UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
or
o TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-14023
A. Full title of the plan and address of the plan, if different from that of the issuer named below:
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
8815 Centre Park Drive, Suite 400
Columbia, Maryland 21045
Issuer’s telephone number, including area code: (410) 730-9092
TABLE OF CONTENTS
FORM 11-K
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Financial Statements |
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Supplemental Schedule |
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Note: Other supplemental schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended, have been omitted because they are not applicable.
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To the Participants and Administrator of the
Corporate Office Properties, L.P. Employee Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Corporate Office Properties, L.P. Employee Retirement Savings Plan (the “Plan”) at December 31, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
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/s/ PricewaterhouseCoopers LLP |
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Baltimore, MD |
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June 27, 2005 |
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Corporate Office Properties, L.P. Employee Retirement Savings Plan
Statements of Net Assets Available for Benefits
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December 31, |
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2004 |
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2003 |
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Assets |
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Investments, at fair value |
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Mutual funds |
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$ |
5,523,283 |
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$ |
3,937,847 |
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Common/collective fund |
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198,316 |
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84,084 |
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Corporate Office Properties Trust common shares |
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63,000 |
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— |
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Participant loans |
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45,007 |
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47,572 |
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Plan investments |
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5,829,606 |
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4,069,503 |
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Receivables |
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Participant contributions |
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52,322 |
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— |
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Employer contribution |
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16,897 |
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— |
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Total receivables |
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69,219 |
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— |
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Net assets available for benefits |
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$ |
5,898,825 |
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$ |
4,069,503 |
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See accompanying notes to financial statements.
4
Corporate Office Properties, L.P. Employee Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2004
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Additions |
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Investment Income |
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Interest and dividend income |
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$ |
115,172 |
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Net appreciation in fair value of investments |
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575,377 |
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Total investment income |
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690,549 |
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Contributions |
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Employee |
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1,038,870 |
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Employer |
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252,385 |
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Total contributions |
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1,291,255 |
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Net additions |
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1,981,804 |
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Deductions |
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Benefits paid |
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152,132 |
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Administrative expense (Note 2) |
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350 |
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Total deductions |
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152,482 |
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Net increase |
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1,829,322 |
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Net assets available for benefits |
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Beginning of year |
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4,069,503 |
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End of year |
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$ |
5,898,825 |
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See accompanying notes to financial statements.
5
Corporate Office Properties, L.P. Employee Retirement Savings Plan
1. Description of Plan
The following description of the Corporate Office Properties, L.P. Employee Retirement Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan document or summary plan description for a more complete description of the Plan’s provisions.
Corporate Office Properties, L.P. (the “Company”), which conducts almost all of Corporate Office Properties Trust’s operations and for which Corporate Office Properties Trust is the sole general partner, maintains the Plan for the benefit of the Company’s employees, as well as of those of its qualifying subsidiaries, who have completed 60 days of employment and are at least 21 years of age. However, the Plan does not cover any employees who are nonresident aliens who have no source of income within the United States from the Company. The Plan is a defined contribution pension plan intended to be qualified under section 401(a) of the Internal Revenue Code of 1986, as amended (the “IRC”), and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Effective January 6, 2004, the Plan was amended to allow participants to invest in common shares of beneficial interest, par value $0.01 per share, of Corporate Office Properties Trust (“common shares”). The Plan administrator for the Plan is the Company and T. Rowe Price Trust Company is the Trustee for the Plan.
Participants may contribute up to 15% of their compensation, as defined in the Plan, per pay period on a before-tax basis, subject to limitations under the IRC. Participants may also contribute up to 15% of their compensation per pay period on an after-tax basis. Total before-tax contributions and after-tax contributions are limited to 15% of compensation. Participants who are fifty years of age or older by the end of a particular plan year and have contributed the maximum 401(k) deferral amount allowed under the Plan for that year are eligible to contribute an additional portion of their annual compensation on a before-tax basis as catch-up contributions, up to the annual IRC limit. Participants may rollover amounts from traditional individual retirement accounts (“IRAs”), 403(b) plans, 457 plans and other qualified retirement plans into the Plan. Participants direct the investment of their contributions into various investment options offered by the Plan. The Company matches 50% of the first 6% of pre-tax and/or after-tax contributions that a participant contributes to the Plan.
Each participant’s account is credited with the participant’s contributions, Company matching contributions and an allocation of Plan earnings. Allocations are based on participant earnings or account balances, as defined in the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Participants immediately vest in their contributions and related earnings thereon. Vesting in the Company’s contribution is based on years of continuous service. A participant is 30% vested in Company matching contributions after one year of service, 60% vested after two years of service and 100% vested after three years of service.
Participants are eligible to obtain loans from the Plan, not to exceed the lesser of $50,000 or 50% of the vested balance of the participant’s account. The loans are secured by the balance in the participant’s account and bear interest at rates that are commensurate with local prevailing rates, as determined by the Plan administrator. At December 31, 2004, interest rates on participant loans ranged from 5.0% to 9.5%.
Upon termination of service, whether by death, disability, retirement or leaving the Company or its qualifying subsidiaries, a participant may elect to receive either a lump sum amount equal to the value of the participant’s vested interest in his or her account, or annual installments over a specified period. Alternatively, a participant or applicable beneficiary may request that the Company make a direct transfer to another eligible retirement plan. In the event of financial hardship (as defined by the Plan), participants may withdraw money from their Plan accounts while they are still employed.
Nonvested Company contributions are forfeited on the date a participant terminates employment with the Company or its qualifying subsidiaries. Forfeitures are available for the Company to apply against Company contributions. Forfeited nonvested
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accounts totaled $34,655 as of December 31, 2004. No forfeited nonvested accounts were used to reduce Company contributions during 2004.
Investment Options
The Plan provides 21 T. Rowe Price mutual funds and one T. Rowe Price common/collective fund in which participants may choose to invest. In addition, as of January 6, 2004, the participants of the Plan may also choose to invest in Corporate Office Properties Trust’s common shares.
2. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Payment of Benefits
Benefits are recorded when paid.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices, which represents the net asset value of shares held by the Plan at year end. The investment in the common/collective fund is valued at the unit value as reported by the trustee of the fund on each valuation date. Investments in Corporate Office Property Trust’s common shares are valued at the closing market price of such shares at the end of the respective periods, as reported on the New York Stock Exchange. Participant loans are valued at cost plus accrued interest, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
The Plan presents in the statements of changes in net assets the net appreciation in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation and depreciation on those investments.
Administrative Expenses
All costs and expenses incurred in connection with administration of the Plan are paid by the Company with the exception of loan fees, which are charged against the respective participants’ accounts.
3. Investments
The following presents the balance of each investment that represents five percent or more of the Plan’s net assets as of the end of the respective periods:
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December 31, |
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2004 |
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2003 |
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T. Rowe Price Mid-Cap Growth Fund |
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$ |
1,211,146 |
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893,324 |
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T. Rowe Price Growth Stock Fund |
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658,543 |
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546,669 |
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T. Rowe Price Equity Index 500 Fund |
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832,945 |
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651,281 |
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T. Rowe Price Small-Cap Value Fund |
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738,076 |
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499,296 |
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T. Rowe Price Equity Income Fund |
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442,498 |
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311,900 |
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T. Rowe Price Balanced Fund |
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331,570 |
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262,556 |
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T. Rowe Price New Income Fund |
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N/A |
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236,145 |
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T. Rowe Price New Horizons Fund |
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N/A |
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228,848 |
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* The balance of these funds do not represent more than 5% of the Plan’s assets at December 31, 2004.
The Plan’s investments appreciated in value by $575,377 in the year ended December 31, 2004 (including realized gains and losses on investments bought and sold, as well as unrealized gains and losses on investments held during the year); $565,142 of
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this net appreciation was attributable to investments in registered investment companies and $10,235 was attributable to investments in Corporate Office Properties Trust common shares.
4. Plan Termination
Although it has not expressed any intention to do so, the Company has the right under the Plan to terminate the Plan and discontinue its contributions at any time, subject to the provisions of ERISA. In the event of termination, participants become 100% vested in their accounts.
5. Related Parties
Certain
Plan investments are shares of mutual funds managed by T. Rowe Price
Associates. T. Rowe Price Associates and
T. Rowe Price Trust Company are subsidiaries of T. Rowe Price Group, Inc. Transactions with the Trustee, T. Rowe Price
Trust Company, therefore, qualify as party-in-interest transactions, which are
exempt from the prohibited transaction rules of ERISA.
During 2004, the Plan purchased 2,293 shares of Corporate Office Properties Trust common shares for $56,512 and sold 147 of such shares for $3,498. At December 31, 2004, the Plan held 2,146 common shares valued at $63,000.
6. Income Tax Status
The Company previously adopted the amended T. Rowe Price Trust Company 401(k) Retirement Plan (“Prototype Plan”) as the Plan document. The Prototype Plan received a favorable determination letter from the Internal Revenue Service on February 27, 2002, which stated that the Prototype Plan was designed in accordance with applicable sections of the IRC. The Company did not apply for a separate favorable determination letter for the Plan. Effective January 6, 2004, the Prototype Plan document was amended by the Company to add Corporate Office Properties Trust common shares as an investment option under the Plan. This amendment caused the Plan to lose its prototype plan status and become an individually-designed plan. The Company has submitted a determination letter request with the Internal Revenue Service as to the tax-qualified status of the Plan. This determination letter request is currently pending before the Internal Revenue Service. The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
7. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
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Corporate Office Properties, L.P. Trust Employee Retirement Savings Plan
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(c) |
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Description of investment |
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(b) |
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including maturity date, rate of |
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(e) |
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Identity of issue, borrower, lessor |
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interest, collateral, par or |
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(d) |
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Current |
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(a) |
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or similar party |
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maturity value |
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Cost** |
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Value |
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* |
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T. Rowe Price Growth Stock Fund |
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Registered investment company |
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$ |
658,543 |
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* |
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T. Rowe Price Equity Index 500 Fund |
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Registered investment company |
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832,945 |
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* |
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T. Rowe Price Mid-Cap Growth Fund |
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Registered investment company |
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1,211,146 |
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* |
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T. Rowe Price Equity Income Fund |
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Registered investment company |
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442,498 |
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* |
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T. Rowe Price Balanced Fund |
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Registered investment company |
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331,570 |
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* |
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T. Rowe Price New Income Fund |
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Registered investment company |
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270,381 |
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* |
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T. Rowe Price New Horizons Fund |
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Registered investment company |
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277,890 |
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* |
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T. Rowe Price International Stock Fund |
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Registered investment company |
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220,256 |
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* |
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T. Rowe Price Small-Cap Value Fund |
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Registered investment company |
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738,076 |
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* |
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T. Rowe Price Media & Telecommunications |
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Registered investment company |
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78,299 |
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* |
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T. Rowe Price Extended Equity Market Index |
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Registered investment company |
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5,392 |
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* |
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T. Rowe Price Science & Technology Fund |
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Registered investment company |
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111,400 |
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* |
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T. Rowe Price Retirement 2010 Fund |
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Registered investment company |
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3,040 |
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* |
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T. Rowe Price Retirement 2015 Fund |
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Registered investment company |
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5,289 |
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* |
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T. Rowe Price Retirement 2020 Fund |
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Registered investment company |
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189,991 |
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* |
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T. Rowe Price Retirement 2030 Fund |
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Registered investment company |
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118,900 |
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* |
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T. Rowe Price Retirement 2035 Fund |
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Registered investment company |
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2,501 |
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* |
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T. Rowe Price Retirement 2040 Fund |
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Registered investment company |
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24,924 |
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* |
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T. Rowe Price Retirement Income Fund |
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Registered investment company |
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242 |
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Registered investment companies |
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5,523,283 |
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* |
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T. Rowe Price Stable Value Fund |
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Common/collective Fund |
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198,316 |
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* |
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Corporate Office Properties Trust common shares |
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Common shares of the Company |
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63,000 |
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* |
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Participant loans |
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Interest rates ranging from |
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45,007 |
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$ |
5,829,606 |
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* Denotes party-in-interest as defined by ERISA.
** Cost information not required for participant-directed accounts.
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Pursuant to the requirements of the Securities Act of 1934, the trustees have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CORPORATE OFFICE PROPERTIES TRUST |
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Date: June 27, 2005 |
By: |
/s/ Randall M. Griffin |
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Randall M. Griffin |
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President and Chief Executive Officer |
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Date: June 27, 2005 |
By: |
/s/ Roger A. Waesche, Jr. |
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Roger A. Waesche, Jr. |
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Executive Vice President and Chief Financial Officer |
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Exhibit Number |
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Exhibit Title |
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23 |
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Consent of Independent Registered Public Accounting Firm. |
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