10-K 1 d10k.txt FORM 10-K =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITITES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the Fiscal Year Ended December 31, 2001 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) Commission File No 0-1743 THE ROUSE COMPANY (Exact name of registrant as specified in its charter) Maryland 52-0735512 ------------------------------- ------------------------ (State or other jurisdiction of) (I.R.S. Employer incorporation or organization Identification No.) 10275 Little Patuxent Parkway Columbia, Maryland 21044-3456 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (410) 992-6000 -------------- Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered ------------------- ------------------------- Common Stock (par value 1 [cent] per share) New York Stock Exchange ------------------------------------------ 9 1/4% Cumulative Quarterly Income Preferred Securities New York Stock Exchange ------------------------------------------------------- Series B Convertible Preferred Stock ------------------------------------ (par value 1 [cent] per share) New York Stock Exchange -----------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE ---- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months for (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ---------- As of March 15, 2002, there were outstanding 86,327,929 shares of the registrant's common stock, par value 1 [cent] , which is the only class of ------ common or voting stock of the registrant. As of that date, the aggregate market value of the shares of common stock held by nonaffiliates of the registrant (based on the closing price as reported in The Wall Street Journal, Eastern -------------------------------- Edition) was approximately $2,590,232,548. ------- Documents Incorporated by Reference The specified portions of the Annual Report to Shareholders for the fiscal year ended December 31, 2000 are incorporated by reference into Parts I, II and IV. Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before April 11, 2001 is incorporated by reference into Part III. =============================================================================== Part I ------ Item 1. Business. Item 1 (a). General Development of Business. The Rouse Company ("we", "Rouse" or "us") was incorporated as a business corporation under the laws of the State of Maryland in 1956. Our principal offices are located at The Rouse Company Building, Columbia, Maryland 21044. Our telephone number is (410) 992-6000. We, through our subsidiaries and affiliates, are engaged in (i) the ownership, management, acquisition and development of income-producing and other real estate in the United States, including retail centers, office and industrial buildings, mixed-use projects and community retail centers, and (ii) the development and sale of land, primarily in and around Columbia, Maryland and the Las Vegas, Nevada metropolitan area for residential, commercial and industrial uses. We elected to be taxed as a real estate investment trust (REIT) pursuant to the Internal Revenue Code of 1986, as amended, effective January 1, 1998. In general, a corporation that distributes at least 90% of its REIT taxable income to shareholders in any taxable year and complies with certain other requirements (relating primarily to the nature of its assets and the sources of its revenues) is not subject to Federal income taxation to the extent of the income which it distributes. We believe that we met the qualifications for REIT status as of December 31, 2001 and intend to meet the qualifications in the future and to distribute at least 90% of our REIT taxable income (determined after taking into account any net operating loss deduction) to shareholders in 2001 and subsequent years. We have elected to treat certain subsidiaries as Taxable REIT Subsidiaries (TRS), which were subject to Federal and state income taxes beginning in 2001. Except with respect to the TRS, we do not believe that we will be liable for significant income taxes at the Federal level or in most of the states in which we operate in 2002 and future years. Developments in 2001 and 2002 Relying on certain provisions of the REIT Modernization Act, which was enacted into law in December 1999, the Company negotiated agreements in the fourth quarter of 2000 to acquire the voting stock of certain real estate ventures owned by The Rouse Company Incentive Compensation Statutory Trust (the "Trust"). On January 2, 2001, the Company exchanged 137,928 shares of common stock for the Trust's I-1 shares of voting common stock of the ventures. Prior to this transaction, we owned substantially all of the financial interest in these ventures but only 9% of their voting stock. The shares acquired by the Company constitute all of the Trust's interests in the ventures. The fair value of the consideration exchanged was approximately $3.5 million. As a result of this transaction, the Company owns 100% of the voting common stock of the ventures. In January 2002, we, Simon Property Group, Inc. and Westfield America Trust announced that affiliates of each (collectively, the "purchasers") entered into a Purchase Agreement with Rodamco North America N.V. ("Rodamco") to purchase substantially all of the assets of Rodamco for an aggregate purchase price of approximately 2.48 billion euros (approximately $2.21 billion based on exchange rates then in effect) in cash, subject to adjustment, and the assumption of substantially all of Rodamco's liabilities, including approximately $2.18 billion of U.S. dollar denominated property debt and subsidiary perpetual preferred stock. Additional obligations to be borne by the purchasers include repayment of Rodamco corporate debt and payment of transaction expenses aggregating approximately $1.2 billion. The purchase price will be reduced by any amounts paid by Rodamco to its shareholders prior to closing. If the closing occurs after May 15, 2002, the purchase price will increase by an amount equal to the product of 622,642 euros and the number of days from May 1, 2002 until the closing. In connection with the Purchase Agreement, the purchasers entered into a Joint Purchase Agreement that specifies the properties each will acquire and sets forth the basis upon which the portion of the aggregate purchase price to be paid to Rodamco by each purchaser will be determined. Our share of the purchase price is expected to be approximately 601 million euros (approximately $536 million based on exchange rates in effect at the date of the Purchase Agreement). We also expect to repay a portion of Rodamco's corporate debt and transaction costs aggregating approximately $321 million and to assume approximately $675 million of U.S. dollar denominated property debt and subsidiary perpetual preferred stock. In the proposed acquisition, we will acquire, directly or indirectly, interests in the following operating properties: I-2 Interest to Property be acquired Location -------- ----------- -------- Collin Creek /(1)/ 70% Plano, TX Lakeside Mall 100% Sterling Heights, MI North Star /(1)/ 96% San Antonio, TX Oakbrook Center /(2)/ 47% Oakbrook, IL Perimeter Mall /(1)/ 50% Atlanta, GA The Streets at South Point 100% Durham, NC Water Tower Place /(2)/ 52% Chicago, IL Willowbrook /(1)/ 62% Wayne, NJ Notes: /(1)/ As a result of the proposed acquisition, we will own 100% interests in these properties. /(2)/ Property also contains significant office space. The purchasers will jointly own the remaining assets to be acquired from Rodamco. We will own an interest of approximately 27.3% in these assets, most of which are intended to be sold. These assets include interests in a property/investment management company (RoProperty Services BV) and a New York office building (745 Fifth Avenue) and investments in real estate operating companies (South Square Mall, River Ridge, the Plaza at Saw Mill Place, Tishman Investments, Westin New York and Kravco). Rodamco may sell some of these assets prior to the closing of the acquisition, and the proceeds from any sales will reduce the purchase price. RoProperty Services BV and 745 Fifth Avenue are currently under contracts for sale. In both cases, sale is subject to a number of conditions, and if the sales are completed, it is uncertain if they will occur before the purchase of the Rodamco assets. The purchasers intend to operate and develop another property management business, Urban Retail Properties Co., with a view toward capitalizing on its current market position and the skills and talents of its existing employees. Also in connection with the Rodamco transaction, we agreed to sell our interest in Franklin Park, a regional retail center in Toledo, Ohio, to an affiliate of Westfield America Trust for $20.6 million. We expect this transaction to close when the purchase of assets from Rodamco closes. As discussed above, the cash portion of the purchase price is payable in euros. In January 2002, we acquired options to purchase 601 million euros at a weighted-average per euro price of $0.8819. These transactions were executed to reduce our risk to movements in currency exchange rates. The contracts expire in May 2002 and had an aggregate cost of $11.3 million. We will carry the contracts at fair value in our balance sheet and record changes in their fair values in operations. If the value of the euro does not exceed the strike prices in the contracts, the contracts will have no value at their maturities. I-3 We intend to fund the acquisition of the assets of Rodamco as follows (in millions): Sales of common stock completed in January/February 2002 $ 457 Sale of certain "noncore" assets acquired from Rodamco 135 Sale of interests in Columbia community retail centers (see below) 60 Sale of interest in Franklin Park 20 Other sources, including proceeds from possible issuance of debt and/or possible dispositions of interests in operating properties 185 ----- $ 857 ===== In January 2002, we obtained a commitment from Banc of America Securities, LLC and Banc of America Mortgage Capital Corporation for up to an $870 million bridge facility with an initial maturity of six months from the closing of the acquisition to provide interim financing for a portion of the purchase price and related costs. Availability under the bridge facility was reduced to $450 million as a result of the issuance of common stock in January and February 2002. We have the right to extend the commitment for an additional twelve months at reduced levels. We believe we will have sufficient liquidity to close the acquisition and repay amounts borrowed under the bridge facility before its extended maturity. There are significant risks associated with our proposed acquisition of assets from Rodamco. Our obligation to consummate the proposed acquisition is not subject to a financing condition. While we believe we have significant liquidity to close the transaction, our plans include using the proceeds from the sales of certain properties and assets to be acquired jointly with the other purchasers to repay any borrowings we may make under the bridge facility. We cannot assure that these assets will be sold on the anticipated time schedule or at the prices we expect. We are jointly and severally liable with the other purchasers under the purchase agreement such that if the other purchasers fail to perform, Rodamco could look to us for its damages (although we would have claims against the other purchasers under cross indemnities). We cannot assure that we will be able to consummate the acquisition if the other purchasers fail to perform. In addition, there are several conditions to closing the acquisition, including approval of the acquisition by the shareholders of Rodamco. I-4 We currently expect that a vote by the shareholders of Rodamco will occur on March 25, 2002; however, there is ongoing legal action in the Netherlands and we cannot assure that the vote will occur on that date. It is possible that other legal challenges could occur. We cannot assure that the shareholders of Rodamco will approve the transaction if and when they do vote. Accordingly, we cannot assure that the transaction will occur. For more information on these and other risks associated with the proposed acquisitions, please refer to Exhibit 99.2 to our Annual Report on Form 10-K for the year ended December 31, 2001. In January and February of 2002, we issued 16.675 million shares of common stock for aggregate gross proceeds of $456.9 million ($27.40 per share) under our effective shelf registration statement. We plan to use the proceeds of the stock issuance to fund a portion of the purchase price of the proposed acquisition of the assets of Rodamco described above. In March 2002, we agreed to sell interests in 12 community retail centers in Columbia for net proceeds of approximately $100 million. We expect to record a gain on this transaction. We also agreed to repay $34.2 million of debt secured by these properties and expect to incur losses on the early extinguishment of this debt of approximately $5.1 million, including prepayment penalties of $4.6 million. We expect this transaction to close in April 2002. Item 1 (b). Financial Information About Industry Segments. Information required by Item 1(b) is incorporated herein by reference to note 8 of the notes to consolidated financial statements included in the 2001 Annual Report to Shareholders. As noted in Item 1(a), we are a real estate company engaged, through our subsidiaries and affiliates, in most aspects of the real estate industry, including the management, acquisition and development of income-producing and other properties (retail and commercial), community development and land development. These business segments are further described below. Item 1 (c). Narrative Description of Business. Retail Centers: -------------- At December 31, 2001, we owned, in whole or in part, and operated: . 41 regional retail centers encompassing 32.6 million square feet, including 19.8 million square feet leased to or owned by department stores; . Retail components of 5 mixed-use projects aggregating 0.9 million square feet of leasable space; . 12 community retail centers in Columbia, Maryland with 1.2 million square feet of leasable space; and I-5 . 3 community retail centers in Summerlin, Nevada with 0.4 million square feet of leasable space. We also provide management services for other retail centers owned by others under management agreements that provide for base and incentive fees. We equity own interests in some of these centers. At December 31, 2001 we managed 5 such centers with 4.9 million square feet of space, 2.6 million of which was department store space. The activities involved in operating and managing retail centers include: . identifying and attracting desirable new tenants; . negotiating lease terms with existing and prospective tenants; . conducting local market and consumer research; . developing and implementing short-term and long-term merchandising and leasing plans; . assisting tenants in the presentation of their merchandise and the layout of their stores and store fronts; and . maintaining the buildings and common areas. Office and Other Properties: --------------------------- At December 31, 2001, we owned and managed: . Office components of 5 mixed-use projects with 1.9 million square feet of leasable space; . 41 office and industrial buildings with 2.2 million square feet of leasable space and other properties in and around Las Vegas, Nevada; . 18 office and industrial buildings with 1.4 million square feet of leasable space in Columbia, Maryland; . 56 office and industrial buildings with 3.8 million square feet of leasable space primarily in the Baltimore-Washington corridor, but outside Columbia. The activities involved in operating and managing office and other properties include: . identifying and attracting desirable new tenants; . negotiating lease terms with existing and prospective tenants; . conducting local market research; I-6 . developing and implementing short-term and long-term leasing plans; . assisting tenants in the layout of their spaces; and . maintaining the buildings and common areas. Commercial Development: ---------------------- We renovate and expand existing retail centers and develop suburban and urban retail centers, mixed-use projects and office and industrial buildings primarily for ourselves or ventures in which we have invested. The activities involved in these development activities include: . initial market and consumer research; . evaluating and acquiring land sites; . obtaining necessary public approvals; . engaging architectural and engineering firms to design projects; . estimating and managing development costs; . developing and testing pro forma operating statements; . selecting a general contractor; . arranging construction and permanent financing; . identifying and obtaining department stores and other tenants; . negotiating lease terms; . negotiating partnership and joint venture agreements; and . promoting new, renovated and/or expanded retail centers, mixed-use projects and other projects. We and a lessee are expanding Fashion Show, in Las Vegas, Nevada. We are an investor in and the development manager for a joint venture developing the Village of Merrick Park, a mixed-use project in Coral Gables, Florida. We are also planning additional retail center expansions and are pursuing new retail center development in San Antonio, Texas, Dade County, Florida and Summerlin, Nevada. In addition, we are developing new office and industrial buildings in Summerlin. Community Development: --------------------- We are the developers of the master-planned communities of Columbia, Maryland and Summerlin, Nevada. Columbia is located in the Baltimore-Washington corridor and encompasses approximately 18,000 acres. We own approximately 1,200 I-7 saleable acres of land in and around Columbia, including the adjacent community of Emerson. Summerlin is located immediately north and west of Las Vegas and encompasses approximately 22,500 acres. We own approximately 7,300 saleable acres of land in Summerlin. We develop and sell land in both communities to builders and other developers for residential, commercial and other uses. We may also develop some of this land for our own purposes. We are an investor in a joint venture that is developing Fairwood, a new community in Prince Georges County, Maryland. We are also developing or holding for sale parcels of land elsewhere in Nevada and California. General ------- In all aspects of our business pertaining to the ownership, management, acquisition or development of income-producing and other real estate, we operate in highly competitive markets. With respect to the leasing and operation or management of developed properties, each project faces market competition from existing and future developments in its geographical market area. We also face competition in and around Columbia, Maryland and Las Vegas, Nevada with respect to the development and sale of land for residential, commercial and industrial uses. Neither our business, taken as a whole, nor any of our operating segments, is seasonal in nature. Federal, state and local statutes and regulations relating to the protection of the environment have previously had no material effect on our business. Future development opportunities may require additional capital and other expenditures in order to comply with such statutes and regulations. It is impossible at this time to predict with any certainty the magnitude of any such expenditures or the long-range effect, if any, on our operations. Compliance with such laws has had no material adverse effect on our operating results or competitive position in the past; we anticipate that they will have no material adverse effect on our future operating results or competitive position in the industry. None of our operating segments depends upon a single customer or a few customers, the loss of which would have a materially adverse effect on the segment. No customer accounts for 10% or more of our consolidated revenues. I-8 We believe department stores and other anchor tenants ("anchors") are instrumental in creating and maintaining customer traffic in our retail centers. Generally, higher levels of customer traffic will result in higher tenant sales, a greater demand for space by other tenants and, as a result, more favorable leasing terms (including higher minimum rents) for our space. Most anchors own their buildings, the land under them and, in some cases, adjacent parking areas. Some anchors enter into long-term lease agreements at rates that are generally lower than the rents charged to other tenants at the retail center. Accordingly, anchors do not provide a significant source of revenues in our operating results. Anchors typically enter into reciprocal easement agreements that cover items such as operational matters, initial construction and future expansion. The following table identifies the owners of the anchors and the name plates on their sites within our portfolio (including our joint venture and managed properties): Owner/Name Plate Locations -------------------------------------------- May Company Lord & Taylor 9 Strawbridge's 6 Hecht's 4 Foley's 4 Robinsons-May 1 -------- 24 -------- JCPenney 21 Sears 17 Dillard's 15 Federated Department Stores Macy's 11 Burdines 2 Bloomingdale's 2 -------- 15 -------- Target Corporation Marshall Field's 4 Mervyn's 3 -------- 7 -------- Nordstrom 6 I-9 Owner/Name Plate, continued Locations -------------------------------------------- Saks Incorporated Saks Fifth Avenue 3 Younkers 1 Carson Pirie Scott 1 -------- 5 -------- Boscov's 4 Rich's 2 Nieman Marcus 1 Other occupied sites 11 Other unoccupied sites 6 -------- Total anchors 134 ======== We employed 3,396 full-time and part-time employees at December 31, 2001. I-10 Item 2. Properties. We lease our headquarters building (approximately 127,000 square feet) in Columbia, Maryland for an initial term of 30 years which expires in 2003 with options for two 15-year renewal periods. The lease on the headquarters building is accounted for as a capital lease. Information respecting our operating properties is incorporated herein by reference to the "Projects of The Rouse Company" table in pages 46 through 49 of Exhibit 13 to this Form 10-K. The ownership of virtually all properties is subject to mortgage financing. The table of projects includes properties managed by us for a fee. Excluding such managed properties, certain of the remaining properties are subject to leases which provide an option to purchase (or repurchase) the property and/or to renew the leases for one or more renewal periods. The years of expiration indicated below assume all options to extend the terms of leases are exercised. The operating properties subject to such leases in whole or part are as follows: Nature of Year of expiration Property interest of lease -------- -------- -------- American City Building Leasehold and fee 2020 Arizona Center Leasehold Various dates from 2017 to 2050 Augusta Mall Leasehold 2068 Bayside Marketplace Leasehold by joint venture 2062 Echelon Mall Leasehold 2008 Faneuil Hall Marketplace Leasehold 2074 Fashion Place Mall Leasehold 2059 First National Bank Plaza Leasehold 2013 Franklin Park Leasehold and fee by 2024 joint venture The Gallery at Market Leasehold 2082 East Governor's Square Leasehold 2054 Harborplace Leasehold 2054 Highland Mall Leasehold and fee by 2070 joint venture I-11 Item 2. Properties, continued. Nature of Year of expiration Property interest of lease -------- -------- -------- Hughes Center Leasehold 2059 The Jacksonville Landing Leasehold 2057 Mall St. Matthews Leasehold 2053 Pioneer Place Leasehold 2076 Plymouth Meeting Leasehold 2063 Riverwalk Leasehold and fee by joint 2076 venture South Street Seaport Leasehold 2031 Tampa Bay Center Leasehold and fee by joint 2047 venture Westdale Mall Leasehold by joint venture Westlake Center Leasehold 2043 I-12 Item 3. Legal Proceedings. None. I-13 Item 4. Submission of Matters to a Vote of Security Holders. None. I-14 Executive Officers of the Registrant The executive officers of the Company as of March 20, 2002 are:
Present office and Date of election Business or professional position with the or appointment to experience during the past Executive Officer Age Company present office five years ------------------ --- ------------------- ----------------- ---------------------------- Anthony W. Deering 57 Chairman of the Board, 2/25/97 Chairman of the Board, President and President and 2/25/93 Chief Executive Officer of the Company; Chief Executive Officer 2/23/95 formerly President and Chief Executive Officer of the Company Jeffrey H. Donahue 55 Executive Vice-President 12/3/98 Executive Vice-President and Chief Financial and Chief Financial Officer 9/23/93 Officer of the Company; formerly Senior Vice- President and Chief Financial Officer of the Company Duke S. Kassolis 50 Senior Vice-President 7/1/99 Senior Vice-President and Director, Property and Director, Property 9/23/93 Operations; formerly Senior Vice-President Operations and Director of Office and Mixed-Use Operations of the Company Douglas A. McGregor 59 Vice Chairman and Chief 12/3/98 Vice Chairman and Chief Operating Officer; Operating Officer formerly Executive Vice-President for Development and Operations of the Company Robert Minutoli 51 Senior Vice-President 9/23/93 Senior Vice-President and Director of and Director of 8/17/93 New Business of the Company New Business
I-15 Executive Officers of the Registrant
Present office and Date of election Business or professional position with the or appointment to experience during the past Executive Officer Age Company present office five years ------------------ --- ------------------- ----------------- ---------------------------- Robert D. Riedy 56 Senior Vice-President 9/23/93 Senior Vice-President and Director of and Director of Retail 8/17/93 Retail Leasing of the Company Leasing Alton J. Scavo 55 Senior Vice-President and 9/23/93 Senior Vice-President and Director of Director of the 8/17/93 the Community Development Division of Community Development the Company and General Manager of Division and General Columbia Manager of Columbia Jerome D. Smalley 52 Executive Vice-President 12/3/98 Executive Vice-President - Development; - Development formerly Senior Vice-President and Director of the Commercial and Office Development Division of the Company Daniel C. Van Epp 46 Senior Vice-President 5/13/99 Senior Vice-President of the Company and of the Company and President of The Howard Hughes Corporation; President of The Howard formerly Vice-President, West Coast Community Hughes Corporation Development Division of the Company and Executive Vice-President, The Howard Hughes Corporation
The term of office of each officer is until election of a successor or otherwise at the pleasure of the Board of Directors. There is no arrangement or understanding between any of the above-listed officers and any other person pursuant to which any such officer was elected as an officer, except with respect to Anthony W. Deering. None of the above-listed officers has any family relationship with any director or other executive officer. I-16 Part II ------- Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. Information required by Item 5 is incorporated herein by reference to page 30 of Exhibit 13. Item 6. Selected Financial Data. Information required by Item 6 is incorporated by reference to page 29 of Exhibit 13. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Information required by Item 7 is incorporated herein by reference to pages 31 through 43 of Exhibit 13. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Information required by Item 7A is incorporated herein by reference to page 40 of Exhibit 13. Item 8. Financial Statements and Supplementary Data. Financial Statements required by Item 8 are set forth in the Index to Financial Statements and Schedules on page IV-2. Supplementary data required by Item 8 are incorporated herein by reference to page 30 of Exhibit 13. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. II-1 Part III -------- The information required by Items 10, 11, 12 and 13 (except that information regarding executive officers called for by Item 10 that is contained in Part I) is incorporated herein by reference from the definitive proxy statement that the Company intends to file pursuant to Regulation 14A on or before April 11, 2002. III-1 Part IV ------- Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1. and 2. Financial Statements and Schedules: Reference is made to the Index to Financial Statements and Schedules on page IV-3. (b) Reports on Form 8-K: Current Report on Form 8-K filed on January 16, 2002 disclosing that the Company, Simon Property Group, Inc. and Westfield America Trust had entered into an agreement to purchase substantially all of the assets of Rodamco North America N.V. Current Report on Form 8-K filed on January 18, 2002, disclosing that the Company was selling 14.5 million shares of common stock under its effective shelf registration statement. (c) Exhibits required by Item 601 of Regulation S-K. Exhibit No. ----------- 3 Articles of Incorporation and Bylaws 12.1 Ratio of earnings to fixed charges 12.2 Ratio of earnings to combined fixed charges and Preferred stock dividend requirements 13 Annual report to security holders 21 Subsidiaries of the Registrant 23 Consent of KPMG LLP, Independent Auditors 24 Power of Attorney 99 Additional Exhibits: 99.1 Form 11-K Annual Report of The Rouse Company Savings Plan for the year ended December 31, 2001 99.2 Factors affecting future operating results IV-1 The Rouse Company Index to Financial Statements and Schedules Page ---- Independent Auditors' Report IV-3 Financial Statements: Included on pages 1 through 30 of Exhibit 13 incorporated herein by reference: Consolidated Balance Sheets at December 31, 2001 and 2000 Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2001, 2000 and 1999 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2001, 2000 and 1999 Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999 Notes to Consolidated Financial Statements Schedules: Schedule II Valuation and Qualifying Accounts IV-4 Schedule III Real Estate and Accumulated Depreciation IV-5 All other schedules have been omitted as not applicable or not required, or because the required information is included in the related financial statements or notes thereto. IV-2 INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors and Shareholders The Rouse Company: We have audited the consolidated financial statements of The Rouse Company and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Rouse Company and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedules referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG LLP Baltimore, Maryland February 22, 2002 IV-3 Schedule II THE ROUSE COMPANY AND SUBSIDIARIES Valuation and Qualifying Accounts Years ended December 31, 2001, 2000 and 1999 (in thousands)
Additions ------------------------ Balance at Charged to Charged to Balance at beginning costs and other end of Descriptions of year expenses accounts Deductions year ------------ ---------- ---------- ---------- ---------- ---------- Year ended December 31, 2001: Allowance for doubtful receivables $ 22,608 $ 8,992 $ 464/(1)/ $ 4,858/(2)/ $ 27,206 ========== ========= ========= ========== ========== Deferred tax asset valuation allowance $ --- $ 2,572 $ 4,463/(1)/ $ 959/(3)/ $ 6,076 ========== ========= ========= ========== ========== Preconstruction $ 7,576 $ 5,434 $ 749/(1)/ $ 6,231/(4)/ $ 7,528 ========== ========= ========= ========== ========== Year ended December 31, 2000: Allowance for doubtful receivables $ 23,570 $ 6,683 $ --- $ 7,645/(2)/ $ 22,608 ========== ========= ========= ========== ========== Preconstruction $ 5,247 $ 4,691 $ --- $ 2,362/(4)/ $ 7,576 ========== ========= ========= ========== ========== Year ended December 31, 1999: Allowance for doubtful receivables $ 19,014 $ 7,972 $ --- $ 3,416/(2)/ $ 23,570 ========== ========= ========= ========== ========== Preconstruction $ 15,908 $ --- $ --- $ 10,661/(4)/ $ 5,247 ========== ========= ========= ========== ==========
Notes: /(1)/ Balance acquired from The Rouse Company Incentive Compensation Statutory Trust. Reference is made to note 2 to the consolidated financial statements for information related to this acquisition. /(2)/ Balances written off as uncollectible. /(3)/ Recognition of deferred tax benefits previously provided for through the valuation allowance account. /(4)/ Costs of unsuccessful projects written off and other deductions. IV-4 Schedule III ------------ THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition --------------------- ------------------------ Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- -------- ---- ----- ------ -------- Operating Properties: The Mall in Columbia $ 136,487 $ 6,788 $ - $ 184,895 - Retail Center Columbia, MD Pioneer Place 133,101 2,813 - 177,571 - Mixed-Use Project Portland, OR Exton Square 101,916 4,979 - 166,356 - Retail Center Exton, PA Fashion Show 39,019 35,036 120,347 8,899 - Retail Center Las Vegas, NV South Street Seaport 45,000 - - 154,462 - Retail Center New York, NY Arizona Center 73,621 98 - 152,231 - Mixed-Use Project Phoenix, AZ Woodbridge Center 126,494 26,301 - 120,893 - Retail Center Woodbridge, NJ Fashion Place 112,601 19,379 119,715 2,181 - Retail Center Salt Lake City, UT Beachwood Place 114,666 10,673 - 128,892 - Retail Center Cleveland, OH Gross amount at which carried at close of period --------------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ------------ Operating Properties: The Mall in Columbia $ 6,788 $ 184,895 $ 191,683 $ 27,058 08/71 N/A Note 6 Retail Center Columbia, MD Pioneer Place 2,813 177,571 180,384 36,905 03/90 N/A Note 6 Mixed-Use Project Portland, OR Exton Square 4,979 166,356 171,335 20,453 03/73 N/A Note 6 Retail Center Exton, PA Fashion Show 35,036 129,246 164,282 16,800 03/81 06/96 Note 6 Retail Center Las Vegas, NV South Street Seaport - 154,462 154,462 36,600 07/83 N/A Note 6 Retail Center New York, NY Arizona Center 98 152,231 152,329 42,915 07/83 N/A Note 6 Mixed-Use Project Phoenix, AZ Woodbridge Center 26,301 120,893 147,194 37,025 03/71 N/A Note 6 Retail Center Woodbridge, NJ Fashion Place 19,379 121,896 141,275 6,605 03/72 10/98 Note 6 Retail Center Salt Lake City, UT Beachwood Place 10,673 128,892 139,565 17,392 08/78 N/A Note 6 Retail Center Cleveland, OH
IV-5 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ----------------------- ---------------------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Oviedo Marketplace $ 70,000 $ 9,594 $ - $ 129,859 - Retail Center Orlando, FL Owings Mills 61,000 21,639 - 116,182 - Retail Center Baltimore, MD Paramus Park 94,802 13,476 - 118,166 - Retail Center Paramus, NJ Moorestown Mall 61,288 10,256 68,889 49,130 - Retail Center Moorestown, NJ The Gallery at Harborplace 95,299 6,648 - 105,186 - Mixed-Use Project Baltimore, MD Westlake Center 70,473 10,582 - 101,116 - Mixed-Use Project Seattle, WA Mall St. Matthews 68,555 - - 108,083 - Retail Center Louisville, KY Bayside Marketplace 72,622 - - 98,381 - Retail Center Miami, FL Faneuil Hall Marketplace 55,000 - - 96,586 - Retail Center Boston, MA Gross amount at which carried at close of period ------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Oviedo Marketplace $ 9,594 $ 129,859 $ 139,453 $ 10,182 03/98 N/A Note 6 Retail Center Orlando, FL Owings Mills 21,639 116,182 137,821 18,856 07/86 N/A Note 6 Retail Center Baltimore, MD Paramus Park 13,476 118,166 131,642 17,773 03/74 N/A Note 6 Retail Center Paramus, NJ Moorestown Mall 10,256 118,019 128,275 9,208 03/63 12/97 Note 6 Retail Center Moorestown, NJ The Gallery at Harborplace 6,648 105,186 111,834 30,073 09/87 N/A Note 6 Mixed-Use Project Baltimore, MD Westlake Center 10,582 101,116 111,698 31,171 10/88 N/A Note 6 Mixed-Use Project Seattle, WA Mall St. Matthews - 108,083 108,083 26,265 03/62 N/A Note 6 Retail Center Louisville, KY Bayside Marketplace - 98,381 98,381 22,783 04/87 N/A Note 6 Retail Center Miami, FL Faneuil Hall Marketplace - 96,586 96,586 15,493 08/76 N/A Note 6 Retail Center Boston, MA
IV-6
THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands) Costs capitalized Initial cost to subsequent Company to acquisition ------------------------ ------------------------ Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- White Marsh $ 78,488 $ 10,782 $ - $ 82,754 - Retail Center Baltimore, MD Governor's Square 67,990 - - 82,974 - Retail Center Tallahassee, FL Augusta Mall 56,431 4,697 - 74,782 - Retail Center Augusta, GA Oakwood Center 51,889 15,938 - 63,083 - Retail Center Gretna, LA Plymouth Meeting 33,336 702 - 77,776 - Retail Center Plymouth Meeting, PA Cherry Hill Mall 75,441 14,767 - 60,610 - Retail Center Cherry Hill, NJ Riverwalk 11,539 - - 72,212 - Retail Center New Orleans, LA Hulen Mall 61,688 7,575 - 64,041 - Retail Center Ft. Worth, TX Echelon Mall 56,060 6,160 - 63,736 - Retail Center Voorhees, NJ Gross amount at which carried at close of period ------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ---------- White Marsh $ 10,782 $ 82,754 $ 93,536 $ 24,000 08/81 N/A Note 6 Retail Center Baltimore, MD Governor's Square - 82,974 82,974 14,247 08/79 N/A Note 6 Retail Center Tallahassee, FL Augusta Mall 4,697 74,782 79,479 10,948 08/78 N/A Note 6 Retail Center Augusta, GA Oakwood Center 15,938 63,083 79,021 14,233 10/82 N/A Note 6 Retail Center Gretna, LA Plymouth Meeting 702 77,776 78,478 17,083 02/66 N/A Note 6 Retail Center Plymouth Meeting, PA Cherry Hill Mall 14,767 60,610 75,377 21,594 10/61 N/A Note 6 Retail Center Cherry Hill, NJ Riverwalk - 72,212 72,212 15,594 08/86 N/A Note 6 Retail Center New Orleans, LA Hulen Mall 7,575 64,041 71,616 13,886 08/77 N/A Note 6 Retail Center Ft. Worth, TX Echelon Mall 6,160 63,736 69,896 14,410 09/70 N/A Note 6 Retail Center Voorhees, NJ
IV-7 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------------------ ------------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Harborplace $ 34,066 $ - $ - $ 59,302 - Retail Center Baltimore, MD 3800 Howard Hughes Parkway 37,083 3,622 38,438 3,400 - Office Building/Industrial Las Vegas, NV Blue Cross & Blue Shield 23,833 1,000 - 44,269 - Building I Office Building Baltimore, MD The Jacksonville Landing 1,629 - - 33,718 - Retail Center Jacksonville, FL Village of Cross Keys 14,097 925 - 31,783 - Mixed-Use Project Baltimore, MD Westdale Mall 22,138 697 30,495 1,251 - Retail Center Cedar Rapids, IA 3993 Howard Hughes Parkway - 1,526 - 28,924 - Office Building Las Vegas, NV 3773 Howard Hughes Parkway 21,272 1,739 22,625 3,564 - Office Building Las Vegas, NV Gross amount at which carried at close of period ------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Harborplace $ - $ 59,302 $ 59,302 $ 12,586 07/80 N/A Note 6 Retail Center Baltimore, MD 3800 Howard Hughes Parkway 3,622 41,838 45,460 8,766 11/86 06/96 Note 6 Office Building/Industrial Las Vegas, NV Blue Cross & Blue Shield 1,000 44,269 45,269 13,368 07/89 N/A Note 6 Building I Office Building Baltimore, MD The Jacksonville Landing - 33,718 33,718 15,829 06/87 N/A Note 6 Retail Center Jacksonville, FL Village of Cross Keys 925 31,783 32,708 11,258 09/65 N/A Note 6 Mixed-Use Project Baltimore, MD Westdale Mall 697 31,746 32,443 2,090 07/79 10/98 Note 6 Retail Center Cedar Rapids, IA 3993 Howard Hughes Parkway 1,526 28,924 30,450 2,801 01/00 N/A Note 6 Office Building Las Vegas, NV 3773 Howard Hughes Parkway 1,739 26,189 27,928 4,068 11/95 6/96 Note 6 Office Building Las Vegas, NV
IV-8 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------------ ---------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Alexander & Alexander $ 16,684 $ 1,000 $ - $ 26,868 - Building II Office Building Baltimore, MD Hunt Valley 75 11,931 8,136 14,187 4,091 - Office Building Hunt Valley, MD 3960 Howard Hughes Parkway 23,254 800 - 24,845 - Office Building Las Vegas, NV Seventy Columbia Corp Ctr 20,847 857 - 24,408 - Office Building Columbia, MD The Gallery at Market East - - - 24,922 - Retail Center Philadelphia, PA Mondawmin Mall 1,098 2,251 - 18,829 - Retail Center Baltimore, MD Blue Cross & Blue Shield 8,693 1,000 - 16,413 - Building II Office Building Baltimore, MD Senate Plaza 11,144 2,284 13,319 1,585 - Office Building Camp Hill, PA Gross amount at which carried at close of period -------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Alexander & Alexander $ 1,000 $ 26,868 $ 27,868 $ 9,139 09/87 N/A Note 6 Building II Office Building Baltimore, MD Hunt Valley 75 8,136 18,278 26,414 1,662 07/84 12/98 Note 6 Office Building Hunt Valley, MD 3960 Howard Hughes Parkway 800 24,845 25,645 5,607 04/98 N/A Note 6 Office Building Las Vegas, NV Seventy Columbia Corp Ctr 857 24,408 25,265 7,654 06/92 N/A Note 6 Office Building Columbia, MD The Gallery at Market East - 24,922 24,922 8,619 08/77 N/A Note 6 Retail Center Philadelphia, PA Mondawmin Mall 2,251 18,829 21,080 9,123 01/78 N/A Note 6 Retail Center Baltimore, MD Blue Cross & Blue Shield 1,000 16,413 17,413 4,598 08/90 N/A Note 6 Building II Office Building Baltimore, MD Senate Plaza 2,284 14,904 17,188 3,077 07/72 12/98 Note 6 Office Building Camp Hill, PA
IV-9 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------------ ---------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- 3753/3763 Howard Hughes Pky $ 10,154 $ 3,844 $ 12,018 $ 941 - Office Building Las Vegas, NV Alexander & Alexander 9,727 650 - 15,796 - Building I Office Building Baltimore, MD Forty Columbia Corp Center 11,234 636 - 15,653 - Office Building Columbia, MD Fifty Columbia Corp Center 11,637 463 - 15,687 - Office Building Columbia, MD 3930 Howard Hughes Parkway 4,800 3,108 11,279 1,325 - Office Building Las Vegas, NV Sixty Columbia Corp Center 14,351 1,050 - 14,526 - Office Building Columbia, MD Centerpointe 8,101 3,855 11,302 155 - Office Building Baltimore, MD Tampa Bay Center 18,770 11,259 - 4,024 - Retail Center Tampa, FL Gross amount at which carried at close of period ----------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- 3753/3763 Howard Hughes Pky $ 3,844 $ 12,959 $ 16,803 $ 2,381 10/91 6/96 Note 6 Office Building Las Vegas, NV Alexander & Alexander 650 15,796 16,446 6,287 11/88 N/A Note 6 Building I Office Building Baltimore, MD Forty Columbia Corp Center 636 15,653 16,289 6,696 06/87 N/A Note 6 Office Building Columbia, MD Fifty Columbia Corp Center 463 15,687 16,150 5,766 11/89 N/A Note 6 Office Building Columbia, MD 3930 Howard Hughes Parkway 3,108 12,604 15,712 3,918 12/94 06/96 Note 6 Office Building Las Vegas, NV Sixty Columbia Corp Center 1,050 14,526 15,576 1,307 02/99 N/A Note 6 Office Building Columbia, MD Centerpointe 3,855 11,457 15,312 936 07/87 12/98 Note 6 Office Building Baltimore, MD Tampa Bay Center 11,259 4,024 15,283 2,157 08/76 N/A Note 6 Retail Center Tampa, FL
IV-10
THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands) Costs capitalized Initial cost to subsequent Company to acquisition ---------------------- ---------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Canyon Center C&D $ 139 $ 1,723 $ - $ 13,480 - Office Building/Industrial Las Vegas, NV Canyon Center 11,862 2,081 7,161 5,281 - Office Building Las Vegas, NV Schilling Plaza South 4,800 5,000 7,402 1,325 - Office Building Baltimore, MD Schilling Plaza North 7,697 4,470 8,059 908 - Office Building Baltimore, MD 3980 Howard Hughes Parkway 10,032 879 5,583 6,251 - Office Building Las Vegas, NV Crossing Business Ctr 5,979 2,842 1,416 8,305 - Phase III Office Building Las Vegas, NV Thirty Columbia Corp Ctr 12,544 1,160 - 10,816 - Office Building Columbia, MD 3770 Howard Hughes Parkway 5,117 691 8,010 3,034 - Office Building Las Vegas, NV Gross amount at which carried at close of period -------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ------------ Canyon Center C&D $ 1,723 $ 13,480 $ 15,203 $ 2,877 06/98 N/A Note 6 Office Building/Industrial Las Vegas, NV Canyon Center 2,081 12,442 14,523 1,931 03/98 N/A Note 6 Office Building Las Vegas, NV Schilling Plaza South 5,000 8,727 13,727 1,150 07/87 12/98 Note 6 Office Building Baltimore, MD Schilling Plaza North 4,470 8,967 13,437 758 07/80 12/98 Note 6 Office Building Baltimore, MD 3980 Howard Hughes Parkway 879 11,834 12,713 1,767 04/97 N/A Note 6 Office Building Las Vegas, NV Crossing Business Ctr 2,842 9,721 12,563 1,915 09/96 N/A Note 6 Phase III Office Building Las Vegas, NV Thirty Columbia Corp Ctr 1,160 10,816 11,976 5,392 04/86 N/A Note 6 Office Building Columbia, MD 3770 Howard Hughes Parkway 691 11,044 11,735 4,445 10/90 06/96 Note 6 Office Building Las Vegas, NV
IV-11 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition -------------------- --------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- -------- ---- --------- -------- --------- Twenty Columbia Corp Ctr $ 6,919 $ 927 $ - $ 10,106 - Office Building Columbia, MD Hickory Ridge 8,028 907 - 10,080 - Village Center Columbia, MD American City Building 3,163 - - 10,790 - Office Building Columbia, MD Dorsey Search 9,092 911 - 9,815 - Village Center Columbia, MD Inglewood Office II 5,859 2,233 7,304 1,186 - Office Building Landover, MD 10000 W. Charleston Arbors 23,981 695 - 9,730 - Office Building Summerlin, NV Harper's Choice 7,566 546 - 9,578 - Village Center Columbia, MD 201 International Circle 3,571 5,464 3,763 652 - Office Building Baltimore, MD Gross amount at which carried at close of period --------------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- --------- ------ ------------ ------------ -------- ------------ Twenty Columbia Corp Ctr $ 927 $ 10,106 $ 11,033 $ 5,048 06/81 N/A Note 6 Office Building Columbia, MD Hickory Ridge 907 10,080 10,987 2,390 06/92 N/A Note 6 Village Center Columbia, MD American City Building - 10,790 10,790 9,592 03/69 N/A Note 6 Office Building Columbia, MD Dorsey Search 911 9,815 10,726 3,066 09/89 N/A Note 6 Village Center Columbia, MD Inglewood Office II 2,233 8,490 10,723 1,047 07/86 12/98 Note 6 Office Building Landover, MD 10000 W. Charleston Arbors 695 9,730 10,425 1,452 05/99 N/A Note 6 Office Building Summerlin, NV Harper's Choice 546 9,578 10,124 3,776 06/71 N/A Note 6 Village Center Columbia, MD 201 International Circle 5,464 4,415 9,879 491 07/82 12/98 Note 6 Office Building Baltimore, MD
IV-12 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition --------------------- ---------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Crossing Business Center $ 7,160 $ 1,326 $ 7,951 $ 535 - Phase I Office Building Las Vegas, NV Riverspark 2/Building 2 3,629 2,783 6,594 - - Office Building/Industrial Columbia, MD Inglewood Office Center I 3,140 2,245 5,867 1,148 - Office Building Landover, MD Metro Plaza - 202 - 8,913 - Retail Center Baltimore, MD Ten Columbia Corp Center 2,621 733 - 8,263 - Office Building Columbia, MD 10190 Covington Cross 6,724 1,257 398 7,285 - Office Building Las Vegas, NV Riverspark Building B 2,864 2,117 2,545 3,940 - Industrial Building Columbia, MD Wilde Lake 1,457 1,486 - 6,877 - Village Center Columbia, MD Gross amount at which carried at close of period -------------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- ---------- ------- ------------ ------------- --------- ------------ Crossing Business Center $ 1,326 $ 8,486 $ 9,812 $ 1,465 12/94 06/96 Note 6 Phase I Office Building Las Vegas, NV Riverspark 2/Building 2 2,783 6,594 9,377 540 07/87 12/98 Note 6 Office Building/Industrial Columbia, MD Inglewood Office 2,245 7,015 9,260 811 07/82 12/98 Note 6 Center I Office Building Landover, MD Metro Plaza 202 8,913 9,115 4,570 N/A 12/82 Note 6 Retail Center Baltimore, MD Ten Columbia Corp Center 733 8,263 8,996 3,870 09/81 N/A Note 6 Office Building Columbia, MD 10190 Covington Cross 1,257 7,683 8,940 1,001 12/97 N/A Note 6 Office Building Las Vegas, NV Riverspark Building B 2,117 6,485 8,602 356 07/85 12/98 Note 6 Industrial Building Columbia, MD Wilde Lake 1,486 6,877 8,363 4,553 07/67 N/A Note 6 Village Center Columbia, MD
IV-13 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition -------------------- ----------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Kings Contrivance $ 7,386 $ 1,072 $ - $ 7,232 - Village Center Columbia, MD USA Group 6,693 1,197 4,880 1,942 - Office Building/Industrial Las Vegas, NV Columbia Crossing 6,515 1,527 - 6,352 - Retail Center Columbia, MD Crossing Business Center 7,443 357 7,071 37 - Phase II Office Building/Industrial Las Vegas, NV Corporate Pointe - 1,743 - 5,552 - Building III Office Building Las Vegas, NV Inglewood Tech IV 3,175 2,576 3,365 846 - Industrial Building Landover, MD Canyon Business Center 90 1,188 - 5,588 - Phase V Office Building/Industrial Las Vegas, NV Gross amount at which carried at close of period -------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Kings Contrivance $ 1,072 $ 7,232 $ 8,304 $ 2,894 06/86 N/A Note 6 Village Center Columbia, MD USA Group 1,197 6,822 8,019 744 11/98 N/A Note 6 Office Building/Industrial Las Vegas, NV Columbia Crossing 1,527 6,352 7,879 1,026 11/98 N/A Note 6 Retail Center Columbia, MD Crossing Business Center 357 7,108 7,465 1,029 12/95 06/96 Note 6 Phase II Office Building/Industrial Las Vegas, NV Corporate Pointe 1,743 5,552 7,295 275 02/01 N/A Note 6 Building III Office Building Las Vegas, NV Inglewood Tech IV 2,576 4,211 6,787 463 07/86 12/98 Note 6 Industrial Building Landover, MD Canyon Business Center 1,188 5,588 6,776 1,366 03/98 N/A Note 6 Phase V Office Building/Industrial Las Vegas, NV
IV-14 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ---------------------- --------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Raytheon $ 153 $ 422 $ 6,134 $ - - Office Building/Industrial Las Vegas, NV Plaza East 4,297 910 5,297 108 - Office Building/Industrial Las Vegas, NV Inglewood Tech V 3,827 2,736 3,494 - - Industrial Building Landover, MD First National Bank Plaza 5,061 - - 6,149 - Office Building Mt. Prospect, IL Hunt Valley 49 3,446 1,718 3,892 357 - Industrial Building Hunt Valley, MD Hunt Valley 36 3,201 1,256 3,954 636 - Industrial Building Hunt Valley, MD Plaza West 4,163 195 5,360 130 - Office Building/Industrial Las Vegas, NV Oakland Mills 1,178 1,746 - 3,884 - Village Center Columbia, MD Gross amount at which carried at close of period -------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ --------- ----------- Raytheon $ 422 $ 6,134 $ 6,556 $ 909 11/92 06/96 Note 6 Office Building/Industrial Las Vegas, NV Plaza East 910 5,405 6,315 864 12/93 06/96 Note 6 Office Building/Industrial Las Vegas, NV Inglewood Tech V 2,736 3,494 6,230 394 07/86 12/98 Note 6 Industrial Building Landover, MD First National Bank Plaza - 6,149 6,149 2,294 07/81 N/A Note 6 Office Building Mt. Prospect, IL Hunt Valley 49 1,718 4,249 5,967 342 02/82 12/98 Note 6 Industrial Building Hunt Valley, MD Hunt Valley 36 1,256 4,590 5,846 471 02/76 12/98 Note 6 Industrial Building Hunt Valley, MD Plaza West 195 5,490 5,685 889 11/95 06/96 Note 6 Office Building/Industrial Las Vegas, NV Oakland Mills 1,746 3,884 5,630 862 06/69 N/A Note 6 Village Center Columbia, MD
IV-15 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------- ------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Long Reach $ 4,696 $ 34 $ - $ 5,510 - Village Center Columbia, MD Dobbin Road 2,114 542 - 4,989 - Village Center Columbia, MD Rutherford 60 3,806 1,166 4,163 - - Industrial Building Woodlawn, MD Other properties and related investments 71,449 55,476 63,470 98,671 - --------------------------------- -------------------- Total Operating Properties $2,653,986 $408,124 $645,747 $3,373,597 - --------------------------------- -------------------- Gross amount at which carried at close of period ------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Long Reach $ 34 $ 5,510 $ 5,544 $ 2,099 06/74 N/A Note 6 Village Center Columbia, MD Dobbin Road 542 4,989 5,531 2,280 06/83 N/A Note 6 Village Center Columbia, MD Rutherford 60 1,166 4,163 5,329 557 07/72 12/98 Note 6 Industrial Building Woodlawn, MD Other properties and related investments 55,476 162,141 217,617 49,821 ---------------------------------------------- Total Operating Properties $408,124 $4,019,344 $4,427,468 $853,087 ----------------------------------------------
IV-16 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition --------------------------- ---------------------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- -------- ------ ------------ -------- --------- Properties in Development: Fashion Show Expansion $ - $ 23,539 $ - $ 108,265 - Expansion of Retail Center Las Vegas, NV Summerlin Town Center 6,543 14,970 - 2,686 - New Retail Center Summerlin, NV Arizona Center 12,800 13,893 - - - Developed/Developable Land Under Master Lease Phoenix, AZ La Cantera Center - - - 8,440 - New Retail Center San Antonio, TX Canyon Pointe - 7,350 - 426 - New Retail Center Summerlin, NV Coral Gables 1,195 7,272 - - - Developed/Developable Land Coral Gables, FL Fashion Place Expansion - - - 6,751 - Expansion of Retail Ctr Salt Lake City, UT The Mall in Columbia - - - 5,686 - Expansion of Retail Center Columbia, MD Gross amount at which carried at close of period ------------------------------------------------------------------ Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ---------- ------- ---------- ---------- ------------- ------------ -------- ------------- Properties in Development: Fashion Show Expansion $ 23,539 $ 108,265 $ 131,804 N/A N/A N/A N/A Expansion of Retail Center Las Vegas, NV Summerlin Town Center 14,970 2,686 17,656 N/A N/A N/A N/A New Retail Center Summerlin, NV Arizona Center 13,893 - 13,893 N/A N/A N/A N/A Developed/Developable Land Under Master Lease Phoenix, AZ La Cantera Center - 8,440 8,440 N/A N/A N/A N/A New Retail Center San Antonio, TX Canyon Pointe 7,350 426 7,776 N/A N/A N/A N/A New Retail Center Summerlin, NV Coral Gables 7,272 - 7,272 N/A N/A N/A N/A Developed/Developable Land Coral Gables, FL Fashion Place Expansion - 6,751 6,751 N/A N/A N/A N/A Expansion of Retail Ctr Salt Lake City, UT The Mall in Columbia - 5,686 5,686 N/A N/A N/A N/A Expansion of Retail Center Columbia, MD
IV-17 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------- ------------------------ Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Pioneer Place - - - 3,434 - Expansion of Mixed-Use Project Portland, OR Other projects - 882 - 14,312 - -------------------------------- ------------------------- Total Properties in Development $ 20,538 $ 67,906 $ - $ 150,000 - -------------------------------- ------------------------- Gross amount at which carried At close of period -------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Pioneer Place - 3,434 3,434 N/A N/A N/A N/A Expansion of Mixed-Use Project Portland, OR Other projects 882 14,312 15,194 N/A ------------------------------------------------ Total Properties in Development $ 67,906 $ 150,000 $ 217,906 - ------------------------------------------------
IV-18 THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 (in thousands)
Costs capitalized Initial cost to subsequent Company to acquisition ------------------- ------------------------- Buildings and Carrying Encum- Improve- Improve- costs Description brances Land ments ments (note 2) ----------- ------- ---- ----- ----- -------- Investment Land and Land Held For Development and Sale: Summerlin $ 88,413 $ 74,029 $ - $ 87,804 - Land in Various Stages of Development Summerlin, NV Columbia and Emerson 12,178 53,000 - 29,106 - Land in Various Stages of Development Howard County, MD Canyon Springs - 12,872 - 11,909 - Land Held for Development Riverside County, CA Investment Land Las Vegas, NV - 15,047 - - - Other - 55 - 469 - ---------------------------------------- ------------------------- Total Investment Land and Land Held for Development & Sale 100,591 155,003 - 129,288 - ---------------------------------------- ------------------------- Total $2,775,115 $631,033 $645,747 $3,652,885 - ======================================== ========================= Gross amount at which carried at close of period ---------------------------------------------------------------------- Life on which depre- Buildings Accumulated Date of ciation in and depreciation completion latest income Improve- and of Date statement Description Land ments Total amortization construction acquired is computed ----------- ---- -------- ----- ------------ ------------ -------- ----------- Investment Land and Land Held For Development and Sale: Summerlin $161,833 $ - $ 161,833 N/A N/A 06/96 N/A Land in Various Stages of Development Summerlin, NV Columbia and Emerson 82,106 - 82,106 N/A N/A 09/85 N/A Land in Various Stages of Development Howard County, MD Canyon Springs 24,781 - 24,781 N/A N/A 07/89 N/A Land Held for Development Riverside County, CA Investment Land Las Vegas, NV 15,047 - 15,047 N/A Other 524 - 524 N/A ----------------------------------------------------------- Total Investment Land and Land Held for Development & Sale 284,291 - 284,291 - ----------------------------------------------------------- Total $760,321 $4,169,344 $4,929,665 $853,087 ===========================================================
IV-19 Schedule III, continued ----------------------- THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 Notes: /(1)/ Reference is made to notes 1, 3 and 6 to the consolidated financial statements. /(2)/ The determination of these amounts is not practicable and, accordingly, they are included in improvements. /(3)/ The changes in total cost of properties for the years ended December 31, 2001, 2000 and 1999 are as follows (in thousands):
2001 2000 1999 ---- ---- ---- Balance at beginning of year $ 3,898,984 $ 3,888,455 $ 4,826,913 Additions, at cost 319,735 212,040 219,374 Cost of properties acquired from The Rouse Company Incentive Compensation Statutory Trust (note 7) 802,720 -- -- Cost of other properties acquired --- 44,685 -- Cost of land sales (87,382) -- (7,211) Retirements, sales and other dispositions (4,392) (246,196) (1,105,486) Provision for loss on operating properties --- --- (45,135) ----------- ----------- ----------- Balance at end of year $ 4,929,665 $ 3,898,984 $ 3,888,455 =========== =========== ===========
IV-20 Schedule III, continued ----------------------- THE ROUSE COMPANY AND SUBSIDIARIES Real Estate and Accumulated Depreciation (note 1) December 31, 2001 Notes: /(4)/ The changes in accumulated depreciation and amortization for the years ended December 31, 2001, 2000 and 1999 are as follows (in thousands):
2001 2000 1999 ---- ---- ---- Balance at beginning of year $ 608,061 $ 527,737 $ 525,098 Depreciation and amortization charged to operations 125,504 90,307 94,532 Retirements, sales and other, net 778 (9,983) (91,893) Accumulated depreciation on properties acquired from The Rouse Company Incentive Compensation Statutory Trust (note 7) 118,744 -- -- --------- --------- --------- Balance at end of year $ 853,087 $ 608,061 $ 527,737 ========= ========= =========
/(5)/ The aggregate cost of properties for Federal income tax purposes is approximately $3,786,755,000 at December 31, 2001. /(6)/ Reference is made to note 1(c) to the consolidated financial statements for information related to depreciation. /(7)/ Reference is made to note 2 to the consolidated financial statements for information related to the acquisition of properties (majority financial interest ventures) from The Rouse Company Incentive Compensation Statutory Trust. /(8)/ Certain amounts for prior years have been reclassified to conform to the presentation for 2001. IV-21 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Rouse Company By: /s/ Anthony W. Deering -------------------------------------- Anthony W. Deering March 22, 2002 Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Principal Executive Officer: /s/ Anthony W. Deering ------------------------------------------ Anthony W. Deering March 22, 2002 Chairman of the Board, President and Chief Executive Officer Principal Financial Officer: /s/ Jeffrey H. Donahue ------------------------------------------ Jeffrey H. Donahue March 22, 2002 Executive Vice President and Chief Financial Officer Principal Accounting Officer: /s/ Melanie M. Lundquist ------------------------------------------ Melanie M. Lundquist March 22, 2002 Vice President and Corporate Controller IV-22 Board of Directors: David H. Benson, Jeremiah E. Casey, Platt W. Davis, III, Anthony W. Deering, Rohit M. Desai, Juanita T. James, Thomas J. McHugh, Hanne M. Merriman, Roger W. Schipke, John G. Schreiber, Mark R. Tercek and Gerard J. M. Vlak. By:/s/ Anthony W. Deering --------------------------------------- Anthony W. Deering March 22, 2002 For himself and as Attorney-in-fact for the above-named persons IV-23 Exhibit Index Exhibit No. ----------- 3 Articles of Incorporation and Bylaws 12.1 Ratio of earnings to fixed charges 12.2 Ratio of earnings to combined fixed charges and Preferred stock dividend requirements 13 Annual report to security holders 21 Subsidiaries of the Registrant 23 Consent of KPMG LLP, Independent Auditors 24 Power of Attorney 99 Additional Exhibits: 99.1 Form 11-K Annual Report of The Rouse Company Savings Plan for the year ended December 31, 2001 99.2 Factors affecting future operating results