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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 1-12923
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WESTFIELD AMERICA, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-0758627
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11601 WILSHIRE BOULEVARD 90025
12TH FLOOR (Zip Code)
LOS ANGELES, CALIFORNIA
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 478-4456
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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 / /
As of May 13, 1999, 73,345,137 shares of Common Stock, par value $.01 per
share, were outstanding.
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<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1: Condensed Financial Statements
Consolidated Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998......... 1
Consolidated Statements of Income (unaudited) for the three months ended March 31, 1999 and
1998...................................................................................... 2
Consolidated Statements of Cash Flows (unaudited) the three months ended March 31, 1999 and
1998...................................................................................... 3
Notes to Condensed Consolidated Financial Statements (unaudited)........................... 4
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations...... 13
Item 3: Quantitative and Qualitative Disclosures about Market Risk................................. 22
PART II--OTHER INFORMATION
Item 1: Legal Proceedings.......................................................................... 24
Item 2: Changes in Securities...................................................................... 24
Item 3: Defaults Upon Senior Securities............................................................ 24
Item 4: Submission of Matters to a Vote of Security Holders........................................ 24
Item 5: Other Information.......................................................................... 24
Item 6: Exhibits and Reports on Form 8-K........................................................... 26
</TABLE>
i
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER
1999 31, 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Land................................................................ $ 477,231 $ 457,801
Buildings, improvements and equipment............................... 3,193,637 3,185,969
Less accumulated depreciation....................................... (371,099) (340,727)
--------- -----------
Net property and equipment........................................ 3,299,769 3,303,043
Construction in progress............................................ 30,332 20,254
Investments in unconsolidated real estate partnerships.............. 141,807 138,747
Participating loan to an affiliate.................................. 145,000 145,000
Direct financing leases receivable.................................. 82,657 83,214
--------- -----------
Net investment in real estate..................................... 3,699,565 3,690,258
Cash and cash equivalents........................................... 27,568 25,272
Restricted cash..................................................... 16,418 25,820
Accounts receivable, net of allowance of $8,576 and $8,400 in 1999
and 1998, respectively............................................ 44,034 45,325
Deferred expenses and other assets, net............................. 32,684 33,964
--------- -----------
Total assets...................................................... $3,820,269 $3,820,639
--------- -----------
--------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable and revolving credit facility......................... $2,665,120 $2,641,015
Accounts payable and accrued expenses............................... 88,376 82,658
Distribution payable................................................ 36,071 33,242
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Total liabilities................................................. 2,789,567 2,756,915
--------- -----------
Minority interests.................................................. 36,065 42,605
Series C and D preferred stock...................................... 275,000 275,000
Common stock........................................................ 731 731
Series A and B preferred stock...................................... 121,000 121,000
Additional paid-in capital.......................................... 597,906 624,388
--------- -----------
Total shareholders' equity........................................ 719,637 746,119
--------- -----------
Total liabilities and shareholders' equity.......................... $3,820,269 $3,820,639
--------- -----------
--------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
REVENUES:
Minimum rents........................................................................... $ 84,653 $ 48,184
Tenant recoveries....................................................................... 37,595 19,159
Percentage rents........................................................................ 3,101 2,574
---------- ----------
Total revenues........................................................................ 125,349 69,917
---------- ----------
EXPENSES:
Operating............................................................................... 38,806 19,926
Management fees......................................................................... 2,478 1,387
Advisory fee............................................................................ 1,627 1,483
General and administrative.............................................................. 490 479
Depreciation and amortization........................................................... 28,741 16,838
---------- ----------
Total expenses........................................................................ 72,142 40,113
---------- ----------
OPERATING INCOME.......................................................................... 53,207 29,804
INTEREST EXPENSE, net..................................................................... (49,144) (20,291)
OTHER INCOME:
Equity in income of unconsolidated real estate partnerships............................. 1,056 487
Interest and other income............................................................... 4,466 3,531
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INCOME BEFORE MINORITY INTEREST........................................................... 9,585 13,531
Minority interest......................................................................... (584) (980)
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NET INCOME................................................................................ $ 9,001 $ 12,551
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---------- ----------
Net income allocable to preferred shares.................................................. $ 8,625 $ 2,723
Net income allocable to common shares..................................................... 376 9,828
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$ 9,001 $ 12,551
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EARNINGS PER COMMON SHARE:
Basic................................................................................... $ 0.00 $ 0.13
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Diluted................................................................................. $ 0.00 $ 0.13
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic................................................................................... 73,338 73,330
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---------- ----------
Diluted................................................................................. 74,326 73,397
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---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------
1999 1998
---------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income............................................................................. $ 9,001 $ 12,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization........................................................ 28,741 16,838
Amortization of deferred loan costs.................................................. 1,599 247
Equity in income of unconsolidated real estate partnerships.......................... (1,056) (487)
Minority interest in earnings of consolidated real estate partnerships............... 584 980
Changes in assets and liabilities:
Accounts receivable.................................................................. (221) 539
Deferred expenses and other assets................................................... (1,516) (1,311)
Accounts payable and accrued expenses................................................ 9,625 (5,603)
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Net cash flows provided by operating activities........................................ 46,757 23,754
---------- -----------
INVESTING ACTIVITIES:
Capital expenditures and acquisitions.................................................. (46,510) (113,127)
Cash distributions received from unconsolidated real estate partnerships............... 2,143 1,952
Notes receivable repayments............................................................ -- 28
Direct financing leases receivable payments............................................ 557 521
Decrease in restricted cash............................................................ 9,402 4,544
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Net cash flows used in investing activities............................................ (34,408) (106,082)
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FINANCING ACTIVITIES:
Cash distributions paid to preferred shareholders...................................... (7,008) (2,685)
Cash distributions paid to common shareholders......................................... (26,035) (25,665)
Cash distributions paid to minority interests.......................................... (806) (1,301)
Cost of stock issuances................................................................ (308) --
Proceeds from notes payable and revolving credit facility.............................. 88,000 134,000
Principal payments on notes payable and revolving credit facility...................... (63,896) (20,713)
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Net cash flows (used in) provided by financing activities.............................. (10,053) 83,636
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Net increase in cash and cash equivalents.............................................. 2,296 1,308
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........................................... 25,272 11,003
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CASH AND CASH EQUIVALENTS, END OF PERIOD................................................. $ 27,568 $ 12,311
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SUPPLEMENTAL CASH FLOW INFORMATION PROVIDED IN NOTES 4 AND 9.
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
1. INTERIM FINANCIAL STATEMENTS:
The accompanying Condensed Consolidated Financial Statements of Westfield
America, Inc. and Subsidiaries (the "Company") are unaudited; however, they have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the disclosures
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting solely of
normal recurring matters) necessary for a fair presentation of the Condensed
Consolidated Financial Statements for these interim periods have been included.
The results for the interim period ended March 31, 1999, are not necessarily
indicative of the results to be obtained for the full fiscal year. These
unaudited Condensed Consolidated Financial Statements should be read in
conjunction with the December 31, 1998 audited Consolidated Financial Statements
and Notes thereto included in the Company's Annual Report on Form 10-K filed on
March 23, 1999.
2. ORGANIZATION:
Westfield America, Inc. (the "Company"), a Missouri corporation, is the
fourth largest publicly traded real estate investment trust ("REIT") in the
United States specializing in enclosed shopping centers. At March 31, 1999, the
Company had interests in 38 regional and super-regional shopping centers branded
nationwide as "Westfield Shoppingtowns". The Company's portfolio of Westfield
Shoppingtowns includes multi-center clusters of shopping centers in the east
coast, midwest and west coast.
The Company, through its controlling interest in Westfield America Limited
Partnership (the "Operating Partnership") and its other subsidiaries and
affiliates, owns interests in a portfolio of 23 super-regional shopping centers,
12 regional shopping centers, three power centers (each individually a "Center"
and collectively the "Centers"), 12 separate department store properties which
are net leased under financing leases to The May Department Stores Company and
are not located at the Centers, and certain other real estate investments
(collectively, the "Properties").
The Company is externally managed and advised by Westfield Holdings Limited
("WHL"), an affiliate of the Company and an Australian public company. The
Company has engaged a property management company (the "Manager"), an asset
management company (the "Advisor") and a development company (the "Developer")
to provide property management, asset management and development services to the
Company. Each of the Manager, Advisor and Developer is a wholly-owned subsidiary
of WHL.
3. BASIS OF PRESENTATION:
The Company conducts its business through its Operating Partnership,
wholly-owned subsidiaries and affiliates. The consolidated financial statements
include the accounts of the Company, the Operating Partnership and its other
subsidiaries and affiliates over which the Company is able to exercise
significant control. The Company does not consider itself to be in control when
the other partners have important approval rights over major actions.
Investments as general and limited partners in non-controlled partnerships are
accounted for using the equity method. All significant intercompany accounts and
transactions have been eliminated in consolidation.
4
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WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
4. ACQUISITIONS:
In January 1999, the Company acquired the remaining 32% of Wheaton Plaza it
did not previously own for approximately $38,400 consisting of 1,129,412 units
in the Operating Partnership ("Investor Unit Rights") and a cash distribution of
$19,200. This acquisition gives the Company a 100% economic interest in the
property.
In March 1999, the Company acquired an additional 15% interest in
Independence Mall for approximately $4,400 consisting of $2,200 of cash and
122,857 partnership units which may be converted into an equivalent number of
Investor Unit Rights in the Operating Partnership or may be exchanged for cash,
or at the discretion of the Company, shares of the Company's common stock. This
acquisition effectively gives the Company an 85% economic interest in the
property.
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS:
As of March 31, 1999, the Company's economic interest in each unconsolidated
partnership is as follows:
<TABLE>
<CAPTION>
OWNERSHIP
PROPERTY LOCATION INTEREST
- ------------------------------------------------------------ -------------------- -----------
<S> <C> <C>
Independence Mall........................................... Wilmington, NC 85.0%
Plaza Camino Real........................................... Carlsbad, CA 40.0%
Valley Fair Mall............................................ San Jose, CA 50.0%
Vancouver Mall.............................................. Vancouver, WA 50.0%
West Valley................................................. Canoga Park, CA 42.5%
</TABLE>
A summary of the condensed balance sheets and unaudited statements of income
for all unconsolidated real estate partnerships on a combined basis is as
follows:
<TABLE>
<CAPTION>
DECEMBER
MARCH 31, 31,
1999 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
CONDENSED COMBINED BALANCE SHEETS:
Investment in real estate:
Land, building and improvements, at cost........... $ 487,474 $ 490,214
Less accumulated depreciation and amortization..... (43,684) (46,908)
Construction in progress........................... 7,880 5,081
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Net investment in real estate........................ 451,670 448,387
Other notes payable.................................. (185,176) (185,674)
Other assets and liabilities, net, and interest of
other partners..................................... (124,687) (123,966)
--------- -----------
Investments in unconsolidated real estate
partnerships....................................... $ 141,807 $ 138,747
--------- -----------
--------- -----------
</TABLE>
5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS: (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
CONDENSED COMBINED STATEMENTS OF INCOME:
Total revenues.......................................................... $ 15,784 $ 14,485
Costs and expenses:
Operating, general and administrative................................. 5,315 4,183
Interest expense, net................................................. 3,321 4,778
Depreciation and amortization......................................... 3,751 3,435
--------- ---------
Net income.............................................................. 3,397 2,089
Other partners' share of income......................................... (2,341) (1,602)
--------- ---------
Equity in income of unconsolidated real estate partnerships............. $ 1,056 $ 487
--------- ---------
--------- ---------
</TABLE>
Significant accounting policies used by unconsolidated real estate
partnerships are similar to those used by the Company.
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY:
As of March 31, 1999 and December 31, 1998, the Company had consolidated
indebtedness as follows:
<TABLE>
<CAPTION>
MARCH DECEMBER
1999 1998
------------ ------------
<S> <C> <C>
Collateralized non-recourse notes to an insurance company, interest only payable
monthly at 6.51%, due in 2001....................................................... $ 167,000 $ 167,000
Senior collateralized non-recourse notes, interest at 6.39%, principal and interest
payable quarterly, due in 2004...................................................... 16,103 16,782
Senior collateralized non-recourse notes bearing interest at 7.33%, interest only
payable until 2004, principal and interest payable thereafter, due in 2014.......... 55,167 55,167
Collateralized non-recourse note payable to an insurance company, interest at an
effective rate of 7.15%, principal and interest payable monthly, due in 2000........ 135,296 136,456
Unsecured revolving credit facility with a group of banks with a maximum commitment of
$600,000, interest only at LIBOR + 1.75% (7.87% effective rate at March 31, 1999)
payable monthly, due in 2000 with options to extend................................. 510,000 490,000
Unsecured bridge facility with a group of banks, interest only at LIBOR + 1.75% (7.87%
effective rate at March 31, 1999) payable monthly, due in 1999...................... 100,000 100,000
Collateralized commercial mortgage notes due in 2004, interest only payable monthly at
6.78%............................................................................... 75,000 75,000
Secured bridge facility with a group of banks, interest only at LIBOR + 1.50% payable
monthly, due in 1999. This note was repaid and retired in January 1999.............. -- 44,000
</TABLE>
6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
<TABLE>
<CAPTION>
MARCH DECEMBER
1999 1998
------------ ------------
<S> <C> <C>
Collateralized non-recourse note payable to an insurance company, effective interest
at 7.77%, principal and interest payable monthly, due in 2002....................... 44,000 --
Collateralized non-recourse note payable to an insurance company, effective interest
at 7.00%, principal and interest payable monthly, due in 2002....................... 61,057 61,603
Secured bridge facility with a group of banks, interest only at LIBOR + 1.75% (8.04%
effective rate at March 31, 1999) payable monthly, due in 1999...................... 95,000 95,000
Collateralized non-recourse note payable to an insurance company, effective interest
at 7.00%, principal and interest payable monthly, due in 2018....................... 18,912 19,026
Collateralized non-recourse note payable to an insurance company, effective interest
at 7.00%, principal and interest payable monthly, due in 2006....................... 22,920 23,043
Collateralized non-recourse note payable to a bank, interest at LIBOR + 2.00% (8.13%
effective rate at March 31, 1999), interest only payable monthly, due in 1999....... 92,476 92,476
Collateralized non-recourse note payable to an insurance company, effective interest
at 7.00%, principal and interest payable monthly, due in 2022....................... 73,367 73,745
Collateralized non-recourse note payable to an insurance company, interest at 7.20%,
principal and interest payable monthly, due in 2006................................. 80,643 81,041
Collateralized non-recourse notes payable to an insurance company, effective interest
at 7.00%, principal and interest payable monthly, due in 2004....................... 62,991 63,488
Collateralized note payable, interest only payable monthly at LIBOR + 0.53% (6.38%
effective rate at March 31, 1999) due in 2001....................................... 754,100 746,100
Unsecured subordinated notes to Australian investors, interest payable semi-annually
at 8.38%, due in equal installments in 2001, 2002 and 2003.......................... 301,088 301,088
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$ 2,665,120 $ 2,641,015
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------------ ------------
</TABLE>
Interest costs capitalized for the three months ended March 31, 1999 and
1998 totaled $243 and $118, respectively.
In conjunction with the issuance of the unsecured subordinated notes to
Australian investors in June 1998, the Company entered into interest rate swap
and foreign currency hedge agreements which effectively fixed the interest and
principal payments due to the holders. The unrealized loss on the interest rate
swap and foreign currency hedge agreements was approximately $6,037 and $12,551
at March 31, 1999 and December 31, 1998, respectively.
7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
6. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
The annual maturities of notes payable and revolving credit facility as of
March 31, 1999, are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999........................................................ $ 287,476
2000........................................................ 645,296
2001........................................................ 921,100
2002........................................................ 105,056
2003........................................................ 100,363
Thereafter.................................................. 605,829
------------
$ 2,665,120
------------
------------
</TABLE>
7. INTEREST RATE SWAP AND EXCHANGE AGREEMENTS:
At March 31, 1999, the Company had thirty interest rate swap agreements.
Interest rate swaps are contractual agreements between the Company and third
parties to exchange fixed and floating interest payments periodically without
the exchange of the underlying principal amounts (notional amounts). In the
unlikely event that a counterparty fails to meet the terms of an interest rate
swap agreement, the Company's exposure is limited to the interest rate
differential on the notional amount. The Company does not anticipate
non-performance by any of the counterparties.
The Company has also entered into deferred interest rate exchange agreements
to manage future interest rates corresponding with the expiration of existing
fixed rate debt. The agreements consist of swaps and involve the future receipt
of a floating rate based on LIBOR and the payment of a fixed rate.
<TABLE>
<CAPTION>
RANGE OF FIXED RANGE OF
NOTIONAL AMOUNT RATES MATURITY RATES
---------------- ------------------- --------------
<S> <C> <C> <C>
Current swaps where the Company receives LIBOR............ $ 1,887,000 5.77% to 6.25% 6/30/01 to
12/11/08
Deferred swaps where the Company receives LIBOR........... 730,000 5.99% to 6.26% 4/01/02 to
04/01/08
</TABLE>
The net unrealized loss on interest rate swap contracts was approximately
$21,420 and $88,675 at March 31, 1999 and December 31, 1998, respectively.
8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
8. CAPITAL STOCK:
At March 31, 1999 and December 31, 1998, the total number of shares
authorized, issued and outstanding were as follows:
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
--------------------------- ---------------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
SHARES SHARES SHARES SHARES
AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Common stock, $.01 par value.......................... 200,000,000 73,337,691 200,000,000 73,337,691
Excess stock, $.01 par value.......................... 205,000,000 -- 205,000,000 --
Non-voting senior preferred stock, $1.00 par value.... 200 -- 200 2
Preferred stock, $1.00 par value of which 940,000
shares are designated Series A cumulative redeemable
preferred stock, 270,000 shares are designated
Series B cumulative redeemable preferred stock,
416,667 shares are designated Series C cumulative
convertible redeemable preferred stock, 138,889
shares are designated Series C-1 cumulative
convertible redeemable preferred stock, 138,889
shares are designated Series C-2 cumulative
convertible redeemable preferred stock, 694,445
shares are designated Series D cumulative
convertible redeemable preferred stock and 138,889
shares are designated Series D-1 cumulative
convertible redeemable preferred stock.............. 5,000,000 2,737,779 5,000,000 2,737,779
</TABLE>
SENIOR PREFERRED STOCK:
Prior to redemption, holders of the Company's non-voting senior preferred
stock were entitled to receive, when declared, cash dividends at an annual rate
of $35 per share, payable quarterly. In February 1999, the Company redeemed the
senior preferred stock at $550 per share, plus unpaid accrued dividends totaling
$5 per share.
SERIES A AND B PREFERRED STOCK:
The holder of the Company's Series A and B preferred stock is entitled to
receive, when declared, cumulative cash dividends equal to the greater of $8.50
per annum per share or an amount currently equal to 6.2461, for Series A
preferred stock, or 6.6667 for Series B preferred stock, times the dollar amount
of dividends declared on the Company's common stock. The Company has an option
to redeem the Series A and Series B preferred stock anytime after July 2003 and
May 2004, respectively, at a redemption price of $100 per share, which is equal
to the liquidation preference.
Concurrent with the issuance of the Series A preferred stock in 1996 and the
Series B preferred stock in 1997, the Company issued warrants (the "1996
Warrants" and "1997 Warrants") to Westfield America Trust, an Australian public
company and an affiliate of the Company ("WAT") to purchase the Company's
9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
8. CAPITAL STOCK: (CONTINUED)
common stock. The 1996 Warrants, which expire in July 2016, entitle WAT to
purchase 6,246,096 shares of the Company's common stock at an exercise price of
$16.01 per share. The 1997 Warrants, which expire in May 2017, entitle WAT to
purchase 2,089,550 shares of the Company's common stock at an exercise price of
$15.00 per share. The holder of the Series A and B preferred stock also holds
WAT Series A and B special options which entitle such holder to exchange each
share of Series A and B preferred stock for WAT ownership units. Upon receipt of
the Series A and B preferred stock, WAT can, with the Company's consent at such
time, surrender the Series A and B preferred stock as consideration for the
exercise of the 1996 and 1997 Warrants.
SERIES C AND D PREFERRED STOCK:
The Series C, C-1, C-2, D and D-1 cumulative convertible redeemable
preferred stock (collectively the "Series C and D Preferred Stock") are separate
designations of preferred stock with similar terms. Holders of the Series C and
D Preferred Stock are entitled to receive, when declared, cumulative cash
dividends equal to the greater of $15.30 per annum per share or an amount equal
to 10.0 times the dollar amount declared on the Company's common stock during
the period. At any time, holders of the Company's Series C and D Preferred Stock
have the right to convert all, or any portion, of their shares into 10 shares of
common stock for each share of Series C and D Preferred Stock. The Company has
the option to redeem the Series C and D Preferred Stock anytime on or after
August 2008 at a redemption price of $180 per share, which is equal to the
liquidation preference. The original holders of the Company's Series C and D
Preferred Stock have the right to require the Company to redeem the Series C and
D Preferred Stock if the Company ceases to qualify as a REIT for federal tax
purposes. If there is a change in control, as defined, or, if after August 2008,
the market price of the Company's common stock is less than $18.00 per share,
holders of the Company's Series C and D Preferred Stock have the right to
require the Company to redeem the Series C and D Preferred Stock.
Holders of the Company's preferred stock are entitled to dividends before
dividends are distributed to common stockholders. In general, preferred
stockholders have no voting rights unless dividends are reduced or not declared
on the preferred stock or common stock at which time the holders have certain
rights to elect additional directors to the board of directors. Once all
distributions in arrears are restored and paid in full, the directors elected by
the preferred shareholders will cease to be directors and the number of
directors on the board will be reduced accordingly.
COMMON STOCK:
The holders of the Company's common stock vote together as a class on all
matters and are entitled to receive distributions declared after payment of
dividends on preferred stock. A quarterly distribution was declared March 22,
1999 to stockholders of record on March 31, 1999 of $0.3625 per common share,
which equates to $1.45 per share on an annualized basis.
In May 1998, the Company entered into a stock subscription agreement ("1998
Subscription Agreement") with WAT. The Company has the right to sell, and WAT
has the obligation to purchase, up to AUS $465,000 (approximately US $300,000)
of the Company's common stock in three equal installments at a 5% discount to
the then prevailing market price of the Company's common stock at June 2001,
2002 and 2003. In lieu of issuing common stock at each installment date, the
Company has the option to pay the 5% discount in cash or common stock.
10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
8. CAPITAL STOCK: (CONTINUED)
OPERATING PARTNERSHIP UNITS:
Under certain circumstances investors in the Operating Partnership may
exchange their Investor Unit Rights for cash or, at the discretion of the
Company, shares of the Company's common stock. Holders of Investor Unit Rights
are entitled to receive, when declared, distributions from the Operating
Partnership in proportion to the dividends paid to holders of the Company's
common stock. There were 2,164,235 Investor Unit Rights outstanding on a
weighted average basis for the three months ended March 31, 1999, in the
Operating Partnership plus an additional 828,603 partnership units outstanding
in partnerships related to Independence Mall which may be converted into an
equivalent number of Investor Unit Rights in the Operating Partnership.
9. SUPPLEMENTAL CASH FLOW INFORMATION:
For the three months ended March 31, 1999 and 1998, the Company paid
interest totaling $42,225 and $20,143, respectively, net of capitalized
interest.
NON CASH INVESTING AND FINANCING INFORMATION:
For the three months ended March 31, 1999 and 1998, no construction in
process was placed into service.
During the three months ended March 31, 1999, the Company recorded a
decrease in minority interest totaling $5,213 as a result of the acquisition of
the remaining interest in Wheaton Plaza that the Company did not already own for
cash and Investor Unit Rights (see Note 4).
10. RELATED PARTIES:
The Manager entered into an agreement with the Company to manage and lease
the properties in the Company's portfolio beginning January 1, 1995. In
consideration for providing these management services, the Manager is reimbursed
certain recoverable property operating costs including mall related payroll and
is entitled to receive gross fees of 5% of minimum and percentage rents received
by the Company. Property management fees totaling $2,478 and $1,387, net of
capitalized leasing fees of $1,779 and $1,009 were expensed by the Company for
the three months ended March 31, 1999 and 1998, respectively. Included in
accounts payable and accrued expenses at March 31, 1999 and December 31, 1998
are management fees payable to the Manager totaling $1,372 and $1,299,
respectively.
In addition to the management fees, the Manager was reimbursed for
recoverable operating costs including mall related payroll costs totaling $5,919
and $4,004 for the three months ended March 31, 1999 and 1998, respectively.
The Company entered into a Master Development Framework Agreement with the
Developer whereby the Company granted the Developer the exclusive right to carry
out expansion, redevelopment and related works on the Company's wholly-owned
shopping centers and to endeavor to have the Developer be appointed by the
relevant partner to carry out similar activities for jointly owned real estate
partnerships. During the three months ended March 31, 1999 and 1998, the Company
reimbursed the Developer $14,800 and $5,358, respectively, for expansion,
redevelopment and related work.
11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES/UNIT AND PER SHARE AMOUNTS)
10. RELATED PARTIES: (CONTINUED)
In July 1996, the Company engaged the Advisor to provide a variety of asset
management and investment services subject to supervision of the Company. The
Advisor is entitled to an annual fee equal to 25% of the annual Funds from
Operations ("Advisory FFO"), in excess of the Advisory FFO Amount ($144,573 at
March 31, 1999), but not to exceed 55 basis points of the Net Equity Value (as
defined) of the Company's assets. The Advisory FFO amount increases whenever the
Company issues additional common stock. The advisory fee was $1,627 and $1,483
for the three months ended March 31, 1999 and 1998, respectively.
Included in interest and other income for the three months ended March 31,
1999 and 1998 is interest income earned on a participating mortgage loan to
wholly-owned indirect subsidiaries of WHL totaling $3,915 and $3,455
respectively.
11. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments due to the Developer totaling approximately $74,565 at
March 31, 1999.
The Company currently is neither subject to any material litigation nor, to
management's knowledge, is any material litigation currently threatened against
the Company other than routine litigation and administrative proceedings arising
in the ordinary course of business. Based on consultation with counsel,
management believes that these items will not have a material adverse impact on
the Company's consolidated financial position or results of operations.
12
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Westfield America, Inc. (the "Company"), a Missouri corporation, is the
fourth largest publicly traded real estate investment trust ("REIT") in the
United States specializing in enclosed shopping centers. At March 31, 1999, the
Company had interests in 38 regional and super-regional shopping centers branded
nationwide as "Westfield Shoppingtowns". The Company's portfolio of Westfield
Shoppingtowns includes multi-center clusters of shopping centers in the east
coast, midwest and west coast.
The Company has been engaged for over 40 years in the business of owning,
acquiring, financing, operating, leasing, developing, and redeveloping regional
and super-regional shopping centers. As of March 31, 1999, the Company's
portfolio of 38 shopping centers (the "Centers") consisted of 23 super-regional
shopping centers with approximately 25.8 million square feet of space, 12
regional shopping centers with approximately 8.1 million square feet of space,
three power centers with approximately 1.4 million square feet of space and six
office buildings adjacent to its Centers with approximately 600,000 square feet
of space, representing approximately 71.9%, 22.6%, 3.9% and 1.6%, respectively
of the Company's 35.9 million square feet of gross leasable area.
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements of the Company and the Notes thereto for the
three months ended March 31, 1999 (unaudited) and the Consolidated Financial
Statements of the Company and the Notes thereto for the year ended December 31,
1998 included in the Company's Annual Report on Form 10-K.
GENERAL BACKGROUND
Fluctuations in the Company's results of operations from period to period
were primarily affected by acquisitions that occurred during the year ended
December 31, 1998. In 1998, the Company acquired interests in 16 shopping
centers, (the "1998 Acquisition Centers") including a portfolio of 12 shopping
centers (the "Hahn Centers") from TrizecHahn Centers, Inc. for approximately
$1.8 billion.
At March 31, 1999 and for the three months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 33 Centers, the equity in income of five unconsolidated
real estate partnerships, 12 separate department store properties net leased to
the May Company under financing leases, a $145 million participating loan made
to two wholly-owned affiliates of WHL in May of 1997 (the "Garden State Plaza
Loan") and the issuance of notes to Australian investors (the "Capital Notes")
totaling $301.1 million in June 1998.
At March 31, 1998 and for the three months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 19 Centers, the equity in income of five unconsolidated
real estate partnerships, Crestwood Plaza following its acquisition in January
1998, 12 separate department store properties net leased to the May Company
under financing leases and the Garden State Plaza Loan.
RESULTS OF OPERATIONS
COMPARISONS OF THREE MONTHS ENDED MARCH 31, 1999 TO THREE MONTHS ENDED MARCH 31,
1998
TOTAL REVENUES increased $55.4 million or 79% to $125.3 million for the
three months ended March 31, 1999 as compared to $69.9 million for the same
period in 1998. The increase is the result of the addition of the 1998
Acquisition Centers which contributed $52.1 million or 94% of the increase in
total revenues. Excluding the total revenues generated by the 1998 Acquisition
Centers, total revenues increased $3.3 million due primarily to increased
minimum rents generated by completed redevelopments at Mission Valley-West,
South Shore, Enfield and Annapolis and increases in occupancy throughout the
portfolio.
13
<PAGE>
TOTAL EXPENSES increased $32.0 million or 80% to $72.1 million for the three
months ended March 31, 1999 as compared to $40.1 million for the same period in
1998. The increase was primarily the result of the addition of the 1998
Acquisition Centers, which contributed a combined $28.8 million or 90% of the
increase in total expenses. Excluding the total expenses incurred by the 1998
Acquisition Centers, total expenses increased $3.2 million due primarily to an
increase in depreciation from redevelopments placed into service in 1998.
INTEREST EXPENSE, net of capitalized interest, increased $28.8 million or
142% to $49.1 million for the three months ended March 31, 1999 as compared to
$20.3 million for the same period in 1998, due primarily to increased borrowings
under the Company's secured and unsecured loan facilities, the Capital Notes and
secured debt assumed and issued in conjunction with the acquisition of the 1998
Acquisition Centers.
EQUITY IN NET INCOME OF UNCONSOLIDATED REAL ESTATE PARTNERSHIPS increased
approximately $0.6 million to $1.1 million for the three months ended March 31,
1999 as compared to $0.5 million for the same period in 1998 due primarily to
the acquisition of joint venture interests in Valley Fair and Independence Mall,
which were partially offset by the acquisition of the remaining 55% interest in
North County Fair in October 1998 and 58% interest in Topanga in November 1998.
INTEREST AND OTHER INCOME increased $1.0 million to $4.5 million for the
three months ended March 31, 1999 as compared to $3.5 million for the same
period in 1998. The increase was due to an increase in participation interest
earned on the Garden State Plaza Loan and interest earned on temporary
investments.
MINORITY INTEREST decreased $0.4 million to $0.6 million for the quarter as
compared to $1.0 million in 1998 due to the acquisition of the remaining 32%
interest in Wheaton in January 1999 which was partially offset by minority
interests in Santa Anita and Capital Mall.
NET INCOME decreased $3.6 million to $9.0 million for the three months ended
March 31, 1999 as compared to $12.6 million for the same period in 1998 for the
reasons discussed above.
FFO Funds from Operations
The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of NAREIT in March 1995
which defines FFO as net income (loss) (computed in accordance with generally
accepted accounting principles ("GAAP")), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. FFO should not be considered as an alternative to net income
(determined in accordance with GAAP) as a measure of the Company's financial
performance or to cash flow from operating activities (determined in accordance
with GAAP) as a measure of the Company's liquidity, nor is it indicative of
funds available to fund the Company's cash needs, including its ability to make
distributions. The Company believes that FFO is an effective measure of the
company's operating performance because analysts and investors utilize FFO in
analyzing the operating results of real estate companies rather than using
earnings per share. FFO as computed by the Company may not be comparable to
similarly titled figures reported by other REITs.
14
<PAGE>
The following is a summary of the Company's FFO and a reconciliation of net
income to FFO for the periods presented:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1999 1998
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Funds from Operations....................................................................... $ 41,170 $ 31,558
--------- ---------
--------- ---------
Increase in Funds from Operations from prior period......................................... 30.5%
---------
---------
Reconciliation:
Net income................................................................................ $ 9,001 $ 12,551
Income allocable to Investor Unit Rights.................................................. 939 --
Depreciation and amortization:
Deferred financing leases............................................................... 557 521
Consolidated properties................................................................. 28,741 16,838
Unconsolidated real estate partnerships................................................. 2,202 1,938
Minority interest portion............................................................... (270) (290)
--------- ---------
Funds from Operations....................................................................... $ 41,170 $ 31,558
--------- ---------
--------- ---------
</TABLE>
EBITDA EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the ability of the Company to increase rent and improve
profitability of its shopping centers, including aggregate retailer sales
volume, sales per square foot, occupancy levels and retailer costs. Each of
these factors has a significant effect on EBITDA. The Company believes that
EBITDA is an effective measure of operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA: (i)
does not represent cash flow from operations as defined by GAAP; (ii) should not
be considered as an alternative to net income (determined in accordance with
GAAP) as a measure of the Company's overall performance; (iii) is not indicative
of cash flows from operating, investing and financing activities (determined in
accordance with GAAP); and (iv) is not an alternative to cash flows (determined
in accordance with GAAP) as a measure of the Company's liquidity.
The Company's EBITDA after minority interest plus its pro-rata share of
EBITDA of unconsolidated real estate partnerships increased from $53.7 million
for the three months ended March 31, 1998 to $91.6 million in for the same
period in 1999. The growth in EBITDA reflects the addition of total gross
leasable area, increased rental rates, increased retailer sales, improved
occupancy levels and effective control of operating costs.
15
<PAGE>
The following is a summary of the Company's EBITDA and a reconciliation of
EBITDA to FFO (which has been reconciled to the company's net income above) for
the periods presented:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1999 1998
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
EBITDA...................................................................................... $ 91,560 $ 53,703
--------- ---------
--------- ---------
Increase in EBITDA from prior period........................................................ 70.5%
---------
---------
Reconciliation:
Funds from Operations..................................................................... $ 41,170 31,558
Interest expense:
Consolidated properties................................................................. 49,144 20,291
Unconsolidated real estate partnership.................................................. 1,700 2,108
Minority interest portion of consolidated properties.................................... (454) (254)
--------- ---------
EBITDA...................................................................................... $ 91,560 $ 53,703
--------- ---------
--------- ---------
</TABLE>
PORTFOLIO DATA
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season when retailer occupancy and retail
sales are typically at their highest levels. In addition, shopping malls achieve
a substantial portion of their specialty (temporary retailer) rents during the
holiday season. As a result of the above, earnings are generally highest in the
fourth quarter of each year.
The following table summarizes certain quarterly operating data for 1998 and
the first quarter of 1999 and for the Company's Centers:
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
--------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
1999 QUARTERLY DATA
Mall Shop sales(1)................................... $ 667,277 N/A N/A N/A
Revenues............................................. $ 145,599 N/A N/A N/A
Percentage leased.................................... 93%(2) N/A N/A N/A
1998 QUARTERLY DATA
Mall Shop sales(1)................................... $ 615,302 $ 685,548 $ 688,089 $ 1,071,951
Revenues............................................. $ 87,933 $ 86,807 $ 108,469 $ 145,072
Percentage leased.................................... 92% 93% 93% 93%
</TABLE>
- ------------------------
(1) Excludes leases in excess of 20,000 square feet.
(2) Excludes the Hahn Centers which were 89% leased as of March 31, 1999 because
the Company did not manage the Hahn Centers for the same period in 1998.
REPORTED TENANT SALES VOLUME AND SALES PER SQUARE FOOT
Total sales for Mall Shops (retail stores with less than 20,000 square feet
of leasable area) affect revenue and profitability levels of the Company because
they determine the amount of minimum rent the Company can charge, the percentage
rent it realizes and the recoverable expenses (common area maintenance, real
estate taxes, etc.) the retailers can afford to pay. Mall Shop sales for the
Company's Centers, for the three months ended March 31, 1999, increased 5.7% on
a per square foot basis over the
16
<PAGE>
same period in 1998. The Company believes these sales levels enhance the
Company's ability to obtain higher rents from retailers.
The table below sets forth Mall Shop sales and per square foot percentage
increases over the same periods in 1998 for the Company's Centers, in the east
coast, the midwest and the west coast regions of the United States.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, 1999
------------------------
MALL STORE INCREASE
SALES PER SQ. FT.
----------- -----------
($000)
<S> <C> <C>
East Coast.............................................. $ 181,687 6.0%
Midwest................................................. 80,925 3.7%
West Coast.............................................. 404,665 6.0%
----------- -----
Total Centers........................................... $ 667,277 5.7%
----------- -----
----------- -----
</TABLE>
LEASING
Mall Shop space was 93% leased at March 31, 1999, excluding the recently
acquired Hahn Centers. The Company excludes temporary leasing from the
calculation of leased Mall Shops space since such leases are on a short-term
basis (less than one year) and are subject to termination by the Company on 30
days' notice. The following table sets forth leased status for the Company's
Centers in the east coast, the mid west and the west coast regions of the United
States, excluding the newly acquired Hahn Centers which were 89% leased as of
March 31, 1999.
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
East Coast..................................................................... 94% 93%
Midwest........................................................................ 91% 88%
West Coast..................................................................... 93% 94%
Total Centers.................................................................. 93% 92%
</TABLE>
RENTAL RATES
As leases have expired, the Company has generally been able to rent the
available space, either to the existing retailer or a new retailer, at rental
rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as retailer's
expectations of future growth become more optimistic. In periods of slower
growth or declining sales, rents on new leases will grow more slowly or will
decline for the opposite reason. Revenues nevertheless increase as older leases
rollover or are terminated early and replaced with new leases negotiated at
current rental rates that are usually higher than the average rates for existing
leases.
Average base rent was $29.08 at March 31, 1999. The following table contains
certain information regarding base rent per square foot of Mall Shop leases that
have been executed since January 1, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Average base rent of Mall Shop leases, at the end of the period............ $ 29.08 $ 27.78
Leases expired during the period........................................... 25.52 24.76
Leases executed during the period.......................................... 36.83 28.04
</TABLE>
17
<PAGE>
As required by GAAP, contractual rent increases are recognized as rental
income using the straight-line method over the respective lease term which may
result in the recognition of income not evidenced by cash receipts. The amount
of contractual rent increases not represented by cash receipts was $1,245 and
$1,001 for the three months ended March 31, 1999 and 1998, respectively (in
thousands).
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had unused capacity under its unsecured
revolving credit facility totaling $90.0 million which will be utilized to fund
acquisition and redevelopment activities and as a revolving working capital
facility. Through its hedging activities, the Company has fixed the interest
rates applicable to the outstanding balance under this facility at rates ranging
from 7.6% to 7.9%.
As of March 31, 1999, the Company's balance of cash and cash equivalents was
$27.6 million, not including its proportionate share of cash held by
unconsolidated real estate partnerships.
During the quarter ended March 31, 1999, the Company closed on secured debt
totaling $44 million at 7.77% due in February 2002. The proceeds of this loan
were utilized to repay a $44 million bridge loan obtained in conjunction with
the acquisition of a 58% interest in Topanga in December 1998.
In January 1999, the Company acquired the remaining interest in Wheaton it
did not previously own for approximately $38.4 million consisting of 1,129,412
Investor Unit rights in the Company's Operating Partnership and a cash
distribution of $19.2 million. This acquisition gave the Company a 100% economic
interest in the property.
In March 1999, the Company acquired an additional 15% interest in
Independence Mall for approximately $4.4 million consisting of $2.2 million of
cash and 122,857 partnership units which may be converted into an equivalent
number of Investor Unit Rights in the Company's Operating Partnership or may be
exchanged for cash, or at the discretion of the Company, shares of the Company's
common stock. This acquisition effectively gives the Company an 85% economic
interest in the property.
The Company's consolidated indebtedness at March 31, 1999 was $2,665.1
million, of which $2,664.0 million is fixed-rate debt and $1.1 million is
variable rate debt after considering interest rate protection agreements
totaling approximately $1.9 billion. The interest rate on the fixed rate debt
ranges from 6.39% to 8.38%. The Company's pro-rata share of debt-to-total market
capitalization, based on the share price at March 31, 1999 was 54.3%, excluding
the Capital Notes from the numerator. The maturity dates of consolidated
indebtedness range from 1999 to 2018. Scheduled principal amortization and
balloon payments in connection with maturing mortgage indebtedness are included
in Note 6 of the Condensed Consolidated Financial Statements included in this
quarterly report on Form 10-Q.
The historical sources of capital used to fund the Company's operating
expenses, interest expense, recurring capital expenditures and non-recurring
capital expenditures (such as major building renovations and expansions) have
been: (i) FFO, (ii) secured and unsecured financing, (iii) capital contributions
and (iv) tenant recoveries. The Company anticipates that development projects,
expansion projects and potential acquisitions will be funded by external
financing sources.
18
<PAGE>
Capital expenditures and capital leasing costs totaled $20.8 million and
$6.9 million, for the three months ended March 31, 1999 and 1998, respectively.
The following table shows the components of capital expenditures and capital
leasing costs.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1999 1998
--------- ---------
($ IN MILLIONS)
<S> <C> <C>
Renovations and expansions.................................................... $ 15.2 $ 4.0
Tenant allowances............................................................. 3.0 1.6
Capital leasing costs......................................................... 1.8 1.0
Other capital expenditures.................................................... 0.8 0.3
--------- ---
Total......................................................................... $ 20.8 $ 6.9
--------- ---
--------- ---
</TABLE>
The Company believes that redevelopment, repositioning and expansion are key
to maximizing the use and performance of its assets and increasing its income
growth and capital appreciation. The Company continually evaluates the
redevelopment potential of its Properties. Due to the financial and regulatory
burdens presented by the development of new regional shopping centers, the
Company believes that an on-going redevelopment program provides a cost
efficient means of ensuring that the Company's existing Centers compete
effectively within their existing markets and are able to attract new customers.
Capital expenditures were financed by external funding and recovery of costs
from retailers where applicable. The Company is currently involved in several
development projects and had outstanding commitments with contractors totaling
approximately $74.6 million as of March 31, 1999, which will be funded through
existing mortgage debt, new mortgage debt and the unsecured revolving credit
facility.
The Company anticipates that its funds from operations will provide the
necessary funds on a short-term and long-term basis for its operating expenses,
interest expense on outstanding indebtedness and all distributions to the
shareholders in accordance with REIT requirements. Sources of recurring and
non-recurring capital expenditures on a short-term and long-term basis, such as
major building renovations and expansions, as well as for scheduled principal
payments, including balloon payments on outstanding indebtedness are expected to
be obtained from: (i) additional debt financing, (ii) additional equity and
(iii) working capital reserves.
Although no assurance can be given, the Company believes that it will have
access to capital resources sufficient to satisfy the Company's cash
requirements and expand and develop its business in accordance with its strategy
for growth.
DISTRIBUTIONS
A quarterly distribution was declared March 22, 1999 to stockholders of
record on March 31, 1999 of $0.3625 per common share, which equates to $1.45 per
share on an annualized basis.
YEAR 2000 READINESS
The Year 2000 Problem is the result of computer hardware and software
systems (collectively referred to as "Systems" and individually as a "System")
having been designed to use a two-digit code rather than a four-digit code to
define the applicable year, as in "98" to represent "1998". Systems may
misinterpret a date using "00" as the year 1900 rather than the year 2000. This
could result in errors causing such Systems to become unreliable or to fail.
19
<PAGE>
On behalf of the Company, the Company's Manager began a company-wide
assessment in 1997 (the "Project") to identify the Company's reliance on Systems
using a two digit date code as well as the Company's exposure to third party
customers and suppliers critical to the Company's operations. The Project
includes an assessment of the Company's dependence upon such Systems and third
parties as well as establishing priorities for addressing any Systems or third
party customers and suppliers which are assessed as potential year 2000
compliance risks.
The Company's initial assessment identified four areas of concern: (i)
internal Systems which the Company uses for information processing, data storage
and communication, (ii) fire, life and safety systems installed at the Company's
Properties which are used for measurement and control of mechanical devices
essential to the Properties' use and operations, (iii) economic dependence upon
significant customers which are critical to the Company's operations, and (iv)
relationships with third party suppliers upon which the Company's business is
substantially dependent.
INTERNAL SYSTEMS
In 1997, the Manager completed a comprehensive assessment of all
communication, hardware and software Systems believed to be critical to the
Company's operations. As a result of that assessment, the Manager began a
program of replacing and upgrading all Systems which were identified as not
being Year 2000 compliant. Requirements for replacing all hardware and software
Systems included receipt of written confirmation that the new Systems were Year
2000 compliant. The conversion was substantially completed on October 31, 1998.
The Manager is now in the final stage of the conversion which consists of
testing the computer system for Year 2000 compliance. Based upon the assessments
and testing to date, no contingency plans are expected to be needed. Management
considers its efforts to ensure Year 2000 compliance of its internal Systems to
be adequate; however, assurances obtained from hardware and software vendors
have not been independently verified and there can be no assurance that testing
yet to be performed will be adequate, in all instances, to ensure that all
software and hardware systems are compatible and able to function reliably in
the year 2000 and thereafter. The cost of the computer conversion as well as the
costs to test the System's Year 2000 compliance will be incurred by the Manager
and are not reimbursable by the Company.
FIRE, LIFE AND SAFETY SYSTEMS
Management's initial assessment of the fire, life and safety Systems and the
heating, ventilating and air conditioning ("HVAC") Systems at its properties
indicates that manual overrides on most Systems are available as an alternative
to automated controls for monitoring and controlling existing Systems. The
Manager has completed an assessment of all electronic and mechanical control
systems at the Properties and is currently in the process of upgrading or
replacing any systems which are not Year 2000 compliant prior to September 30,
1999. Any cost incurred to replace or upgrade such Systems are a cost of
maintaining the Centers and are therefore considered to be recoverable from the
tenants under the terms of existing leases. Although there can be no assurance,
management considers that the financial impact and risk of significant loss
because of System changes or business interruptions caused by fire, life and
safety Systems and HVAC Systems which are not Year 2000 compliant will not be
material.
SIGNIFICANT CUSTOMERS
The Company is also reliant on its customers to make the necessary
preparations for the year 2000 so that their business operations will not be
interrupted, thus threatening their ability to honor their financial
commitments. As of December 31, 1998, all tenants had been notified of their
responsibilities under their leases notwithstanding interruptions to their
business resulting from Year 2000 problems. The Manager's risk assessment, which
was completed in the first quarter of 1999, indicates that the Company's
exposure to losses as a result of tenants not being Year 2000 compliant is
minimal. Although the Company's tenants have indicated that they are in the
process of upgrading and testing their Systems, there can be no
20
<PAGE>
assurance that all tenants will adequately complete the necessary upgrades or
that the Systems tests being or to be performed will be adequate to ensure that
all Systems will function reliably in the year 2000 and thereafter.
THIRD PARTY SUPPLIERS
Exposure to third party suppliers is considered to pose a significant risk.
Information requests have been distributed to key third party suppliers and
replies are being evaluated. Where the risk assessment indicates significant
exposure, follow-up questionnaires and direct contact in the form of
teleconferences and site visits will be performed to assess accuracy of
information received and to determine and minimize, to the extent possible,
potential loss exposure. This assessment is anticipated to be completed by the
end of the second quarter of 1999. Although management believes that its efforts
with respect to such risks are appropriate, there can be no assurance that such
efforts will be adequate to determine the readiness of any of its key third
party suppliers in sufficient time to prevent a material adverse effect on the
Company. The Company's contingency planning for non-compliant third party
suppliers is to identify by the third quarter of 1999, to the extent possible,
alternative suppliers who are Year 2000 compliant as a replacement source for
goods or services. The cost of communicating with the Company's third party
suppliers will be incurred by the Manager and is not reimbursable by the
Company.
WORST CASE SCENARIO
The worse case scenario could be as far reaching as an extended loss of
utility service resulting from interruptions at the point of power generation or
line transmission or local distribution to the Properties. Such an interruption
could result in an inability to provide tenants with access to their spaces
thereby affecting the Company's ability to collect rent and pay its obligations
which could result in a material adverse effect on the Company. The effect could
be as insignificant as a minor interruption in services provided to tenants at
the Centers resulting from unanticipated problems encountered by the Company's
Systems or any of the significant third parties with whom the Company does
business. The pervasiveness of the Year 2000 issue makes it likely that
previously unidentified issues will require remediation during the normal course
of business. In such a case, the Company anticipates that automated procedures
could be replaced by manual procedures while Systems are repaired and that such
interruptions would have a minor effect on the Company's operations.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report includes, and future public filings and oral and written
statements by the Company and its management may include, statements (other than
the consolidated financial statements and other statements of historical fact)
that are subject to risks and uncertainties. Forward-looking statements include
the information concerning possible future results of operations, earnings,
expenses, cash flows, funds from operations and other capital resources of the
Company (including with respect to increased revenues and rental rates, cost
savings and operating efficiencies) and market trends set forth under (a)
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Results of Operations" (b) "Legal Proceedings," "Portfolio Data,"
"Liquidity and Capital Resources," "Distributions," and "Year 2000 Readiness,"
"Quantitative and Qualitative Disclosure about Market Risk" and (c) statements
preceded by, followed by or that include the words "believes," "expects," "may,"
"will," "anticipates," "intends," "plans," "estimates," "proposes," "scheduled,"
or other similar expressions.
Forward-looking statements are made based on management's current
expectations and belief concerning future developments and their potential
effects on the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Many of the
factors that will determine these results are beyond the Company's ability to
control or predict.
21
<PAGE>
The following important factors, and those important factors described
elsewhere in this report (including without limitation those discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Quantitative and Qualitative Disclosure About Market Risk" and
"Legal Proceedings"), or in other Securities and Exchange Commission filings,
could affect (and in some cases have affected) the Company's actual results and
could cause such results to differ materially from estimates or expectations
reflected in such forward-looking statements; (i) risks generally inherent in
real estate investment, such as changes in the national economic climate, the
regional economic climate (including the impact of local employers or industry
concentrations on the economic climate) or local real estate conditions;
perceptions by retailers or shoppers of the safety, convenience and
attractiveness of a shopping center, trends in the retail industry; competition
for retailers, changes in market rental rates and vacancy rates, the ability to
collect rent from retailers, the need to periodically renovate, repair and relet
space and the costs thereof; the ability of an owner to provide adequate
management and maintenance and insurance, and increased operating costs, as well
as changes in governmental regulations, zoning or tax laws; and possible
environmental liabilities; (ii) the ability of the Company to successfully
redevelop properties (including the ability to complete the redevelopment, to
complete construction within the estimated time frame and budget or to realize
anticipated occupancy and rental rates from completed projects), or to achieve
anticipated operating results from acquired properties; (iii) competition from
other shopping centers and other forms of retailing; (iv) the impact of the
financial condition of anchors and major tenants on the Centers' operations,
including the bankruptcy or insolvency of anchors or retailers or the decision
of any anchor or major tenant to not renew its lease when it expires; (v) the
Company's ability to make scheduled payments of principal or interest on, or to
refinance its obligations with respect to its indebtedness and to comply with
the covenants and restrictions contained in the instruments governing such
indebtedness, which will depend on its future operating performance and cash
flow, which are subject to prevailing economic conditions, prevailing interest
rate levels, and financial, competitive, business and other factors beyond its
control, including changes in consumer buying patterns, regulatory developments
and increased operating costs; (vi) the Company's ability to continue to qualify
as a REIT for federal income tax purposes and the taxation of the Company as a
regular corporation if it were to lose that status, the 100% tax on net income
from transactions that constitute prohibited transactions pursuant to the rules
relating to REITs under the Code; and possible taxation of the Company with
respect to built-in gain on disposition of certain property if such property
disposed of during a ten-year period; and the possibility of a dramatic decrease
in cash available for distributions if any such taxes become payable; and (vii)
possible conflicts of interest due to the controlling ownership interest of
affiliates.
While the Company periodically reassesses material trends and uncertainties
affecting the operations and financial condition in connection with its
preparation of Management's Discussion and Analysis of Results of Operations and
Financial Condition contained in its quarterly and annual reports, the Company
does not intend to review or revise any particular forward-looking statement
referenced in this report in light of future events, even if new information,
future events or other circumstances have made them incorrect or misleading.
The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any
documents incorporated herein by reference, in any of the Company's public
filings or press releases or in any oral statements made by the Company or any
of its officers or any other persons acting on its behalf. For those statements,
the Company intends to avail itself of the protection of the safe harbor from
liability with respect to forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business the Company enters into interest rate swap
contracts to reduce its exposure to fluctuations in interest rates. Net interest
differentials to be paid or received related to these contracts are accrued as
incurred or earned. Any gain or loss from terminating current swap contracts is
22
<PAGE>
recognized in the period the swap contract is terminated or reversed. The
Company's policy is to maintain fixed rate borrowing (including fixed rate
mortgages and interest rate swaps) for approximately 75% of forecast debt
(existing debt and future expiring debt anticipated to be refinanced) for a term
of not more than ten years. Additional hedging may be entered into for up to
100% of forecast debt if interest rates are extremely favorable.
It is the Company's policy to enter into interest rate swap contracts to
hedge fluctuations in interest rates only to the extent necessary to meet its
objectives as stated above. The Company does not enter into interest rate swap
contracts for speculative purposes but rather for limiting the Company's
exposure to changes in interest rates.
Interest rate swaps are contractual agreements between the Company and third
parties to exchange fixed and floating interest payments periodically without
the exchange of the underlying principal amounts (notional amounts). In the
unlikely event that a counterparty fails to meet the terms of an interest rate
swap contract, the Company's exposure is limited to the interest rate
differential between the contract rate and the market rate on the notional
amount. The Company does not anticipate non-performance by any of the
counterparties.
The following is a summary of fixed rate debt, average fixed interest rate
and average remaining term to maturity for the Company's pro rata share of fixed
rate notes payable and revolving credit facility:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------ ------------
1999 1998
------------ ------------
($ IN THOUSANDS)
<S> <C> <C>
Principal amount of fixed rate debt.................................................. $ 817,992 $ 777,911
Principal (notional) amount of other current fixed rate payable instruments.......... 1,887,000 1,700,000
------------ ------------
$ 2,704,992 $2,477,911
------------ ------------
------------ ------------
Fixed rate debt as a percentage of total notes payable and revolving credit
facility........................................................................... 98.7% 91.4%
------------ ------------
------------ ------------
Average effective fixed rate (inclusive of margins) of total fixed rate debt and
hedges, including delayed start swaps.............................................. 7.29% 7.09%
------------ ------------
------------ ------------
Average remaining term (in years) of total fixed rate debt and hedges, including
delayed start swaps................................................................ 8.5 9.1
------------ ------------
------------ ------------
</TABLE>
There have been no material changes in the market risks reported in the
Company's Annual Report on Form 10-K other than those disclosed in Notes 6 and 7
of the Condensed Consolidated Financial Statements for the quarter ended March
31, 1999 included in this quarterly report on Form 10-Q.
23
<PAGE>
PART II--OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company currently is neither subject to any material litigation nor, to
management's knowledge, is any material litigation currently threatened against
the Company other than routine litigation and administrative proceedings arising
in the ordinary course of business. Based on consultation with counsel,
management believes that these items will not have a material adverse impact on
the Company's consolidated financial position or results of operations.
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: OTHER INFORMATION
(a) The Registrant's Annual Meeting of Shareholders was held on April 29,
1999 in New York, New York.
(b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14
under the Securities Exchange Act of 1934, as amended. There was no
solicitation in opposition to the management's nominees as listed in the
proxy statement to elect three Directors. All of the nominees were
elected.
(c) The matters voted on at the meeting and the results were as follows:
(1) To elect three Directors to serve as such until the Annual Meeting of
Shareholders to be held in 2002 and until their successors are
elected and qualified.
<TABLE>
<CAPTION>
FOR AGAINST
------------ ---------
<S> <C> <C> <C>
Director #1--David H. Lowy Common Shares 66,610,926 57,563
Director #2--Herman Huizinga Common Shares 66,611,426 57,063
Director #3--Bernard Marcus Common Shares 66,616.026 52,463
</TABLE>
(2) To approve the issuance of our Common Shares upon conversion of our
Series D Preferred Shares if then held by a substantial security
holder of us or other restricted holder under Rule 312 of the New
York Stock Exchange Listed Company Manual.
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
------------ --------- --------- ---------------
<S> <C> <C> <C> <C>
Common Shares....................................... 59,020,284 226,466 157,818 7,263,921
</TABLE>
(3) To approve and ratify the appointment of Ernst & Young LLP as our
independent auditors for the fiscal year ending December 31, 1999.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------------ --------- ---------
<S> <C> <C> <C> <C>
Common Shares....................................... 66,530,469 48,787 89,233
</TABLE>
24
<PAGE>
(4) To approve the amendment of our Series C Certificate of Designation
so that the holders of the Series C Preferred Shares, the holders of
the Series C-1 Preferred Shares and the holders of the Series C-2
Preferred Shares will, in some cases, vote together as a single
class.
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
------------ --------- --------- ---------------
<S> <C> <C> <C> <C>
Common Shares....................................... 59,009,816 209,597 185,155 7,263,921
Series C Preferred Shares........................... 416,667 0 0 0
</TABLE>
(5) To approve the issuance of our Common Shares upon conversion of our
Series D-1 Preferred Shares if then held by a substantial security
holder of us or other restricted holder under Rule 312 of the New
York Stock Exchange Listed Company Manual.
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
------------ --------- --------- ---------------
<S> <C> <C> <C> <C>
Common Shares....................................... 59,016,161 228,304 160,103 7,263,921
Series C Preferred Shares........................... 4,166,670 0 0 0
</TABLE>
(6) To approve the issuance of our Common Shares to Westfield America
Trust pursuant to a stock subscription agreement entered into on May
29, 1998.
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
------------ ---------- --------- ---------------
<S> <C> <C> <C> <C>
Common Shares..................................... 58,196,209 1,044,265 164,094 7,263,921
Series C Preferred Shares......................... 4,166,670 0 0 0
Series C-1 Preferred Shares....................... 1,388,890 0 0 0
Series C-2 Preferred Shares....................... 1,388,890 0 0 0
</TABLE>
The holders of Common Shares and the holders of Series C Preferred Shares
voted as separate classes on item (4) above. Accordingly, each Common Share was
entitled to one vote and each Series C Preferred Share was entitled to one vote.
The holders of Common Shares and the holders of Series C Preferred Shares voted
together as a single class on item (5) above. Accordingly, each Common Share was
entitled to one vote and each Series C Preferred Share was entitled to ten
votes. The holders of Common Shares and the holders of Series C Preferred Shares
voted together as a single class on item (6) above, the holders of Common Shares
and the holders of Series C-1 Preferred Shares voted together as a single class
on item (6) above, and the holders of Common Shares and the holders of Series
C-2 Preferred Shares voted together as a single class on item (6) above. In each
instance with respect to item (6), each Common Share was entitled to one vote
and each Series C Preferred Share, Series C-1 Preferred Share or Series C-2
Preferred Share, as applicable, was entitled to ten votes.
25
<PAGE>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
3.1 Restated Articles of Incorporation of the Company (Exhibit 3.1(1)).
3.2 Second Amended and Restated By-Laws of the Company.
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws of the Company.
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws of the Company.
3.5 Amendment No. 3 to the Second Amended and Restated By-Laws of the Company.
11 Statements regarding Computation of Per Share Earnings for the three
months ended March 31, 1999.
12 Statement regarding Computation of Ratios.
27 Financial Data Schedule
99 Agreement regarding Disclosure of Long-Term Debt Instruments.
</TABLE>
- ------------------------
(1) Incorporated by reference to designated exhibit to the Company's current
report on Form 8-K, filed on February 19, 1999.
(b) Reports on Form 8-K:
The Company filed the following reports on Form 8-K during the three months
ended March 31, 1999:
<TABLE>
<CAPTION>
FINANCIAL
DATE OF FILING ITEMS REPORTED STATEMENT
- ----------------------------------------------------------------------------- -------------- ------------------
<S> <C> <C>
February 1, 1999............................................................. 7 Yes
February 3, 1999............................................................. 5, 7 Yes
February 19, 1999............................................................ 5 No
</TABLE>
Form 8-K/A was filed on February 1, 1999. Under Item 7 Financial Statements
and Exhibits, the Company updated the previous 8-K filed on December 2, 1998 to
include the required financial statements and pro forma financial statements for
the properties acquired pursuant to an Asset Purchase Agreement, dated as of
April 6, 1998, between TrizecHahn Centers, Inc., The Rouse Company and the
Company, as amended.
Form 8-K was filed on February 3, 1999. Under Item 5 Other Events, the
Company reported the acquisition of the remaining 58% interest in Topanga Plaza
that the Company did not already own. Under item 7 financial statements and
exhibits, the Company reported the financial statements for Topanga Plaza.
Topanga Plaza is a super-regional center located in Canoga Park, California.
Form 8-K was filed on February 19, 1999. Under Item 5 Other Events, the
Company reported $746.1 million in borrowings made from the Capital Company of
America in October and December 1998, the issuance of 138,889 Series C-1 and
138,889 Series C-2 preferred shares to Security Capital Preferred Growth
("SCPG") and the issuance of 138,889 shares of Series D-1 preferred shares to
Westfield America Trust ("WAT") in December 1998. The Company also reported the
issuance of 416,667 Series C preferred shares and 416,667 Series D preferred to
SCPG and WAT, respectively, in August 1998 and the issuance of 277,778 shares of
the Series D preferred shares to Westfield American Investments Pty. Limited, a
subsidiary of Westfield Holdings Limited also in August 1998. The company also
reported the amendment of (i) its Second Amended and Restated By-Laws, (ii) the
Asset Purchase Agreement, dated April 6, 1998, between TrizecHahn Centers, Inc,
The Rouse Company and the Company and (iii) the First Amended and Restated
Agreement of Limited Partnership of Westfield America Limited Partnership (the
"Operating Partnership"). The Company also reported the issuance of Investor
Unit Rights in the Operating Partnership to several third parties.
26
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
- --------- ------------------------------------------------------------------------------------------- -------------
<S> <C> <C>
3.2 Second Amended and Restated By-Laws of the Company 29
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws of the Company. 43
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws of the Company. 44
3.5 Amendment No. 3 to the Second Amended and Restated By-Laws of the Company. 45
11 Statements regarding Computation of Per Share Earnings for the Three Months Ended March 31,
1999. 46
12 Statement regarding Computation of Ratios. 48
27 Financial Data Schedule. 49
99 Agreement Regarding Disclosure of Long-Term Debt Instruments. 50
</TABLE>
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
Date: May 14, 1999
WESTFIELD AMERICA, INC.
By: /s/ PETER S. LOWY
-----------------------------------------
Peter S. Lowy
CO-PRESIDENT
By: /s/ RICHARD E. GREEN
-----------------------------------------
Richard E. Green
CO-PRESIDENT
By: /s/ MARK A. STEFANEK
-----------------------------------------
Mark A. Stefanek
CHIEF FINANCIAL OFFICER AND TREASURER
</TABLE>
28
<PAGE>
Exhibit 3.2
SECOND AMENDED AND RESTATED
BY-LAWS
OF
Westfield America, Inc.
(formerly, Centermark Properties, Inc.)
ARTICLE I
SHAREHOLDERS
Section I.1 ANNUAL MEETINGS. An annual meeting of shareholders of the
Corporation for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be held on the second
Tuesday in May (or if such day is a legal holiday, then on the next succeeding
business day) at such time and place either within or without the State of
Missouri as may be designated by the Board of Directors from time to time, or on
such other date as may be fixed by the Board of Directors from time to time, and
as set forth in the notice or waiver of notice of the meeting. Any previously
scheduled annual meeting of the shareholders may be postponed by resolution of
the Board of Directors upon public announcement made on or prior to the date
previously scheduled for such annual meeting of shareholders.
To be properly brought before an annual meeting, business must be (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a shareholder of the Corporation who was
a shareholder of record at the time of giving of the notice provided for in
Section 1.3, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 1.1. For business to be properly
brought before an annual meeting by a shareholder, if such business is related
to the election of directors of the Corporation, the procedures in Section 1.4
must be complied with. If such business relates to any other matter, the
shareholder must have given timely notice thereof in writing to the Secretary of
the corporation. To be timely, a shareholder's notice must be delivered to or
mailed to and received at the principal executive offices of the corporation not
less than 60 days nor more than 90 days prior to the meeting; PROVIDED, HOWEVER,
that in the event that less than 70 days notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be so delivered not later than the 10th day after
the first public notice or disclosure of the date of such annual meeting. Such
shareholder's notice shall set forth in writing as to each matter the
shareholder proposes to bring before the annual meeting (I) a brief description
of the business desired to be brought before the annual meeting, the reasons for
conducting such business at the annual meeting, and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (II) as to the shareholder giving the notice
and the beneficial owner, if any, on whose behalf the proposal is made (A) the
name and address of such shareholder, as they appear on the corporation's books,
and of such beneficial owner and (B) the class and number of shares of the
corporation which are owned beneficially and of record by such shareholder and
such beneficial owner. Notwithstanding anything in these By-Laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 1.1. The chairman of
the meeting shall, if the facts warrant, determine and declare to the
29
<PAGE>
meeting that business was not properly brought before the meeting in
accordance with the provisions of this Section 1.1, and if he should so
determine, such chairman shall declare to the meeting that any such business
not properly brought before the meeting shall not be transacted.
For the purposes of this Section 1.1 and Sections 1.2 and 1.4, "public
notice or disclosure" shall mean disclosure in a press release reported by the
Dow Jones News Service, Associated Press or comparable national news service or
in a document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition to the provisions of this
Section 1.1, a shareholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in these By-Laws shall be deemed to affect any
rights of shareholders to request inclusion of proposals in the corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section I.2. SPECIAL MEETINGS. Unless otherwise provided by law or in the
Articles of Incorporation, special meetings of shareholders may be called only
by the Chairman of the Board, the Vice Chairman of the Board, any President or
the Board of Directors, to be held at such date, time and place either within or
without the State of Missouri as may be stated in the notice of the meeting.
The purpose or purposes of any special meeting of the shareholders shall be
set forth in the notice of meeting, and, except as otherwise required by law or
by the Articles of Incorporation, no business shall be transacted at any special
meeting of the shareholders other than the items of business stated in the
notice of meeting. The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 1.2, and if
he should so determine, such chairman shall declare to the meeting that any such
business not properly brought before the meeting shall not be transacted.
Section I.3. NOTICE OF MEETINGS. Whenever shareholders are required or
permitted to take any action at a meeting, the Secretary or any Assistant
Secretary shall cause a written notice of the meeting to be given which shall
state the place, date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. Unless
otherwise provided by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
shareholder entitled to vote at such meeting. If mailed, such notice shall be
deemed to be given three (3) days after it is deposited in the United States
mail, postage prepaid, directed to the shareholder at such shareholder's address
as it appears on the records of the Corporation.
Section I.4. NOMINATION OF DIRECTORS. (a) Only persons who are nominated in
accordance with the procedures set forth in this Section 1.4 shall be eligible
for election as directors of the corporation. Nominations of persons for
election to the Board of Directors of the corporation may be made at any annual
meeting of stockholders by or at the direction of the Board of Directors or by
any shareholder of the corporation entitled to vote for the election of
directors at the meeting who was a shareholder of record at the time of giving
of the notice provided for in this Section 1.4 and who complies with the notice
procedures set forth in this Section 1.4. Any such nomination by a shareholder
shall be made pursuant to timely notice in writing to the Secretary of the
corporation. To give timely notice for an annual meeting, a shareholder's notice
shall be delivered to the Secretary of the corporation at the principal
executive offices of the corporation not less than 60 days nor more than 90 days
prior to the meeting; PROVIDED, however, that in the event that less than 70
days notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be so
delivered not later than the 10th day after the first public notice or
disclosure (as defined in Section 1.1) of the date of such meeting. Such
shareholder's notice shall be set forth in writing and shall state (A) such
shareholder's name and business address and residence, (B) the name, age,
business address and residence address of the persons to be nominated, (C) the
30
<PAGE>
principal occupation or employment of the persons to be nominated, (D) the class
and number of shares of stock of the corporation which are beneficially owned by
such shareholder and by each nominee, and (E) any other information relating to
such shareholder or nominee that is required to be disclosed in connection with
the solicitation of proxies for election of directors, or as otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including,
without limitation, each such person's written consent to being named in a proxy
statement as a nominee and to serving as a director if elected).
(b) Nominations of persons for election to the Board of Directors of the
corporation may be made at a special meeting of shareholders at which directors
are to be elected pursuant to the corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) provided that the Board of
Directors has determined that directors shall be elected at such special
meeting, by any shareholder of the corporation who is a shareholder of record at
the time of giving of notice provided for in this Section 1.4, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 1.4. In the event the corporation calls a special meeting
of shareholders for the purpose of electing one or more directors to the Board
of Directors, any such shareholder may nominate a person or persons (as the case
may be) for election to such position(s) as specified in the corporation's
notice of meeting, if the shareholder's notice shall be delivered to the
Secretary of the corporation at the principal executive offices of the
corporation not earlier than the 90th day prior to such special meeting and not
later than the close of business on the later of the 60th day prior to such
special meeting or the 10th day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
(c) At the request of the Board of Directors, any person nominated by the
Board of Directors for election as a director shall furnish to the Secretary of
the corporation that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this Section 1.4. The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
By-Laws and in that event the defective nomination shall be disregarded. In
addition to the provisions of this Section 1.4, a shareholder shall also comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth herein.
Section I.5. ADJOURNMENTS. Any meeting of shareholders, annual or special,
may be adjourned from time to time, to reconvene at the same or some other
place, provided that notice of any such adjourned meeting shall be given to each
shareholder of record entitled to vote at such adjourned meeting. A
determination of the shareholders of record entitled to notice of or to vote at
a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, the Board of Directors may fix a new record date for the
adjourned meeting. At the adjourned meeting the Corporation may transact any
business which might have been transacted at the original meeting.
Section I.6. QUORUM. For purposes of these By-Laws the term "Common Equity
Stock" shall mean the Corporation's Common Shares, par value $.01 per share, and
the Corporation's Excess Shares, par value $.01 per share. At each meeting of
shareholders, except where otherwise provided by law or the Articles of
Incorporation or these By-Laws, the holders of a majority in interest of the
outstanding shares of Common Equity Stock entitled to vote present in person or
represented by proxy, shall constitute a quorum to take action with respect to
that vote on that matter. In the absence of a quorum of the holders of stock
entitled to vote on a matter, the holders of Common Equity Stock so present or
represented may, by majority vote, adjourn the meeting of shareholders from time
to time in the manner provided by Section 1.5 of these By-Laws until a quorum of
such holders of stock shall be so present or represented. Shares of its own
stock belonging on the record date for the meeting to the Corporation or to
another corporation, if a majority of the
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shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall
neither be entitled to vote nor be counted for quorum purposes.
Section I.7. ORGANIZATION. Meetings of shareholders shall be presided over
by the Chairman of the Board, if any, or in the absence of the Chairman of the
Board by the Vice Chairman of the Board, if any, or in the absence of the Vice
Chairman of the Board by any President, or in the absence of the President by a
Vice President, or in the absence of the foregoing persons by a chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the meeting, but in
the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section I.8. VOTING; PROXIES. Unless otherwise provided in these By-Laws,
the Articles of Incorporation or by law, each shareholder entitled to vote at
any meeting of shareholders shall be entitled to one vote for each share of
stock held by such shareholder which has voting power upon the matter in
question. Each shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such shareholder by proxy, but no
such proxy shall be voted or acted upon after eleven months from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power,
regardless of whether the interest with which it is coupled is an interest in
the stock itself. A shareholder may revoke any proxy which is not irrevocable by
attending the meeting and voting in person or by filing an instrument in writing
revoking the proxy or another duly executed proxy bearing a later date with the
Secretary of the Corporation. Proxies by telegram, cablegram or other electronic
transmission must either set forth or be submitted with information from which
it can be determined that the telegram, cablegram or other electronic
transmission was authorized by the shareholder. Any copy, facsimile
telecommunication or other reliable reproduction of a writing or transmission
created pursuant to this section may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission. Voting at meetings of shareholders need
not be by written ballot unless the holders of a majority in interest of the
outstanding shares of all classes of stock entitled to vote thereon present in
person or represented by proxy at such meeting shall so determine. At each
meeting of the shareholders for the election of directors, provided a quorum is
present, the directors shall be elected by a plurality of the votes validly cast
in such election. In all other matters, unless otherwise provided by law or by
the Articles of Incorporation or these By-Laws, the affirmative vote of the
holders of a majority of all shares of Common Equity Stock present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders.
Section I.9. FIXING DATE FOR DETERMINATION OF SHAREHOLDERS OF RECORD. In
order that the Corporation may determine the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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In order that the Corporation may determine the shareholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Missouri, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of shareholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining shareholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolution taking such
prior action.
In order that the Corporation may determine the shareholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the shareholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining shareholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Section I.10. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The Secretary shall
prepare and make, at least ten days before every meeting of shareholders, a
complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each shareholder and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any shareholder who is present.
Section I.11. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Articles of Incorporation or by law, any action required by law
to be taken at any annual or special meeting of shareholders of the Corporation,
or any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by all holders of each outstanding class of stock entitled to
vote on such action and shall be delivered to the Corporation by delivery to (A)
its registered office in the State of Missouri by hand or by certified mail or
registered mail, return receipt requested, (B) its principal place of business,
or (C) an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of shareholders are recorded. Every written
consent shall bear the date of signature of each shareholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this By-Law to the Corporation, written
consents signed by a sufficient number of holders to take action are delivered
to the Corporation by delivery to (A) its registered office in the State of
Missouri by hand or by certified or registered mail, return receipt requested,
(B) its principal place of business, or (C) an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
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ARTICLE II
BOARD OF DIRECTORS
Section II.1. POWERS; NUMBER; QUALIFICATIONS. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the Articles of
Incorporation. The Board of Directors shall not be less than three nor more than
fourteen, the exact number thereof within such limitations to be fixed from time
to time by resolution adopted by a majority of the entire Board of Directors,
and the exact number shall be eleven unless otherwise determined by resolution
adopted by a majority of the entire Board of Directors. As used in this Section,
"entire Board" means the total number of Directors which the Corporation would
have if there were no vacancies as such number is fixed by resolution of the
Board of Directors. In the event that the Board of Directors is increased by
such a resolution, the vacancy or vacancies so resulting shall be filled by a
vote of the majority of the Directors then in office. No decrease in number of
the Board of Directors shall shorten the term of any incumbent Directors.
Directors need not be shareholders.
The Board of Directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class expiring at
the Annual Meeting of Shareholders in 1998, the second class expiring at the
Annual Meeting of Shareholders in 1999, and the third class expiring at the
Annual Meeting of Stockholders in 2000. At each Annual Meeting of Shareholders,
commencing with the 1998 Annual Meeting, successors to Directors of the Class
whose terms then expire shall be elected to hold office for a term expiring at
the third succeeding Annual Meeting of Shareholders. Any director (other than a
director elected by the holders of the Preferred Shares of the Corporation upon
a failure to pay dividends) or the entire Board of Directors may be removed, for
cause only, by the holders of 66 2/3 of all shares then entitled to vote at an
election of directors. The provisions of this Section 2.1 shall not be amended,
altered, changed or repealed unless approved by the affirmative vote of the
holders of not less than seventy five percent of the total voting power of all
outstanding shares of voting stock.
Section II.2. ELECTION; TERM OF OFFICE; RESIGNATION; VACANCIES; NEWLY
CREATED DIRECTORSHIPS. (a) Each director shall hold office until his or her
successor is elected and qualified or until his or her earlier death,
resignation, removal or disqualification. Any director may resign at any time
upon written notice to the Board of Directors or to the Chairman, any President
or the Secretary of the Corporation. Such resignation shall take effect at the
time specified therein, and unless otherwise specified therein no acceptance of
such resignation shall be necessary to make it effective. Should the office of
any director become vacant through death, removal, resignation, disqualification
or otherwise, and where newly created directorships result from any increase in
the authorized number of directors, the Board of Directors shall have the right
to elect or appoint, as the case may be, the replacement director or newly
created directorship. Any director elected or appointed to fill a vacancy or
newly created directorship shall hold office until the election of the class for
which such director shall have been chosen and his or her successor is elected
and qualified or until his or her earlier resignation or removal. Except as
otherwise set forth in these By-Laws or the Articles of Incorporation, at each
meeting of the shareholders for the election of directors, directors shall be
elected by a plurality of the votes cast in such election.
Section II.3. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such places within or without the State of Missouri and at such
times, but no less frequently than quarterly, as the Board may from time to time
determine, and if so determined notice thereof need not be given. The Board of
Directors from time to time may by resolution provide for the holding of regular
meetings and fix the place (which may be within or without the State of
Missouri) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action shall
be mailed promptly, or sent by telegram,
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radio or cable, to each director who shall not have been present at the
meeting at which such action was taken, addressed to him or her at his or her
usual place of business, or shall be delivered to him or her personally.
Notice of such action need not be given to any director who attends the first
regular meeting after such action is taken without protesting the lack of
notice to him or her, prior to or at the commencement of such meeting, or to
any director who submits a signed waiver of notice, whether before or after
such meeting.
Section II.4. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held upon the request of the Chairman of the Board or any President on
three (3) days written notice to each director by mail or on one days notice if
delivered to him personally or communicated to him by telephone, telegram or
telecopier, and at a place in Los Angeles, California or such other reasonable
place as is specified in such notice; special meeting shall be called by the
Chairman, any President or the Secretary in like manner and on like notice on
the written consent of a majority of the Board of Directors.
Section II.5. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE PERMITTED.
Unless otherwise restricted by the Articles of Incorporation or these By-Laws,
members of the Board of Directors, or any committee designated by the Board, may
participate in a meeting of the Board or of such committee, as the case may be,
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this By-Law shall constitute presence in
person at such meeting.
Section II.6. QUORUM; VOTE REQUIRED FOR ACTION. (a) At all meetings of the
Board a majority of the total authorized number of directors shall constitute a
quorum for the transaction of business.
(b) The vote of a majority of the directors present at any meeting at which
a quorum is present shall be the act of the Board of Directors.
(c) In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall be present.
Section II.7. ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by any President, or in their absence
by a chairman chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the meeting, but in
the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting. The duties of
the Chairmen of the Board shall include presiding over meetings of the Board and
the shareholders and the Chairman shall also be entitled to vote as part of the
Board.
Section II.8. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Articles of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section II.9. COMPENSATION OF DIRECTORS. The amount, if any, which any
member of the Board of Directors or any committee thereof shall be entitled to
receive as compensation for his or her services as such shall be fixed from time
to time by resolution of the Board of Directors.
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ARTICLE III
COMMITTEES
Section III.1. COMMITTEES. (a) The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees with
each such committee to consist of such number of directors as from time to time
may be fixed by the Board of Directors.
(b) Should any vacancy occur in any committee of the Board due to the
removal, resignation, death or other absence from office of a committee member,
the Board of Directors shall designate a qualified person as a replacement
member of such committee. Any person designated to any committee pursuant to
this Section 3.1(b) shall hold office for the unexpired term of the committee
member whom he replaced. The Board of Directors shall have the right, with or
without cause, to remove such committee member from such committee and to
designate a replacement committee member as provided above.
(c) Any such committee, to the extent provided in the resolution of the
Board of Directors or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the shareholders a
dissolution of the Corporation or a revocation of a dissolution or amending
these By-Laws; and, unless the resolution, these By-Laws or the Articles of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, to adopt a
certificate of merger or to remove or indemnify directors.
Section III.2. QUORUM; VOTE REQUIRED FOR ACTION. (a) Subject to Section
3.2(b) below, at all meetings of any committee of the Board, a majority of the
total authorized membership for such committee shall constitute a quorum for the
transaction of business.
(b) When action is to be taken by vote of any committee of the Board each
member of such committee shall be accorded one vote. Each and every corporate
action taken by vote of any committee of the Board shall be authorized by
affirmative vote of a majority of the committee members present at a duly
constituted meeting at which a quorum is present and acting throughout.
Section III.3. OTHER COMMITTEE RULES. Except as provided in Section 3.2
above and unless the Board of Directors otherwise provides, each committee
designated by the Board may adopt, amend and repeal rules for the conduct of its
business. Each committee shall otherwise conduct its business in the same manner
as the Board conducts its business pursuant to Article II of these By-Laws.
Section III.4. NOMINATING COMMITTEE. In addition to any other committees
which the Board of Directors may designate pursuant to Section 3.1 above, the
Corporation shall establish a Nominating Committee. The Nominating Committee
shall be comprised of the Chairman and two Independent Directors and shall make
recommendations as to the organization, size and composition of the Board and
committees thereof, propose nominees for election to the Board and the
committees thereof, and consider the qualifications, compensation and retirement
of Directors.
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ARTICLE IV
OFFICERS
Section IV.1. OFFICERS; ELECTION. As soon as practicable after the annual
meeting of shareholders in each year, the Board of Directors shall elect one or
more Presidents, a Secretary and a Treasurer, and from among its members a
Chairman of the Board. The Board may also elect one or more Vice Presidents, one
or more Assistant Vice Presidents, one or more Assistant Secretaries, and one or
more Assistant Treasurers and such other officers as the Board may deem
desirable or appropriate and may give any of them such further designations or
alternate titles as it considers desirable. Any number of offices may be held by
the same person.
Section IV.2. TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES. Unless
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any officer
may resign at any time upon written notice to the Board or to a President or the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The Board may remove any
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation, but the election of an officer shall not of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled by the Board at any
regular or special meeting.
Section IV.3. AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws under the direction of the
Board of Directors, except that in any event each officer shall exercise such
powers and perform such duties as may be required by law. The Board shall set a
policy as to which actions taken by officers shall be considered material and
shall require board authorization.
Section IV.4. THE PRESIDENTS. Each President shall be the chief executive
officer and chief operating officer of the Corporation, shall have general
control and supervision of the policies and operations of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. He or she shall manage and administer the Corporation's business
and affairs under the direction of the Board of Directors and shall also perform
all duties and exercise all powers usually pertaining to the office of a chief
executive officer and chief operating officer of a corporation. He or she shall
have the authority to sign, in the name and on behalf of the Corporation,
checks, orders, contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the Corporation, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments to which the seal of the Corporation is affixed.
He or she shall have the authority to cause the employment or appointment of
such employees and agents of the Corporation as the conduct of the business of
the Corporation may require, to fix their compensation, and to remove or suspend
any employee or agent elected or appointed by the President or the Board of
Directors. The President shall perform such other duties and have such other
powers as the Board of Directors or the Chairman may from time to time
prescribe.
If there are two Co-Presidents, the Co-Presidents shall be co-chief
executive officers and co-chief operating officers of the Corporation. The
Co-Presidents shall have general control and supervision of the policies and
operations of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. Each Co-President shall manage
and administer the Corporation's business and affairs under the direction of the
Board of Directors and shall also perform all duties and exercise all powers
usually pertaining to the office of a chief executive officer or chief operating
officer of a corporation,
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as the case may be. Each shall have the authority to sign, in the name and on
behalf of the Corporation, checks, orders, contracts, leases, notes, drafts
and other documents and instruments in connection with the business of the
Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the
seal of the Corporation is affixed. Each shall have the authority to cause
the employment or appointment of such employees and agents of the Corporation
as the conduct of the business of the Corporation may require, to fix their
compensation, and to remove or suspend any employee or agent elected or
appointed by a Co-President or the Board of Directors, other than the other
Co-President. The Co-Presidents shall perform such other duties and have such
other powers as the Board of Directors or the Chairman may from time to time
prescribe.
Section IV.5. THE VICE PRESIDENTS. Each Vice President shall perform such
duties and exercise such powers as may be assigned to him or her from time to
time by a President. In the absence of a President, the duties of President
shall be performed and his or her powers may be exercised by such Vice President
as shall be designated by a President, or failing such designation, such duties
shall be performed and such powers may be exercised by each Vice President in
the order of their earliest election to that office; subject in any case to
review and superseding action by a President.
Section IV.6. THE SECRETARY. The Secretary shall have the following powers
and duties:
(a) He or she shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of Directors in
books provided for that purpose.
(b) He or she shall cause all notices to be duly given in accordance with
the provisions of these by-laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a resolution of
the Board of Directors, he or she shall furnish a copy of such resolution to the
members of such Committee.
(d) He or she shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or a facsimile thereof) to be affixed to all
certificates representing shares of the Corporation prior to the issuance
thereof and to all instruments the execution of which on behalf of the
Corporation under its seal shall have been duly authorized in accordance with
these By-Laws, and when so affixed he or she may attest the same.
(e) He or she shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by law,
the Articles of Incorporation or these by-laws.
(f) He or she shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the Corporation
of each class issued and outstanding, the names (alphabetically arranged) and
the addresses of the holders of record of such shares, the number of shares held
by each holder and the date as of which each became such holder of record.
(g) He or she shall sign (unless the Treasurer, an Assistant Treasurer or
an Assistant Secretary shall have signed) certificates representing shares of
the Corporation the issuance of which shall have been authorized by the Board of
Directors.
(h) He or she shall perform, in general, all duties incident to the office
of secretary and such other duties as may be specified in these by-laws or as
may be assigned to him or her from time to time by the Board of Directors, the
Chairman or a President.
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Section IV.7. THE TREASURER. The Treasurer shall be the chief financial
officer of the Corporation and shall have the following powers and duties:
(a) He or she shall have charge and supervision over and be responsible for
the moneys, securities, receipts and disbursements of the Corporation, and shall
keep or cause to be kept full and accurate records of all receipts of the
Corporation.
(b) He or she shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the Corporation in
such banks or trust companies or with such bankers or other depositaries.
(c) He or she shall cause the moneys of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation and cause
to be taken and preserved proper vouchers for all moneys disbursed.
(d) He or she shall render to the Board of Directors or the President,
whenever requested, a statement of the financial condition of the Corporation
and of all his or her transactions as Treasurer, and render a full financial
report at the annual meeting of the stockholders, if called upon to do so.
(e) He or she shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he or she may desire with respect to any and all financial
transactions of the Corporation.
(f) He or she may sign (unless an Assistant Treasurer or the Secretary or
an Assistant Secretary shall have signed) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(g) He or she shall perform, in general, all duties incident to the office
of Treasurer and such other duties as may be specified in these By-Laws or as
may be assigned to him or her from time to time by the Board of Directors, the
Chairman or a President.
Section IV.8. ADDITIONAL OFFICERS. The Board of Directors may appoint such
other officers and agents as it may deem appropriate, and such other officers
and agents shall hold their offices for such terms and shall exercise such
powers and perform such duties as may be determined from time to time by the
Board of Directors. The Board of Directors from time to time may delegate to any
officer or agent the power to appoint subordinate officers or agents and to
prescribe their respective rights, terms of office, authorities and duties. Any
such officer or agent may remove any such subordinate officer or agent appointed
by him or her, for or without cause.
Section IV.9. SECURITY. The Board of Directors may require any officer,
agent or employee of the Corporation to provide security for the faithful
performance of his or her duties, in such amount and of such character as may be
determined from time to time by the Board of Directors.
ARTICLE V
STOCK
Section V.1. CERTIFICATES. Every holder of stock in the corporation shall
be entitled to have a certificate signed by or in the name of the Corporation by
the Chairman or Vice Chairman of the Board of Directors, if any, or a President
or a Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an
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Assistant Secretary, of the Corporation, representing the number of shares of
stock in the Corporation owned by such holder. If such certificate is
manually signed by one officer or manually countersigned by a transfer agent
or by a registrar, any other signature on the certificate may be a facsimile,
engraved or printed, to the extent permitted by law. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
If the Corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided by law, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
shareholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section V.2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed upon delivery to the Board of Directors of an affidavit of the
owner or owners of such certificate, setting forth such allegation. The
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such owner's legal representative, to give the Corporation a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
Section V.3. LEGENDS. Each certificate of stock shall bear such legends as
are required by the agreement or document pursuant to which such stock was
issued, the Articles of Incorporation and applicable law, including, without
limitation, a conspicuous notation of the restrictions on transfer of such stock
so long as the Articles of Incorporation remain in effect. The Corporation
shall, at the request of any shareholder holding a certificate bearing any such
legend, issue a new certificate or certificates in lieu of and in exchange for
such existing certificate, but free of any such legend, at such time as any such
agreement or document, the Articles of Incorporation and applicable law cease to
require such certificate to bear such legend.
Section V.4. TRANSFER OF SHARES. Upon surrender on any business day to the
Corporation at its principal office or the transfer agent of the Corporation of
a certificate of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer or exchange, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto to reflect any such transfer or exchange, cancel the old certificate,
and record the transaction upon its books; provided, however, that the
Corporation shall (and shall cause its transfer agent to) close its books
against any transfer or exchange of shares of stock at any time if and to the
extent such transfer or exchange is not permitted pursuant to applicable
provisions of the Articles of Incorporation, any agreement or document pursuant
to which such stock was issued, any legend appearing on such certificate or
applicable law.
ARTICLE VI
MISCELLANEOUS
40
<PAGE>
Section VI.1. FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of January and end on the thirty-first day of December of each
year.
Section VI.2. SEAL. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors. The corporate seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section VI.3. WAIVER OF NOTICE OF MEETINGS OF SHAREHOLDERS, DIRECTORS AND
COMMITTEES. Whenever notice is required to be given by law or under any
provision of the Articles of Incorporation or these By-Laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the shareholders,
directors or members of a committee of directors need be specified in any
written waiver of notice unless so required by the Articles of Incorporation or
these By-Laws.
Section VI.4. INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS. (a) The
Corporation shall, to the fullest extent permitted by the General and Business
Corporation Law of Missouri (the "GBCL"), indemnify and advance expenses to any
person who was or is a party or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
Director or Officer of the Corporation or is or was serving at the request of
the Corporation as a director or officer of any other corporation or enterprise.
Such right of indemnification shall inure to the benefit of the heirs,
executors, administrators and personal representatives of such a person. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any agreement, vote of
shareholders or disinterested directors or otherwise.
(b) The Corporation may, to such extent as it deems appropriate and as may
be permitted by the GBCL, indemnify any other person acting in any of the other
capacities referred to in Section 351.355 of the GBCL against any such claim by
reason of the fact that he is or was serving the Corporation or at the request
of the Corporation in any of such capacities or arising out of his status in any
such capacity.
(c) The Corporation may, but shall not be required to, supplement the right
of indemnification under paragraph (a) above by (1) the purchase of insurance on
behalf of any one or more of such persons, whether or not the Corporation would
be obligated to indemnify such person under paragraph (a) above, (2) individual
or group indemnification agreements with any one or more of such persons and (3)
advances for related expenses of such a person.
Section VI.5. INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, if the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by a majority of the disinterested
directors.
Section VI.6. FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form
41
<PAGE>
of, punch cards, magnetic tape, photographs, microphotographs or any other
information storage device, provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled
to inspect the same.
Section VI.7. AMENDMENT OF BY-LAWS. These By-Laws may be amended, altered
or repealed, and new By-Laws may be adopted:
(a) by resolution adopted by a majority of the Board of Directors at any
special or regular meeting of the Board if, in the case of such special meeting
only, notice of such amendment, alteration, repeal or adoption is contained in
the notice or waiver of notice of such meeting; or
(b) by the affirmative vote of the holders of record of a majority of the
outstanding voting stock of the Corporation at any regular or special meeting of
the stockholders if, in the case of such special meeting only, notice of such
amendment, alteration, repeal or adoption is contained in the notice or waiver
of notice of such meeting, unless the provision of the Articles of Incorporation
or these By-Laws provide for greater than majority vote.
42
<PAGE>
Exhibit 3.3
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED
BY-LAWS
OF
WESTFIELD AMERICA, INC.
(FORMERLY, CENTERMARK PROPERTIES, INC.)
This Amendment No. 1 to the Second Amended and Restated By-Laws of
Westfield America, Inc. (the "CORPORATION"), hereby amends the Second Amended
and Restated By-Laws (the "BY-LAWS") of the Corporation as follows:
The fourth sentence of paragraph two of Section 1.1 of the By-Laws and the
fourth sentence of Section 1.4(a) of the By-Laws are hereby amended and restated
in their entirety to read as follows:
"To be timely, a shareholder's written notice must be delivered to or mailed
to and received by the Secretary of the Corporation at the principal executive
offices of the Corporation not less than 90 days nor more than 120 days prior to
the anniversary date of the immediately preceding annual meeting of
shareholders; PROVIDED, HOWEVER, that in the event that the annual meeting is
called on a date that is not within 30 days before or after such anniversary
date, notice by the shareholder in order to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure of
the date of the annual meeting was made, whichever first occurred."
The second sentence of Section 1.4(b) of the By-Laws is hereby amended and
restated in its entirety to read as follows:
"In the event the Corporation calls a special meeting of shareholders for the
purpose of electing one or more directors to the Board of Directors, any such
shareholder may nominate a person or persons (as the case may be) for election
to such position(s) as specified in the Corporation's notice of meeting, if the
shareholder's notice shall be delivered to the Secretary of the Corporation at
the principal executive offices of the Corporation not earlier than the 120th
day prior to such special meeting and not later than the close of business on
the later of the 90th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such special meeting."
Except to the extent specifically set forth herein, the By-Laws shall remain
in full force and effect, unmodified in any respect.
43
<PAGE>
Exhibit 3.4
AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED
BY-LAWS
OF
WESTFIELD AMERICA, INC.
This Amendment No. 2 to the Second Amended and Restated By-Laws of Westfield
America, Inc. (the "CORPORATION"), hereby amends the Second Amended and
Restated By-Laws (the "BY-LAWS") of the Corporation as follows:
The second sentence of Section 2.1 of the By-Laws is hereby amended and
restated in its entirety to read as follows:
"The Board of Directors shall not be less than three nor more than the sum of
(i) fourteen and (ii) the number of directors that the holders of preferred
stock of the Corporation shall then have the right to elect, the exact number
thereof within such limitations to be fixed from time to time by resolution
adopted by a majority of the entire Board of Directors, and the exact number
shall be ten unless otherwise determined by resolution adopted by a majority of
the entire Board of Directors."
Section 3.1(c) of the By-Laws is hereby amended and restated in its entirety
to read as follows:
"(c) Any such committee, to the extent provided in the resolution of the
Board of Directors or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the shareholders a
dissolution of the Corporation or a revocation of a dissolution or amending
these By-Laws; and, unless the resolution, these By-Laws or the Articles of
Incorporation expressly so provides, no such committee shall have the power or
authority to authorize the issuance of stock, to adopt a certificate of merger
or to remove or indemnify directors."
Except to the extent specifically set forth herein, the By-Laws shall remain
in full force and effect, unmodified in any respect.
44
<PAGE>
Exhibit 3.5
AMENDMENT NO. 3 TO
SECOND AMENDED AND RESTATED
BY-LAWS
OF
WESTFIELD AMERICA, INC.
This Amendment No. 3 to the Second Amended and estated By-Laws of Westfield
America, Inc. (the "CORPORATION"), amends the Second Amended and Restated
By-laws (the "BY-LAWS") of the Corporation, effective as of April 29, 1999, as
follows:
The second sentence of Section 2.1 of the By-Laws is mended and restated in
its entirety to read as follows:
The Board of Directors shall not be less than three nor more than the sum of
(i) fourteen and (ii) the number of directors that the holders of preferred
stock of the Corporation shall then have the right to elect, the exact number
thereof within such limitations to be fixed from time to time by resolution
adopted by a majority of the entire Board of Directors, and the exact number
shall be nine unless otherwise determined by resolution adopted by a majority
of the entire Board of Directors.
Except to the extent specifically set forth herein, the By-Laws shall remain
in full force and effect, unmodified in any respect.
45
<PAGE>
EXHIBIT 11
WESTFIELD AMERICA, INC.
COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARE
OUTSTANDING OUTSTANDING
----------- --------------
<S> <C> <C> <C> <C>
Average share price for the three months ended
March 31, 1999 (1) $16.97
BASIC
COMMON SHARES OUTSTANDING
As of January 1, 1999 73,337,691 90 73,337,691
Net income $9,001
Less dividends on preferred shares:
Series A $2,128
Series B 653
Series C 1,594
Series C-1 531
Series C-2 531
Series D 2,657
Series D-1 531 (8,625)
-----------
Net income allocable to common shares 376
-----------
-----------
Per share amount $ 0.00
-----------
-----------
DILUTED
COMMON SHARES OUTSTANDING
As of January 1, 1999 73,337,691 90 73,337,691
1996 WARRANTS:
As of January 1, 1998 6,246,096
Series A Preferred Shares (5,871,330)
-----------
Excess 1996 Warrants (a) 374,766
-----------
-----------
Per Share Price
Average Market Price (b) $16.97
Exercise Price (c) $16.01
Common equivalent shares ((b-c)*a)/b 90 21,201
1997 WARRANTS:
As of January 1, 1998 2,089,552
Series B Preferred Shares (1,800,000)
-----------
Excess 1997 Warrants (d) 289,552
-----------
-----------
Per Share Price
Average Market Price (b) $16.97
Exercise Price (e) $15.00
Common equivalent shares ((b-e)*d)/b 90 33,613
</TABLE>
46
<PAGE>
WESTFIELD AMERICA, INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARE
OUTSTANDING OUTSTANDING
----------- --------------
<S> <C> <C> <C>
1998 SUBSCRIPTION AGREEMENT:
Capital Notes as of 1/1/1999 (g) 301,087,500
Per Share Price
Average Market Price (b) $ 16.97
Common equivalent shares (g*.05)/(b*.95) 933,807 90 933,807
-----------
Weighted average common and common equivalent shares 74,326,312
Net income $ 9,001
Less net income allocable to preferred shares (8,625)
-----------
Net income allocable to common shares $ 376
-----------
-----------
Per share amount $ 0.00
-----------
-----------
</TABLE>
Note 1 - The Company's preferred shares were not included in the earnings per
share calculation as their effect is antidilutive
Note 2 - The Company's Investor Unit Rights, which may be converted under
certain circumstances into shares of the Company's common stock, were not
included in the earnings per share calculation as their effect is antidilutive.
(1) The share price used for the earnings per share calculation is based on
the average daily closing market price of the Company's common stock as
reported by the New York Stock Exchange.
47
<PAGE>
Exhibit 12
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Income before income taxes $ 9,001 $12,551
Add: Minority interest in consolidated real estate partnerships 584 980
Equity in (income) losses of unconsolidated real estate partnerships (1,056) (487)
Distributions from unconsolidated real estate partnerships 2,143 1,952
Interest expense 49,144 20,291
------- -------
Total earnings available to cover fixed charges $59,816 $35,287
------- -------
------- -------
Total fixed charges-interest expensed and capitalized 49,387 20,409
Total Preferred Stock Dividends 8,625 2,723
------- -------
Total combined fixed charges and preferred stock dividends $58,012 $23,132
------- -------
------- -------
Ratio of earnings to fixed charges 1.21x 1.73x
------- -------
------- -------
Ratio of earnings to fixed charges and preferred stock dividends 1.03x 1.53x
------- -------
------- -------
Supplemental Disclosure of Ratio of Funds from Operations (FFO) to Fixed Charges:
FFO $41,170 $31,558
Interest expense 49,144 20,291
------- -------
Adjusted FFO available to cover fixed charges $90,314 $51,849
------- -------
------- -------
Total fixed charges - interest expensed and capitalized 49,387 20,409
Total preferred stock dividends 8,625 2,723
------- -------
Total combined fixed charges and preferred Stock dividends $58,012 $23,132
------- -------
------- -------
Ratio of adjusted FFO to fixed charges 1.83x 2.54x
------- -------
------- -------
Ratio of adjusted FFO to fixed charges and preferred stock dividends 1.56x 2.24x
------- -------
------- -------
</TABLE>
48
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q,
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 43,986
<SECURITIES> 0
<RECEIVABLES> 52,610
<ALLOWANCES> (8,576)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,070,664
<DEPRECIATION> (371,099)
<TOTAL-ASSETS> 3,820,269
<CURRENT-LIABILITIES> 124,447
<BONDS> 2,665,120
0
396,000
<COMMON> 731
<OTHER-SE> 624,388
<TOTAL-LIABILITY-AND-EQUITY> 3,820,269
<SALES> 0
<TOTAL-REVENUES> 125,349
<CGS> 0
<TOTAL-COSTS> 72,142
<OTHER-EXPENSES> (5,522)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,144
<INCOME-PRETAX> 9,001
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,001
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<PAGE>
EXHIBIT 99
AGREEMENT REGARDING DISCLOSURE OF LONG-TERM DEBT INSTRUMENTS
In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K,
Westfield America, Inc., a Missouri corporation (the "Company"), has not
filed as an exhibit to its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, any instrument with respect to long-term debt not being
registered where the total amount of securities authorized thereunder does
not exceed 10 percent of the total assets of the Company and its subsidiaries
on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A), of Regulation
S-K, the Company hereby agrees to furnish a copy of any such agreement to the
Securities Exchange Commission upon request.
WESTFIELD AMERICA, INC.
By: /s/ PETER S. LOWY
-----------------------
Peter S. Lowy
Co-President
50
