staff is responsible for managing the
Company's buildings, ground leases and lands, and overseeing the Company's
investments in joint ventures. The property development group is responsible
for all phases of the development process, from obtaining entitlements through
construction and leasing of new buildings. The property sales group supervises
the disposition of land and operating properties.
PROPERTY PORTFOLIO
The Company's property portfolio totalled over $1.7 billion in current
value as of December 31, 1993, and approximately 908,000 acres. As shown in
more detail in the following tables, the current value at December 31, 1993 of
the Company's income producing properties totalled approximately $709 million,
comprised primarily of industrial buildings. The current value of the Company's
developable land at December 31, 1993 totalled approximately $767 million,
concentrated in industrial sites and sites targeted for mixed-use development.
The Company's surplus land, which is not targeted for near-term development, and
its agricultural, mountain and desert properties totalled approximately $280
million in current value at December 31, 1993. The Company's properties are
located primarily in California, where real estate values have been declining.
On an annual basis, the Company estimates the current value of its
real estate assets in light of the prevailing economic and real estate environ-
ments. Although the current value of the Company's real estate has declined
over the past several years, current value reporting provides recognition that,
over time, real property generally appreciates in value, and that value may be
realized through the development process and effective management of income
producing assets. It does not represent the net realizable value of the Company
as a whole, nor does it contemplate liquidation or a distressed sale of the
Company's assets. Management believes that current value provides meaningful
information regarding the Company's financial condition and the value of its
real property in today's real estate market. Management determines the methods
used to develop current values. These methods, as well as other relevant
information, are described in Note 2 to the Consolidated Financial Statements.
2
<PAGE>
INCOME PRODUCING PROPERTIES
Income producing properties comprised approximately 40% of the
Company's portfolio, as measured by current value as of December 31, 1993, and
include buildings, ground leases and joint ventures. As of that date, the
Company owned and operated 277 buildings, primarily industrial, warehouse and
distribution facilities, totalling approximately 14.6 million square feet. As
of December 31, 1993, the Company owned 73 ground leases on 5,396 acres of land
in California, Arizona and Texas. Ground leases are typically Company-owned
land that underlies income producing properties and is leased to other building
owners and managers. The Company's nine joint venture interests include over
1.1 million square feet of office and mixed-use space, two hotels comprising
1,939 rooms, and a 387-unit apartment complex.
DEVELOPABLE LAND
Developable land comprised approximately 44% of the Company's
portfolio, as measured by current value as of December 31, 1993, and consists of
land in prime locations that is ready for development. Developable land
included 7,811 acres.
Most parcels of developable land are in central urban locations or in
existing industrial and business parks. Obtaining the requisite governmental
approvals for development (the entitlement process), particularly for urban
locations, is a time-consuming and costly process. Developable acreage with
full entitlements to build large scale urban projects, especially in California,
is scarce. Of the Company's developable property, a significant portion is
fully entitled for development of the building product type and project scope
currently planned by the Company. These entitlements do not encompass specific
building permits for any particular project. The Company believes that its
current supply of developable land is sufficient for its development projects
for at least 20 years.
SURPLUS DEVELOPABLE LAND
Surplus developable land comprised approximately 6% of the Company's
portfolio, as measured by current value as of December 31, 1993. It consists of
land which potentially may be used by the Company for development, but not in
the next 5 to 10 years, and included 20,485 acres at December 31, 1993. The
Company expects that these holdings, which are located in 10 states, will either
be used to replenish developable lands or, if not held for long-term
development, will be a source of cash flow when sold.
Most of the surplus holdings are in California, primarily in the
central valleys, extending south from the city of Fairfield through the cities
of Stockton, Tracy, Merced and Fresno. Demographic studies show the state's
population moving steadily into these areas; over time, this may increase the
value of surplus holdings. The Company also has significant surplus holdings in
New Mexico, Texas and Utah.
Agricultural, mountain and desert properties comprised approximately
10% of the Company's portfolio, as measured by current value as of December 31,
1993. At that date, the Company owned 16,130 acres of agricultural lands in
California's San Joaquin Valley. Since 1986, the Company has sold approximately
142,000 acres of agricultural lands. The Company is continuing to market this
land, although drought conditions in 1991 and 1992 have reduced sales and
prices.
The Company's mountain and desert properties included 857,185 acres at
December 31, 1993. Located in California, these properties are not expected to
have development potential because of their remote locations, use restrictions
and other considerations. The value of this property is attributable to its
availability for sale or exchange with the government and other interested
parties. Federal legislation has been introduced in the U.S Congress from time
to time to protect California desert land, and would affect the Company's desert
property. The currently proposed legislation would not adversely affect the
value or use of the Company's property, but the Company cannot predict what
effect any future legislation might have.
3
<PAGE>
The following table summarizes the Company's properties by asset
category, by acres and by current value at December 31, 1993.
COMPANY'S PORTFOLIO BY ASSET CATEGORY
AT DECEMBER 31, 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
% TOTAL
CURRENT CURRENT
ASSET TYPE DESCRIPTION ACRES(1) VALUE(2) VALUE
---------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
INCOME PRODUCING PROPERTIES
Buildings 277 buildings, primarily industrial,
warehouse and distribution facilities 765 $553.6 31%
Ground Leases 73 leases ranging from acreage under
retail centers to one 5,140 acre lease
of desert land to an aerospace
manufacturer 5,396 105.0 6
Joint Ventures 9 joint ventures; 1,939 hotel rooms,
1.1 million square feet of commercial
property, 387 apartment units and
various land - 50.3 3
------- -------- ---
Subtotal 6,161 708.9 40
DEVELOPABLE LAND 53 industrial sites, 11 mixed-use sites,
9 other 7,811 767.0 44
SURPLUS DEVELOPABLE LAND Land which is located outside existing
communities. Development potential
is expected in 10 to 15 years 20,485 103.1 6
AGRICULTURAL,MOUNTAIN AND Land in remote locations, typically
DESERT LAND AND OTHER(3) sold to government users or for
agricultural purposes 873,315 177.1 10
------- -------- ---
907,772 $1,756.1 100%
------- -------- ---
------- -------- ---
<FN>
(1) Does not include acres as to which the Company owns mineral rights only.
(2) Does not include estimated cash disposition costs of 2.5% of current
value, as reflected in the current value balance sheet included in the
Consolidated Financial Statements.
(3) Value includes mineral rights ($2.0 million) and office equipment ($5.4
million).
</TABLE>
4
<PAGE>
The following table reflects the current value of the Company's
portfolio by type and by region at December 31, 1993.
<TABLE>
<CAPTION>
CURRENT VALUE AS OF DECEMBER 31, 1993
-------------------------------------
% OF TOTAL
AMOUNT CURRENT VALUE
------ --------------
(IN MILLIONS) (PERCENT OF TOTAL)
<S> <C> <C>
INCOME PRODUCING
- ----------------
Buildings
Industrial
Northern California . . . . . . . $ 41.6 2.4%
Southern California . . . . . . . 278.9 15.9
Other . . . . . . . . . . . . . . 66.2 3.8
-------- -----
386.7 22.1%
Office. . . . . . . . . . . . . . . . 125.5 7.1
Retail. . . . . . . . . . . . . . . . 41.4 2.3
Ground leases. . . . . . . . . . . . . . 105.0 6.0
Joint ventures . . . . . . . . . . . . . 50.3 2.9
-------- -----
708.9 40.4%
-------- -----
DEVELOPABLE LAND
- ----------------
Industrial
Northern California . . . . . . . 65.1 3.7%
Southern California . . . . . . . 144.3 8.2
Other . . . . . . . . . . . . . . 99.8 5.7
-------- -----
309.2 17.6%
-------- -----
Mixed Use
Northern California . . . . . . . 240.1 13.7%
Southern California . . . . . . . 125.1 7.1
Other . . . . . . . . . . . . . . 11.4 0.7
-------- -----
376.6 21.5%
-------- -----
Other
Northern California . . . . . . . 49.9 2.8%
Southern California . . . . . . . 25.3 1.4
Other . . . . . . . . . . . . . . 6.0 0.3
-------- -----
81.2 4.5
-------- -----
767.0 43.6%
-------- -----
SURPLUS LAND
- ------------
Northern California . . . . . . . . . 45.3 2.6%
Southern California . . . . . . . . . 11.1 0.6
Other . . . . . . . . . . . . . . . . 46.7 2.7
-------- -----
103.1 5.9%
-------- -----
AGRICULTURAL, MOUNTAIN AND DESERT LAND
- --------------------------------------
Northern California . . . . . . . . . 9.6 0.6%
Southern California . . . . . . . . . 160.1 9.1
Other . . . . . . . . . . . . . . . . -- --
-------- -----
169.7 9.7%
-------- -----
MINERAL RIGHTS AND OFFICE EQUIPMENT. . . 7.4 0.4%
- ----------------------------------- -------- -----
Total . . . . . . . . . . . . . . . . $1,756.1 100.0%
-------- -----
-------- -----
</TABLE>
5
<PAGE>
The following table summarizes the Company's land holdings by property
type and by state at December 31, 1993. These properties and the Company's
plans for them are reviewed from time to time and the properties are re-
categorized by the Company when appropriate.
COMPANY'S PORTFOLIO BY STATE
(IN ACRES)
<TABLE>
<CAPTION>
INCOME PRODUCING
-----------------
GROUND MOUNTAIN/
STATE DEVELOPABLE BUILDING LEASES SURPLUS AGRICULTURAL DESERT TOTAL
---- ----------- -------- ------ ------- ------------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Arizona. . . . . . . . . 359 80 22 891 1,352
California . . . . . . . 4,420 547 5,373 9,177 16,130 857,185 892,832
Colorado . . . . . . . . 7 49 56
Illinois . . . . . . . . 955 50 1,005
Kansas . . . . . . . . . 72 2 289 363
Nevada . . . . . . . . . 161 161
New Mexico . . . . . . . 59 3,265 3,324
Oklahoma . . . . . . . . 7 349 356
Oregon . . . . . . . . . 4 300 304
Texas. . . . . . . . . . 1,946 68 1 3,555 5,570
Utah . . . . . . . . . . 2,449 2,449
----- --- ----- ------ ------ ------- -------
Total. . . . . . . . . . 7,811 765 5,396 20,485 16,130 857,185 907,772
----- --- ----- ------ ------ ------- -------
----- --- ----- ------ ------ ------- -------
</TABLE>
ASSET MANAGEMENT
The asset management group is comprised of 38 individuals and is
responsible for managing the Company's buildings, ground leases and land
holdings, and overseeing joint venture investments.
BUILDINGS
At December 31, 1993, the Company's buildings were principally
industrial properties, including large distribution warehouses and light
manufacturing facilities, as well as office buildings and small retail outlets.
INCOME PRODUCING BUILDINGS BY PRODUCT TYPE
(SQUARE FEET IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------
1993 1992 1991
---------------------- ---------------------- ----------------------
SQUARE SQUARE SQUARE
PRODUCT TYPE FEET PERCENT FEET PERCENT FEET PERCENT
- ------------ ------ ------- ----- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Industrial . . . . . . . 12,179 83.5% 12,694 83.7% 11,911 83.5%
Office . . . . . . . . . 1,718 11.8 1,788 11.8 1,669 11.7
Retail . . . . . . . . . 676 4.6 675 4.4 667 4.7
Residential. . . . . . . 11 .1 13 .1 13 .1
------ ----- ------ ----- ------ -----
Total. . . . . . . . . . 14,584 100.0% 15,170 100.0% 14,260 100.0%
------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ -----
</TABLE>
6
<PAGE>
Income producing buildings are located in various states, but are
concentrated in California, as shown in the following table.
INCOME PRODUCING BUILDINGS BY LOCATION
(SQUARE FEET IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------
1993 1992 1991
---------------------- ---------------------- ----------------------
SQUARE SQUARE SQUARE
PRODUCT TYPE FEET PERCENT FEET PERCENT FEET PERCENT
- ------------ ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Southern California. . . 7,898 54.2% 7,970 52.5% 7,207 50.5%
Northern California. . . 3,070 21.0 3,488 23.0 3,466 24.3
Arizona, Colorado, Oregon,
New Mexico . . . . . 1,545 10.6 1,866 12.3 1,865 13.1
Illinois, Kansas . . . . 1,335 9.2 1,109 7.3 960 6.8
Texas, Oklahoma. . . . . 736 5.0 737 4.9 762 5.3
------ ----- ------ ----- ------ -----
Total. . . . . . . . . . 14,584 100.0% 15,170 100.0% 14,260 100.0%
------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ -----
</TABLE>
The Company's asset management strategy consists of managing its core
portfolio of industrial income producing properties to increase income and
value. To increase cash flow, the Company strives to maximize the occupancy of
its income producing properties. The percentage of leased square feet
(including buildings under construction) has risen from 85.3% at December 31,
1991 to 93.6% at December 31, 1993. While the Company has been successful in
increasing the occupancy of its buildings and gaining new tenants, it is also
focusing on the retention of existing tenants. Through attention to tenant
needs and an aggressive approach in meeting competitive rental rates and
brokerage commissions, the Company is striving to increase its retention rate.
The following table sets forth the leasing performance of the Company's
properties.
LEASING STATISTICS
(% LEASED)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Stabilized(1). . . . . . . . . . . . . . . . 93.8% 91.2% 88.0%
Non-stabilized (2) . . . . . . . . . . . . . 79.3 84.3 52.8
---- ----- ----
Completed buildings. . . . . . . . . . . . . 93.6 90.9 85.1
Under construction (3) . . . . . . . . . . . 92.6 100.0 88.6
---- ----- ----
All buildings. . . . . . . . . . . . . . . . 93.6% 91.1% 85.3%
<FN>
(1) Stabilized buildings (14,387,000 square feet at December 31, 1993) are
either 95% or more leased or have been completed for more than 18 months.
(2) Non-stabilized buildings (197,000 square feet at December 31, 1993) are in
an 18-month lease-up period.
(3) Under construction (577,000 square feet at December 31, 1993) refers to
facilities being built as of the dates indicated.
</TABLE>
At December 31, 1993, the Company had approximately 786 tenants with
lease terms ranging from month-to-month to 20 years. Generally, leases for
newly constructed buildings have terms of 10 years or longer and leases
7
<PAGE>
for existing space being re-leased have terms of three to five years. For the
five years from 1994 through 1998, leases for 11.1%, 11.1%, 18.1%, 10.8% and
5.3%, respectively, of total square footage are scheduled to expire. In
addition, approximately 4.2% of the Company's leases are on a month-to-month
basis.
GROUND LEASES
Ground leases are properties owned by the Company but leased to third
parties who construct and own the improvements on the land. The size of ground
lease parcels range from a few acres in major metropolitan locations to one
lease for 5,140 acres.
JOINT VENTURE INVESTMENTS
The Company is currently an investor in nine joint ventures totalling
approximately 1.1 million square feet of office and mixed-use space, two hotels
with a total of 1,939 rooms, a 387-unit apartment complex and other projects in
the early stages of development. The Company generally is not the managing
partner of the ventures. The largest joint venture investment is Pacific Design
Center (PDC) located in West Hollywood, California. The Company owns a majority
interest in a partnership which owns a 75% interest in PDC. This building
complex, which contains 930,638 rentable square feet, is the center for the West
Coast interior design and contract furnishings industry. Although the Company
has a significant interest in PDC and oversees day-to-day operations, major
decisions must be made jointly by the Company and one of its partners.
Accordingly, the Company does not consolidate PDC in its financial statements.
DEVELOPMENT
From 1990 through December 31, 1993, the Company completed to hold 40
properties comprising approximately 5.2 million square feet, which were 96.2%
leased as of December 31, 1993.
PROPERTIES DEVELOPED TO HOLD
(SQUARE FEET IN THOUSANDS)
<TABLE>
<CAPTION>
PRODUCT TYPE 1993 1992 1991 1990 TOTAL % LEASED
- ------------ ---- ---- ---- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Industrial . . 392 804 1,486 2,038 4,720 97.1%
Office . . . . -- 115 98 156 369 93.3
Retail . . . . -- -- -- 93 93 68.2
--- --- ----- ----- ----- ----
Total. . . . . 392 919 1,584 2,287 5,182 96.2%
--- --- ----- ----- ----- ----
--- --- ----- ----- ----- ----
Location
- --------
California . . 131 770 1,170 1,856 3,927 94.9%
Illinois . . . 261 149 214 265 889 99.6
Other. . . . . -- -- 200 166 366 100.0
--- --- ----- ----- ----- ----
Total. . . . . 392 919 1,584 2,287 5,182 96.2%
--- --- ----- ----- ----- ----
--- --- ----- ----- ----- ----
</TABLE>
INDUSTRIAL DEVELOPMENT PROJECTS
The Company's industrial development is focused primarily in
industrial parks, including warehouses, distribution centers, light
manufacturing, and research and development facilities. The Company expects to
continue its emphasis on industrial development, since many of its properties
are located near transportation corridors in and around major metropolitan areas
such as Los Angeles, Chicago, Dallas and the San Francisco Bay Area. The
Company's Southern California properties are located primarily in the light
industrial/warehouse/office corridors
8
<PAGE>
interspersed throughout the communities of Los Angeles, Orange, Riverside and
San Bernardino Counties. The Company's Northern California properties are
located primarily in the San Francisco Bay Area.
The Company's industrial development strategy consists of build-to-
suit activities, whereby the Company develops and holds (build-to-hold)
properties for a pre-specified tenant or develops and sells (build-to-sell)
properties for a pre-specified purchaser. Lease or purchase contracts are
entered into prior to commencement of construction by the Company. In response
to market conditions, the Company has eliminated virtually all speculative
development; however, the Company may resume speculative development as market
conditions warrant. Build-to-sell activity allows the Company to develop its
property for a fee and to monetize the value of the land. The Company is
currently developing for a fee a 626,000 square foot headquarters building for
the Metropolitan Transportation Authority ("MTA") in the Company's Union Station
in Los Angeles, on land previously sold to the MTA by the Company.
The following are examples of the Company's current industrial
development projects:
ALVARADO BUSINESS CENTER. The Company has nine industrial buildings
totalling 844,000 square feet in this industrial park in Union City, California.
All nine of these buildings were 100% leased at December 31, 1993. The Company
recently completed a 56,000 square foot build-to-sell project for an industrial
user in the park.
INTERNATIONALE CENTRE. The Company has five buildings totalling
889,000 square feet in Internationale Centre, a 729-acre business park located
at the intersection of two major interstate highways 22 miles southwest of
downtown Chicago, Illinois. The first building totalling 265,000 square feet
was completed in 1990 and was 100% leased at December 31, 1993. Two facilities
totalling 214,000 square feet were constructed for major tenants in 1991 and
were 98.3% leased at December 31, 1993. In January 1992, a fourth building
totalling 148,000 square feet was completed and a 261,000 square foot build-to-
suit distribution facility was completed for a retailer in June 1993; both
buildings were 100% leased at December 31, 1993. Upon completion, the Company
expects the park to include 14 million square feet of industrial, research and
development and office facilities.
PACIFICENTER SANTA ANA. This 67-acre business park is located in
Santa Ana, California in Orange County, five miles north of the John Wayne
Airport. Three research and development buildings totalling 127,000 square feet
were completed in 1990 and were 100% leased at December 31, 1993. In addition,
a build-to-suit office and distribution facility consisting of 218,000 square
feet was completed in 1992 and is 100% leased. The Company has entitlements for
1.5 million square feet of office, research and development, industrial and
retail space in the park.
NORTHPOINT COMMERCE CENTER. Northpoint Commerce Center is a 115-acre
business park located near the Santa Ana and Riverside Freeways in the cities of
Fullerton and Buena Park, California. The park consists of seven buildings
totalling 704,000 square feet. The Company sold two of the buildings in 1993,
and the five remaining buildings owned by the Company totalling 585,000 square
feet were 93% leased at December 31, 1993.
MIXED-USE DEVELOPMENT PROJECTS
The Company owns or controls several large development sites in or
near prime urban areas. The Company's four active mixed-use projects include a
313-acre site within one mile south of downtown San Francisco, a 50-acre site
within one mile of downtown Los Angeles, a 40-acre site located in the cities of
Emeryville and Oakland, California and a 600-acre site in Fremont, California.
The Company has postponed development of a fifth urban development site consists
of 16 acres adjacent to the waterfront in downtown San Diego. The Company plans
to develop these properties as mixed-use projects, containing residential,
retail, commercial and office components. The Company is required to make
various payments to municipalities and construct or pay for certain public
amenities in order to retain its entitlements on several of these properties.
These amounts are included by the Company as fixed commitments for capital
expenditures and totalled approximately $38.7 million at December 31, 1993,
payable over nine years.
9
<PAGE>
Described below are the Company's major mixed-use development
projects. The Company is under construction on two projects. Subject to
regulatory and other approvals (including receipt of required building permits),
and as warranted by market conditions, the Company expects to begin construction
on the other two projects (with the exception of San Diego) during the next two
to three years. In the first years of development, the Company expects to
develop a limited number of residential units, as well as sell improved parcels
to homebuilders.
MISSION BAY IN SAN FRANCISCO. The Mission Bay development is one of
the largest urban planning projects in the United States. The proposed plan
will transform a 313-acre area one mile south of downtown San Francisco into a
new neighborhood composed of residential, office, retail and commercial uses.
The project is expected to be developed over a 20-year period. This site
includes 169 acres owned by the Company, with the balance owned by the City and
Port of San Francisco and the State of California. The parties are undertaking
various land transfers to enable development to proceed. During the development
of the project, the Company will dedicate to various governmental authorities
certain properties, including wetlands, parks, streets and affordable housing,
so that the City and others will own 188.5 acres in the aggregate and the
balance will be owned (or previously sold during development) by the Company.
The Company has received entitlements to develop the project pursuant
to a development agreement entered into with the City of San Francisco effective
March 31, 1991. The term of the agreement is 22 years, which term may be
extended. The development agreement permits development of 4.8 million square
feet of office space, 900,000 square feet of commercial/light industrial space,
approximately 8,700 housing units, 68 acres of parks and open space, 731,000
square feet of retail space, a 400,000 square-foot 500-room hotel and 16 acres
of public facilities. The agreement requires the Company to pledge a letter of
credit or similar security of $30 million before undertaking any environmental
remediation of the property. The amount pledged would be available to the City
if the Company does not undertake to remediate identified environmental
contamination in accordance with the development agreement. The Company
currently is in discussion with the City regarding this pledge. No new project
development authorized by the development agreement can commence until certain
environmental investigation and remediation work is performed.
Under San Francisco regulations, the annual amount of new office
construction in the city is limited. The Company must apply each year for
approval of the office space it plans to develop in Mission Bay in the following
year. Management believes that the interrelated nature of the Mission Bay
project in developing residential, retail and recreational space
contemporaneously with office space will assist the Company in obtaining
allocations for some or all of its planned office space in a given year. The
Company believes that failure to obtain allocations in any year will not limit
the project in scope, but will result in revised phasing of the project.
UNION STATION IN LOS ANGELES. The Company completed the acquisition of
the historic Union Station in downtown Los Angeles in early 1990 and is
proceeding with plans to revitalize the 50-acre site as a regional
transportation center and mixed-use complex of office buildings and retail
space. Amtrak and the region's commuter rail system serve the station daily.
The station is also the terminating point for suburban bus lines into downtown
Los Angeles and is served by the City's new subway system connecting to downtown
Los Angeles. The site currently is entitled for government uses. The Company
is working on a master plan to develop approximately 7 million square feet of
primarily commercial and governmental uses, including approximately 5.5 million
square feet of office buildings, 180,000 square feet of retail space,
residential condominium units, two hotels and a conference center. The Company
must enter and conclude the entitlement process with the City (requiring an
estimated 18 to 24 months) prior to starting any commercial development at this
site; this process could require changes in the master plan. The targeted
tenants for the first several office buildings are public or quasi-public users;
the site does not need new entitlement approvals for such uses. The Company has
no current plan to commence construction of any office building that is not
either a build-to sell or substantially pre-leased.
The first building to be developed is the headquarters of MTA. Con-
struction of the 626,000 square feet building, which will be owned and occupied
by MTA, commenced in 1993 and is expected to be completed in 1995.
10
<PAGE>
The MTA building is the first component of Gateway Center (part of the Union
Station project), a multi-phased project that consists of two office towers
comprising over 1.1 million square feet, a 3.5-acre regional public transit
center and bus plaza, 20,000 square feet of service retail, an underground
parking garage and a new transit concourse connecting the bus and train
terminals.
EAST BAYBRIDGE CENTER IN EMERYVILLE/OAKLAND. East Baybridge Center is
a 40-acre development site located in the cities of Emeryville and Oakland in
Northern California. The property is located at the Interstate 580-880-80
interchange, one of the busiest in the nation, directly across the Bay Bridge
from downtown San Francisco. The Company plans to develop a 462,000 square foot
shopping center on the property in two phases. Construction of Phase I,
totalling 270,000 square feet, commenced in August 1993 and is expected to be
completed in the summer of 1994. Long term leases, ranging from 10 to 15 years,
have been signed with four "discount" retail users and a 20-year lease has been
signed with a large grocery store. At December 31, 1993, Phase I was 84.1%
leased. Certain of the retail users have lease termination rights upon failure
of specified conditions (such as the failure of the Company to complete
construction by dates from June 1994). The Company currently is negotiating two
build-to-sell projects, totalling 157,000 square feet, with retail users; the
Company will not commence construction on Phase II of the shopping center until
it is substantially pre-sold or pre-leased.
PACIFIC GREENS IN FREMONT. The Company entered into a development
agreement with the City of Fremont in March 1992 for the development of a major
mixed-used development on a 600-acre vacant site bordering Interstate 880 in the
San Francisco South Bay City of Fremont, California. Upon completion, the
project is expected to include approximately 1,040 single family homes, 210
apartments, 150 condominiums, an 18-hole golf course, an elementary school and a
park, as well as 2 million square feet of industrial space and 340,000 square
feet of office and retail space. The Company currently expects to start
construction on this project in 1995.
PROPERTY SALES
The Company's sales activities are managed by a group of 16
individuals. The Company's sales strategy consists of selling non-strategic
properties to provide cash flow which, in part, is deployed in the Company's
development activities described above. Property sales have consisted
principally of the sale of surplus developable properties which are not targeted
for development in the near-term and agricultural, mountain and desert
properties. Property sales also include ground leases, selected buildings and
developable land. As shown below, for the year ended December 31, 1993 the
Company had approximately $72.6 million of sales of land and buildings,
including the sale of easements and the recognition of deferred revenue related
to prior sales. As in 1993, the sale of income producing properties may
generate relatively low cash flow because of required debt repayments.
The Company believes that because of its large and diverse portfolio
of property holdings and the fact that a substantial portion (as measured by
current value) of its land holdings are unleveraged and a significant portion of
its developable land holdings are fully entitled, it has flexibility to respond
to and capitalize on development and sales opportunities. However, due to the
lack of demand caused by a weak real estate market in California and the
difficulty in obtaining financing for land acquisitions, land sales have
declined significantly over the past three years. For 1993, 1992 and 1991,
property sales were 94.5%, 85.3% and 103.6%, respectively, of the Company's
estimate of the current value of the applicable properties at the preceding
December 31.
11
<PAGE>
SALES AS A PERCENTAGE OF CURRENT VALUE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL SALES
NUMBER OF SALES OF CURRENT VALUE AS PERCENT OF
SALES TRANSACTIONS LAND AND BUILDINGS(1) OF ASSETS SOLD CURRENT VALUE
------------------ --------------------- -------------- --------------
<S> <C> <C> <C> <C>
1993 . . . . . 110 $ 72,417 $ 76,660 94.5%
1992 . . . . . 93 82,242 96,413 85.3
1991 . . . . . 136 55,773 53,812 103.6
</TABLE>
RECENT SALES ACTIVITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1993 1992 1991
---------------------- ---------------------- ----------------------
SALES PERCENT SALES PERCENT SALES PERCENT
---- ------ ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Land
Developable. . . . . . $ 6,745 9.3% $21,054 25.1% $ 7,771 12.9%
Surplus and other. . . 19,687 27.1 31,023(1) 36.9 49,521 82.5
------ ---- ------ ---- ------ -----
Subtotal. . . . . . 26,432 36.4% 52,077 62.0 57,292 95.4
Income Producing
Buildings. . . . . . . 30,165 41.6 -- -- 370 .6
Ground leases. . . . . 15,972 22.0 18,476 22.0 2,386 4.0
Joint ventures . . . . -- -- 13,403 16.0 -- --
------ ----- ------ ----- ------ -----
Subtotal. . . . . . 46,137 63.6 31,879 38.0 2,756 4.6
------ ----- ------ ----- ------ -----
$72,569 100.0% $83,956 100.0% $60,048 100.0%
------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ -----
Number of acres -
land. . . . . . . . 46,546 -- 201,620(2) -- 48,133 --
Number of square feet -
buildings . . . . . 916,482 -- -- -- 3,430 --
<FN>
- ---------------
(1) Excludes the recognition of deferred revenue.
(2) Includes one sale of 169,000 acres of land.
</TABLE>
In 1991, 1992 and 1993, a significant portion of the Company's sales
contracts did not contain financing as a condition to the buyer's obligation to
close the transaction. During this period, the buyers principally have been
users of the property.
Since 1990, the Company has sold substantial amounts of agricultural
land and a variety of additional surplus lands. In addition, since 1990 the
Company has exchanged significant acreage of desert land for developable
property closer to high-growth areas. Pursuant to an exchange agreement with
The Atchison, Topeka & Santa Fe Railway Company (ATSF), a subsidiary of SFP,
between 1989 and 1992 the Company transferred to ATSF approximately 1,491,208
acres of desert land and mineral rights in Nevada, Southern California and Utah
and 74 acres of rail yards in Northern Illinois in return for developable
properties in California, Illinois, Texas, Kansas and New Mexico. In 1992, the
Company completed the transactions pursuant to the agreement with the sale of
approximately 169,000 acres of desert land and 4,000 acres of mineral rights in
Nevada and Utah to an affiliate of ATSF at a price which was approximately 67%
of current value. The Company believes that the price received by it is
comparable to that which could have been obtained in a similar transaction on an
arm's-length basis with an unaffiliated third party.
12
<PAGE>
The Company also functions as the exclusive agent for the management
and sale of surplus properties (approximately 26,000 acres) owned by ATSF. A
wholly-owned subsidiary of the Company has been established for this function.
ENVIRONMENTAL MATTERS
Various federal, state and local laws and regulations covering the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, may affect the Company's operations and costs.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Environmental Matters." Such regulations can increase the cost of
planning, designing, developing, managing and maintaining the Company's
properties. The Company has expended and will continue to expend significant
financial and managerial resources to comply with environmental regulations and
local permitting requirements. While the Company or outside consultants have
evaluated the environmental liabilities associated with most of the Company's
properties, any evaluation necessarily is based upon then prevailing law and
identified site conditions. In addition, many of the Company's properties are
in the early stages of development and the environmental studies and
investigations which have been performed are preliminary. It is possible that
significant unknown costs and liabilities may arise in the future relating to
these properties and that certain development projects may be significantly
delayed, modified or cancelled as a result of associated remediation costs. In
addition, other properties presently or formerly owned by the Company or its
corporate predecessors have required or may require remediation. Although there
can be no assurance, the Company does not believe that such costs will have a
material adverse effect on its business, financial condition or results of
operations.
The Company has been or may be named a defendant or a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), or analogous
state statutes. At the Johns-Manville Coalinga site in Fresno County,
California, the Company has been named a PRP. In December 1989, the Company
sold the subject property to a subsidiary of SFP. As part of this transaction
the purchaser indemnified the Company for environmental liabilities at this
site. At the Point Isabel site in Richmond, California, the Company has already
paid for certain remediation costs, and proper closure of the site was certified
by the State of California in 1986. The Company is presently spending
approximately $25,000 per year for operation and maintenance of the
environmental controls at the site. The Company does not anticipate these costs
to increase significantly in the future. The Company has instituted a private
action under CERCLA to recover its response costs for this site. At the Liquid
Gold site in Richmond, California, a predecessor of the Company was initially
named a PRP. To date, preliminary investigations concerning remediation have
been completed, and a claim against the Company for contribution has been
threatened by the party which is presently remediating the site. However, in
June 1993, the State of California issued a Non-Binding Allocation of
Responsibility which assigned no share of the financial responsibility to the
Company. At the Marina Bay site in the City of Richmond, the Company has been
sued by the City of Richmond and others in a CERCLA cost recovery action. The
Company has various contractual defenses and cost recovery claims against prior
tenants and operators of this site. In addition, the Company instituted an
action against its insurer to recover certain costs. The Company has recorded a
liability for potential reimbursement of the plaintiffs' clean-up costs for this
site, but has deferred this amount because the Company believes it is probable
that it will recoup from prior tenants, operators and/or insurers substantially
all of any payments the Company might make. With respect to a site in
Livermore, California, the Regional Water Quality Control Board has issued a
Tentative Site Cleanup Order naming the Company as one of 11 responsible
parties. In February 1994, the Company reached a settlement with plaintiffs and
all of the other potentially responsible parties pursuant to which the Company
will pay $67,650 into a fund covering certain past and future remediation costs
in exchange for a qualified release of liability.
The Company may be named as defendant or PRP under CERCLA in the
future at other sites. The Company is and may in the future be subject to
various other environmental remediation orders or directives of state and local
governmental agencies or may have liability to third parties. Although there
can be no assurance, the Company does not believe that the liability associated
with identified matters will have a material adverse effect on its business or
financial condition.
13
<PAGE>
In 1993, 1992 and 1991, the Company incurred environmental
investigation and remediation costs, including legal fees, of approximately $6.8
million, $6.6 million and $6.0 million, respectively. Those costs that were
incurred during the normal development process were capitalized as part of the
project costs; the remainder were charged to income as operating and maintenance
expense or cost of sales. The Company has budgeted approximately $6.0 million
for environmental investigation and remediation costs in 1994.
A significant portion of the Company's environmental remediation costs
will not impact the Company's net income because such costs will be incurred in
connection with its development projects. The Company's development budgets and
its current values reflect the Company's estimates of necessary clean-up costs,
and such costs will be capitalized as part of the project costs. The Company's
environmental remediation costs are expected to increase as the Company develops
its major mixed-use projects, although generally the Company may be able to
defer some or all of these development-related environmental costs if the clean-
up is not justified by the scope and potential value of the project. See Notes
4 and 12 to the Consolidated Financial Statements.
The drought situation that has existed in California for several years
prior to 1992 has affected sales of surplus agricultural land. Future drought
conditions could potentially constrain development opportunities. Although the
Company is not able to control government efforts to manage this issue on a
statewide level, it will continue to monitor the situation in each of its
markets and work to diminish any potential adverse effects on future
development.
COMPETITION
Real estate markets are regional, and levels of competition vary by
market. The Company encounters significant competition for leasing and sales of
real estate in each of its market areas, but no one competitor is dominant. The
Company is not dependent on any one customer for a significant portion of its
revenues.
PROPERTIES
Catellus' principal executive office is located in San Francisco, and
it has regional or field offices in nine other locations in the United States.
Catellus believes that its property and equipment are generally well maintained,
in good condition and adequate for its present needs.
Catellus' principal properties are summarized in the foregoing
sections. Catellus owns all such properties.
EMPLOYEES
At December 31, 1993, the Company had 230 employees, including 40
employees of the Company's subsidiary which manages certain ATSF properties.
The Company engages third parties to manage properties in locations which are
not in close proximity to the Company's regional or field offices. In addition,
the Company engages outside consultants such as architects and design firms in
connection with its pre-development activities. The Company also employs third
party contractors on development projects for infrastructure and building
construction.
14
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Catellus, its subsidiaries and other related companies are named
defendants in several lawsuits arising from normal business activities, are
named parties in certain governmental proceedings (including environmental
actions) and are the subject of various environmental remediation orders of
local governmental agencies arising in the ordinary course of its business. The
matters described below may involve substantial claims for damages. While the
outcome of these lawsuits or other proceedings against the Company and the cost
of compliance with any governmental order cannot be predicted with certainty,
management does not expect any of these matters to have a material adverse
effect on the business or financial condition of the Company. Reference is made
to Items 1 and 2 above for additional information on environmental matters,
which information is incorporated herein by reference.
CITY OF RICHMOND, ET AL. V. UNITED STATES OF AMERICA, ET AL. (United
States District Court, Northern District of California; filed August 1989) is an
action brought by the City of Richmond and Richmond Redevelopment Agency
(collectively, "Richmond") and various developers against the Company and
others, claiming that property, formerly Richmond Shipyard Number 2, purchased
by Richmond in 1977 from the Company's predecessor, Santa Fe Land Improvement
Company ("SFLI"), is contaminated. The United States and United States Maritime
Administration are also named defendants. By third-party complaint, the Company
has sued Kaiser Aluminum and Chemical Corporation ("Kaiser") and James L. Ferry
& Son, Inc. ("Ferry") for indemnity.
The plaintiffs seek damages exceeding $48.6 million for environmental
response costs, natural resources damages and declaratory relief under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), compensatory damages under state law theories of
negligence and strict liability, compensatory and punitive damages for alleged
fraudulent concealment and indemnity, and also seek declaratory relief. The
plaintiffs estimate that their environmental response costs will total
approximately $16 million.
Evidence to date indicates that the contamination at the property was
the result of World War II shipbuilding operations by Kaiser between approxi-
mately 1941 and 1945. As the owner of the property at that time, the Company is
a potential responsible party ("PRP") under CERCLA, as is Kaiser, the tenant and
operator on the property. The United States also may be considered a PRP
inasmuch as Kaiser's wartime operations on the property were apparently
controlled by the government. Richmond and the plaintiff developers are PRPs
because they currently own and operate the property, and Ferry, a Richmond
dredging contractor, may be considered a PRP because it was responsible for
spreading contaminated soils on the site.
The Company has substantial defenses to state common law claims,
including the fraudulent concealment claim, and also believes that it has
substantial contribution and indemnity claims against Kaiser and Ferry.
The California Environmental Protection Agency's Department of Toxic
Substances Control has issued a remedial action plan regarding the clean-up
activities at this property. The plan contains a preliminary non-binding
allocation of responsibility allocating an 11 percent share to the Company.
Plaintiffs recently reached a settlement agreement in principle with
the United States. The terms of the settlement have not been disclosed.
Settlement discussions between plaintiffs and the Company have occurred over a
period of more than one year and are expected to resume after terms of the
settlement with the United States have been revealed.
The Company estimates that it will recoup all or some portion of its
costs and damages through its contribution and indemnity claims. However, it is
not possible now to predict reliably the amount of the Company's recovery.
The Company tendered defense of this action to its insurer, Employers
Casualty Insurance Company (Employers). On November 16, 1993, Employers filed a
declaratory relief action in Contra Costa Superior Court against the Company,
seeking a declaration that it has no duty to defend or indemnify with respect to
the
15
<PAGE>
contamination at issue. The Company removed the action to federal court and
filed a counterclaim and motion for summary judgment on December 20, 1993.
Subsequently, Employers placed $1.3 million into escrow, the approximate amount
of the Company's claimed past defense costs, some or all of which may be paid to
the Company. On January 6, 1994, Employers was placed into receivership. The
Company, Employers and its receiver entered into a settlement agreement pursuant
to which the Company will receive $300,000 of the escrow fund and the receiver
and Employers stipulate that the Company has a valid claim for an additional
$700,000 for past defense costs against Employers' assets in the receivership.
The agreement is subject to receivership court approval. The Company does not
know the extent of other claims which will be made against the assets in
receivership or the extent of the assets which will be available to satisfy such
claims. Therefore, the Company does not know how much, if any, of the $700,000
or future defense costs will be paid out of the assets in receivership.
THE ATCHISON, TOPEKA & SANTA FE RAILWAY CO. V. THE TESTATE AND
INTESTATE SUCCESSORS OF GRACE RICHARDS, ET AL. (Superior Court of California,
County of San Diego; filed May 1983) and HERBERT LINCOLN HUBBARD, ET AL. V. THE
ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY, SANTA FE LAND IMPROVEMENT COMPANY,
ET AL. (Superior Court of California, County of San Diego; filed January 1988)
are consolidated cases in which both the Company and the litigants claim title
to a 550 foot by 75 foot strip of property located on and along the Santa Fe
Depot site in downtown San Diego. The opposing litigants also seek damages for
alleged fraud, interference with prospective economic advantage, and inverse
condemnation. The trial court ruled that the Company and some of the opposing
litigants each own an undivided one-half fee interest in the property, subject
to a perpetual railroad easement in favor of The Atchison, Topeka & Santa Fe
Railway Company. The trial court also rejected all of the opposing litigants'
damage claims. The Company has appealed the portion of the trial court's
judgment granting the opposing litigants a one-half undivided fee interest in
the property and the opposing litigants have appealed all other aspects of the
judgment. The cases are awaiting oral argument before the California Court of
Appeal.
GRUBB & ELLIS REALTY INCOME TRUST, LIQUIDATING TRUST V. CATELLUS
DEVELOPMENT CORPORATION, ET AL. (United States District Court, Northern District
of California; filed February 1993) is an action brought by Grubb & Ellis Realty
Income Trust, Liquidating Trust ("Grubb & Ellis"), against the Company, among
others, to recover the costs of environmental investigation and cleanup and
other compensatory damages at the Livermore Arcade Shopping Center located in
Northern California.
Grubb & Ellis, the current owner of the site, claims that
perchlorethylene (PCE) was released to soil and groundwater from a leaking sewer
pipe carrying discharge from the operations of a dry cleaning establishment,
whose tenancy at the shopping center includes a period when the property was
owned by a predecessor of the Company. In February 1994, the Company reached a
settlement with plaintiffs and all of the other defendants in this action
pursuant to which the Company will pay $67,650 into a fund to cover certain past
and future remediation costs in exchange for a qualified release of liability.
KHACHATURIAN V. CATELLUS DEVELOPMENT CORPORATION, ET AL. (Superior
Court of California, County of Alameda; filed April 1991) is an action by an
auto dealer who contracted to purchase land from the Company in an auto mall in
Fremont, California, in June 1990. The complaint alleged the Company had
reneged on an oral agreement to pay the plaintiff a 3% commission on each land
transaction in the auto mall, and stated breach of contract, fraud, false
promise, bad faith denial of contract, and quantum meruit causes of action. The
Company asserted, among other things, that no such agreement existed and that it
denied plaintiff's claim in good faith and with probable cause.
In November 1993, a jury found for plaintiff on his breach of contract
and bad faith denial claims, awarding him $441,780.87 in damages and $7.6
million in punitive damages. The Company believes these verdicts are not
supported by the evidence or the law, and that numerous errors at trial
substantially prejudiced it. The Company filed its notice of appeal on February
3, 1994.
TRUCK INSURANCE EXCHANGE V. CITY OF ONTARIO, ET AL. (Superior Court of
California, San Bernardino County, Case No. RCY050056) involves a subrogation
claim by insurance companies for the Ontario Auto Center dealerships against
adjacent property owners, including the Company, for damages of approximately
$4.5 million caused by sand
16
<PAGE>
blowing onto auto dealers' properties. As described above, the Company's
insurer in this matter, Employers, has filed for receivership. At this time,
the Company is unable to ascertain what impact, if any, the receivership will
have upon the Company's coverage for indemnification and defense costs in this
matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the quarter ended December 31, 1993.
EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------
The following persons are the executive officers of Catellus.
NAME AGE POSITION
- ---- --- --------
Vernon B. Schwartz 43 Chairman, President and Chief Executive Officer
James G. O'Gara 44 Senior Vice President
David A. Smith 49 Senior Vice President and Chief Financial Officer
James W. Augustino 45 Vice President Development
J. Todd Bender 37 Vice President Development
Faye A. Beverett 36 Vice President Financial Planning and Analysis
Mary Burczyk 40 Vice President Corporate Communications
Thomas W. Gille 45 Vice President Asset Management
Daniel M. Gonzales 48 Vice President Human Resources and Administration
John W. Greer 38 Vice President Development
Jeffrey K. Gwin 55 Vice President Development
William C. Matheson 41 Vice President Sales and Land Management
Douglas B. Stimpson 37 Vice President Finance
Maureen Sullivan 39 Vice President Law, General Counsel and Secretary
Theodore L. Tanner 46 Vice President Development
David M. Perna 41 Controller
Additional information concerning the business background of each
executive officer of Catellus is set forth below:
Mr. Schwartz has served as President and Chief Executive Officer and a
Director of Catellus since April 1989, and as Chairman since December 1989.
Prior to joining Catellus, Mr. Schwartz served for eight years as the Executive
Vice President and Chief Operating Officer of The Hahn Company, a major real
estate developer. Mr. Schwartz has resigned from the Company effective June 30,
1994. The Board of Directors has undertaken a search for his successor.
Mr. O'Gara was elected Senior Vice President in September 1992. He
had served as Senior Vice President Development from December 1989 and Vice
President Special Real Estate Projects of Catellus from 1984.
Mr. Smith was elected Senior Vice President and Chief Financial
Officer in March 1993. From November 1990 to March 1993, he was Vice President
and Chief Financial Officer. Mr. Smith served as Vice President Finance from
November 1989 to November 1990. Prior to that, he was Assistant Vice President
Finance and Director of Finance for SFP.
Mr. Augustino was elected Vice President Development in February 1990.
For more than five years prior to such time, he served as Project Director and
Assistant Vice President Special Projects of Catellus.
17
<PAGE>
Mr. Bender was elected Vice President Development in April 1990.
Mr. Bender joined Catellus as Director of Development in July 1989. For more
than five years prior to such time, he served as Vice President Development of
Fifield Development Corporation, a Chicago-based real estate development firm.
Ms. Beverett was elected Vice President Financial Planning and
Analysis in February 1994. From April 1990 through January 1994, Ms. Beverett
served as Director of Financial Analysis. For four years prior to that, she was
a manager in the real estate consulting division of Deloitte, Haskins, & Sells
in San Francisco.
Ms. Burczyk was elected Vice President Corporate Communications in
March 1990. From 1986 through March 1990, she was Senior Vice President of OLC
Corporation, a Chicago-based investor relations consulting firm.
Mr. Gille was elected Vice President Asset Management in April 1990.
For more than five years prior to such time, he was Senior Vice President of
Hogland, Bogart and Bertero, a commercial property management and consulting
firm in San Francisco.
Mr. Gonzales was elected Vice President Human Resources and
Administration in April 1990. Mr. Gonzales served as Catellus' Director of
Administration & Human Resources from May 1988 and its Director of Human
Resources from September 1984.
Mr. Greer was elected Vice President Development in February 1994.
From January 1990 through January 1994, Mr. Greer served as Director of
Development of Catellus. Prior to joining Catellus, he was Development Partner
in the Industrial Division of Lincoln Properties, a real-estate development firm
in Foster City, California.
Mr. Gwin was elected Vice President Development in June 1988. From
January 1985 through May 1988, Mr. Gwin served as a Regional Director of
Catellus.
Mr. Matheson was elected Vice President Sales and Land Management in
April 1990. Mr. Matheson served as Catellus' Director of Sales & Land
Management from July 1989; Regional Manager, Property Sales from November 1986;
and Director of Outlying Lands from January 1985.
Mr. Stimpson was elected Vice President Finance in February 1992. Mr.
Stimpson served as Assistant Vice President Finance from February 1990; Director
of Finance and Planning from June 1988; and Director of Planning from February
1986.
Ms. Sullivan was elected Vice President Law, General Counsel and
Secretary in March 1990. For five years prior to that, Ms. Sullivan was a
partner in the real estate department of the law firm of Brobeck, Phleger and
Harrison.
Mr. Tanner was elected Vice President Development in February 1992.
Mr. Tanner served as Director of Development from September 1989 to February
1992. From March 1988 through August 1989, he was Vice President of Cal Fed
Enterprises, a real estate subsidiary of Cal Fed, Inc. Mr. Tanner served as
Regional Project Manager of Catellus from February 1986 through March 1988.
Mr. Perna joined Catellus as Controller in March 1990. He had served
as Director of Internal Audit for SFP from 1988 to 1990, and as Audit Manager
for SFP from 1985 to 1988.
18
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock commenced trading on December 5, 1990 and is traded
on the New York Stock Exchange, the Midwest Stock Exchange and the Pacific Stock
Exchange under the symbol "CDX." The following table sets forth the high and low
sale prices of the common stock, as reported on the New York Stock Exchange
Composite Tape, during the periods indicated.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1990
Fourth Quarter (from December 5, 1990). . . . . . . $10 3/4 $ 8 1/2
1991
First Quarter . . . . . . . . . . . . . . . . . . . $15 $ 8 3/4
Second Quarter. . . . . . . . . . . . . . . . . . . 14 1/4 11 7/8
Third Quarter . . . . . . . . . . . . . . . . . . . 12 3/8 10
Fourth Quarter. . . . . . . . . . . . . . . . . . . 10 1/4 7 3/4
1992
First Quarter.. . . . . . . . . . . . . . . . . . . $11 3/4 $ 9 1/2
Second Quarter. . . . . . . . . . . . . . . . . . . 10 3/4 7 7/8
Third Quarter . . . . . . . . . . . . . . . . . . . 8 3/8 6 1/8
Fourth Quarter. . . . . . . . . . . . . . . . . . . 6 7/8 6 1/8
1993
First Quarter . . . . . . . . . . . . . . . . . . . $ 8 1/4 $ 6 3/8
Second Quarter. . . . . . . . . . . . . . . . . . . 7 1/8 5 3/4
Third Quarter . . . . . . . . . . . . . . . . . . . 8 1/8 6 3/8
Fourth Quarter . . . . . . . . . . . . . . . . . . 9 1/8 7 3/8
</TABLE>
No cash dividends were paid in 1993 or 1992 on the Company's common
stock and the Company does not anticipate paying any cash dividends on its
common stock in the foreseeable future.
At March 1, 1994, there were approximately 64,995 holders of record of
common stock.
19
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected income statement and balance sheet data with respect
to each of the years in the five-year period ended December 31, 1993 have been
derived from the annual Consolidated Financial Statements. The operating and
cash flow data have been derived from the Company's underlying financial and
management records and are unaudited. This information should be read in
conjunction with the Consolidated Financial Statements and related Notes
thereto. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of results of operations for 1993, 1992
and 1991.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Property sales. . . . . . . . . . . . . . . . . . . $ 72,569 $ 83,956 $ 60,048 $ 68,665 $ 161,729
Rentals . . . . . . . . . . . . . . . . . . . . . . 106,358 96,542 85,387 80,509 81,847
Total . . . . . . . . . . . . . . . . . . . . . . . 190,451 186,185 152,969 158,246 255,482
Costs and Expenses:
Cost of property sold . . . . . . . . . . . . . . . 39,327 43,678 16,289 14,536 48,474
Operating and maintenance . . . . . . . . . . . . . 30,684 30,792 31,102 27,458 29,449
Interest. . . . . . . . . . . . . . . . . . . . . . 43,959 53,221 44,677 42,935 32,897
Total . . . . . . . . . . . . . . . . . . . . . . . 173,459 183,800 144,687 132,644 153,708
Non-recurring expenses
Litigation costs. . . . . . . . . . . . . . . . . . 8,300 -- -- -- --
Conversion of debenture . . . . . . . . . . . . . . 29,552 -- -- -- --
Write-down of property to net realizable value . . . . 32,500 -- -- -- --
Income (loss) before extraordinary expense . . . . . . (45,352) 1,177 5,023 21,253 103,990
Extraordinary expense related to early extinguishment
of debt, net of income tax benefits (2) . . . . . . (7,401) -- -- -- --
Net income (loss) (1) (2). . . . . . . . . . . . . . . $ (52,753) $ 1,177 $ 5,023 $ 21,253 $ 103,990
Preferred stock dividends. . . . . . . . . . . . . . . 16,132 -- -- -- --
Net income (loss) available to common stockholders . . $ (68,885) $ 1,177 $ 5,023 $ 21,253 $ 103,990
Earnings (loss) available to common stockholders (3):
Before cumulative effect of a change in accounting. $ (.87) $ .02 $ .09 $ .39 $ 1.47
Cumulative effect of a change in accounting (1) . . -- -- -- -- .46
Extraordinary expense (2) . . . . . . . . . . . . . (.10) -- -- -- --
-------- -------- -------- -------- --------
Net income (loss). . . . . . . . . . . . . . . . . . . $ (.97) $ .02 $ .09 $ .39 $ 1.93
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Average number of common shares outstanding. . . . . . 70,834 53,976 53,973 53,973 53,973
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL COST BASIS INFORMATION
AS OF DECEMBER 31
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total properties . . . . . . . . . . . . . . . . $1,091,832 $1,129,634 $1,108,263 $ 988,996 $ 857,026
Total assets . . . . . . . . . . . . . . . . . . 1,373,827 1,208,887 1,189,029 1,063,321 968,695
Mortgage and other debt. . . . . . . . . . . . . 663,764 887,185 862,557 741,402 649,464
Stockholders' equity . . . . . . . . . . . . . . 525,949 145,923 144,686 139,656 118,403
<CAPTION>
CURRENT VALUE BASIS INFORMATION(4)
AS OF DECEMBER 31
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total properties . . . . . . . . . . . . . . . . $1,712,217 $2,123,816 $2,488,446 $2,710,036 $3,080,359
Total assets . . . . . . . . . . . . . . . . . . 1,952,513 2,163,561 2,526,644 2,751,000 3,153,627
Stockholders' equity . . . . . . . . . . . . . . 1,002,120 963,150 1,286,440 1,575,037 2,007,497
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Cash provided by (used for):
Operating activities . . . . . . . . . . . . . . $ 26,643 $ 51,551 $ 53,075 $ 39,844 $ 134,159
Investing activities . . . . . . . . . . . . . . (14,981) (55,612) (150,422) (150,430) (127,470)
Financing activities . . . . . . . . . . . . . . 120,212 7,664 100,866 82,699 (37,335)
--------- --------- --------- --------- ---------
Total. . . . . . . . . . . . . . . . . . . . $ 131,874 $ 3,603 $ 3,519 $ (27,887) $ (30,646)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Capital expenditures:
Financed . . . . . . . . . . . . . . . . . . . . $ 2,171 $ 22,201 $ 65,103 $ 65,330 $ 29,329
Not financed . . . . . . . . . . . . . . . . . . 33,296 36,364 49,618 52,480 79,060
Capitalized interest . . . . . . . . . . . . . . 25,593 29,337 35,949 30,667 21,264
--------- --------- --------- --------- ---------
Total. . . . . . . . . . . . . . . . . . . . $ 61,060 $ 87,902 $ 150,670 $ 148,477 $ 129,653
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Dividends. . . . . . . . . . . . . . . . . . . . -- -- -- -- $ 613,052
Dividends per common share(3). . . . . . . . . . -- -- -- -- $ 11.36
OPERATING DATA:
Buildings owned (square feet)(5) . . . . . . . . 15,160 15,562 15,072 13,817 11,861
Leased percentage(5) . . . . . . . . . . . . . . 93.6% 91.1% 85.3% 78.3% 79.9%
<FN>
- ---------------
(1) Net income in 1989 reflects a change in accounting for income taxes,
resulting in a $25 million increase to net income.
(2) Net income in 1993 reflects extraordinary expense relating to a redemption
premium paid to a lender and write-off of deferred financing costs on the
Company's $388.2 million first mortgage loan.
(3) Per share amounts are computed by dividing the appropriate amounts by the
average number of shares of common stock outstanding during the indicated
period, after giving retroactive effect to the share issuance and
recapitalization effected in connection with the distribution referred to
in Note 3 to the Consolidated Financial Statements.
(4) Current value basis balance sheet data has been presented at December 31 of
each year to provide supplemental information about management's estimates
of financial position; current value is not intended to represent net
realizable value or market value taken as a whole. See Item 1 of this
report and Note 2 to the Consolidated Financial Statements.
(5) Includes all buildings in the Company's portfolio, including those under
construction. Leased percentage excluding buildings under construction
would have been 93.6% 90.9%, 85.1%, 81.2% and 86.9%, respectively.
</TABLE>
21
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
COMPANY STRATEGIES
The Company's operations are guided by two key strategies: converting
its land portfolio into operating properties and cash and creating maximum cash
flow from the Company's existing income properties. A major advantage in
pursuing these strategies is that a significant portion of the Company's
undeveloped land is unleveraged and a significant portion of its developable
holdings are fully entitled. This provides considerable flexibility in the
timing of development activities.
Catellus has limited its speculative development, focusing instead on
built-to-suit opportunities. In 1991, 90% of all construction starts were build-
to-suit, reaching 100% in 1992 and 1993. While Catellus expects the focus on
build-to-suit to continue for the near term, it could return to speculative
development if the market conditions warrant. In 1992, Catellus also began to
pursue "build-to-sell" opportunities with building users or pre-arranged
investors. These arrangements allow the Company to monetize the value of the
land and receive a development fee.
Property sales have consisted principally of surplus properties, and
have also included selected income producing and developable properties. The
level of sales and revenue generated by these sales fluctuates from period to
period and cannot be predicted with certainty. Due to the lack of demand caused
by a weak real estate market in California and the difficulty in obtaining
financing for land acquisitions, land sales have declined over the past three
years. Over that period, the Company has increased its sales of income
producing properties and developable land. Income producing properties are
often subject to debt, and the sale of such properties therefore generates
relatively low cash flow because of the required debt paydowns. Overall,
property sales represent a key element of the Company's cash flow, and provide
flexibility necessary to respond to continued tightness in credit markets and
the increased equity required in financings. The Company currently expects
property sales of $50 million to $100 million for 1994; actual sales will depend
on prevailing market conditions and the Company's anticipated level of capital
expenditures. Any significant decrease in the sales level or cash flow
generated by sales could impact the Company's ability to meet its obligations
for fixed charges, capital expenditures and preferred stock dividends.
Cash flow from operations is used to support income producing proper-
ties, including improvements to these properties which are not financed. It
also supports corporate activities and pre-development work. Catellus'
financial strategy is to increase operating cash flow so that, combined with the
proceeds from the sale of income producing properties, it will continue to cover
all operating activities and unfinanced investing activities. The Company's
objective is for future cash flow to also cover the equity required for
construction and long-term financing.
Development activities require significant investments of capital. In
1993, 1992 and 1991, the Company's capital expenditures for developable and
income producing properties were $61.1 million, $87.9 million and $150.7
million. This capital comes from various sources, including funds provided by
operating properties, financing activities, build-to-sell projects and property
sales. Funds generated by operating properties, excluding property sales, have
increased each year since 1991 as the Company has developed properties and
increased its total leased square footage. Although credit markets have
tightened increasingly over the past few years, and the Company must now
contribute more cash equity for new development and refinancings, Catellus has
been able to finance its requirements at reasonable terms.
In response to the changing real estate markets, the Company has been
reducing capital expenditures, generally limiting development projects to
build-to-suit and build-to-sell projects, and providing funding for pre-devel-
opment of selected long-term mixed-use projects. The Company believes that
capital spending could be reduced further if, for a limited period of time,
Catellus were unable to generate sufficient funds from property sales to cover
planned expenditures.
22
<PAGE>
COMPARISON OF 1993, 1992 AND 1991
Cash provided by operating activities decreased $26.4 million from
1991 to 1993. The key factors in the decline were an overall decrease in net
cash from surplus property sales, offset in part by an overall improvement in
operating results of the Company's rental operations. Net cash from sales of
land was $18.9 million, $48.1 million and $55.9 million in 1993, 1992 and 1991.
These amounts do not reflect the net proceeds from the sale of income producing
properties (including joint ventures) totalling $45 million and $30.7 million in
1993 and 1992. The increase in cash from rental operations is due principally
to higher occupancy, as well as slightly higher average rental rates, from
existing buildings. Although average rental rates are higher because of
scheduled rent increases, rates on releasing and to new tenants are lower than
existing rates. Although it is difficult to make meaningful direct comparisons
of portfolio-wide rental rates because of the numerous factors affecting rates,
including the term of each lease, rental concessions, size of space and the
disparity among the Company's various markets, rental rates in 1993 for renewal
leases and new tenants in existing industrial buildings were generally 10% to
15% below the final rate on the former lease for the same space. At December
31, 1993, the Company's total building portfolio was 93.6% leased compared to
90.9% and 85.1% at December 31, 1992 and 1991. For the four years from 1994
through 1997, leases for 11.1%, 11.1%, 18.1%, and 10.8% of total square footage
is scheduled to expire.
Net cash used for investing activities was $15 million, $55.6 million
and $150.4 million in 1993, 1992 and 1991. The decrease in 1993 results from a
$26.8 million reduction in capital expenditures and a $14.3 million increase in
the net proceeds from the sale of income producing properties. The decrease in
1992 reflects both a $62.8 million decrease in capital expenditures and net
proceeds from the sale of income producing properties and a joint venture
interest of $30.7 million.
In 1993, the Company invested $61.1 million to develop its land and
improve its income producing properties. These funds were used for building
construction and improvements, as well as entitlement efforts and pre-constru-
ction activities. They were financed through borrowings from revolving
construction facilities, property sales, funds generated from operations and
cash on hand. During 1993, the Company completed 392,000 square feet for two
build-to-suit projects that were 100% pre-leased and an additional 151,000
square feet that was built for and sold to users. In addition, the Company had
under construction an additional 577,000 square feet which is 92.6% pre-leased.
Net cash provided by financing activities was $120.2 million, $7.7
million and $100.9 million in 1993, 1992 and 1991, respectively. The 1993
amounts reflect principally the net proceeds from the Series A and B preferred
stock offerings. These amounts also reflect the use of a portion of those
proceeds to repay debt, to purchase investments held for future repayment of the
$388.2 million mortgage loan with The Prudential Insurance Company of America
(Prudential), and to pay dividends on the Series A preferred stock.
In 1993, the Company renewed an unsecured revolving facility as a
two-year $75 million unsecured revolving facility and a three-year $46 million
unsecured term facility. The Company also renewed its construction facility for
a one-year revolving period, with maximum borrowings at any time of $75.5
million. The Company also obtained a separate two-year $25.4 million con-
struction facility for the East Baybridge Center project.
CONVERSION OF DEBENTURE AND ISSUANCE OF SERIES A AND SERIES B PREFERRED STOCK
During 1993, the Company completed a major restructuring of its debt
with Bay Area Real Estate Investment Associates L.P. (BAREIA). On February 11,
1993, BAREIA converted a convertible debenture (accreted value of $111.4
million) into common stock with a value of $141 million. Concurrently with the
conversion, the Company issued 3,449,999 shares of Series A preferred stock for
$172.5 million. BAREIA purchased 40.7% of the Series A preferred stock sold, the
same percentage as its common stock ownership.
The net proceeds of the Series A preferred stock issuance were
approximately $164.4 million. These proceeds were used to repay $69 million of
an unsecured revolving credit facility and to invest $50 million in
23
<PAGE>
securities which were held for the benefit of The Prudential Insurance Company
of America (Prudential) and committed to the paydown and refinancing of the
Company's $388.2 million loan with Prudential. The balance of the proceeds were
invested in short-term marketable securities until February 1994 when the
refinancing of this loan with Prudential was completed.
On November 4, 1993, the Company completed a private placement of
3,000,000 shares of Series B preferred stock for $150 million. The net proceeds
of $143.5 million were used to repay $24 million of an unsecured term facility,
with the remainder to be used to repay debt that matures from 1994 through 1997,
and for general corporate purposes.
The conversion of the debenture and the application of the net
proceeds of the preferred stock issuances significantly reduced the Company's
debt. The Company believes that the increased equity provided by the conversion
of the debenture and the issuance of the Series A and Series B preferred stock
will significantly increase its financial flexibility.
At December 31, 1993, cash and cash equivalents totalled $146.6
million and restricted cash totalled $67.4 million. Assuming the refinancing
and paydown of the Prudential loans, as described below, cash and cash
equivalents at December 31, 1993 would have totalled $85.8 million. In
addition, the Company had available $69.3 million under its working capital
facility, $68.5 million under its construction facilities, and $1.9 million
under its intermediate term loan facilities.
REFINANCING OF PRUDENTIAL MORTGAGE LOAN
On February 18, 1994, the Company refinanced its $388.2 million
mortgage loan with Prudential with a $280 million mortgage loan due March 1,
2004 and bearing an average interest rate of 8.71%. The new loan reflects a
paydown of $108.2 million, of which $81 million was required to meet current
loan underwriting standards and $27.2 million was paid to release selected
properties from the loan. In connection with this refinancing, the Company also
paid down $10 million of another mortgage loan with Prudential due January 1,
1996, and incurred an extraordinary expense of $11.9 million ($7.4 million, net
of income tax benefits). This extraordinary expense consisted of a redemption
premium paid to Prudential and the write-off of deferred financing costs
associated with the $388.2 million loan.
24
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
(in thousands)
YEAR-ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
PROPERTY SALES
Sales. . . . . . . . . . . . . . . . $ 72,569 $ 83,956 $ 60,048
Cost of sales. . . . . . . . . . . . 39,327 43,678 16,289
-------- -------- --------
Gross profit on sales . . . . . . . $ 33,242 $ 40,278 $ 43,759
-------- -------- --------
-------- -------- --------
Gross profit percentage. . . . . . . 45.8% 48.0% 72.9%
-------- -------- --------
-------- -------- --------
OPERATING PROPERTIES
Rentals
Commercial and industrial . . . . $ 105,251 $ 94,737 $ 83,303
Agricultural and other. . . . . . 1,107 1,805 2,084
-------- -------- --------
106,358 96,542 85,387
-------- -------- --------
Expenses
Operating and maintenance . . . . 30,684 30,792 31,102
Taxes other than income . . . . . 19,726 18,204 17,505
-------- -------- --------
50,410 48,996 48,607
-------- -------- --------
Income from operating properties . . $ 55,948 $ 47,546 $ 36,780
-------- -------- --------
-------- -------- --------
Income as a percentage of rentals. . 52.6% 49.2% 43.1%
-------- -------- --------
-------- -------- --------
</TABLE>
COMPARISON OF 1993 TO 1992
The Company had a 1993 net loss of $52.8 million, after non-recurring
expenses, property write-downs and extraordinary expense. The 1993 net loss per
share was $.97 after preferred stock dividends of $16.1 million. This compares
to net income of $1.2 million or $.02 per share in 1992.
Before non-recurring expenses, property write-downs and extraordinary
expense, the Company had 1993 net income of $7.7 million after tax, or a net
loss of $.12 per share (after preferred stock dividends of $16.1 million). This
compares to net income of $1.2 million, or $.02 per share, in 1992. Income
before taxes was $17 million (before the non-recurring expenses, property write-
downs and extraordinary expense) in 1993 compared to $2.4 million in 1992.
The significant improvement in 1993 operating performance is due to a
combination of factors. Income from operating properties increased, interest
income increased from investments of the cash proceeds from equity offerings,
and interest expense decreased from conversion of the Debenture and repayment of
debt. This was partially offset by lower gross profit from property sales. Net
income for 1993 also reflects a $3 million charge for income taxes related to
the 1993 increase in the federal corporate tax rate.
The decrease in gross profit from property sales resulted from a
combination of lower sales and higher cost basis in properties sold. Property
sales in 1993 included $46.9 million from sales of income producing properties,
which generated gross profit of $23 million. For 1992, gross profit included
$14.9 million from the sale of income producing properties and a $6.4 million
loss on the sale of a joint venture interest. The income producing properties
were sold in 1993 in conjunction with the Company's build-to-sell activities and
the Prudential refinancing. The Prudential refinancing allowed the Company to
sell certain buildings and ground leases which were subject to the mortgage,
without paying a prepayment penalty. Land sales have decreased since 1992
because of a lack of demand caused by a weak real estate market in California
and the limited financing available for land acquisitions. Property sales and
related gross profit will continue to fluctuate from period to period. This
fluctuation results from both
25
<PAGE>
changing market conditions and the Company's approach to selling property when
it can obtain attractive prices. The factors in the decision to sell property
include the attractiveness of the price, the property's future value potential
and, in the case of income producing properties, the loss of rental revenue.
Cost of sales may also vary widely because it is determined by the Company's
historical cost basis in the underlying land sold.
Income from operating properties increased 18% due to higher rental
revenue coupled with only a slight increase in operating expenses. Nearly 85%
of the growth in rental revenue came from existing properties, with the
remainder coming from rents from buildings completed over the past twelve
months. Over 80% of the increase in rental revenue from existing buildings was
the result of higher occupancy and the remainder from higher rental rates. The
increase in rental rates is from automatic rental increases, offset in part by
decreases in rates for renewal leases and new tenants. The increase in taxes
other than income resulted primarily from increases in property taxes from
completed buildings and improvements, coupled with a reduction of property taxes
in 1992 due to a reassessment of the Chicago Railway Exchange office building.
The increase in interest income resulted from the investment of the
net proceeds of the Series A and Series B preferred stock issuances. The
increase in equity in earnings of joint ventures in 1993 was caused primarily by
the suspension in recording losses incurred by Pacific Design Center. The
suspension of losses began when the Company's interest in cumulative losses of
that joint venture exceeded its interest in cumulative earnings. The equity in
earnings of joint ventures was also affected by the 1992 sale of the Company's
interest in a joint venture in a San Francisco office building. The Company's
other joint ventures, as a group, are performing well and showed an overall
improvement in operating results compared to 1992. Other revenue was lower than
1992 mainly due to the receipt of a non-refundable option deposit and an
arbitration settlement in 1992. This was partially offset by increased revenue
from early lease terminations and developers' fees earned in 1993. Interest
expense decreased as a result of the conversion of the Debenture as well as
paydowns on the working capital facility. This decrease, however, was partially
offset by borrowings on intermediate secured term loans and by reduced
capitalized interest due mainly to decreased construction activity.
In 1993, the Company recorded a $32.5 million ($19.5 million net of
income tax benefits) write-down of certain properties where carrying costs
exceeded estimated net realizable value.
As required by SFAS No. 109, the Company increased its tax expense and
related deferred tax liability by $3 million during the third quarter of 1993 as
a result of legislation enacted on August 10, 1993 increasing the federal
corporate tax rate from 34% to 35% effective January 1, 1993. Excluding this,
tax expense before the extraordinary item decreased $12.2 million due to lower
pre-tax income ($21.2 million), offset by charges attributable to the conversion
of the Debenture ($9 million).
COMPARISON OF 1992 TO 1991
The Company had 1992 net income of $1.2 million, or $.02 per share,
compared to $5 million, or $.09 per share, in 1991. Income before taxes was $2.4
million in 1992 compared to $8.3 million in 1991. The declines in 1992 were due
to increases in interest and depreciation expenses and lower income from
property sales. These increases were only partially offset by higher income from
operating properties.
The decrease in gross profit from property sales was due to an overall
increase in the cost basis of properties sold in 1992 and a $6.4 million loss on
the sale of a joint venture interest. The loss resulted from a decline in the
value of the office building held by the venture and the Company's high cost
basis in the interest sold. In addition to the joint venture sale, property
sales in 1992 included $18.5 million from the sale of income producing
properties which generated gross profit of $14.9 million, the sale of land and
easements to the Southern California Rapid Transit District, and a number of
smaller transactions, including the recognition of previously deferred revenue
from installment sales. As described above, property sales and cost of sales
will fluctuate from period to period.
26
<PAGE>
Income from operating properties increased 29% due to higher rental
revenue, offset slightly by a marginal increase in operating expenses. Higher
rental revenue from existing buildings contributed two-thirds of this increase,
with the remainder from rents on buildings completed during 1992. Almost 60% of
the increase in rental revenue from existing buildings was the result of higher
occupancy. The rest came from higher rental rates. The increase in rental rates
in existing buildings resulted from automatic increases in leases, offset in
part by decreases in rates for renewal leases and new tenants. The increase in
taxes other than income resulted principally from supplemental property tax
billings for improvements on certain Southern California properties and for
properties acquired in 1991 through a land exchange program with The Atchison,
Topeka and Santa Fe Railway Company. These increases were partially offset by
the reduction in property taxes due to a reassessment of an office building the
Company owns in Chicago.
Equity in losses of joint ventures increased due principally to higher
losses from the Pacific Design Center. The Company's other joint ventures, as a
group, performed well and had improved operating results compared to 1991. A
reduction in general and administrative expenses resulted mainly from staff
reductions and lower cost of outside professional services. The increased
depreciation expense is due to buildings placed in service during 1992 and new
tenant improvements in existing buildings. Interest expense increased as a
result of lower interest capitalized due to reduced capital expenditures and
compounding interest on the Debenture and new borrowings.
Income tax expense decreased $2.1 million in 1992 primarily as a
result of lower pre-tax income.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective January 1, 1993. This
Statement supersedes SFAS No. 96, "Accounting for Income Taxes," which was
adopted by the Company in 1989. Adoption of SFAS No. 109 required no adjustment
to the Company's balance sheet or statement of income.
At December 31, 1993, the Company had gross deferred tax assets total-
ling $83 million. This included $20 million relating to net operating loss
carryforwards (NOLs) of $21.3 million, $16.9 million and $13.3 million, which
expire in 2006, 2007 and 2008, respectively. The Company's other deferred tax
assets of $63 million relate primarily to differences between book and tax basis
of properties. These deferred tax assets are not subject to expiration and will
be realized at the time of taxable dispositions of the properties. Deferred tax
liabilities in excess of deferred tax assets are often associated with the same
property, with the result that the deferred tax asset will be realized in a
taxable disposition, without regard to other taxable income. The Company
believes it is more likely than not that it will realize the benefit of its
deferred tax assets, and that no valuation allowance is required. In making this
determination, the Company considered: the nature of its deferred tax assets
(and liabilities); the amounts and expiration dates of its NOLs; the historical
levels of taxable income; the significant unrealized appreciation of its
properties, including surplus properties likely to be sold during the NOL
carryforward periods; and its ability to control the timing of property sales in
order to assure that deferred tax assets will be offset by deferred tax
liabilities or realized appreciation.
ENVIRONMENTAL MATTERS
Many of the Company's properties are in urban and industrial areas,
and many properties may have been leased to commercial or industrial tenants who
may have discharged hazardous materials. From 1991 to 1993, expensed and
capitalized environmental costs, including legal fees, totalled $19.4 million.
The Company expects to spend $5.9 million for environmental investigation and
remediation costs in 1994, including related legal costs. The Company's
environmental remediation costs are expected to increase as the Company develops
its major mixed-use projects.
While the Company or outside consultants have evaluated the
environmental liabilities associated with most of the Company's properties, any
evaluation necessarily is based on the prevailing law and identified site
conditions
27
<PAGE>
at that time. Although the Company closely monitors its environmental costs, the
size of the portfolio precludes extensive review of every property on a regular
basis. Since the Company generally takes properties from an undeveloped to
developed state, it may be obligated to achieve compliance with environmental
laws only as they apply to the undeveloped property. Further remediation would
only be required if the property were to be developed. The property would not be
developed unless the scope and potential value justified the clean-up costs.
Environmental costs incurred in connection with income producing
properties and properties previously sold are expensed. Costs relating to
undeveloped properties are capitalized as part of development costs. At
December 31, 1993, the Company's estimate of its potential liability for
identified environmental costs ranged from $2 million to $24 million for
properties where costs would be charged to operations. These costs are expected
to be incurred over an estimated ten-year period, with a substantial portion
incurred over the next five years. At December 31, 1993, the Company's estimate
of its potential liability for identified environmental costs relating to
developable properties ranged from $18 million to $63 million. These costs
generally will be capitalized as they are incurred, over the course of the
estimated development period of approximately 20 years.
The Company maintains a reserve for the known, probable costs of
environmental remediation to be incurred in connection with income producing
properties and properties previously sold. Although an unexpected event could
have a material impact on the results of operations for any period, the Company
does not believe that such costs for identified liabilities will have a material
adverse effect on its financial condition. See Note 4 to the Consolidated
Financial Statements.
SUPPLEMENTAL CURRENT VALUE
Since management believes that the current value of its properties is
an important financial measure, the Company annually provides a current value
balance sheet. Presented in addition to historical cost financial statements,
the Company believes current value provides meaningful information regarding the
financial condition and the value of its properties in today's real estate
market. Current value does not contemplate liquidation or a distressed sale of
the Company's assets. It is a measure of the value in the intended use of the
property. It is determined through analyzing the economy, market trends and
operating results affecting each property, direct sales comparisons and
discussions with knowledgeable independent real estate professionals.
Therefore, aggregate current value of the Company's assets will reflect
increases and declines in the value of the Company's portfolio, which are not
reflected in historical cost accounting. Management determines the valuation
methods used to develop the current value balance sheets. These methods, as
well as other relevant information, are discussed in Note 2 to the Consolidated
Financial Statements.
At December 31, 1993, stockholders' equity on a current value basis
was $1 billion or $9.31 per share, compared to $964 million or $14.52 per share
at December 31, 1992, after giving effect in each year to the 1993 conversion of
the convertible debenture and the issuance of Series A and B preferred stock.
Also assuming conversion of all Series A and B preferred stock in each year, at
their respective $9.06 and $9.80 conversion prices, stockholders' equity per
share on a current value basis would have been $9.34 and $12.88 at December 31,
1993 and 1992.
At December 31, 1993, the current value of the Company's real estate
assets was $1.7 billion, compared to $2.1 billion and $2.5 billion in 1992 and
1991. These represent declines of $411.6 million (19.4%) and $364.6 million
(14.7%) in 1993 and 1992. Both the 1993 and 1992 declines were largely the
result of a general decline in real estate values, particularly with respect to
land held for development.
28
<PAGE>
The table below identifies the components of the change in current
value, by property type, from December 31, 1992 to December 31, 1993:
VALUE CHANGE BY COMPONENT AND PROPERTY TYPE
(IN MILLIONS)
<TABLE>
<CAPTION>
PROPERTIES HELD AT BEGINNING PROPERTIES SOLD, ACQUIRED
AND END OF YEAR OR EXCHANGED DURING THE YEAR
-------------------------------------- ------------------------------
REVALUATION OF
EXISTING PROPERTIES TRANSFERS WITHIN SALES ACQUISITIONS CHANGES FROM
AND IMPROVEMENTS CATEGORIES AND EXCHANGES AND EXCHANGES DECEMBER 31, 1992
------------------- ---------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Developable. . . . . . . . . . . . $ (187.7) $ (4.4) $ (5.5) $ .1 $ (197.5)
Income producing . . . . . . . . . (98.8) 4.4 (52.5) -- (146.9)
Surplus developable. . . . . . . . (54.6) -- (8.5) -- (63.1)
Agricultural and other . . . . . . (3.8) -- (11.9) 1.0 (14.7)
-------- ------ ------- ----- --------
Subtotal. . . . . . . . . . . . (344.9) -- (78.4) 1.1 (422.2)
Estimated disposition costs. . . . 10.6 -- -- -- 10.6
-------- ------ ------- ----- --------
Total . . . . . . . . . . . . . $ (334.3) -- $ (78.4) $ 1.1 $ (411.6)
-------- ------ ------- ----- --------
-------- ------ ------- ----- --------
</TABLE>
The value of the developable portfolio declined 20.5% overall in 1993.
The portfolio declined 19.5% solely as the result of market conditions caused by
decreased demand for new real estate product. Continued poor economic
conditions in the western United States has further reduced demand for new
commercial real estate. This lack of demand has depressed rental rates for new
development and in turn, resulted in falling land values in most markets.
The value of income producing properties decreased 17.2% overall,
again due to a general decline in real estate values. Approximately 11.5% of
the decline was market related, after adjusting for sales, exchanges and trans-
fers. This decline in value was caused principally by a general decline in the
economy which reduced rents and increased investor yield requirements. Two
other factors which affected value were sales of certain ground leases and
buildings, offset by transfers of completed buildings from the developable
portfolio.
The value of surplus developable properties decreased 38%, of which
32.9% was market related, after adjusting for sales, exchanges and transfers.
The value of agricultural and other properties declined 7.7%, of which 2% was
related to current market conditions only, with the remaining decline due to
sales and exchanges.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedules required under Regulation S-X
promulgated under the Securities Act of 1933 are identified in Item 14 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
29
<PAGE>
PART III
Except for the information relating to the executive officers of the
Company set forth in Part I of this Annual Report on Form 10-K, the information
required by the following items will be included in the Company's definitive
Proxy Statement ("1994 Proxy Statement") which will be filed with the Securities
and Exchange Commission in connection with the 1994 Annual Meeting of
Stockholders.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in the section captioned "Election of Directors" in
the 1994 Proxy Statement is incorporated herein by reference.
The information in the section captioned "Compliance with Section
16(a) of the Securities Exchange Act of 1934" in the 1994 Proxy Statement is
incorporated herein by reference.
The information in the section captioned "Security Ownership of
Certain Beneficial Owners" in the 1994 Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information in the sections captioned "Election of Directors--
Directors' Compensation" and "Compensation of Executive Officers" included in
the 1994 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the sections captioned "Security Ownership of
Directors and Officers" and "Security Ownership of Certain Beneficial Owners" in
the 1994 Proxy Statement are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in the section captioned "Certain Transactions" in the
1994 Proxy Statement is incorporated herein by reference.
30
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) AND (a)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
See Index to Financial Statements and Financial Statement Schedules at
F-1 herein.
All other Schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(a)(3) EXHIBITS
Exhibit
No.
- -------
3.1 Form of Restated Certificate of Incorporation of the Registrant (1)
3.1A Amendment to Restated Certificate of Incorporation of the Registrant *
3.3 Form of Certificate of Designations, Preferences and Rights of $3.25
Series A Cumulative Convertible Preferred Stock (2)
3.4 Form of Restated By-Laws (3)
3.5 Form of Certificate of Designations, Preferences and Rights of $3.625
Series B Cumulative Convertible Exchangeable Preferred Stock (9)
4.1 Form of stock certificate representing Common Stock (1)
4.2 13 1/2% Convertible Debenture of the Registrant due December 28,
1994 (4)
4.3 Credit Agreement dated December 17, 1988, as amended December 28,
1989, between the Registrant and The Prudential Insurance Company
of America ("Prudential") (1)
4.4 Term Loan Agreement dated December 6, 1988 between Security Pacific
National Bank ("Security Pacific") and the Registrant (1)
4.5 Revolving Credit Agreement dated as of December 6, 1988 between
Security Pacific and the Registrant (1)
4.6 Loan Agreement dated as of December 29, 1989 between the Registrant
and The Chase Manhattan Bank, N.A. ("Chase") (1)
4.7 Amended and Restated Loan Agreement dated December 31, 1990 between
Chase and the Registrant (5)
4.8 Extension and Modification Agreement dated November 6, 1991 between
Chase and the Registrant (6)
4.9 Form of stock certificate representing $3.75 Series A Cumulative
Convertible Preferred Stock (2)
4.10 Form of stock certificate representing $3.625 Series B Cumulative
Convertible Exchangeable Preferred Stock *
4.11 Loan Agreement dated as of February 16, 1994 between the Registrant
and Prudential **
10.1 Exploration Agreement and Option to Lease dated December 28, 1989
between the Registrant and Santa Fe Pacific Minerals Corporation
(1)
10.2 Agreement to Exchange Real Property dated as of December 29, 1989
("Exchange Agreement") between the Registrant and The Atchison,
Topeka and Santa Fe Railway Company ("ATSF") (1)
10.2A First Amendment to Exchange Agreement dated December 4, 1990 between
the Registrant and ATSF (5)
10.3 Long-Term Stockholders Agreement dated as of December 29, 1989 among
the Registrant, Bay Area Real Estate Investment Associates L.P.
("BAREIA"), Olympia & York SF Holdings Corporation ("O&Y") and Itel
Corporation ("Itel") (1)
10.4 Registration Rights Agreement dated as of December 29, 1989 among the
Registrant, BAREIA, O&Y and Itel (1)
10.6 Restated Tax Allocation and Indemnity Agreement dated December 29,
1989 among the Registrant and certain of its subsidiaries and Santa
Fe Pacific Corporation ("SFP") (1)
31
<PAGE>
Exhibit
No. Exhibits
- ------- --------
10.7 State Tax Allocation and Indemnity Agreement dated December 29, 1989
among the Registrant and certain of its subsidiaries and SFP (1)
10.8 Executive Employment Agreement dated April 1, 1989 between Vernon B.
Schwartz and the Registrant(4)
10.9 Registrant's Annual Performance Bonus Program (4)
10.10 Registrant's Stock Purchase Program (4)
10.11 Registrant's Profit Sharing & Savings Plan and Trust (4)
10.12 Registrant's Long-Term Incentive Compensation Program (4)
10.12A Registrant's Long-Term Incentive Compensation Program, as amended and
restated effective February 27, 1992 (3)
10.13 Registrant's Incentive Stock Compensation Plan (4)
10.14 Management Agreement between ATSF and Catellus Management Corporation
dated December 1, 1990 (5)
10.15 Termination, Substitution and Guarantee Agreement between ATSF and the
Registrant dated December 21, 1990 (5)
10.16 Registrant's Stock Option Plan (5)
10.17 Development Agreement dated April 1, 1991 between the Registrant and
the San Francisco Board of Supervisors (7)
10.18 Development Agreement dated May 9, 1983, by and between the City of
San Diego and the Registrant (5)
10.19 Owner Participation Agreement dated June 16, 1983, by and between
Redevelopment Agency of The City of San Diego and the Registrant
(5)
10.20 Development Agreement dated October 30, 1991, by and between The
Southern California Rapid Transit District and the Registrant (6)
10.21 Executive Stock Option Plan (3)
10.21A Amended and Restated Executive Stock Option Plan *
10.22 Amended and Restated Development Agreement between the City of Fremont
and the Registrant effective March 19, 1992 (3)
10.22A First Amendment to Amended and Restated Development Agreement between
the City of Fremont and the Registrant effective July 1, 1993 *
10.23 First Amendment to Development Agreement between the Southern
California Rapid Transit District ("RTD") and the Registrant (3)
10.24 Letter Agreement dated June 30, 1992 between RTD and the Registrant
(3)
10.25 Agreement dated as of January 14, 1993 between the Registrant and
BAREIA (8)
10.26 Form of First Amendment to Registration Rights Agreement among the
Registrant, BAREIA, O&Y and Itel(8)
10.27 Form of Stockholders Agreement among the Registrant, BAREIA, O&Y and
Itel (8)
10.28 Agreement dated February 22, 1994 between Registrant and Vernon B.
Schwartz *
21.1 Subsidiaries of Registrant (3)
23.1 Consent of Independent Accountants *
23.2 Consent of Independent Real Estate Appraisers *
24.1 Powers of Attorney from directors with respect to the filing of the
Form 10-K *
The Registrant has omitted instruments with respect to long-term debt
where the total amount of the securities authorized thereunder does not exceed
10 percent of the assets of the Registrant and its subsidiaries on a consoli-
dated basis. The Registrant agrees to furnish a copy of such instrument to the
Commission upon request.
MANAGEMENT'S CONTRACTS AND COMPENSATORY PLANS - Exhibits 10.9, 10.11,
10.12, 10.13, 10.16, 10.21A and 10.28 are current management contracts or
compensatory plans.
32
<PAGE>
(b) Reports on Form 8-K
During the quarter ended December 31, 1993, the Registrant filed a
Current Report on Form 8-K dated October 19, 1993 to file, under Item 5, the
Company's earnings release for the quarter and nine months ended September 30,
1993.
- ---------------
* Filed with this report on Form 10-K.
** To be filed by amendment.
(1) Incorporated by reference to Exhibit of the same number of the Registration
Statement on Form 10 (Commission File No. 0-18694) as filed with the
Commission on July 18, 1990 ("Form 10").
(2) Incorporated by reference to Exhibit of the same number on the Form 8
constituting a Post-Effective Amendment No. 1 to the Form 8-A as filed with
the Commission on February 19, 1993.
(3) Incorporated by reference to Exhibit of the same number of Registration
Statement on Form S-3 (Commission File No. 33-56082) as filed with the
Commission on December 21, 1992 ("Form S-3").
(4) Incorporated by reference to Exhibit of the same number of the Form 8
constituting Post-Effective Amendment No. 1 to the Form 10 as filed with
the Commission on November 20, 1990.
(5) Incorporated by reference to Exhibit of the same number on the Form 10-K
for the year ended December 31, 1990.
(6) Incorporated by reference to Exhibit of the same number on the Form 10-K
for the year ended December 31, 1991.
(7) Incorporated by reference to Exhibit of the same number on the Form 10-K
for the year ended December 31, 1990, referred to therein as "Development
Agreement dated February 19, 1991 between the Registrant and the San
Francisco Board of Supervisors".
(8) Incorporated by reference to Exhibit of the same number of Amendment No. 2
to Form S-3 as filed with the Commission on February 4, 1993.
(9) Incorporated by reference to Exhibit of the same number on the Form 10-Q
for the quarter ended September 30, 1993.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Catellus Development Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CATELLUS DEVELOPMENT CORPORATION
By /s/ Vernon B. Schwartz
------------------------------
Vernon B. Schwartz
Chairman, President and Chief
Executive Officer
Dated: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Catellus
Development Corporation and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- -----
/s/Vernon B. Schwartz Chairman, President, March 25, 1994
- -------------------------- Chief Executive
Vernon B. Schwartz Officer and Director
Principal Executive
Officer
/s/ David A. Smith Senior Vice President and March 25, 1994
- -------------------------- Chief Financial Officer
David A. Smith Principal Financial
Officer
/s/ David M. Perna Controller March 25, 1994
- -------------------------- Principal Accounting
David M. Perna Officer
34
<PAGE>
Signature Title Date
- --------- ----- -----
* Director
- --------------------------
Joseph F. Alibrandi
* Director
- --------------------------
Darla Totusek Flanagan
* Director
- --------------------------
Gary M. Goodman
* Director
- --------------------------
Robert D. Krebs
* Director
- --------------------------
Judd D. Malkin
* Director
- --------------------------
John E. Neal
* Director
- --------------------------
Joseph R. Seiger
* Director
- --------------------------
Jacqueline R. Slater
* Director
- --------------------------
Tom C. Stickel
* Director
- --------------------------
John E. Zuccotti
By /s/ David M. Perna March 25, 1994
--------------------------
David M. Perna
Attorney-in-fact
35
<PAGE>
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT
SCHEDULES (ITEM 14(A)(1) AND (A)(2))
Page
----
(A)(1) FINANCIAL STATEMENTS
Report of Independent Accountants dated February 18, 1994, F-2
Report of Independent Real Estate Appraisers dated February 17, 1994 F-3
Consolidated Balance Sheet - Historical Cost Basis and Supplemental
Current Value Basis at December 31, 1993 and 1992 F-4
Consolidated Statement of Income - Historical Cost Basis
for the years ended December 31, 1993, 1992 and 1991 F-5
Consolidated Statement of Stockholders' Equity - Historical
Cost Basis for the years ended December 31, 1993, 1992 and 1991 F-7
Consolidated Statement of Cash Flows - Historical Cost Basis for
the years ended December 31, 1993, 1992 and 1991 F-8
Consolidated Statement of Changes in Revaluation Equity-Supplemental
Current Value Basis for the years ended December 31, 1993 and 1992 F-10
Notes to Consolidated Financial Statements F-11
Summarized Quarterly Results (Unaudited) F-25
(A)(2) FINANCIAL STATEMENT SCHEDULES
Page
----
Report of Independent Accountants dated February 18, 1994 S-1
Schedule V - Property, Plant and Equipment S-2
Schedule VI - Accumulated Depreciation, Depletion and Amortization S-3
Schedule VII - Guarantees of Securities of Other Issuers S-4
Schedule VIII - Valuation and Qualifying Accounts S-5
Schedule IX - Short-Term Borrowings S-6
Schedule X - Supplementary Income Statement Information S-7
Schedule XI - Real Estate and Accumulated Depreciation S-8
Attachment A to Schedule XI S-9
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Catellus Development Corporation
We have audited the accompanying historical cost basis consolidated
balance sheet of Catellus Development Corporation and its subsidiaries (the
Company) as of December 31, 1993 and 1992, and the related historical cost basis
consolidated statements of income, of stockholders' equity and of cash flows for
each of the three years in the period ended December 31, 1993. We have also
audited the supplemental current value basis consolidated balance sheet of the
Company as of December 31, 1993 and 1992 and the related supplemental current
value basis consolidated statement of changes in revaluation equity for the
years ended December 31, 1993 and 1992. These financial statements are the
responsibility of the Company'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 audits 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 historical cost basis consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Catellus Development Corporation and its subsidiaries as
of December 31, 1993 and 1992, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
As described in Note 2, the supplemental current value basis consoli-
dated balance sheets have been prepared by management to present relevant
financial information that is not provided by the historical cost basis finan-
cial statements and are not intended to be a presentation in conformity with
generally accepted accounting principles. In addition, the supplemental current
value basis consolidated balance sheets do not purport to present net realiz-
able, liquidation, or market value of the Company as a whole.
Current values of real estate are estimated by management in accor-
dance with the procedures described in Note 2, which included receipt of an
appraisers' concurrence report from Landauer Associates, Inc. We have tested
the procedures used by management in arriving at their estimate of current value
and have tested the underlying documentation. In the circumstances, we believe
the procedures are reasonable and the documentation appropriate. Because of the
subjectivity inherent in any estimate of current value of real estate, and
because, generally, the Company's real estate assets are held for long-term
operation and appreciation and thus are not presently for sale, amounts realized
by the Company from the operation and ultimate disposition of real estate assets
may vary significantly from the current values presented.
In our opinion, the supplemental consolidated current value basis
financial statements referred to above present fairly, in all material re-
spects, the information set forth therein on the basis of accounting described
in Note 2.
/s/ Price Waterhouse
Price Waterhouse
San Francisco, CA
February 18, 1994
F-2
<PAGE>
REPORT OF INDEPENDENT REAL ESTATE APPRAISERS
To the Board of Directors
and Stockholders of
Catellus Development Corporation
and Price Waterhouse
We have reviewed the estimate of aggregate current value of the
portfolio of real estate holdings of Catellus Development Corporation (the
Company) as of December 31, 1993 and 1992. The property interests at December
31, 1993 include approximately 277 income producing buildings; approximately
7,811 acres of land planned for near-term development; approximately 20,485
acres of land held for long-term development or sale; 73 ground lease positions;
approximately 16,130 acres of agricultural land; approximately 857,185 acres of
mountain and desert land; and 9 joint venture interests. The property interests
were valued subject to tenants' leases, but before debt.
The aggregate current value of the interests, estimated by the Company
as of December 31, 1993 and 1992, was $1,712,217,000 and $2,123,816,000,
respectively. These totals represent the Company's estimate of the aggregate
current value of the interests in the entire property portfolio and assume that
the individual assets are marketable and would be disposed of in an orderly
manner, allowing a sufficient time period for exposure of each property interest
to potential purchasers. The current valuation of the portfolio has applied
neither a premium nor a discount with regard to a bulk sale of the entire
portfolio.
Based upon our review, we concur with the Company's estimates of
aggregate current value of the portfolio. By this we mean it is our opinion
that the current value estimates by the Company are within ten percent (10%) of
the aggregate value which we would estimate in a full and complete appraisal of
the same interests. A variation of less than ten percent (10%) between apprais-
ers implies substantial agreement as to the most probable current value of such
property interests.
The data used in our review were supplied to us in summary form by the
Company. We have had complete and unrestricted access to all underlying
documents. We have relied upon the Company's interpretation and summaries of
leases, operating agreements, estimate of environmental remediation costs, etc.
During 1992 and 1993, we physically inspected Company properties with combined
individual current value estimates representing approximately 86% of the
aggregate current value estimate.
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 conclu-
sion were based are materially true and correct. No one other than the under-
signed, 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 analy-
ses, opinions, or conclusions in, or the use of, this review.
This review has been prepared in conformity with the Code of Ethics
and Standards of Professional Practice of the Appraisal Institute. As of the
date of this letter, James C. Kafes has completed the requirements of the
continuing education program of the Appraisal Institute.
Respectfully submitted,
Landauer Associates, Inc. Real Estate Counselors
/s/ James C. Kafes /s/ John F. Brengelman
James C. Kafes, MAI, CRE John F. Brengelman
Managing Director Senior Vice President
New York, NY
February 17, 1994
F-3
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEET -- HISTORICAL COST BASIS
AND SUPPLEMENTAL CURRENT VALUE BASIS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
--------------------------- ---------------------------
SUPPLEMENTAL SUPPLEMENTAL
CURRENT VALUE HISTORICAL CURRENT VALUE HISTORICAL
BASIS (NOTE 2) COST BASIS BASIS (NOTE 2) COST BASIS
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Developable properties . . . . . . . . . . . . . . . . . . . . . $ 766,980 $ 592,497 $ 964,465 $ 581,443
Income producing properties. . . . . . . . . . . . . . . . . . . 708,936 552,387 855,809 561,258
Surplus developable properties . . . . . . . . . . . . . . . . . 103,104 75,078 166,239 92,949
Agricultural and other properties. . . . . . . . . . . . . . . . 177,100 12,198 191,760 12,571
Less accumulated depreciation. . . . . . . . . . . . . . . . . . -- (140,328) -- (118,587)
Less estimated disposition costs . . . . . . . . . . . . . . . . (43,903) -- (54,457) --
--------- --------- --------- ---------
1,712,217 1,091,832 2,123,816 1,129,634
Other assets and deferred charges. . . . . . . . . . . . . . . . 8,989 51,207 10,052 51,044
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . 10,098 9,579 9,369 7,885
Accounts receivable, less allowances . . . . . . . . . . . . . . 7,195 7,195 5,594 5,594
Restricted cash and investments. . . . . . . . . . . . . . . . . 67,410 67,410 -- --
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . 146,604 146,604 14,730 14,730
--------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,952,513 $1,373,827 $2,163,561 $1,208,887
--------- --------- --------- ---------
--------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage and other debt. . . . . . . . . . . . . . . . . . . . . $ 645,083 $ 663,764 $ 867,712 $ 887,185
Accounts payable and accrued expenses. . . . . . . . . . . . . . 47,585 47,585 28,484 28,484
Deferred credits and other liabilities . . . . . . . . . . . . . 13,109 22,200 13,151 20,382
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 244,616 114,329 291,064 126,913
Stockholders' equity
Preferred stock-$0.01 par value; 50,000,000
shares authorized; 3,449,999 $3.75 Series A
cumulative convertible shares and 3,000,000
$3.625 Series B cumulative convertible
exchangeable shares issued at December
31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . 322,500 322,500 -- --
Common stock--$0.01 par value; 150,000,000
shares authorized; 72,967,236 shares
issued at December 31, 1993 and
53,977,337 shares issued at
December 31, 1992. . . . . . . . . . . . . . . . . . . . . . 730 730 540 540
Paid--in capital . . . . . . . . . . . . . . . . . . . . . . . 244,151 244,151 117,930 117,930
Retained earnings (accumulated deficit). . . . . . . . . . . . (41,432) (41,432) 27,453 27,453
Revaluation equity . . . . . . . . . . . . . . . . . . . . . . 476,171 -- 817,227 --
--------- --------- --------- ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 1,002,120 525,949 963,150 145,923
--------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,952,513 $1,373,827 $2,163,561 $1,208,887
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF INCOME -- HISTORICAL COST BASIS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
REVENUE
Property sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72,569 $ 83,956 $ 60,048
Rental
Commercial and industrial. . . . . . . . . . . . . . . . . . . . . . . . . 105,251 94,737 83,303
Agricultural and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,107 1,805 2,084
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,120 1,158 1,702
Equity in earnings (losses) of joint ventures . . . . . . . . . . . . . . . . 1,818 (2,016) (539)
Other--net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,586 6,545 6,371
-------- -------- --------
190,451 186,185 152,969
-------- -------- --------
COSTS AND EXPENSES
Cost of property sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,327 43,678 16,289
Operating and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . 30,684 30,792 31,102
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,073 26,440 22,217
General and administrative. . . . . . . . . . . . . . . . . . . . . . . . . . 11,690 11,465 12,897
Taxes other than income . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,726 18,204 17,505
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,959 53,221 44,677
-------- -------- --------
173,459 183,800 144,687
-------- -------- --------
Non-recurring expenses
Reserve for litigation costs. . . . . . . . . . . . . . . . . . . . . . . . . (8,300) -- --
Conversion of debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,552) -- --
Write-down of property to estimated net realizable value . . . . . . . . . . . . (32,500) -- --
-------- -------- --------
(70,352) -- --
-------- -------- --------
INCOME (LOSS) BEFORE TAXES AND EXTRAORDINARY EXPENSE . . . . . . . . . . . . . . (53,360) 2,385 8,282
-------- -------- --------
Income taxes (benefit)
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 24 --
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,050) 1,184 3,259
-------- -------- --------
(8,008) 1,208 3,259
-------- -------- --------
Income (loss) before extraordinary expense . . . . . . . . . . . . . . . . . . . (45,352) 1,177 5,023
Extraordinary expense related to early retirement of debt,
net of income tax benefit of $4,535. . . . . . . . . . . . . . . . . . . . . . (7,401) -- --
-------- -------- --------
NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (52,753) $ 1,177 $ 5,023
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF INCOME -- HISTORICAL COST BASIS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (52,753) $ 1,177 $ 5,023
Preferred stock dividends. . . . . . . . . . . . . . . . . . . . . . . . . 16,132 -- --
-------- -------- --------
Net income (loss) applicable to common stockholders. . . . . . . . . . . . $ (68,885) $ 1,177 $ 5,023
-------- -------- --------
-------- -------- --------
Income (loss) per share of common stock:
Income (loss) before extraordinary expense. . . . . . . . . . . . . . . $ (.87) $ .02 $ .09
Extraordinary expense . . . . . . . . . . . . . . . . . . . . . . . . . (.10) -- --
-------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (.97) $ .02 $ .09
-------- -------- --------
-------- -------- --------
Average number of common shares. . . . . . . . . . . . . . . . . . . . . . 70,834 53,976 53,973
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY -- HISTORICAL COST BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
PREFERRED STOCK COMMON STOCK EARNINGS
------------------- --------------- PAID-IN (ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT)
----- ------ ----- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 . . . . . . . . . . . . . -- $ -- 53,973 $ 540 $117,863 $ 21,253
Stock grants . . . . . . . . . . . . . . . . . . . . -- -- -- -- 7 --
Net income . . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- 5,023
------ ------- ------ ---- ------- -------
Balance at December 31, 1991 . . . . . . . . . . . . . -- -- 53,973 540 117,870 26,276
Issuance of restricted stock . . . . . . . . . . . . -- -- 4 -- 60 --
Net income . . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- 1,177
------ ------- ------ ---- ------- -------
Balance at December 31, 1992 . . . . . . . . . . . . . -- -- 53,977 540 117,930 27,453
Issuance of common stock . . . . . . . . . . . . . . -- -- 18,990 190 140,810 --
Issuance of Series A preferred stock . . . . . . . . 3,450 172,500 -- -- (8,089) --
Issuance of Series B preferred stock . . . . . . . . 3,000 150,000 -- -- (6,500) --
Series A preferred stock dividends . . . . . . . . . -- -- -- -- -- (13,081)
Series B preferred stock dividends . . . . . . . . . -- -- -- -- -- (3,051)
Net loss . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- (52,753)
------ ------- ------ ---- ------- -------
Balance at December 31, 1993 . . . . . . . . . . . . . 6,450 $322,500 72,967 $ 730 $244,151 $(41,432)
------ ------- ------ ---- ------- -------
------ ------- ------ ---- ------- -------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS -- HISTORICAL COST BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(52,753) $ 1,177 $ 5,023
Non-cash items included in net income (loss):
Extraordinary expense related to early retirement of debt,
before income tax benefit. . . . . . . . . . . . . . . . . . . . . . . . 11,936 -- --
Non-recurring expense related to conversion of debenture. . . . . . . . . 29,552 -- --
Non-recurring expense related to reserve for litigation costs . . . . . . 8,300 -- --
Write-down of property to estimated net realizable value . . . . . . . . . 32,500 -- --
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,073 26,440 22,217
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (12,584) 1,184 3,259
Interest accrued on convertible debenture . . . . . . . . . . . . . . . . 1,665 13,058 11,601
Amortization of deferred loan fees and other costs . . . . . . . . . . . . 5,560 4,283 3,811
Equity in (earnings) losses of joint ventures . . . . . . . . . . . . . . (1,818) 2,016 539
Cost of land sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,624 16,999 12,576
Gain on sale of income producing properties . . . . . . . . . . . . . . . (22,999) (14,887) --
Loss on sale of joint venture interest . . . . . . . . . . . . . . . . . . -- 6,392 --
Other--net. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,925 257 (2,968)
Changes in:
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . (2,534) 3,578 2,792
Other assets and deferred charges . . . . . . . . . . . . . . . . . . . . . . (9,649) (4,551) (8,174)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . (1,066) (2,408) 2,080
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89) (1,987) 319
------- ------- -------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . 26,643 51,551 53,075
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for developable and income producing
properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61,060) (87,902) (150,670)
Net proceeds from sale of income producing properties . . . . . . . . . . . . 44,959 17,619 --
Net proceeds from sale of joint venture interest. . . . . . . . . . . . . . . -- 13,096 --
Distributions from joint ventures . . . . . . . . . . . . . . . . . . . . . . 1,324 2,500 6,182
Contributions to joint ventures . . . . . . . . . . . . . . . . . . . . . . . (254) (1,574) (1,545)
Changes in notes receivable, net. . . . . . . . . . . . . . . . . . . . . . . 50 649 (4,389)
------- ------- -------
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . (14,981) (55,612) (150,422)
------- ------- -------
</TABLE>
See notes to consolidated financial statements.
F-8
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS -- HISTORICAL COST BASIS--(CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,493 $ 168,772 $ 172,637
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . (126,533) (161,108) (71,771)
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,847) -- --
Proceeds from issuance of preferred stock . . . . . . . . . . . . . . . . . . 322,500 -- --
Stock issuance costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,991) -- --
Investment in restricted cash for future reduction of debt. . . . . . . . . . (67,410) -- --
------- ------- -------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . . . 120,212 7,664 100,866
------- ------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . 131,874 3,603 3,519
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 14,730 11,127 7,608
------- ------- -------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . $ 146,604 $ 14,730 $ 11,127
------- ------- -------
------- ------- -------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized). . . . . . . . . . . . . . . . . . . . . $ 36,901 $ 35,890 $ 28,681
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38 $ 51 $ 7,577
</TABLE>
See notes to consolidated financial statements.
F-9
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN REVALUATION
EQUITY - SUPPLEMENTAL CURRENT VALUE BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1993 1992
---- ----
<S> <C> <C>
REVALUATION EQUITY AT BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . $ 817,227 $1,141,754
Revaluation equity attributable to properties sold . . . . . . . . . . . . . . . (43,227) (61,054)
Reduction in value of properties held at beginning and
end of year:
Developable properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . (187,701) (100,994)
Income producing properties . . . . . . . . . . . . . . . . . . . . . . . . . (98,806) (139,214)
Surplus developable properties. . . . . . . . . . . . . . . . . . . . . . . . (54,617) (21,343)
Agricultural and other properties . . . . . . . . . . . . . . . . . . . . . . (3,759) (15,709)
-------- --------
(344,883) (277,260)
Increase (decrease) attributable to value of properties
purchased or exchanged. . . . . . . . . . . . . . . . . . . . . . . . . . . . (614) 350
Other decrease (increase) in historical cost of properties, net. . . . . . . . . 4,373 (57,386)
Decrease in estimated disposition costs. . . . . . . . . . . . . . . . . . . . . 10,554 9,349
Decrease in deferred taxes, net of historical cost . . . . . . . . . . . . . . . 33,864 57,633
Increase (decrease) in value of other assets, net of liabilities . . . . . . . . (1,123) 3,841
-------- --------
47,054 13,787
-------- --------
REVALUATION EQUITY AT END OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . $ 476,171 $ 817,227
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
F-10
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
Catellus Development Corporation (the Company) is a diversified real
estate company which owns substantial property interests principally in Califor-
nia, and in 10 other states in the West, Southwest and Midwest. The Company
develops and manages its income producing properties which consist primarily of
industrial facilities and a limited number of office and retail buildings
located in California, Illinois and Texas. The Company has substantial undevel-
oped land holdings primarily in California, Texas, New Mexico and Utah.
NOTE 2. CURRENT VALUE PRESENTATION
CURRENT VALUE REPORTING
Current value basis consolidated balance sheets presented as of
December 31, 1993 and 1992 provide supplemental information about the economic
condition of the Company. Because of the low historical cost basis of the
Company's real estate assets, management believes that the historical cost basis
presentation used in customary financial statements does not reflect the true
economic value of the Company's holdings. Current value reporting provides
recognition that, over time, real property generally appreciates in value, and
that value may be realized through the development process and effective
management of income producing assets. It does not represent the net realizable
value of the Company as a whole, nor does it contemplate liquidation or a
distressed sale of the Company's assets. Management believes that current value
information provides meaningful information regarding the Company's economic
condition and the value of its holdings in today's real estate market.
Current value accounting continues to represent an experimental ap-
proach; authoritative criteria have not been established for its preparation and
presentation. As experimentation continues, preparation and presentation
methods may be modified in future reporting periods.
BASIS OF VALUATION
The following methods for estimating current value are based on
management's best judgments regarding the economy, market trends and operating
results. Such factors, along with the capitalization or discount rates used to
estimate current values, cannot be precisely quantified and verified. In
addition, they may change based on ongoing evaluation of future economic trends.
DEVELOPABLE PROPERTIES--These properties, which have been designated
by the Company for development, are located primarily in the San Francisco, Los
Angeles, San Diego and Chicago metropolitan areas. Estimates of current value
are made primarily using the direct sales comparison method. However, in cases
where relevant comparable sales data is not available, current value is estimat-
ed using the residual land analysis method.
Under the direct sales comparison approach, recent sales of similar
properties are used as a basis for estimating current value. The resulting
values are adjusted to reflect the estimated costs to remediate known environ-
mental contamination. In 1993, current value estimates for large contiguous
parcels include a discount to reflect current market absorption rates for
undeveloped land; no such discount was included in the corresponding 1992
values.
Under the residual land analysis approach, current value is derived
based on anticipated future cash flows associated with the Company's intended
development plan, which considers the needs and opportunities of the market.
Infrastructure costs, development costs (including costs to remediate known
environmental contamination), operating cash flow and a residual sales amount
are projected over an assumed period of development and operation. Such amounts
are then discounted to the balance sheet date using a discount rate the Company
believes is appropriate given the level of project risk.
F-11
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INCOME PRODUCING PROPERTIES (BUILDINGS)--The Company estimates the
current value of buildings, which are located primarily in California, Arizona
and Illinois, using the discounted cash flow method.
Operating cash flows were projected based on current lease terms and
management's estimate of potential future rents, operating costs, tenant
improvement costs, leasing commissions and structural repairs. Buildings were
assumed sold after 10 to 16 years; sales prices were determined using direct
capitalization at capitalization rates ranging from 9% to 13% in 1993 and 9% to
14.5% in 1992. Operating cash flows and cash from property sales were discount-
ed back to the balance sheet date at discount rates ranging from 10% to 14% in
1993 and a discount rate of 11.5% in 1992.
INCOME PRODUCING PROPERTIES (GROUND LEASES)--The majority of the
Company's land under lease is located in California. The Company generally
estimates current value using discounted cash flow where annual cash flows are
calculated based on existing lease agreements. In 1993, land subject to ground
leases was assumed sold at conclusion of the existing lease and renewal options.
Land values were based on the direct sales comparison approach and were project-
ed to increase at an annual rate of 3% through the date of sale.
In 1992, land subject to ground leases expiring within 10 years was
assumed sold at conclusion of the existing lease. Land values were based on the
direct sales comparison approach and were projected to increase at an annual
rate of 4% through the date of sale. Existing leases with terms greater than 10
years were assumed to be renewed and the underlying land sold at the end of 20
years. Land values were based on direct capitalization of income projected for
the year following sales using a rate of 9%.
The projected cash flow for each lease together with the projected
sales price, less estimated costs to ready the property for sale, were discount-
ed back to the balance sheet date using a discount rate of 10% for both 1993 and
1992.
INCOME PRODUCING PROPERTIES (JOINT VENTURE INVESTMENTS)--Current
values for investments in joint ventures represent the Company's proportionate
equity in the underlying net assets of the ventures. The current values of
assets and liabilities of joint ventures were based on methods and assumptions
similar to those used to estimate the current values of similar assets and
liabilities of the Company.
SURPLUS DEVELOPABLE PROPERTIES--These are properties which have
development potential but are not currently scheduled for development. The
Company estimates current values using direct sales comparisons. The properties
are located primarily in California, New Mexico, Utah and Texas.
AGRICULTURAL AND OTHER PROPERTIES--The Company's agricultural property
holdings, which are in the process of being sold, are located in the San Joaquin
Valley of California. Current values for these properties were determined using
direct sales comparisons. Other properties consist of mountain and desert lands
located in California. Current values for these properties were determined
using direct sales comparisons supplemented by estimates made by management.
ESTIMATED DISPOSITION COSTS--Selling commissions and other estimated
disposition costs have been provided at 2.5% of the current value of the
Company's properties and joint venture investments.
F-12
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEFERRED INCOME TAXES--Deferred income taxes on a current value basis
represent the present value of estimated income tax payments based on projec-
tions of taxable income through the year 2028. The differences between the
current value and historical cost bases of the Company's properties should be
realized over an extended, indefinite period of time through future operations
or sales. The Company has no current intention of selling any significant
portion of its operating properties and fully expects that current values will
be realized through operations. The projections of taxable income are based on
cash flow assumptions and include anticipated sales of currently owned proper-
ties, as well as projected investment in properties currently planned for
development. The projections reflect deductions for anticipated depreciation on
developed properties and other holding costs. These projections are based on
the current provisions of the Internal Revenue Code. The discount rate used to
compute the present value of income taxes is similar to the rate used to compute
the current values of real estate assets which are the source of the taxable
income.
OTHER ASSETS AND LIABILITIES--Certain deferred assets and liabilities
have been excluded from the current value balance sheet because they are already
considered in the current value of real estate assets or have no current value.
The remaining other assets and liabilities are carried in the current value
balance sheet at historical costs which approximate current value. Projected
property tax assessments for municipal debt are reflected in the current values
of related properties. As a result, current value has been reduced by the
municipal debt principal and no current value amount has been reflected in the
caption "mortgage and other debt."
REVALUATION EQUITY--The difference between the current value basis and
historical cost basis of the Company's assets and liabilities is reported as
revaluation equity in the stockholders' equity section of the consolidated
current value basis balance sheet. The components of revaluation equity at
December 31, 1993 and 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Excess of current values over historical cost:
Developable properties . . . . . . . . . . . . . . . $181,604 $390,417
Income producing properties
--Buildings . . . . . . . . . . . . . . . . . . . 98,216 170,580
--Ground leases . . . . . . . . . . . . . . . . . 95,104 123,516
--Joint venture investments . . . . . . . . . . . 88,729 104,650
Surplus developable properties . . . . . . . . . . . 29,177 74,503
Agricultural and other properties. . . . . . . . . . 171,458 184,973
Estimated disposition costs. . . . . . . . . . . . . . (43,903) (54,457)
Net reduction of current values of other assets
and liabilities over historical cost . . . . . . . . (13,927) (12,804)
Excess of present value of estimated deferred taxes
over historical cost basis deferred taxes. . . . . . (130,287) (164,151)
-------- ---------
Total revaluation equity . . . . . . . . . . . . . . . $476,171 $817,227
-------- ---------
-------- ---------
</TABLE>
NOTE 3. CAPITAL STRUCTURE
Prior to December 29, 1989, the Company was wholly owned by Santa Fe
Pacific Corporation (SFP). On December 29, 1989, the Company issued 19.9% of
its common stock to Bay Area Real Estate Investment Associates L.P. (BAREIA)
for $398 million cash. In connection with the stock issuance, BAREIA also
purchased from the
F-13
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Company, at par, a $75 million convertible debenture (Debenture). BAREIA is a
California limited partnership whose general partner is JMB/Bay Area Partners
and whose limited partner is the California Public Employees' Retirement System.
On December 4, 1990, SFP distributed, in the form of a stock dividend, its
remaining 80.1% interest in the Company to its stockholders (Distribution).
On February 11, 1993, BAREIA converted the Debenture (accreted value
of $111.4 million) into common stock with a value of $141 million. This is
treated as a non-cash item in the statement of cash flows. After the conver-
sion, BAREIA owned 40.7% of the outstanding common stock. At that time, the
Company incurred a non-recurring non-cash expense of $29.6 million ($28.3
million net of income tax benefit), representing the excess of the value of the
common stock issued over the accreted value of the Debenture at the date of
conversion. Concurrently with the conversion of the Debenture, the Company
issued 3,449,999 shares (of a total 3,500,000 authorized) of $3.75 Series A
Cumulative Convertible Preferred Stock (Series A preferred stock) for $172.5
million, of which BAREIA purchased 1,405,702 shares (approximately 40.7% of the
total). The Series A preferred stock has an annual dividend of $3.75 per share
and a stated value and liquidation preference of $50 per share (plus accrued and
unpaid dividends). It is convertible into common stock at a price of $9.06 per
share, subject to adjustment in certain events. It is also redeemable, at the
option of the Company, at any time after February 16, 1996, at $52.625 per share
and thereafter at prices declining to $50 per share on or after February 16,
2003.
The net proceeds of the Series A preferred stock issuance were used to
repay $69 million of the working capital facility and to invest $50 million in
securities to be held for the benefit of The Prudential Insurance Company of
America (Prudential) and committed to the paydown and refinancing of the
Company's $388.2 million first mortgage loan with Prudential (Note 5). The
balance of the proceeds were invested in short-term marketable securities.
On November 4, 1993, the Company sold, in a private placement,
3,000,000 shares (of a total 4,600,000 authorized) of $3.625 Series B Cumulative
Convertible Exchangeable Preferred Stock (Series B preferred stock) for $150
million. The Series B preferred stock has an annual dividend of $3.625 per
share and a stated value and liquidation preference of $50 per share (plus
accrued and unpaid dividends). It is convertible into the Company's common
stock at a price of $9.80 per share, subject to adjustment in certain events.
The Series B preferred stock is exchangeable, at the Company's option, at any
time after November 15, 1995, into 7.25% Convertible Subordinated Debentures due
November 15, 2018, at a rate of $50 principal amount of debentures for each
share of Series B preferred stock. It is also redeemable, at the option of the
Company, at any time after November 15, 1996, at $52.5375 per share and thereaf-
ter at prices declining to $50 per share on or after November 15, 2003. The
proceeds of the Series B preferred stock issuance will be used to repay debt
that matures from 1994 through 1997, and for general corporate purposes.
The Company has reserved 19,039,735 and 15,306,000 shares of common
stock for issuance on conversion of the Series A and Series B preferred stock,
respectively, and 2,400,000 shares for issuance pursuant to various compensation
programs.
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The accompanying financial statements
include the accounts of the Company and investees over 50% owned which are
controlled by the Company. All other investees are accounted for using the
equity method.
F-14
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
REVENUE RECOGNITION--Rental revenue, in general, is recognized when
due from tenants; however, revenue from leases with rent concessions are recog-
nized on a straight-line basis over the initial term of the lease. Direct costs
of negotiating and consummating a lease are deferred and amortized over the term
of the related lease.
The Company recognizes revenue from the sale of properties using the
accrual method. Sales not qualifying for full recognition at the time of sale
are accounted for under the installment method. In general, specific identi-
fication is used to determine the cost of sales. Estimated future costs to be
incurred by the Company after completion of each sale are included in cost of
sales.
CASH EQUIVALENTS--The Company considers all highly liquid investments
with a maturity of three months or less at time of purchase to be cash equiva-
lents.
PROPERTY AND DEFERRED COSTS--Real estate is stated at the lower of
cost or estimated net realizable value. In cases where the Company determines
that the carrying costs for properties held for sale exceeds estimated net
realizable value, or an impairment has been sustained, a write-down to estimated
net realizable value is recorded. A property is considered impaired when it is
probable that the property's estimated undiscounted future cash flow is less
than its book value. The Company capitalizes construction and development
costs. Costs associated with financing or leasing projects are also capitalized
and amortized over the period benefitted by those expenditures.
Depreciation is computed using the straight-line method. Buildings
and improvements are depreciated using lives of between 20 and 40 years. Tenant
improvements are depreciated over the primary terms of the leases (generally 3-
15 years), while furniture and equipment are depreciated using lives ranging
between 3 and 10 years.
Maintenance and repair costs are charged to operations as incurred,
while significant improvements, replacements and major renovations are capital-
ized.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS--Accounts receivable are present-
ed net of an allowance for uncollectible accounts totalling $1.9 million and
$3.3 million at December 31, 1993 and 1992. The provision for uncollectible
accounts in 1993, 1992 and 1991 totalled $.1 million, $.9 million and $2.0
million, respectively.
ENVIRONMENTAL COSTS--The Company incurs on-going environmental
remediation costs, including clean-up costs, consulting fees for environmental
studies and investigations, monitoring costs, and legal costs relating to clean-
up, litigation defense, and the pursuit of responsible third parties. Costs
incurred in connection with income producing properties and properties previous-
ly sold are expensed. Costs relating to undeveloped properties are capitalized
as part of development costs. Environmental costs charged to operations for
1993, 1992 and 1991 were $5.5 million, $4.9 million and $3.5 million. Environ-
mental costs capitalized in 1993, 1992 and 1991 were $1.4 million, $2.2 million
and $2.5 million. The Company maintains a reserve for known, probable costs of
environmental remediation to be incurred in connection with income producing
properties and properties previously sold. This reserve was $5.6 million and
$3.8 million at December 31, 1993 and 1992. When there is a legal requirement
for environmental remediation of developable property, the Company will accrue
for the estimated cost of remediation and capitalize that amount. Where there
is no legal requirement for remediation, costs will be capitalized, as incurred,
as part of the project costs.
The Company also considers potential future costs of environmental
remediation relating to individual development properties in conjunction with
its analysis of current value and net realizable value. The current value of
the Company's properties reflect the Company's best estimate of possible
remediation costs. Based on this analysis, no loss has been recognized relating
to environmental remediation because management believes that no material
recoverability issues exist.
F-15
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INCOME TAXES--The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," effective January 1,
1993. This statement supersedes SFAS No. 96, "Accounting for Income Taxes,"
which was adopted by the Company in 1989. The primary change from SFAS No. 96
is to allow for the possible earlier recognition of tax benefits. Adoption of
SFAS No. 109 required no adjustment to the Company's balance sheet or statement
of income.
EARNINGS PER SHARE--Net income (loss) per share of common stock is
computed by dividing net income (loss), after reduction for preferred stock
dividends, by the weighted average number of shares of common stock outstanding
during the year. Fully diluted earnings per share amounts have not been
presented because assumed conversion of the Series A and Series B preferred
stock would be anti-dilutive for all relevant periods. Assuming conversion of
the Debenture on January 1, 1993, the net loss and loss before extraordinary
item for 1993 would have been $.93 and $.84 per share.
RECLASSIFICATIONS--Certain prior year amounts have been reclassified
to conform with the current year financial statement presentation.
NOTE 5. MORTGAGE AND OTHER DEBT
Mortgage and other debt at December 31, 1993 and 1992 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
First mortgage loan, interest at 9.89% to 10.13%, due at
various dates through January 1, 1996(a) . . . . . . . . . . . . . . . . . . . $388,150 $388,900
First mortgage loans, interest at 8.85% to 10.05%, due at
various dates through December 10, 2007(b) . . . . . . . . . . . . . . . . . . 118,457 130,399
Intermediate secured term loans, interest variable (5.44%
to 5.82% at December 31, 1993), due at various dates
through May 1, 1997(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,045 82,385
Revolving credit facility, interest variable (4.94% to 6.25% at
December 31, 1992)(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 115,000
Term loan, unsecured, interest variable (5.50% at
December 31, 1993), due December 31, 1996(d) . . . . . . . . . . . . . . . . . 22,000 --
Construction loans, interest variable (4.75% to 5.75% at
December 31, 1993), due at various dates through
November 3, 1995(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,968 40,696
Debenture, interest at 13.50%(f) . . . . . . . . . . . . . . . . . . . . . . . . -- 109,784
Mortgage loan, interest at 8.88%, due at various dates
through August 1, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 548
Assessment district bonds, interest at 5.50% to 12.0%, due at
various dates through April 10, 2021(g). . . . . . . . . . . . . . . . . . . . 18,681 19,473
------- -------
$663,764 $887,185
------- -------
------- -------
</TABLE>
(a) This first mortgage loan with The Prudential Insurance Company of America
(Prudential) is collateralized by a majority of the Company's income
producing properties and by an assignment of rents generated by the
underlying properties. The Company refinanced this loan on February 18,
1994 with a $280 million mortgageloan due March 1, 2004 and bearing an
average interest rate of 8.71%. The new loan reflects a paydown of $108.2
million, of which $81 million was required to meet current loan
underwriting standards
F-16
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and $27.2 million was paid to release selected properties from the loan.
In connection with this refinancing, the Company incurred an extraordinary
expense of $11.9 million ($7.4 million, net of income tax benefits). This
extraordinary expense consisted primarily of a redemption premium paid to
Prudential and the write-off of deferred financing costs associated with
the $388.2 million loan.
(b) These first mortgage loans are collateralized by certain of the Company's
income producing properties and by an assignment of rents generated by the
underlying properties. A majority of these loans have penalties if paid
prior to maturity. In conjunction with the Prudential refinancing
described in (a) above, a $10 million principal payment was made in
February 1994 on a $54.4 million loan. The remaining principal balance of
this loan is due January 1, 1996. Monthly payments on the remaining $64.1
million of these loans require principal payments through 2007.
(c) The Company has a three-year $24 million secured term loan agreement of
which none was available for future borrowings and a two-year $46.9 million
secured term loan agreement of which $1.9 million was available for future
borrowings.
(d) The Company had a $155 million unsecured revolving credit agreement which
allowed borrowings to be converted at either the lender's or the Company's
option to a collateralized four-year term loan. Proceeds from the Series A
preferred stock issuance (Note 3) were applied to reduce the amounts
outstanding under the facility from $115 million to $46 million. On March
18, 1993, this facility was renewed as a $75 million unsecured revolving
facility and a $46 million unsecured term facility. The term facility was
paid down to $22 million in November 1993. The revolving facility expires
on December 31, 1994; if the facility is not renewed by that date, the
amount then outstanding will convert to a three-year term loan payable in
installments. In June 1993, $5.7 million of this facility was used to
provide a letter of credit, leaving $69.3 million available at December 31,
1993 for future borrowings.
(e) The Company's construction loans are used to finance development projects
and are secured by the related land and buildings. On May 4, 1993, the
Company renewed its $100 million construction facility for a one-year
revolving period to March 31, 1994, with maximum borrowings at any time of
$75.5 million. If the construction facility is not renewed, the Company
will be able to borrow up to $.9 million to complete projects already
approved under the facility. Based on current discussions, the Company
expects that the construction facility will be renewed for a one-year
revolving period with maximum borrowings at any time of approximately $75
million. At December 31, 1993, $68.5 million was available under all
construction loans for future borrowings.
(f) The Debenture was convertible at any time into common stock of the Company
at the market price per share when converted. Interest at the rate of
13.5% per year was compounded annually and payable at maturity. On
February 11, 1993, the Debenture was converted into common stock with a
value of $141 million (Note 3).
(g) The assessment district bonds are issued by local municipalities to fund
the construction of public infrastructure and improvements which benefit
the Company's properties. These bonds are secured by certain of the
Company's properties.
F-17
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Certain debt agreements include covenants which place limitations on
the amount of indebtedness that may be incurred and dividends which may be paid
by the Company. The Company was in compliance with all such
covenants at December 31, 1993. Currently, the most restrictive of these
covenants limit annual dividends to $27.6 million and total debt to $1.6
billion; up to $180 million of this debt may be for non-property related
activities. Other covenants require stockholders' equity on a current value
basis to be no less than $800 million and on a historical cost basis to be no
less than $500 million, accelerate payment upon certain change of control
events, and contain negative pledges with respect to certain of the Company's
properties.
The maturities of mortgage and other debt outstanding as of December 31,
1993 and pro forma as of December 31, 1993, reflecting the paydown and
refinancing of the first mortgage loans described in (a) and (b) above, are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
--------- ----------
<S> <C> <C>
1994 . . . . . . . . . . . . . . . $ 104,997 $ 313,427
1995 . . . . . . . . . . . . . . . 21,024 14,430
1996 . . . . . . . . . . . . . . . 82,280 256,219
1997 . . . . . . . . . . . . . . . 14,099 7,097
1998 . . . . . . . . . . . . . . . 20,177 14,080
Thereafter . . . . . . . . . . . . 303,037 58,511
-------- --------
$ 545,614 $ 663,764
-------- --------
-------- --------
</TABLE>
Interest costs incurred during 1993, 1992 and 1991 relating to
mortgage and other debt totalled $64.0 million, $78.3 million and $76.8 million.
Total interest costs, which also includes loan fee amortization and other
interest costs, amounted to $69.6 million, $82.6 million and $80.6 million in
1993, 1992 and 1991. Of these amounts, $25.6 million, $29.3 million and $35.9
million were capitalized during 1993, 1992 and 1991.
NOTE 6. INCOME TAXES
Total income taxes (benefit) reflected in the consolidated statement
of income differ from the amounts computed by applying the federal statutory
rate (35% in 1993 and 34% in 1992 and 1991) to income (loss) before extraordi-
nary item as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Federal income tax at statutory rate . . . . . . . . . . . . . $(18,676) $ 811 $2,816
Increase (decrease) in taxes resulting from:
State income taxes, net of federal benefit . . . . . . . . . (1,318) 427 498
Non-recurring expense related to conversion
of Debenture (Note 3) . . . . . . . . . . . . . . . . . 9,013 -- --
Increase in federal rate applied to prior years'
temporary differences . . . . . . . . . . . . . . . . . . 2,970 -- --
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (30) (55)
------ ------ -----
$ (8,008) $1,208 $3,259
------ ------ -----
------ ------ -----
</TABLE>
F-18
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the Company's assets
and liabilities and for operating loss and tax credit carryforwards. Signifi-
cant components of the Company's net deferred tax liability as of December 31,
1993 are as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax liabilities:
Involuntary conversions (condemnations) of property . . . . $ 84,981
Capitalized interest and taxes. . . . . . . . . . . . . . . 78,227
Like-kind property exchanges. . . . . . . . . . . . . . . . 20,523
Investments in partnerships . . . . . . . . . . . . . . . . 9,202
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,399
-------
197,332
-------
Deferred tax assets:
Operating loss carryforwards. . . . . . . . . . . . . . . . 19,667
Intercompany transactions (prior to spin-off) . . . . . . . 16,363
Capitalized rent. . . . . . . . . . . . . . . . . . . . . . 17,032
Write-down of property to estimated net realizable value. . 12,960
Depreciation and amortization . . . . . . . . . . . . . . . 5,300
Litigation reserve. . . . . . . . . . . . . . . . . . . . . 3,043
Environmental reserve . . . . . . . . . . . . . . . . . . . 2,025
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,613
-------
83,003
Deferred tax assets valuation allowance. . . . . . . . . . . . . -------
83,003
-------
Net deferred tax liability. . . . . . . . . . . . . . . . . $114,329
-------
-------
</TABLE>
During 1993, 1992 and 1991, the Company generated net operating loss
carryforwards of $13.3 million, $16.9 million and $21.3 million for tax purposes
which expire in 2008, 2007 and 2006. Deferred income tax expense was reduced to
reflect the benefit of these amounts.
The Company increased its tax expense and related deferred tax
liability by $3 million in 1993 as a result of legislation enacted in August
1993 increasing the federal tax rate from 34% to 35% commencing January 1, 1993.
NOTE 7. JOINT VENTURE INVESTMENTS
The Company is involved in a variety of real estate-oriented joint
venture activities. At December 31, 1993, these included two hotels, one office
building, a 900,000 square foot trade mart center for the contract and home
furnishing industries, an apartment complex and other projects in the early
stages of development.
The Company loaned a total of $.3 million in 1992 and $1.9 million in
1991 to one of its joint ventures and a joint venture partner. The loans bear
interest at one percentage point over the rate payable under the joint venture's
note to its creditor bank (6.3% at December 31, 1993) and are secured either by
a second lien on the joint venture property or by the partner's interest in the
joint venture. Principal and interest are due on or before February 1, 1996 on
the loan to the joint venture. The loan to the joint venture partner matured on
January 28, 1993. The Company has the right to foreclose on the partner's
interest in the joint venture if the loan is not repaid.
F-19
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In the fourth quarter of 1992, the Company sold its 50% interest in an
office building joint venture. The Company recognized a $6.4 million loss on
the sale, attributable to the decline in value of the building and the high cost
basis in the Company's interest in the joint venture.
The condensed combined balance sheets and statements of income of the
joint ventures, along with the Company's proportionate share, are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
------------------------ ------------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Assets, primarily real estate. . . . . . . . . . . . . . . . . . $ 355,178 $ 361,076 $ 145,790 $ 126,443
--------- --------- --------- ---------
--------- --------- --------- ---------
Liabilities, primarily debt. . . . . . . . . . . . . . . . . . . $ 412,251 $ 419,177 $ 184,162 $ 165,526
Venturers' deficit . . . . . . . . . . . . . . . . . . . . . . . (57,073) (58,101) (38,372) (39,083)
--------- --------- --------- ---------
Total liabilities and venturers' deficit . . . . . . . . . . . . $ 355,178 $ 361,076 $ 145,790 $ 126,443
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The Company's proportionate share of venturers' deficit is an aggre-
gate amount for all ventures. Because the Company's ownership percentage
differs from venture to venture, and certain ventures have accumulated deficits
while others have accumulated equity, the Company's percentage of venturers'
deficit is not reflective of the Company's ownership percentage of the ventures.
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
-------------------------------------- ----------------------------------------
1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenue. . . . . . . . . . . . . . . . $114,353 $126,294 $112,602 $30,561 $42,655 $37,710
Operating and interest expenses. . . . 95,337 108,159 94,686 24,823 38,553 32,245
Depreciation and amortization. . . . . 15,595 15,975 15,885 3,920 6,118 6,004
------ ------ ------- ------ ------ ------
Net earnings (loss) before taxes . . . $ 3,421 $ 2,160 $ 2,031 $ 1,818 $(2,016) $ (539)
------ ------ ------- ------ ------ ------
------ ------ ------- ------ ------ ------
</TABLE>
NOTE 8. PROPERTY
Property and capitalized property costs at December 31, 1993 and 1992
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Land and improvements. . . . . . . . . . . . . . . . . . . . $ 525,843 $ 547,241
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . 440,583 434,732
Construction in progress . . . . . . . . . . . . . . . . . . 45,715 70,438
Capitalized interest and property taxes. . . . . . . . . . . 225,660 199,620
Other (including proportionate share of joint
ventures' net deficits of $38,372 and $39,083) . . . . . . (5,641) (3,810)
--------- ---------
1,232,160 1,248,221
Less accumulated depreciation. . . . . . . . . . . . . . . . (140,328) (118,587)
--------- ---------
$ 1,091,832 $1,129,634
--------- ---------
--------- ---------
</TABLE>
F-20
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. LEASES
The Company, as lessor, has entered into noncancelable operating
leases expiring at various dates through 2052. Rental revenue under these
leases totalled $105.1 million in 1993, $94.7 million in 1992 and $83.2 million
in 1991. Included in this revenue are rentals contingent on lease operations of
$3.2 million in 1993, $3.9 million in 1992 and $4.2 million in 1991. Future
minimum rental revenues under existing noncancelable operating leases as of
December 31, 1993 are summarized as follows (in thousands):
<TABLE>
<S> <C>
1994 . . . . . . . . . . . . . . . . . . . . . . $ 75,269
1995 . . . . . . . . . . . . . . . . . . . . . . 67,325
1996 . . . . . . . . . . . . . . . . . . . . . . 54,390
1997 . . . . . . . . . . . . . . . . . . . . . . 41,219
1998 . . . . . . . . . . . . . . . . . . . . . . 34,879
Thereafter . . . . . . . . . . . . . . . . . . . 276,837
--------
$549,919
--------
--------
</TABLE>
The Company, as lessor, had income producing property under operating
leases or held for rent as of December 31, 1993 and 1992 in the following
amounts (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992
---- ----
<S> <C> <C>
Buildings. . . . . . . . . . . . . $ 520,555 $ 523,875
Land and improvements. . . . . . . 71,275 77,948
-------- --------
591,830 601,823
Less accumulated depreciation. . . (133,923) (113,055)
-------- --------
$ 457,907 $ 488,768
-------- --------
-------- --------
</TABLE>
The Company, as lessee, has entered into noncancelable operating
leases expiring at various dates through 2033. Rental expense and related
sublease income under these leases totalled $4 million and $1.3 million in 1993,
$5.9 million and $1.9 million in 1992 and $6.1 million and $2.2 million in 1991.
Future minimum lease payments as of December 31, 1993 are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
MINIMUM
PAYMENTS
----------
<S> <C>
1994 . . . . . . . . . . . . . . . . . . . . . . $ 2,211
1995 . . . . . . . . . . . . . . . . . . . . . . 1,480
1996 . . . . . . . . . . . . . . . . . . . . . . 1,315
1997 . . . . . . . . . . . . . . . . . . . . . . 1,365
1998 . . . . . . . . . . . . . . . . . . . . . . 1,019
Thereafter . . . . . . . . . . . . . . . . . . . 342
------
$ 7,732
------
------
</TABLE>
F-21
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. TRANSACTIONS WITH AFFILIATES
The Company has a management agreement with The Atchison, Topeka &
Santa Fe Railway Company (ATSF), a subsidiary of SFP, under which the Company
acts as exclusive management and selling agent for ATSF's nonoperating railroad
properties. This agreement is in effect until October 31, 1994 but is subject
to termination at any time on 180 days' notice. Fees of $4.8 million, $5.7
million and $6.2 million were earned in 1993, 1992 and 1991, respectively, under
this agreement.
The Company had an agreement to exchange certain desert properties for
certain ATSF properties with comparable market value. The Company transferred
approximately 154,000 acres ($10.3 million market value) and 174,000 acres
($12.2 million market value) of primarily desert land in exchange for five and
six developable properties in 1992 and 1991, respectively. These exchanges had
no impact on the historical cost of the Company's total assets. The Company
concluded the exchange agreement during 1992 by selling an additional 169,000
acres of desert land and 4,000 acres of mineral rights to an affiliate of ATSF
and recognized a gain of $6.3 million.
NOTE 11. EMPLOYEE BENEFIT AND STOCK OPTION PLANS
The Company has a profit sharing and savings plan for all employees.
Funding consists of employee contributions along with matching and discretionary
contributions by the Company. Total expense for the Company under this plan was
$.6 million, $.7 million and $.7 million in 1993, 1992 and 1991, respectively.
The Company has various plans through which employees may purchase
common stock of the Company or receive common stock as incentive compensation.
The Incentive Stock Compensation Plan (Substitute Plan) was adopted to
provide substitute awards to employees whose awards under certain SFP plans were
forfeited as a result of the Distribution. The number of shares, exercise price
and expiration dates of these awards were set so the participant retained the
full unrealized potential value of the original SFP grant. Options are exercis-
able after March 5, 1992 and expire from 1997 through 1999. The Company also
has a Stock Option Plan under which the Board of Directors may issue options to
purchase up to 250,000 shares of common stock at a price not less than the fair
market value at the date of grant. Options are exercisable no earlier than six
months from the date of grant and generally expire ten years after the date of
grant. All options granted to date are exercisable in installments on a
cumulative basis at a rate of 25% each year commencing on the first anniversary
of the date of grant.
Under the Executive Stock Option Plan, the Board of Directors may issue
non-qualified stock options to purchase up to 1,250,000 shares of common stock
at a price not less than fair market value at the date of grant. Options are
exercisable no earlier than six months from the date of grant and generally
expire ten years after the date of grant. Each non-management director is
automatically granted an option, upon initial election to the Board of Direc-
tors, to purchase 5,000 shares of common stock at a price of 127.63% of the fair
market value on the date of grant, increasing 5% on each anniversary of the
grant date commencing on the sixth anniversary. The options are exercisable in
installments on a cumulative basis at a rate of 20% each year. Unless otherwise
provided at the time of grant, the exercise price for all other options will be
the fair market value on the date of grant, increasing 5% on each anniversary of
the grant date, and the options are exercisable in full on the fifth anniversary
of the grant date.
F-22
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Transactions under these plans during 1992 and 1993 are summarized below:
<TABLE>
<CAPTION>
EXECUTIVE
SUBSTITUTE STOCK STOCK
PLAN OPTION PLAN OPTION PLAN
---------- ----------- -----------
<S> <C> <C> <C>
Outstanding at December 31, 1991 . . . . . . 405,182 77,500 --
Granted. . . . . . . . . . . . . . . . . . . -- 13,500 1,041,000
Expired. . . . . . . . . . . . . . . . . . . (15,382) (18,500) (180,000)
------- ------- ---------
Outstanding at December 31, 1992 . . . . . . 389,800 72,500 861,000
Granted. . . . . . . . . . . . . . . . . . . -- 10,000 175,000
Expired. . . . . . . . . . . . . . . . . . . (4,645) (8,500) --
------- ------- ---------
Outstanding at December 31, 1993 . . . . . . 385,155 74,000 1,036,000
------- ------- ---------
------- ------- ---------
Exercise price range at December 31, 1993. . $10.70--$19.18 $7.45-$12.25 $7.45-$13.78
Exercisable at December 31, 1993 . . . . . . 385,155 29,000 8,000
Available for grant at December 31, 1993 . . -- 176,000 214,000
</TABLE>
In addition, in 1992 restrictions lapsed on a total of 4,781 shares of
common stock awarded under the Substitute Plan to holders of SFP restricted
stock.
Under the Long-Term Incentive Compensation Program (LICP), partici-
pants will share a percentage of the increase in stockholders' equity (on a
current value basis) over the five-year period ending December 31, 1996. The
amount of the LICP award pool may range from one-quarter of one percent of the
increase (if the annual compound growth over the period exceeds 5%) to 1% of the
increase (if the annual compound growth exceeds 20%). All of the Company's
executive officers are participants in the LICP. Certain executive officers
will receive a portion of their awards in cash (equal to the amount of income
tax payable on the award) and the balance in the Company's common stock; all
other awards are payable in cash. There will be no LICP award pool if the
annual compound growth is less than 5%; accordingly, there has been no accrual
for the plan as of December 31, 1993.
NOTE 12. COMMITMENTS AND CONTINGENCIES
In April 1991, a lawsuit was brought against the Company alleging
breach of contract for a finder's fee in connection with an August 1990 sale of
land in Fremont, California. On November 1, 1993, the jury returned a verdict
in favor of the plaintiff and made an award of approximately $440,000 which,
together with pre-judgment interest, totals approximately $600,000. Addition-
ally, the jury awarded approximately $7.7 million in punitive damages for what
it found was the Company's bad faith denial of an alleged contract. While the
Company intends to vigorously pursue an appeal, it has provided $8.3 million as
a non-recurring expense in the consolidated statement of income for the year
ended December 31, 1993.
The Company has obtained standby letters of credit and surety bonds in
favor of local municipalities to guarantee performance obligations on real
property improvements. As of December 31, 1993, $29.2 million was outstanding.
The Company, as a partner in certain joint ventures, has made certain
financing guarantees which do not individually or collectively represent a
material commitment.
F-23
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company is a party to a number of legal actions arising in the
ordinary course of business. While the Company cannot predict with certainty
the final outcome of these proceedings, considering the substantial legal
defenses available, management believes that none of these actions, when finally
resolved, will have a material adverse effect on the consolidated financial
position or results of operations of the Company.
Inherent in the operations of the real estate business is the possi-
bility that environmental pollution conditions may exist on or relate to proper-
ties owned or previously owned. The Company may be required in the future to
take action to correct or reduce the effects on the environment of prior
disposal or release of hazardous substances by third parties, the Company, or
its corporate predecessors. The amount of such future cost is difficult to
estimate with a high degree of accuracy due to such factors as the unknown
magnitude of possible contamination, the unknown timing and extent of the
corrective actions which may be required, the determination of the Company's
liability in proportion to other responsible parties, and the extent to which
such costs are recoverable from insurance.
At December 31, 1993, management estimates that future costs for
remediation of identified or suspected environmental contamination which will be
treated as an expense may be in the range of $2 to $24 million. It is antici-
pated that such costs will be incurred over the next ten years. The Company has
provided a reserve for such costs (Note 4). Management also estimates that
similar costs relating to the Company's developable properties may range from
$18 million to $63 million. These amounts generally will be capitalized as
components of development costs when incurred. It is anticipated that environ-
mental remediation costs relating to property developments will be incurred over
a period of twenty years. These estimates were developed based on extensive
reviews which took place over several years based upon then prevailing law and
identified site conditions. Because of the breadth of its portfolio, the
Company is unable to review extensively each property on a regular basis. Such
estimates are not precise and are always subject to the availability of further
information about the prevailing conditions at the site, the future requirements
of regulatory agencies and the availability of other parties to pay some or all
of such costs.
F-24
<PAGE>
SUMMARIZED QUARTERLY RESULTS (UNAUDITED)
The Company's earnings and cash flow are determined to a large extent
by property sales. While the Company's commercial and industrial rental revenue
has increased steadily, particularly in recent years, the Company's sales and
net income have fluctuated significantly from quarter to quarter, as evidenced
by the following summary of unaudited quarterly consolidated results of opera-
tions. Property sales fluctuate from quarter to quarter, reflecting general
market conditions and the Company's intent to sell property when it can obtain
attractive prices. Cost of sales may also vary widely because it is determined
by the Company's historical cost basis in the underlying land. Historically,
sales in the fourth quarter have been high, reflecting the Company's experience
that both buyers and sellers attempt to complete pending transactions prior to a
calendar year-end.
<TABLE>
<CAPTION>
1993 1992
------------------------------------ -----------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
------ ------ ----- ------ ----- ------ ----- ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property sales . . . . . . . . . . $ 5,850 $ 7,247 $ 4,800 $ 54,672 $ 2,373 $ 28,779 $ 17,912 $ 34,892
Rental revenue
Commercial and industrial. . . . 25,603 27,450 26,688 25,510 23,407 23,512 24,057 23,761
Agricultural and other . . . . . 294 212 491 110 481 488 476 360
Total revenue. . . . . . . . . . . 33,305 38,068 33,963 85,115 26,531 54,468 44,213 60,973
Costs and expenses
Cost of sales. . . . . . . . . . 2,392 4,214 4,373 28,348 1,361 8,629 3,133 30,555
All other expenses . . . . . . . 33,706 33,101 33,359 33,966 35,239 34,282 34,951 35,650
Non-recurring expenses . . . . . . 29,552 -- 8,300 -- -- -- -- --
Write-down of property to estimated
net realizable value . . . . . . -- -- -- 32,500 -- -- -- --
Net income (loss) before
extraordinary expense. . . . . . (29,788) 400 (10,144) (5,820) (5,860) 6,764 3,716 (3,443)
Extraordinary expense, net . . . . -- -- -- (7,401) -- -- -- --
Net income (loss). . . . . . . . . (29,788) 400 (10,144) (13,221) (5,860) 6,764 3,716 (3,443)
Net income (loss) per common share:
Net income (loss) before
extraordinary expense. . . . . . (.52) (.04) (.18) (.17) (.11) .13 .07 (.07)
Extraordinary expense, net . . . -- -- -- (.10) -- -- -- --
Net income (loss) per share. . . (.52) (.04) (.18) (.27) (.11) .13 .07 (.07)
</TABLE>
F-25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Catellus Development Corporation
Our audits of the consolidated historical cost basis financial state-
ments referred to in our report dated February 18, 1994, appearing on page F-2
of this Form 10-K of Catellus Development Corporation, also included an audit of
the Financial Statement Schedules listed in Item 14(a)(2) of this Form 10-K. In
our opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated historical cost basis financial statements.
/s/ Price Waterhouse
Price Waterhouse
San Francisco, CA
February 18, 1994
S-1
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITALIZED
INTEREST
CONSTRUCTION AND
LAND & IN PROPERTY
IMPROVEMENTS BUILDINGS PROGRESS TAX OTHER TOTAL
------------ --------- ------------ ----------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 . $470,969 $316,353 $117,789 $129,614 $42,650 $1,077,375 (1)
Additions at cost. . . . . . 12,100 881 80,367 40,297 9,862 143,507
Retirements. . . . . . . . . (9,944) (2,094) (562) (59) (3,069) (15,728)
Other. . . . . . . . . . . . 38,753 83,160 (98,877) 144 (10,303) 12,877
------- ------- ------- ------- ------ ---------
Balance at December 31, 1991 . 511,878 398,300 98,717 169,996 39,140 1,218,031 (1)
Additions at cost. . . . . . 1,419 203 45,245 32,598 4,293 83,758
Retirements. . . . . . . . . (14,113) (1,263) (149) (2,540) (1,816) (19,881)
Other. . . . . . . . . . . . 48,057 37,492 (73,375) (434) (6,344) 5,396
------- ------- ------- ------- ------ ---------
Balance at December 31, 1992 . 547,241 434,732 70,438 199,620 35,273 1,287,304 (1)
Additions at cost. . . . . . 10 218 24,299 28,196 4,422 57,145
Retirements. . . . . . . . . (44,437) (21,403) (1,087) (1,695) (1,461) (70,083)
Other. . . . . . . . . . . . 23,029 27,036 (47,935) (461) (5,503) (3,834)
------- ------- ------- ------- ------ ---------
Balance at December 31, 1993 . $525,843 $440,583 $ 45,715 $225,660 $32,731 $1,270,532 (1)(2)
------- ------- ------- ------- ------ ---------
------- ------- ------- ------- ------ ---------
<FN>
- ---------------
Notes:
(1) Excludes investment in joint ventures of ($16,434,000), ($39,083,000) and
($38,372,000) at December 31, 1991, 1992 and 1993, respectively.
(2) Reference is made to Note 4 to the Consolidated Financial Statements for
information related to depreciation.
</TABLE>
S-2
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITALIZED
LAND & INTEREST AND
IMPROVEMENTS BUILDINGS PROPERTY TAX OTHER TOTAL
------------ --------- ------------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1990 . . . . . . . . . . . $ 6,190 $ 62,905 $2,164 $ 5,820 $ 77,079
Additions. . . . . . . . . . . . . . . . . . . . 2,109 17,710 1,109 1,241 22,169
Retirements. . . . . . . . . . . . . . . . . . . (1,551) (1,027) (2,861) (5,439)
Other. . . . . . . . . . . . . . . . . . . . . . (475) (475)
------ ------- ----- ------ -------
Balance at December 31, 1991 . . . . . . . . . . . 6,748 79,113 3,273 4,200 93,334
Additions. . . . . . . . . . . . . . . . . . . . 3,263 20,206 1,493 1,420 26,382
Retirements. . . . . . . . . . . . . . . . . . . (124) (886) (49) (1,059)
Other. . . . . . . . . . . . . . . . . . . . . . (32) (38) (70)
------ ------- ----- ------ -------
Balance at December 31, 1992 . . . . . . . . . . . 9,887 98,401 4,766 5,533 118,587
Additions. . . . . . . . . . . . . . . . . . . . 3,444 21,893 1,513 1,199 28,049
Retirements. . . . . . . . . . . . . . . . . . . (150) (3,787) (92) (327) (4,356)
Other. . . . . . . . . . . . . . . . . . . . . . (24) (1,928) -- -- (1,952)
------ ------- ----- ------ -------
Balance at December 31, 1993 . . . . . . . . . . . $13,157 $114,579 $6,187 $ 6,405 $140,328
------ ------- ----- ------ -------
------ ------- ----- ------ -------
</TABLE>
S-3
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
TOTAL AMOUNT GUARANTEED AND
NAME OF ISSUER OF CLASS OF SECURITIES AND
SECURITIES GUARANTEED GUARANTEED OUTSTANDING NATURE OF GUARANTEE
--------------------- ------------------- --------------------------- --------------------
<S> <C> <C> <C>
Torrance Investment Company Construction loan Principal -- $12,674,718 A subsidiary of Catellus is jointly and severally
Interest -- $ 75,525 liable for 100% of the principal and interest.
Estimated annual interest guarantee is $.8 million.
International Rivercenter Mortgage note Principal -- $ 3,500,000 Catellus guarantees payment of 35% of $10 million of
Interest -- $ 75,600 principal and 35% of interest. Estimated annual
interest guarantee is $.7 million.
International Rivercenter Working capital Principal -- $ -- Catellus guarantees 35% of principal and interest of
line of credit Interest -- $ -- the $5 million line of credit up to a maximum of
$1.7 million. There were no outstanding amounts as
of December 31, 1993.
JMB/Santa Fe Bayfront Construction loan Principal -- $ 6,000,000 Catellus guarantees payment of 50% of outstanding
Venture principal. Guarantee is limited to a maximum of $6
million.
</TABLE>
S-4
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
---------- --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Allowance for doubtful receivables. . . . $1,706 $2,019 $ -- $450 (1) $3,275
Reserve for abandoned projects. . . . . . 387 -- -- 37 (2) 350
Reserve for environmental costs . . . . . -- -- 1,591 -- 1,591
Year ended December 31, 1992:
Allowance for doubtful receivables. . . . 3,275 923 -- 849 (1) 3,349
Reserve for abandoned projects. . . . . . 350 732 -- 678 (2) 404
Reserve for environmental costs . . . . . 1,591 1,100 1,145 -- 3,836
Year ended December 31, 1993:
Allowance for doubtful receivables. . . . 3,349 50 -- 1,511 (1) 1,888
Reserve for abandoned projects. . . . . . 404 732 -- 852 (2) 284
Reserve for environmental costs . . . . . 3,836 2,272 143 632 (3) 5,619
<FN>
- ---------------
Notes:
(1) Balances written off as uncollectible.
(2) Costs of unsuccessful projects written off.
(3).Environmental costs incurred.
</TABLE>
S-5
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE IX--SHORT-TERM BORROWINGS
THREE YEARS ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE BALANCE AT INTEREST DURING DURING DURING
SHORT-TERM BORROWINGS(1) END OF YEAR RATE THE YEAR THE YEAR(2) THE YEAR(3)
------------------------ ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Unsecured bank loan
Intermediate term loan . . . . . . . . . . . $ 1,000 7.9% $ 34,600 $ 34,511 8.0%
Secured bank loans
Construction loan. . . . . . . . . . . . . . 70,942 7.9% 81,774 75,539 8.1%
Construction loan. . . . . . . . . . . . . . 14,877 8.1% 15,025 13,054 7.8%
Mortgage loan. . . . . . . . . . . . . . . . 9,000 6.9% 9,000 25 6.9%
Year ended December 31, 1992:
Unsecured bank loan
Revolving credit agreement. . . . . . . . . . . 11,500 5.6% 14,200 12,617 5.7%
Secured bank loans
Intermediate term loan . . . . . . . . . . . 9,720 6.5% 9,720 106 6.6%
Construction loan. . . . . . . . . . . . . . 17,401 5.7% 38,604 31,947 5.6%
Construction loan. . . . . . . . . . . . . . 13,332 5.6% 13,332 12,129 5.6%
Year ended December 31, 1993:
Secured bank loans
Mortgage loan. . . . . . . . . . . . . . . . 214,000 9.9% 214,750 214,121 9.9%
Intermediate term loan . . . . . . . . . . . 9,600 5.5% 27,727 27,099 5.4%
Intermediate term loan . . . . . . . . . . . 45,045 5.6% 46,647 45,238 5.7%
Construction loan. . . . . . . . . . . . . . 13,332 4.5% 13,332 13,332 4.7%
Construction loan. . . . . . . . . . . . . . 28,682 5.3% 34,030 31,556 5.3%
<FN>
- ---------------
Notes:
(1) Reference is made to Note 5 to the Consolidated Financial Statements.
(2) The average amount outstanding during the year was computed based on a 365
day year.
(3) Interest rate was determined by dividing actual interest expense in each
year by the average amount outstanding during the year.
</TABLE>
S-6
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs. . . . . . . . . . . $ 6,804 $ 6,701 $ 6,262
------ ------ ------
------ ------ ------
Taxes, other than payroll and income taxes:
Real estate and personal property . . . . $18,054 $16,601 $15,779
Other . . . . . . . . . . . . . . . . . . 1,018 933 957
------ ------ ------
$19,072 $17,534 $16,736
------ ------ ------
------ ------ ------
</TABLE>
S-7
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE XI -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COST CAPITALIZED
INITIAL COST TO SUBSEQUENT
CATELLUS TO ACQUISTION
------------------------ -------------------------
BUILDINGS & CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS
- ----------- ------------ ---- ------------- ------------ --------
<S> <C> <C> <C> C> <C>
DEVELOPABLE PROPERTIES
Mission Bay, San Francisco,
CA . . . . . . . . . . . . . . $ -- $ 64,025 $ 3,952 $ (1,663)(6) $103,111
Other developable properties
less than 5% of total. . . . . 79,252 207,307 13,833 132,783 69,149
------- ------- ------- ------- -------
Total developable properties . . 79,252 271,332 17,785 131,120 172,260
------- ------- ------- ------- -------
INCOME PRODUCING PROPERTIES
BUILDINGS. . . . . . . . . . . . 498,549 59,134 43,683 435,053 41,819
GROUND LEASES. . . . . . . . . . 61,727 5,944 -- 4,649 477
------- ------- ------- ------- -------
Total income producing
properties. . . . . . . . . . . 560,276 65,078 43,683 439,702 42,296
------- ------- ------- ------- -------
SURPLUS DEVELOPABLE
PROPERTIES . . . . . . . . . . . 2,236 58,134 1,149 4,794 11,001
------- ------- ------- ------- -------
AGRICULTURAL AND
OTHER PROPERTIES . . . . . . . . -- 850 -- 521 98
------- ------- ------- ------- -------
TOTAL. . . . . . . . . . . . . . . $641,764 $395,394 $ 62,617 $576,137 $225,655
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED LIFE ON WHICH
AT CL0SE OF PERIOD DEPRECIATION
(1)(2)(3)(4) IN LATEST
----------------------------------- DATE OF INCOME
BUILDINGS & ACCUMULATED COMPLETION OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ----------- ---- ------------ ---- ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEVELOPABLE PROPERTIES
Mission Bay, San Francisco,
CA . . . . . . . . . . . . . . $ 64,025 $105,400 $ 169,425 $ 1,805 N/A various (5)
Other developable properties
less than 5% of total. . . . . 207,307 215,765 423,072 5,316 N/A various (5)
------- ------- --------- -------
Total developable properties . . 271,332 321,165 592,497 7,121
------- ------- --------- -------
INCOME PRODUCING PROPERTIES
BUILDINGS. . . . . . . . . . . . 59,134 520,555 579,689 124,326 various various (5)
GROUND LEASES. . . . . . . . . . 5,944 5,126 11,070 1,173 N/A various N/A
------- ------- --------- -------
Total income producing
properties. . . . . . . . . . . 65,078 525,681 590,759 125,499
------- ------- --------- -------
SURPLUS DEVELOPABLE
PROPERTIES . . . . . . . . . . . 58,134 16,944 75,078 1,151 N/A N/A (5)
------- ------- --------- -------
AGRICULTURAL AND
OTHER PROPERTIES . . . . . . . . 850 619 1,469 152 N/A various (5)
------- ------- --------- -------
TOTAL. . . . . . . . . . . . . . . $395,394 $864,409 $1,259,803 $133,923
------- ------- --------- -------
------- ------- --------- -------
<FN>
- ---------------
Notes:
(1) A reserve of $284,000 against predevelopment has been established for
projects to be abandoned.
(2) The aggregate cost for Federal income tax purposes is approximately $922,000,000.
(3) See Attachment A to Schedule XI for reconciliation of beginning of period
total to total at close of period.
(4) Excludes investments in joint ventures and furniture and equipment.
(5) Reference is made to Note 4 to the Consolidated Financial Statements for
information related to depreciation.
(6) Net incremental revenues.
</TABLE>
S-8
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
ATTACHMENT A TO SCHEDULE XI
RECONCILIATION OF COST OF REAL ESTATE AT BEGINNING OF PERIOD
WITH TOTAL AT END OF PERIOD
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Balance at January 1 . . . . . . . . . . . . . . . . . . . . $1,276,334 $1,208,553 $1,067,108
--------- --------- ---------
Additions during period:
Acquisitions through foreclosure. . . . . . . . . . . . 523 -- 2,436
Other acquisitions. . . . . . . . . . . . . . . . . . . 15 1,413 11,627
Improvements. . . . . . . . . . . . . . . . . . . . . . 57,360 87,623 140,473
Other:
Reclassification from other accounts . . . . . . . . -- 871 --
Other . . . . . . . . . . . . . . . . . . . . . . . -- 147 156
--------- --------- ---------
Total additions. . . . . . . . . . . . .. . . . . . 57,898 90,054 154,692
--------- --------- ---------
Deductions during period:
Cost of real estate sold. . . . . . . . . . . . . . . . . 34,554 17,443 11,611
Other:
Write-down of properties to estimated net
realizable value. . . . . . . . . . . . . . . . . . 32,500 -- --
Direct write-off of costs. . . . . . . . . . . . . . . 1,261 1,495 6
Write-down of property due to purchase
price adjustments . . . . . . . . . . . . . . . . . 2,796 -- --
Reclassification due to demolition . . . . . . . . . . 1,952 32 581
Reclassification to personal property
and other accounts . . . . . . . . . . . . . . . . . 217 1,659 --
Increase reserve for abandoned projects. . . . . . . . 732 732 --
Other . . . . . . . . . . . . . . . . . . . . . . . . 417 912 1,049
--------- --------- ---------
Total deductions . . . . . . . . . . . . . . . . . . . 74,429 22,273 13,247
--------- --------- ---------
Balance at December 31 . . . . . . . . . . . . . . . . . . . $1,259,803 $1,276,334 $1,208,553
--------- --------- ---------
--------- --------- ---------
</TABLE>
RECONCILIATION OF REAL ESTATE ACCUMULATED DEPRECIATION
AT BEGINNING OF PERIOD WITH TOTAL AT END OF PERIOD
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Balance at January 1 . . . . . . . . . . . . . . . . . . . . $ 113,055 $ 89,134 $ 71,260
--------- --------- ---------
Additions during period:
Charged to expense. . . . . . . . . . . . . . . . . . . . 26,850 24,962 20,928
Other . . . . . . . . . . . . . . . . . . . . . . . . -- -- 106
--------- --------- ---------
Total additions. . . . . . . . . . . . . . . . . . . . 26,850 24,962 21,034
--------- --------- ---------
Deductions during period:
Cost of real estate sold. . . . . . . . . . . . . . . . . 4,030 152 2,579
Direct write-off of costs . . . . . . . . . . . . . . . . -- -- --
Other . . . . . . . . . . . . . . . . . . . . . . . . 1,952 889 581
--------- --------- ---------
Total deductions . . . . . . . . . . . . . . . . . . . 5,982 1,041 3,160
--------- --------- ---------
Balance at December 31 . . . . . . . . . . . . . . . . . . . $ 133,923 $ 113,055 $ 89,134
--------- --------- ---------
--------- --------- ---------
</TABLE>
S-9
<PAGE>
EXHIBIT 3.1A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
CATELLUS DEVELOPMENT CORPORATION
The undersigned corporation, in order to amend its Restated
Certificate of Incorporation, hereby certifies as follows:
FIRST: The name of the corporation is:
Catellus Development Corporation
SECOND: The corporation hereby amends Article 4 of its Restated
Certificate of Incorporation as follows:
ARTICLE 4 of the Restated Certificate of Incorporation, relating
to Capital Stock, is hereby amended by inserting the following as
clause (2) of paragraph (b)(ii) (preceding the "or" which appears
between the present clauses (1) and (2) and with the present
clause (2) becoming clause (3)):
, (2) as required by any national securities
exchange on which the Preferred Stock is or may
be listed for trading
THIRD: The amendment effected herein was authorized by the
affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon at a meeting of
stockholders pursuant to Sections 222 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury this 18th day of
May, 1993.
/s/ Vernon B. Schwartz
Vernon B. Schwartz, President
Attest:
/s/ Maureen Sullivan
Maureen Sullivan, Secretary
<PAGE>
EXHIBIT 4.10
DESCRIPTION OF EXHIBIT
Form of standard stock certificate for:
Catellus Development Corporation
$3.625 Series B Cumulative Convertible Exchangable Preferred Stock
<PAGE>
EXHIBIT 10.21A
CATELLUS DEVELOPMENT CORPORATION
AMENDED AND RESTATED EXECUTIVE STOCK OPTION PLAN(1)
1. PURPOSES
The purposes of the Catellus Development Corporation Executive Stock
Option Plan (the "Plan") are to provide an incentive program competitive in
the real estate industry which will reward and retain senior management whose
performance will contribute to the long-term success and growth of Catellus
Development Corporation (the "Company") and to further the identity of
interests of senior management and the stockholders of the Company. The Plan
is also intended to further the identity of interests of the directors of the
Company with senior management and the stockholders.
2. ELEMENTS OF THE PLAN
The Plan provides the Company's Board of Directors (the "Board"),
through a committee designated by the Board, with the discretion to grant
participants incentives relating to the Company's common stock utilizing
nonqualified stock options.
3. SHARES SUBJECT TO THE PLAN
The maximum aggregate number of shares as to which options may at
any time be granted under the Plan shall be 1,250,000 shares of common stock,
par value $.01 per share (the "Common Shares"), subject to adjustment in
accordance with Section 12. Such Common Shares may be either authorized but
unissued shares or shares previously issued and reacquired by the Company.
If and to the extent options granted under the Plan terminate, expire or are
cancelled without having been exercised, the shares subject to such options
shall again be available for purposes of the Plan.
4. PLAN ADMINISTRATION
The Plan shall be administered by the Compensation and Benefits
Committee of the Board, or any other committee designated by the Board (the
"Committee"). The members of the Committee shall each be a "disinterested
person" within the meaning of Regulation 16b-3 ("Regulation 16b-3")
promulgated under the Securities Exchange Act of 1934, as amended. Except
with respect to options granted to directors, the Committee shall have the
sole authority to determine (a) to whom options shall be granted under the
Plan; (b) the type, amount and terms of the options to be granted; (c) the
time when options will be granted and the duration of the exercise period; and
(d) any other matters arising under the Plan. The Committee shall have full
power and authority to administer and interpret the Plan and to adopt or amend
such rules, regulations, agreements and instruments for implementing the Plan
and for conduct of its business
- ---------------
(1) Gives effect to amendments approved by the Company's stockholders on
May 18, 1993 and May 25, 1994.
<PAGE>
as it deems necessary or advisable. The Committee's interpretations of the Plan
and all determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any options granted hereunder.
A majority of the Committee shall constitute a quorum for purposes
of meetings which may be held at such times and places and on such notice as
the Committee deems appropriate. All actions and determinations of the
Committee shall be made by not less than a majority of its members and may be
made at a meeting or by written consent in lieu of a meeting.
Any references in the Plan to the Committee shall mean either the
Board or the Committee, except to the extent that Regulation 16b-3
specifically requires that a decision be made by "disinterested persons".
5. ELIGIBILITY FOR PARTICIPATION
Senior management of the Company, the directors of the Company as
of the Effective Date of the Plan, and each non-employee director of the
Company elected or appointed after the Effective Date and during the term of
the Plan, shall be eligible to participate in the Plan (the "Participants").
Nothing contained in the Plan shall be construed to limit the right of the
Company to grant options otherwise than under the Plan.
6. GRANTING OF OPTIONS
(a) As of the Effective Date set forth in Section 19, the Committee
shall have the right to grant Participants non-qualified stock options
("Options") until the tenth anniversary of the date on which the Board
approved the Plan on the terms and conditions set forth herein. Any Option
shall be evidenced by a written agreement, as provided in Section 16 ("the
Option Agreement").
(b) Unless the Committee provides otherwise, and such provision is
reflected in the Option Agreement, the exercise price for an Option granted
to an employee shall be the Fair Market Value (as hereinafter defined) of a
share of such stock on the date the Option is granted, increasing 5% on each
anniversary of the date of grant. The exercise price for an Option granted
to a director as of the Effective Date shall be $13.78, increasing 5% on each
anniversary of the grant date, commencing February 1998. The exercise price
for an Option granted to a director thereafter shall be 127.63% of the Fair
Market Value of a share of such stock on the date the Option is granted (which
shall be deemed to be the date of such person's initial election or
appointment to the Board), increasing 5% on each anniversary of the grant
date, commencing on the sixth anniversary of the date of grant.
Notwithstanding anything else in this Plan, the exercise price of an option
may not be less than the Fair Market Value of the Common Stock on the date of
grant.
2
<PAGE>
For purposes of this Plan, Fair Market Value shall be deemed to be
the average of the closing prices of a Common Share for the five trading days
immediately preceding the applicable date on (i) the New York Stock Exchange
("NYSE"), if the Common Shares are then listed on such exchange, (ii) if the
Common Shares are not listed on the NYSE, on the principal national stock
exchange on which the Common Shares are then listed, or (iii) if not listed
on any national stock exchange, as reported by NASDAQ. If the Common Shares
are not then listed on any national stock exchange or reported by NASDAQ, then
the Fair Market Value shall be determined in any reasonable manner approved
by the Committee.
7. TERMS OF OPTIONS
Unless the Option Agreement provides otherwise, Options granted to
employees hereunder shall be exercisable for a term of ten years from the date
of grant (the "Expiration Date"). The Expiration Date of Options granted to
non-employee directors shall be the tenth anniversary of the date of grant.
8. EXERCISE OF OPTIONS
(a) Unless the Committee provides otherwise and such provision is
reflected in the Option Agreement, Options granted to employees will become
fully exercisable on the fifth anniversary of the date of grant. The date
that all or any portion of an Option becomes exercisable is referred to as the
"Vesting Date" for such Option or portion thereof. Options granted to non-
employee directors will become exercisable in installments on a cumulative
basis at a rate of 20% each year beginning on the first anniversary of the
date of grant. No Option shall be exercisable for a period of six months from
the date of grant.
(b) Unless the Committee provides otherwise and such provision is
reflected in the Option Agreement, Options granted hereunder shall be
exercisable for cash or any other property (including Common Shares valued at
the Fair Market Value on the date of exercise of the Option or promissory
notes) deemed acceptable by the Committee; provided that, in the case of
payment by a promissory note, the Participant shall pay in cash or other
property an amount equal to at least the par value of the Common Shares being
purchased.
(c) Except as otherwise provided herein, no Option granted to an
employee may be exercised at any time unless the holder is then a full-time
employee of the Company and has continuously remained an employee at all times
(other than on an absence for an approved leave of absence or service in the
Armed Forces) since the date of grant of such Option.
(d) Options shall be exercised by a Participant giving written
notice of such exercise to the Company. No fractional shares, or cash in lieu
thereof, shall be issued under this Plan or under any Option granted
hereunder.
(e) An Option shall be exercisable during a Participant's lifetime
only by the Participant, or, if the Participant has become disabled, by his
legal representative.
3
<PAGE>
9. EXERCISE ON TERMINATION OF EMPLOYMENT
(a) Unless the Committee provides otherwise and such provision is
reflected in the Option Agreement, if a Participant (other than a director)
ceases to be an employee by reason of his retirement at or after age 65,
disability (the inability of the Participant to continue to perform his duties
of employment as determined by the Committee) or death prior to the initial
Vesting Date, a fraction of the Option will vest, equal to the number of
months elapsed from the date of grant divided by the number of months from the
date of grant to the final Vesting Date.
If a Participant ceases to be an employee or director by reason of
death, any unexercised portion of his Options that is or becomes vested upon
his death will be exercisable for one year after such death. During such one
year period, the Participant's personal representative, or the person or
persons to whom the Option shall have been transferred by will or by the laws
of descent and distribution, shall have the same rights to exercise the
unexercised portion of the Option to the extent so vested as the Participant
would have had if he were still an employee or director of the Company.
If an employee resigns or is terminated for any reason other than
death or "for cause," or if a director resigns or is not re-elected, any
unexercised portion of his or her Options that is or becomes vested upon such
termination of employment, resignation or failure to be re-elected will be
exercisable for the three months following such termination to the extent so
vested.
Notwithstanding the foregoing, in no event shall any Option be
exercisable after the stated Expiration Date. Any portion of an Option that
is not vested upon termination of employment, or is vested and is not
exercised as provided in this Section 9, shall be forfeited.
(b) Termination "for cause" prior to or after the Vesting Date shall
result in forfeiture of all outstanding Options, whether or not vested.
Termination "for cause" after the Vesting Date shall result in the termination
of the Options. For purposes of the Plan, "for cause" means (i) the continued
failure by the Participant to substantially perform his duties with the
Company (other than any such failure resulting from his incapacity due to
physical or mental illness) or (ii) the engaging by the Participant in conduct
which is materially injurious to the Company, monetarily or otherwise, in
either case as determined by the Company.
10. FORFEITURE OF BENEFITS
Notwithstanding any other provision of this Plan, any and all
unexercised Options and all rights under the Plan of a Participant who
received such Option grant (or his designated beneficiary or legal
representatives) and the exercise thereof, shall be forfeited if, prior to the
time of such exercise, the Participant shall (a) be employed by a competitor
of, or shall be engaged in any activity in competition with, the Company
without the Company's consent, (b) divulge without the Company's consent any
secret or confidential information belonging to the
4
<PAGE>
Company or (c) engage in any other activities which would constitute grounds for
termination "for cause", as defined in Section 9.
11. NON-TRANSFERABILITY OF OPTIONS
A Participant's rights and interests under this Plan (including the
right to exercise unexercised Options) may not be assigned or transferred
except, in the case of a Participant's death, to the person or persons to whom
the option shall have been transferred by will or by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined
by the Internal Revenue Code of 1986, as amended (the "Code"), or Title I of
the Employee Retirement Income Security Act of 1974 ("ERISA"), or the rules
thereunder.
12. ADJUSTMENTS FOR CERTAIN EVENTS
The total number of Common Shares available for Options under the
Plan and the terms of any existing Options (both as to the number of Common
Shares and the per share Option price) shall be appropriately adjusted to
reflect any change in the capitalization of the Company due to a stock split,
stock dividend, recapitalization, merger, consolidation, combination or
similar event.
Any adjustments pursuant to this Section shall be determined by the
Committee in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to
an Option.
13. AMENDMENT AND TERMINATION
The Committee may from time to time terminate, modify or amend the
Plan in any respect; PROVIDED, however, that the provisions of the Plan shall
not be modified or amended more than once every six months, other than to
comply with changes in the Code, ERISA or the rules thereunder, and PROVIDED,
further that, unless also approved or ratified by a vote of the holders of the
outstanding shares of the capital stock of the Company entitled to a majority
of the voting power of the Company, any such modification or amendment shall
not (subject, however, to the provisions of Section 12): (a) increase the
maximum number of Common Shares for which Options may be granted under the
Plan; (b) reduce the Option price at which Options may be granted; (c) extend
the period during which Options may be granted or exercised beyond the times
originally prescribed; (d) materially modify the requirements as to
eligibility for participation in the Plan; or (e) materially increase the
benefits accruing to Participants under the Plan. No such termination,
modification or amendment may adversely affect the rights of a Participant
under an outstanding Option. Nevertheless, with the consent of the
Participant affected, the Committee may amend outstanding Options in a manner
not inconsistent with the terms of the Plan.
5
<PAGE>
14. RIGHTS OF A PARTICIPANT
No Participant or other person shall have any claim or right to be
granted an Option under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be
retained in the employ of the Company.
15. RIGHTS AS A STOCKHOLDER
A Participant or a transferee of an Option shall have no rights as
a stockholder with respect to any Common Share covered by his Option until he
shall have become the holder of record of such share, and, except for stock
dividends as provided in Section 12 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such share for which
the record date is prior to the date on which he shall become the holder of
record thereof.
16. AGREEMENTS WITH PARTICIPANTS
Each award made under the Plan shall be evidenced by a written
agreement containing such terms and conditions as the Committee shall approve.
Each such agreement shall provide that, as a condition to the grant evidenced
thereby, the Participant agrees that the Company shall arrange to deduct from
any payments of any kind otherwise due to the Participant from the Company,
the aggregate amount of federal, state or local taxes of any kind required by
law to be withheld with respect thereto, or if no such payments are due or
become due to the Participant, that the Participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the payment to it
of, the aggregate amount of such taxes. Subject to Committee discretion and
upon any conditions the Committee may prescribe, Participants may elect to pay
their withholding taxes by directing the Company to withhold from the Common
Shares to be issued upon exercise that number of Common Shares equivalent (at
a current market value) to the withholding taxes due.
17. REQUIREMENTS FOR ISSUANCE OF SHARES
No Common Shares shall be issued or transferred hereunder unless and
until all legal requirements applicable to the issuance or transfer of such
shares have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any award or the issuance of
Common Shares made to any Participant hereunder on such Participant's
undertaking in writing to comply with such restrictions on his subsequent
disposition of such shares as the Committee shall deem necessary or advisable
as a result of any applicable law, regulation or official interpretation
thereof, and certificates representing such shares may be legended to reflect
any such restrictions.
6
<PAGE>
18. GRANTS TO DIRECTORS
A single grant will be made automatically to each director
(excluding officers of the Company) of the Company as of the Effective Date
of the Plan and each director elected or appointed after the Effective Date
and during the term of the Plan. Each such director shall receive an Option
to purchase 5,000 Common Shares and will not be eligible to receive any future
grant of Options.
19. EFFECTIVE DATE
The Plan shall be effective as of February 27, 1992 ("Effective
Date") and shall continue in effect thereafter until terminated or suspended
by the Committee.
7
<PAGE>
EXHIBIT 10.22A
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Fremont
39100 Liberty Street
Fremont, California 94537
Attention: City Manager
- -------------------------------------------------------------------------------
FIRST AMENDMENT TO
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
BY AND BETWEEN THE CITY OF FREMONT AND
CATELLUS DEVELOPMENT CORPORATION
______________
PACIFIC GREENS
FREMONT, CALIFORNIA
(CA0010163)
THIS FIRST AMENDMENT TO THE AMENDED AND RESTATED DEVELOPMENT AGREEMENT (the
"First Amendment") is made as of this 18th day of July, 1993, by and between the
City of Fremont, a municipal corporation ("City") and Catellus Development
Corporation, a Delaware corporation ("Catellus"), on the basis of the following
facts, understandings and intentions of the parties.
R E C I T A L S
A. The City and Catellus have entered into that certain Amended and
Restated Development Agreement (the "Development Agreement") with respect to the
Property, which was effective as of the Effective Date. These recitals refer to
and utilize
-1-
<PAGE>
certain terms with initial capital letters which are defined in the Glossary to
the Development Agreement.
B. Pursuant to section 8.1 of the Development Agreement, the Development
Agreement may be modified or amended with the mutual consent of the Developer
and the City in writing, in the manner provided for by California Government
Code section 65868 and City Procedures Section 8- 7110. This amendment
constitutes the written consent of the Developer and the City as set forth in
Section 8.1 of the Development Agreement. The City and Catellus intend that this
Amendment be adopted as set forth in Section 8.1 of the Development Agreement.
C. The City and Catellus now wish to modify the Development Agreement as
set forth hereinbelow.
NOW THEREFORE, pursuant to the authority contained in the Development
Agreement Law, and in consideration of the mutual covenants and agreements of
the parties contained herein, the City and Catellus agree as follows:
1. MODIFICATIONS OF SECTION 3.3.10 OF THE DEVELOPMENT AGREEMENT. Section
3.3.10 of the Development Agreement is hereby modified as set forth below.
Accordingly, Section 3.3.10 of the Development Agreement shall read as follows:
3.3.10 SERVICE COST REIMBURSEMENT. Developer acknowledges that,
but for the mitigation payments
-2-
<PAGE>
provided for in this Section 3.3.10 and in other provisions of this
Amended and Restated Agreement, development of the Project would have
an adverse impact on the City's general fund during the next 15-20
years as a result of the system of tax increment financing for
interchange improvements established in the Redevelopment Plan; and
that the payments provided for in this Section 3.3.10 (each a "Service
Cost Reimbursement Payment") and in other provisions of this Amended
and Restated Agreement are necessary to enable the parties to provide
adequate public services and facilities for the Project in a
financially reliable manner as contemplated by the Development
Agreement Law.
3.3.10.1 SPECIAL DEFINITIONS. The following definitions shall
apply in implementing this Section 3.3.10:
3.3.10.1.1 CATEGORY I INCENTIVE CONDITIONS. "Satisfaction
of the Category I Incentive Conditions" (or words to that effect)
means the commencement of construction of facilities adequate to house
TWO fully operational General Motors Franchises for Auto Dealer(s) who
possess manufacturer's approval to operate such General Motors
Franchises.
3.3.10.1.2 CATEGORY II INCENTIVE CONDITIONS. "Satisfaction
of the Category II Incentive Conditions"
-3-
<PAGE>
(or words to that effect) means the commencement of construction of
facilities adequate to house ONE General Motors Franchise (which shall
be a franchise other than the General Motors Franchises that are used
to satisfy the Category I Incentive Conditions and the Category III
Incentive Conditions) for an Auto Dealer who possesses manufacturer's
approval to operate such General Motors Franchise.
3.3.10.1.3 CATEGORY III INCENTIVE CONDITIONS. "Satisfaction
of the Category III Incentive Conditions" (or words to that effect)
means either: (i) satisfaction of the conditions of paragraph (a)
below, or (ii) satisfaction of the conditions of paragraph (b) below.
(a) Satisfaction of the Category III Incentive
Conditions will be achieved upon commencement of construction of
facilities adequate to house THREE or more Domestic Franchises for
Auto Dealer(s) who possess manufacturer's approval to operate such
Domestic Franchises.
(b) As an alternative to the conditions described in
this Section 3.3.10.1.3(a), satisfaction of the Category III Incentive
Conditions will be achieved upon commencement of construction of
complete facilities adequate to house TWO General Motors Franchises
(which shall be franchises other than
-4-
<PAGE>
the General Motors Franchises that are used to satisfy the Category I
Incentive Conditions and the Category II Incentive Conditions) for
Auto Dealer(s) who possess manufacturer's approval to operate such
General Motors Franchises.
3.3.10.1.4 CATEGORY IV INCENTIVE CONDITIONS. "Satisfaction
of the Category IV Incentive Conditions" (or words to that effect)
means the satisfaction of ALL of the following conditions by September
19, 1993:
(a) Three (3) separate automobile franchises (which
shall be franchises other than those which are used to satisfy the
Category I, the Category II and the Category III Incentive Conditions
and other than the franchises which are in the Auto Mall on March 19,
1993) which have manufacturer's approval to sell new automobiles, are
open for, and actively engaged in, the business of selling automobiles
in the Auto Mall.
(b) Building permits have been obtained to commence
facilities adequate to house in the Auto Mall one (1) or more
automobile franchises (which shall be a franchise(s) other than a
franchise(s) which is used to satisfy the Category I, the Category II
and the Category III Incentive Conditions and other then a
franchise(s) which is in
-5-
<PAGE>
the Auto Mall on March 19, 1993) which has manufacturer's approval to
sell new automobiles.
3.3.10.1.5 CATEGORY V INCENTIVE CONDITIONS. "Satisfaction
of the Category V Incentive Conditions" (or words to that effect)
means the satisfaction of ALL of the following conditions:
(a) Satisfaction of the Category IV Incentive
Conditions; AND
(b) A fourth (4th) franchise which was not open for
business on September 19, 1993, is open for, and is actively engaged
in, the business of selling new automobiles; AND
(c) All three (3) franchises described in Section
3.3.10.1.4(a) remain open for, and are actively engaged in, the
business of selling new automobiles.
(d) In the event that one or more of the franchises
described in Section 3.3.10.1.4(a) and 3.3.10.1.5(b) are not open for
and actively engaged in the business of selling new automobiles in the
Auto Mall on March 19, 1994, March 19, 1995 or March 19, 1996, as the
case may be, a different franchise may be substituted therefor and
such different franchise, along with the other franchises described in
Section 3.3.10.1.4, shall satisfy the condition set forth in Section
3.3.10.1.5(a) so long as such substitute
-6-
<PAGE>
franchise is not one which has been actively engaged in the business
of selling new automobiles in the Auto Mall on March 19, 1993.
3.3.10.1.6 CATEGORY VI INCENTIVE CONDITIONS. "Satisfaction
of the Category VI Incentive Conditions" (or words to that effect)
means the satisfaction of the Category V Incentive Conditions.
3.3.10.1.7 CATEGORY I CREDIT. "Category I Credit" means
the credit to be applied in the manner set forth in Section 3.3.10.3
against the Service Cost Reimbursement Payments otherwise payable
under this Section 3.3.10.
3.3.10.1.8 CATEGORY II CREDIT. "Category II Credit" means
the credit to be applied in the manner set forth in Section 3.3.10.4
against the Service Cost Reimbursement Payment otherwise payable under
this Section 3.3.10.
3.3.10.1.9 CATEGORY III CREDIT. "Category III Credit"
means the Credit to be applied in the manner set forth in Section
3.3.10.5 against the Service Cost Reimbursement Payment otherwise
payable under this Section 3.3.10.
3.3.10.1.10 CATEGORY IV CREDIT. "Category IV Credit" means
the credit to be applied in the manner set forth in Section 3.3.10.6
against the Service Cost
-7-
<PAGE>
Reimbursement Payments otherwise payable under this Section 3.3.10.
3.3.10.1.11 CATEGORY V CREDIT. "Category V Credit" means
the credit to be applied in the manner set forth in Section 3.3.10.7
against the Service Cost Reimbursement Payment otherwise payable
under this Section 3.3.10.
3.3.10.1.12 CATEGORY VI CREDIT. "Category VI Credit"
means the Credit to be applied in the manner set forth in Section
3.3.10.8 against the Service Cost Reimbursement Payment otherwise
payable under this Section 3.3.10.
3.3.10.1.13 DOMESTIC FRANCHISE. "Domestic Franchise" means
a franchise (other than a General Motors Franchise) for retail sale of
a vehicle line that is manufactured by an American auto manufacturer,
which franchise was not owned or operated, as of the date of formation
of Local Improvement District No. 44, by an Auto Dealer that is an
assessee within Local Improvement District No. 44.
3.3.10.1.14 GENERAL MOTORS FRANCHISE. "General Motors
Franchise" means a franchise for retail sale of a vehicle line that is
manufactured by General Motors Corporation. By way of illustration,
General Motors Franchises include, but are not necessarily limited to,
Cadillac, Oldsmobile, Buick, Pontiac, GMC,
-8-
<PAGE>
and Chevrolet/Geo (considered to be one General Motors Franchise).
3.3.10.2 BASIC PAYMENT. Subject to the adjustments for a
Category I Credit and/or a Category II Credit and/or a Category III
Credit and/or Category IV Credit and/or a Category V Credit and/or a
Category VI Credit as set forth in Sections 3.3.10.3, 3.3.10.4,
3.3.10.5, 3.3.10.6, 3.3.10.7 and 3.3.10.8 respectively, on each
anniversary of the Effective Date, commencing on the first (1st)
anniversary of the Effective Date and continuing through and including
the tenth (10th) anniversary of the Effective Date, the Developer
shall pay to the City a Service Cost Reimbursement Payment in the
annual amount of $600,000. Any past due Service Cost Reimbursement
Payment shall bear interest from the date due at the lesser of the
rate of twelve percent (12%) per annum or the maximum rate permitted
by law.
3.3.10.3 CATEGORY I CREDIT. If full satisfaction of the
Category I Incentive Conditions occurs on or before March 19, 1995,
the amount of each Service Cost Reimbursement Payment due on and after
March 19, 1997, shall be reduced by $144,000 from the amount otherwise
payable pursuant to this Section 3.3.10.
3.3.10.4 CATEGORY II CREDIT. If full satisfaction of the
Category II Incentive Conditions occurs on or before March 19, 1995,
the amount of each
-9-
<PAGE>
Service Cost Reimbursement Payment due on and after March 19, 1997
shall be reduced by $72,000 from the amount otherwise payable pursuant
to this Section 3.3.10.
3.3.10.5 CATEGORY III CREDIT. If full satisfaction of the
Category III Incentive Conditions occurs on or before March 19, 1995,
the amount of each Service Cost Reimbursement Payment due on and after
March 19, 1997, shall be reduced by $144,000 from the amount otherwise
payable pursuant to this Section 3.3.10.
3.3.10.6 CATEGORY IV CREDIT. If full satisfaction of the
Category IV Incentive Conditions occurs on or before September 19,
1993, within sixty (60) days after the date of the last satisfied of
the Category IV Incentive Conditions, the City shall repay to
Developer the sum of $360,000, as a credit against the Service Cost
Reimbursement Payment made on April 6, 1993.
3.3.10.7 CATEGORY V CREDIT. In the event that the Category V
Incentive Conditions are satisfied on or before September 19, 1994,
the City shall repay to the Developer $360,000, as a credit against
the Service Cost Reimbursement Payment which is to be made on the
second anniversary of the Effective Date.
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If full satisfaction of the Category V Incentive Conditions
exists at the time the third and fourth Service Cost Reimbursement
Payments are due, the amount of each of the Service Cost Reimbursement
Payments due on March 19, 1995 and March 19, 1996, respectively, shall
be reduced by $360,000.
3.3.10.8 CATEGORY VI CREDIT. If full satisfaction of the
Category VI Incentive Conditions exists on March 19, 1996, the amount
of each Service Cost Reimbursement Payment due on and after March 19,
1997, shall be reduced by an amount equal to the product of (i) the
remainder arrived at by subtracting from $360,000 the sum of the
Category I, II and III Credits, multiplied by (ii) a fraction, the
numerator of which is the number of automobile franchises (which may
include franchises operating in the Auto Mall on March 19, 1993) which
are open for, and are actively engaged in, the business of selling new
automobiles in the Auto Mall on a particular anniversary date of the
Effective Date for which a Service Costs Reimbursement Payment is due,
and the denominator of which is fifteen (15); provided, however, that
in no event shall such fraction exceed a value of one (1). Subject to
the provisions of Section 3.3.10.9 hereof, this Category VI Credit
will be in addition to any Category I, II, and III Credits to which
the Developer may be entitled.
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<PAGE>
3.3.10.9 SEPARATE CREDITS. The credit amounts to which the
Developer is entitled under Sections 3.3.10.3, 3.3.10.4, 3.3.10.5,
3.3.10.6, 3.3.10.7 and/or 3.3.10.8 shall be independent of each other
and shall be added together to determine the total credit to which the
Developer is entitled against the annual Service Cost Reimbursement
Payments otherwise payable pursuant to this Section 3.3.10. In no
event shall the total of all credits to which the Developer is
entitled pursuant to Sections 3.3.10.3 - 3.3.10.8 hereof, exceed
$360,000 with respect to any one Service Cost Reimbursement Payment.
3.3.10.10 PURPOSE OF CREDIT. The parties acknowledge that the
adjustments to Service Cost Reimbursement Payments provided through
the Category I Credit, the Category II Credit, the Category III
Credit, the Category IV Credit, the Category V Credit, and/or the
Category VI Credit, pursuant to Section 3.3.10.3, 3.3.10.4, 3.3.10.5,
3.3.10.6, 3.3.10,7, and 3.3.10.8, respectively, are appropriate in
that, should the conditions to receive such credits be satisfied, the
Developer will have assisted in providing the City with an additional
revenue source from the Property that will enable such reduction in
Service Cost Reimbursement Payments without adversely affecting the
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provision of necessary public services and facilities to the Project.
3.3.10.11 WITHHOLDING OF PERMITS. In the event that the
Developer fails to make Service Cost Reimbursement Payment(s) when
due, the City may withhold the issuance of residential building
permits or non-residential building permits (other than permits for
Excluded Improvements) until such time as the missed installment
payment(s) of Service Cost Reimbursement Payments plus interest
thereon is made; provided, however, that the City shall not withhold a
residential building permit or a non-residential building permit on
the grounds that an installment of Service Cost Reimbursement
Payment(s) has not been made if:
(a) In the case of residential building permits, the number
of the particular residential building permit which is sought does not
exceed the remainder of (i) the product of (A) the number of annual
Service Cost Reimbursement payments previously paid by the Developer,
multiplied by (B) 120, less (ii) the number of residential building
permits which have been issued (exclusive of permits for the Excluded
Improvements); and
(b) In the case of non-residential building permits, the
building permit which is sought is not for
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<PAGE>
square footage which is in excess of the remainder of (i) the product
of (A) 2,553,000 square feet, multiplied by (B) a fraction, the
numerator of which is the number of annual Service Cost Reimbursement
Payment(s) previously paid by the Developer and the denominator of
which is ten (10), less (ii) the square footage of non-residential
structures within the Project for which building permits have been
issued.
3.3.10.12 DEFAULT BY CITY. In addition, the Developer shall not
be in default of its obligations to pay Service Cost Reimbursement
Payment(s) and, the City may not withhold building permits pursuant to
Section 2.1.3 and this Section 3.3.10 if, at the time an installment
of Service Cost Reimbursement Payment(s) is due, there exists a
default on the part of the City of its obligations under this Amended
and Restated Agreement or the 1989 or 1992 Approvals and this default
remains uncured after the delivery to the City of a final notice of
default pursuant to the provisions of Section 6.3; in which case the
Developer shall be obligated to make such Service Cost Reimbursement
Payment(s), plus interest thereon, which are past due at the earlier
of such time as (i) the City has been found not to have committed an
event of default after such issues have been determined by a court of
competent jurisdiction or submitted to arbitration
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<PAGE>
pursuant to the provisions of Section 11.1, or (ii) the City has or
cured such default.
3.3.10.13 USE OF PAYMENTS. Payments received by the City
pursuant to this Section 3.3.10 shall be used for the cost of
improvements, facilities, services and activities payable from the
City's general fund."
2. MODIFICATIONS OF SECTION 4.4. Section 4.4 of the Development Agreement
is modified as set forth below. Accordingly, Section 4.4 of the Development
Agreement shall read as follows:
"4.4 ON-SITE FINANCING.
4.4.1 ASSESSMENT DISTRICTS. At the Developer's request, the
City shall, if it reasonably determines that such action is
financially feasible and prudent, form assessment districts or other
authorized financing districts for purposes of financing or
reimbursing the Developer the costs, expenses, fees, and other charges
incurred in connection with the dedication, design and construction of
improvements, facilities, services and other matters which may legally
be financed through such districts including, without limitation,
on-site improvements required in connection with the 1989 and 1992
Approvals which may include, to the extent
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permitted by law, public streets, sidewalks, curbs, gutters, street
lighting, utilities, traffic signals, sewers, storm drains,
landscaping, school(s) and fire stations, and such services,
facilities, fees and other matters which may be so financed; provided,
however, that any such assessment district(s) may be structured so as
to impose assessment liens against private residential parcels within
the Property only if such assessment liens are required to be released
from such private residential parcels at the later of (i) the issuance
of a certificate of occupancy for any dwelling unit(s) which are
located on such private residential parcels within the Property or
(ii) the time of transfer of such dwelling unit to a homeowner, if it
can be verified to the City's reasonable satisfaction that such
assessment lien is or will be removed at the time of such transfer.
The City agrees that at such time as the Developer shall submit
an application therefor, the City shall (i) commence and conduct
proceedings under the Municipal Improvement Act of 1913, the
Improvement Bond Act of 1915 or any similar act under the general law
of the State of California designated by the City for the purpose of
arranging bond financing for the construction and/or acquisition of
improvements and facilities and the financing of services; and
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(ii) proceed with all due diligence in conducting and completing all
assessment district proceedings in the normal and customary manner in
which the City processes such district(s), leading to issuance and
sale of bonds to accomplish construction and/or acquisition of the
subject public improvements upon completion. Notwithstanding the
foregoing, the City's obligation to form such district(s) and issue
bonds shall be subject to its determination that such district
formation and bond issuance is financially feasible and prudent, as
set forth herein.
If the City reasonably determines that the issuance of bonded
indebtedness by such assessment or other financing district(s) is
financially feasible and prudent then, to the extent then permitted by
state law, said financing may include the cost of designing,
engineering, financing, (including costs of providing any bonds
required pursuant to Section 3.4.10) and constructing said
improvements and, if requested by Developer and approved by the City,
the fair market value of land within the Project allocated for such
purpose. Developer's right hereunder to finance such improvements,
facilities and services upon the City's reasonable determination that
such financing is financially feasible and prudent shall exist
notwithstanding any requirements of the 1989 or 1992
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<PAGE>
Approvals requiring dedication of such improvements and facilities
and, the City shall cooperate with Developer with respect to such
dedications so that such financing by assessment districts of
improvements and facilities which are to be dedicated, can occur.
For purposes of this Section 4.4.1, the formation of an
assessment or other financing district(s) and the issuance of bonded
indebtedness by such district(s) shall be determined by the City to be
financially feasible and prudent if the issuance of such bonded
indebtedness is performed in accordance with generally accepted
underwriting standards and represents an investment with quality and
terms consistent with other similar debt issued by the City and with
requirements of the financial markets for such debt at the time of
issuance. The City shall evaluate any proposed debt issue's compliance
with these provisions with the advice of an independent financial
advisory firm approved by the City Manager and Finance Director. Under
no circumstances shall any assessment district debt issued pursuant to
this Section 4.4.1 constitute a lien or contingent lien on the assets
or resources of the City.
4.4.2 MELLO-ROOS FINANCING. Upon Developer's written request,
City shall receive and consider the formation of a Community
Facilities District pursuant to the Mello-Roos Community Facilities
Act of 1982, as
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<PAGE>
subsequently amended, provided Developer enters into a written
agreement to pay the costs associated with the City's review of
Developer's Mello-Roos proposal. The cost for said review shall
include but are not limited to:
(a) Consultant fees for City selected consultants to assist
the City in developing a Mello-Roos policy;
(b) Attorney's fees, including outside counsel fees; and
(c) Staff time.
Furthermore, should the City Council adopt a policy allowing
the imposition of special taxes or assessments on residential units,
the City shall extend the same terms and conditions to Developer.
4.4.3 [Intentionally Omitted]"
3. The First Amendment shall be recorded in the Official Records of the
County of Alameda against the Property that is the subject of the Development
Agreement. The local description of the Property is attached to this Agreement
as Exhibit A and incorporated herein by this reference.
4. Except as modified herein, the terms of the Development Agreement
remain in full force and effect and are hereby ratified
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<PAGE>
and confirmed. This amendment shall be effective on the effective date
of the Ordinance which is passed by the City by which the City adopts
this amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
DEVELOPER:
CATELLUS DEVELOPMENT CORPORATION,
a Delaware corporation,
By: /s/ Vernon B. Schwartz
_______________________
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /s/ D.A. Smith
_______________________
Its: SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
CITY:
CITY OF FREMONT,
a municipal corporation
By:/s/ Bill Ball
_______________________
BILL BALL,
Mayor
ATTEST:
By /s/ Sharon Whitten
_______________________
SHARON WHITTEN, City Clerk
APPROVED AS TO FORM:
By /s/ Allen E. Sprague
_______________________
ALLEN SPRAGUE, City Attorney
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<PAGE>
DESCRIPTION
Property Subject to Development Agreement
Parcel 1
All that certain real property situate in the City of Fremont, County of
Alameda, State of California portions of which are lands shown on the map of
Record of Survey No. 407 recorded January 12, 1970 in Book 7 of Record of
Surveys at pages 87 thru 92, Alameda County Records, described as follows:
Beginning at the most northerly corner of Parcel 1 as said parcel is shown on
Parcel Map 5527 a map of which is filed in Book 191 of Maps at pages 4 and 5,
Alameda County Records; thence from said point of beginning along the
northwesterly prolongation of said Parcel 1, North 46DEG.51'00" West 10.46 feet
to a point on the south-easterly line of the parcel of land conveyed to the City
of Fremont (AUTO MALL PARKWAY) by deed recorded May 31,1991, instrument
No.90-149278, Alameda County Records; thence along said southeasterly line,
North 60DEG.16'00" East 223.61 feet; thence North 62DEG.27'54" East 363.45 feet;
thence North 63DEG.40'00" East 525.08 feet; thence North 66DEG.31'45" East 80.10
feet; thence North 63DEG.40'00" East 100.21 feet; thence North 65DEG.40'27" East
228.36 feet; thence North 63DEG.40'00" East 112.85 feet; thence North
62DEG.27'54" East 178.55 feet; thence North 65DEG.22'24" East 80.00 feet; thence
North 62DEG.27'54" East 283.06 feet to a point on the southwesterly line of
Christy Street as shown on the map of said Record of Survey No. 407; thence
leaving said southwesterly line, North 67DEG.12'30" East 53.90 feet to a point
on the northeasterly line of said Christy Street; thence leaving said
northeasterly line from a tangent which bears, North 21DEG.41'01" East along a
curve to the right having a radius of 50.00 feet thru a central angle of
39DEG.11'29" for an arc length of 34.20 feet; thence North 60DEG.52'30" East
323.03 feet to a point on the general northerly line of the 26.665 acre parcel
shown on said Record of Survey No. 407 thence along said general northerly line,
North 69DEG.09'37" East 107.81 feet; thence along a curve to the right having a
radius of 360.02 feet thru a central angle of 33DEG.42'15" for an arc length of
211.78 feet; thence South 77DEG.08'08" East 732.32 feet; thence along a curve to
the right having a radius of 660.04 feet thru a central angle of 19DEG.32'28"
for an arc length of 225.11 feet to the most easterly corner of said parcel;
thence along the southeasterly line of last said parcel, South 64DEG.23'37" West
19.97 feet; thence South 13DEG.52'27" West 1242.83 feet to a point on said
northeasterly line of Christy Street; thence South 45DEG.15'22" West 50.00 feet
to a point on the southwesterly line of Christy Street; thence along said
southwesterly line, South 44DEG.44'18" East 227.93 feet; thence South
14DEG.31'27" West 8.15 feet; thence South 44DEG.44'18" East 23.16 feet; thence
along a curve to the left having a radius of 532.00 feet thru a central angle of
21DEG.52'59" for an arc length of 203.19 feet; thence South 66DEG.37'17" East
554.06 feet; thence along a curve to the right having a radius of 468.00 feet
thru a central angle of 7DEG.28'44" for an arc length of 61.09 feet; thence
North 30DEG.51'27" East 32.00 feet; thence from a tangent which bears, south
59DEG.08'33" East along a curve to the right having a radius of 500.00 feet thru
a central angle of 12DEG.52'57" for an arc length of 112.42 feet; thence South
46DEG.15'36" East 969.70 feet; thence North 43DEG.44'24" East 32.00 feet; thence
North 43DEG.45'22" East
EXHIBIT A
Page 1 of 3
<PAGE>
599.62 feet to the Northwesterly corner of the parcel of land described in the
Deed to State of California, recorded December 12, 1982, Instrument No.
82-199452, Alameda County Records; thence along the general southwesterly line
of last said parcel South 46DEG.14'38" East 316.06 feet;thence North
89DEG.52'43" East 180.36 feet; thence South 55DEG.05'09" east 455.44 feet;
thence South 50DEG.03'29" East 75.21 feet; thence South 46DEG.14'38" East 285.10
feet; thence South 46DEG.15'14" East 689.16 feet to a point on the westerly line
of the Lands of Alameda County Flood Control and Water Conservation District
described in Book 8112 of Official Records, page 1, Alameda County Records;
thence along said westerly line from a tangent which bears South 15DEG.47'16"
West along a curve to the left having a radius of 564.00 feet thru a central
angle of 20DEG.23'46" for an arc length of 200.77 feet; thence leaving said
westerly line, South 81DEG.59'56" West 565.07 feet; thence North 8DEG.00'04"
West 12.00 feet; thence South 81DEG.59'56" West 23.09 feet; thence South
8DEG.00'04" East 12.00 feet; thence South 81DEG.59'56" West 27.52 feet; thence
South 9DEG.47'18" West 2392.37 feet to a point on the northwesterly line of
Cushing Road; thence along said northwesterly line, South 38DEG.40'33" West
733.92 feet; thence North 89DEG.27'43" West 1520.27 feet; thence South
0DEG.14'12" East 59.97 feet; thence leaving said Cushing Road North 89DEG.27'32"
West 410.29 feet; thence North 46DEG.27'23" West 1377.36 feet to a point on the
southwesterly line of the Lands conveyed to Alameda County Flood Control
District by Deed recorded August 21, 1987, Instrument No. 87-235512 Alameda
County Records; thence along the southwesterly, southeasterly, northeasterly and
northwesterly line of last said parcel, South 60DEG.10'01" East 510.39 feet;
thence along a curve to the left having a radius of 300.00 feet thru a central
angle of 76DEG.40'59" for an arc length of 401.51 feet; thence North
43DEG.09'00" East 173.77 feet; thence North 46DEG.51'00" West 100.00 feet;
thence South 43DEG.09'00" West 173.77 feet; thence along a curve to the right
having a radius of 200.00 feet thru a central angle of 76DEG.40'59" for an arc
length of 267.67 feet; thence North 60DEG.10'01" West 59.76 feet; thence North
59DEG.24'11" West 300.02 feet; thence North 60DEG.10'01" West 2300.00 feet;
thence North 58DEG.51'27" West 568.04 feet; thence North 64DEG.26'58" West
227.40 feet; thence leaving said lands of Alameda County Flood Control, North
60DEG.10'01" West 222.58 feet to the southerly corner of the parcel of land
conveyed to Josephine H. Robbins etal by Deed Recorded April 6, 1990, Instrument
No. 90-93142, Alameda County Records; thence along the southeasterly and
northeasterly line of last said parcel, North 29DEG.49'59" East 187.76 feet;
thence North 60DEG.07'48" West 95.24 feet; thence North 32DEG.20'30" East 407.49
feet to a point on the southwesterly line of Cushing Parkway (114.00 feet wide)
as shown on said map of Parcel Map 5527; thence along last said southwesterly
line, South 60DEG.00'00" East 631.62 feet to the southeasterly terminus of said
Parkway; thence along said southeasterly terminus and the southeasterly line of
Parcel 1 as shown on said Parcel map, North 43DEG.09'00" East 1315.55 to the
most easterly corner of said Parcel 1; thence North 1DEG.51'00" West 396.18 feet
to the northeasterly corner of said Parcel 1; thence along the northeasterly
line of said Parcel 1, North 46DEG.51'00" West 1918.25 feet to the Point of
Beginning.
Containing 598.8 acres of land more or less.
EXHIBIT A
Page 2 of 3
<PAGE>
Parcel 2
All that certain real property situated in the City of Fremont, County of
Alameda, State of California, more particularly described as follows:
Parcels 4, 6, 7 and 8 as shown on Parcel Map 5970, recorded in Book 191 of
Parcel Maps, pages 90-93, inclusive, Series No. 90-234985, Alameda County
Records.
EXHIBIT A
Page 3 of 3
<PAGE>
EXHIBIT 10.28
February 22, 1994
Mr. Vernon B. Schwartz
P. O. Box 292
Ross, California 94957
Dear Vernon:
This letter constitutes an agreement between Catellus Development
Corporation ("Catellus") and you setting forth the terms and conditions which we
have agreed upon with respect to your termination of employment with Catellus
and the settling of all matters between us.
1. Catellus agrees to continue you in its employ and you agree to remain
in the employ of Catellus until June 30, 1994. You shall serve as
chief executive officer of Catellus until June 30, 1994 or such
earlier date as the Board of Directors may designate. After the date
on which you cease to be the chief executive officer, you shall
perform such services as may be necessary or appropriate to assist in
an orderly transition of your responsibilities. Throughout the period
of your employment, you shall faithfully discharge your duties and
shall cooperate and consult with the Policy Committee of the Board of
Directors.
2. You hereby resign, and this agreement shall constitute notice of such
resignation, from all offices and directorships of Catellus and its
affiliates including its employee benefit plans, such resignation to
be effective as of the date on which you cease to be the chief
executive officer of Catellus.
3. During the period of your employment in accordance with paragraph 1
above, you shall be entitled to the following payments (all of which
shall be subject to all customary withholding and payroll deductions):
<PAGE>
Page 2
(a) Within ten days following the date on which you accept this
agreement, you will be paid a lump sum amount of $320,625 as your
bonus for 1993.
(b) You will continue to be paid your base salary at the rate of
$450,000 per annum through June 30, 1994 at regular payroll
periods (i.e., a total salary for 1994 of $225,000).
(c) No later than ten days after your termination of employment on
June 30, 1994, you will be paid $654,375, such amount to be in
lieu of all other bonus or severance amounts to which you are or
may otherwise become entitled.
4. During the period of your employment in accordance with paragraph 1
above, you will be entitled to participate in all applicable employee
benefits plans of Catellus, in accordance with their terms, and to
receive the normal benefits associated with your employment based on
your compensation and service with Catellus as an employee, subject to
the following:
(a) The payments under paragraph 3 above shall be in lieu of all
other cash compensation including bonuses, to which you are or
may otherwise become entitled.
(b) The payments under paragraph 3 above shall be inclusive of all
vacation pay, including banked vacation, to which you are or may
become entitled.
(c) You shall not be entitled to any new awards under any incentive
compensation programs maintained by Catellus, including, but not
limited to, the Incentive Stock Compensation Plan, the Stock
Option Plan, the Long Term Incentive Compensation Program and the
Executive Stock Option Plan. Your rights with respect to any
awards made under any such incentive compensation plans (other
than bonus plans) shall be determined in accordance with the
terms of the plans and based on your termination of employment on
June 30, 1994; provided, however, that Catellus shall accelerate
to the date hereof the vesting of the stock option
<PAGE>
Page 3
awarded to you in March, 1993, to purchase 150,000 shares of
Catellus stock, and such option shall be exercisable by you by
payment of the exercise price in cash (including an exercise by
cash through a broker pursuant to a "cashless exercise") during
the period commencing with the date hereof and ending on
September 30, 1994.
(d) Catellus agrees to reimburse you for the costs of your "COBRA"
coverage with respect to its welfare benefit plans if you elect
such coverage for the period commencing on the last day of your
employment under paragraph 1 above through December 31, 1994.
5. You agree that you will take all actions reasonably necessary to
assist Catellus and its affiliates in making the transition between
you and your successor.
6. As a material inducement to the parties to enter into this agreement
and in consideration for the commitments set forth this in agreement,
including the payments to you described in paragraph 3 through 5
above, on behalf of yourself, your heirs, administrator, executors,
successors and assigns (collectively, "Your Group"), you hereby
release and forever discharge Catellus, its past and present officers,
directors, shareholders, partners, agents and employees, predecessors,
subsidiaries and affiliates, and each of them and their respective
heirs, administrators, executors, successors and assigns and Catellus
hereby releases and forever discharges you and Your Group from any and
all demands, debts, claims, liabilities, lawsuits or causes of action
whatsoever, including attorneys' fees, for or by reason of any matter
up to the date hereof; provided, however, that, except for Catellus
and its subsidiaries, such release shall be limited to matters arising
out of your employment with Catellus or any of its subsidiaries or
affiliates or the termination of that employment including any
allegation of discrimination based upon age (including the Age
Discrimination in Employment Act and the Older Workers Benefit
Protection Act), race, sex, national origin, handicap or other
reasons. This release and discharge does not include the waiver of
rights or claims relating to your employ-
<PAGE>
Page 4
ment that may arise from acts occurring after the execution of this
agreement or of any rights or claims arising under this agreement. You
declare that you understand the terms of this agreement, that you have
been given the opportunity and have been advised to review this
agreement with representatives of your choice, including an attorney,
prior to executing this agreement, that you understand that you have
21 days from receipt to consider and execute this agreement and that
you have 7 days following execution of this agreement to revoke the
agreement. This agreement shall not become effective or enforceable
and no payments shall be made hereunder until the revocation period
has expired.
7. You agree that you will hold confidential and will not use for your
personal benefit or that of any other person or entity all material,
non-public information about Catellus, its shareholders, officers,
directors, subsidiaries and affiliates and all of their businesses
that you obtain or obtained during the period of your employment with
Catellus and its subsidiaries or affiliates ("Confidential
Information"). You further agree that on or before your last day of
employment under paragraph 1 above you will promptly deliver to
Catellus all papers, documents and materials containing Confidential
Information and other corporate documents and materials in whatever
form, including computer-readable storage devices, and wherever
located obtained by you during the course of your employment by
Catellus. You acknowledge that any breach of the obligations
undertaken pursuant to this paragraph would cause immediate and
irreparable damage and, therefore, in addition to any other legal
remedies, you agree that Catellus or such other party with respect to
whom such Confidential Information relates is entitled to an
injunction without any bond or other security being required
prohibiting you from engaging in any of the activities prohibited by
this paragraph.
8. You agree that, at the request of Catellus, you will cooperate with
Catellus and its subsidiaries and affiliates and their officers,
directors and counsel in connection with any investigation, claim or
litigation relating to any matter in which you were involved
<PAGE>
Page 5
during your employment or association with Catellus and its
subsidiaries and affiliates or of which you have knowledge and
Catellus agrees to cooperate with you and your counsel in connection
with any investigation, claim or litigation involving you and relating
to such employment or association. Catellus agrees to reimburse you
for all reasonable expenses incurred by you in providing such
assistance and to pay a reasonable PER DIEM rate for any services
requested of you in connection therewith.
9. The provisions of this agreement are severable, and if any part of it
is found to be unenforceable, the remainder will remain fully valid
and enforceable. If any provision of this agreement is found by a
court of competent jurisdiction to be unreasonable and unenforceable,
such provision will be modified to the extent necessary to cause it to
be reasonable and binding on the parties hereto. This agreement will
survive termination of any arrangements contained herein.
10. You acknowledge that you have been represented by your own counsel in
the negotiation of this agreement, that this agreement has been the
subject of substantial negotiation and that you have entered into this
agreement voluntarily and with full knowledge of its final and binding
effect. You agree that Catellus shall have no responsibility or
liability for the fees or expenses of your counsel or other advisors
with respect to this agreement.
11. This agreement contains and constitutes the entire agreement between
you and Catellus relating to your employment with Catellus and the
termination thereof. Any representation, promise or condition not
incorporated herein shall not be binding on either of us.
12. Your interests under this agreement are not subject to the claims of
your creditors and may not otherwise be voluntarily or involuntarily
assigned, alienated or encumbered.
13. The waiver by either you or Catellus of a breach of any provision
of this agreement shall not operate as or be
<PAGE>
Page 6
deemed a waiver of any subsequent breach by either you or Catellus.
Continuation of payments hereunder by Catellus following a breach by
you of any provision of this agreement shall not preclude Catellus
from thereafter terminating said benefits based upon the same
violation.
14. The validity, interpretation, construction, performance and
enforcement of this agreement shall be governed by the laws of the
State of California.
15. All notices, requests, demands or other communications provided for by
this agreement shall be in writing and sufficiently given if and when
mailed in the continental United States of America by registered or
certified mail, return receipt requested, postage paid, or if sent by
telecopy or personally delivered to the parties entitled thereto at
the addresses stated below or to such changed address or addresses as
may have been given by similar notice:
To Catellus:
Judd D. Malkin
JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60611
Fax No. (312) 915-1016
With a copy to:
Robert A. Helman, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Fax No. (312) 701-7711
To you:
Vernon B. Schwartz
P. O. Box 292
Ross, California 94957
<PAGE>
Page 7
With a copy to:
Edwin N. Lowe, Esq.
Fenwick & West
8th Floor
Two Palo Alto Square
Palo Alto, California 94306
Fax No. (415) 857-0361
Very truly yours,
CATELLUS DEVELOPMENT CORPORATION
By: /s/ Judd D. Malkin
_____________________
Judd D. Malkin
Chairman of the Policy Committee
of the Board of Directors
ACCEPTED AND AGREED TO:
/s/ Vernon B. Schwartz
________________________
DATE: February 22, 1994
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (No. 33-38827) of
Catellus Development Corporation Profit Sharing & Savings Plan and Trust of
our report dated February 18, 1994, appearing on page F-2 of this Form 10-K.
/s/ Price Waterhouse
Price Waterhouse
San Francisco, CA
February 18, 1993
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT REAL ESTATE APPRAISERS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (No. 33-38827) of
Catellus Development Corporation of our report dated February 17, 1994,
appearing on page F-3 of this Form 10-K.
Landauer Associates, Inc.
Real Estate Counselors
/s/ James C. Kafes /s/ John F. Brengelman
James C. Kafes, MAI, CRE John F. Brengelman
Managing Director Senior Vice President
New York, NY
February 17, 1994
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 10, 1994 /s/ Joseph F. Alibrandi
-----------------------
Joseph F. Alibrandi
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ John E. Zuccotti
---------------------
John E. Zuccotti
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ Judd D. Malkin
------------------
Judd D. Malkin
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ Robert D. Krebs
-------------------
Robert D. Krebs
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 10, 1994 /s/ Gary M. Goodman
-------------------
Gary M. Goodman
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ Darla Totusek Flanagan
--------------------------
Darla Totusek Flanagan
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ John E. Neal
----------------
John E. Neal
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 23, 1994 /s/ Jacqueline R. Slater
------------------------
Jacqueline R. Slater
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 16, 1994 /s/ Joseph R. Seiger
--------------------
Joseph R. Seiger
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Vernon B. Schwartz, David A. Smith and
David M. Perna, or any of them, with full power of substitution, to sign on his
behalf, in the capacity stated below, the Annual Report on Form 10-K for the
year ended December 31, 1993 (the "10-K") of Catellus Development Corporation
(the "Company"), and to file such 10-K together with exhibits thereto and any
post-effective amendment to the 10-K and other documents in connection
therewith, with the Securities ad Exchange Commission.
Dated: March 15, 1994 /s/ Tom C. Stickel
-----------------
Tom C. Stickel
