================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commission file number 1-13762
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
RECKSON 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(631) 694-6900
================================================================================
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Reckson 401(k) Plan
Year ended December 31, 2003
with Report of Independent Auditors
Reckson 401(k) Plan
Financial Statements
and Supplemental Schedule
Year ended December 31, 2003
CONTENTS
Report of Independent Auditors............................................... 1
Financial Statements
Statements of Net Assets Available for Benefits as of
December 31, 2003 and December 31, 2002................................... 2
Statement of Changes in Net Assets Available for Benefits for the
Year ended December 31, 2003 ............................................. 3
Notes to Financial Statements................................................ 4
Supplemental Schedule
Schedule H, Line 4(i)--Assets (Held at End of Year) at December 31, 2003..... 9
Report of Independent Registered Public Accounting Firm
Plan Administrator
Reckson 401(k) Plan
Retirement and Benefits Committee
We have audited the accompanying statements of net assets available for benefits
of Reckson 401(k) Plan (the "Plan") as of December 31, 2003 and 2002, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2003. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) at December 31, 2003 is presented for the purpose of
additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
-----------------------
Ernst & Young
New York, New York
June 9, 2004
1
Reckson 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
------------------------------
2003 2002
----------- ----------
ASSETS
Investments (Note 3) $ 4,754,776 $2,940,203
Receivables:
Participant contributions 11,430 26,216
Participant loans 157,715 151,893
Cash and cash equivalents 709,771 624,496
----------- ----------
Net assets available for benefits $ 5,633,692 $3,742,808
=========== ==========
See accompanying notes.
2
Reckson 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions:
Additions to net assets attributed to:
Net realized and unrealized appreciation in
fair value of investments (Note 3) $ 986,550
Interest and dividends 76,287
Participant contributions 1,015,664
-----------
Total additions 2,078,501
-----------
Deductions:
Benefits paid to participants (187,617)
-----------
Net increase in net assets available for benefits 1,890,884
Net assets available for benefits:
Beginning of the year 3,742,808
-----------
End of year $ 5,633,692
===========
See accompanying notes.
3
Reckson 401(k) Plan
Notes To Financial Statements
December 31, 2003
1. DESCRIPTION OF THE PLAN
The following description of the Reckson 401(k) Plan (the "Plan") provides only
general information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
GENERAL
The Plan was created on January 1, 2001 for the purpose of providing eligible
employees of Reckson Management Group, Inc. (the "Employer") and its related
companies (collectively, the "Affiliates") that participate in the Plan
(collectively, the "Participating Employers") with an opportunity to increase
their savings on a tax-favored basis. Shares of the common stock of Reckson
Associates Realty Corp. ("Reckson") are among the investment options offered to
participants pursuant to the Plan.
The Plan is a defined contribution plan sponsored by the Employer covering all
eligible full-time employees of the Participating Employers who have completed
six months of service and are age twenty-one or older. Effective January 1,
2004, an employee is considered an eligible participant upon the completion of
three months of service and is age twenty-one or older.
The following Participating Employers participated in the Plan during the years
ended December 31, 2003 and 2002:
Reckson Management Group, Inc.
Reckson Construction Group, Inc.
RANY Management Group, Inc.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
4
Reckson 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS
During calendar years prior to 2004, participants were able to contribute up to
15% of pretax annual compensation, as defined in the Plan. Commencing January
1, 2004, participants may contribute up to 30% of their pretax annual cash
compensation and up to 15% of their pretax cash bonus, as defined in the Plan.
Participants may also roll over amounts representing distributions from other
qualified benefit or defined contribution plans. In addition, the Plan permits
individuals who are at least age 50 before the end of the calendar year to make
a catch-up contribution. Participants direct the investment of their
contributions into various investment options offered by the Plan. As of
December 31, 2003, the Plan offered 13 mutual funds and the common stock of
Reckson as investment options for participants. Additional discretionary
matching contributions may be contributed at the option of the Participating
Employers. Contributions are subject to certain limitations.
The aggregate of all employee contributions are subject to the limitations of
Section 401(k) of the Internal Revenue Code.
Employer contributions are based on a discretionary amount determined by the
Participating Employer's management. During the years ended December 31, 2003
and 2002, the Participating Employers did not contribute to the Plan. Commencing
with the calendar year beginning January 1, 2004, the Participating Employers
have elected to match 50% to eligible participants deferral contribution up to
3% of their annual compensation, as defined, up to an aggregate of $1,000 per
employee per year.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of Plan earnings, and charged with an allocation of the Plan's
administrative expenses, if not paid by the Participating Employer. Allocations
are based on participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.
VESTING
Participants are immediately 100% vested in their contributions and earnings
thereon. Additionally, a participant is eligible for employer matching
contributions, if any, after one year of credited service, which then vests
ratably based on five years of credited service.
5
Reckson 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT LOANS
Participants may generally borrow from their accounts up to 50 percent of their
vested account balance. The loans are secured by the balance in the
participant's account and bear interest at the U.S. prime lending rate plus
one-half percentage point.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Participating Employers
have the right under the Plan to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants will become 100 percent
vested in their accounts.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive a lump-sum amount
equal to the value of the participant's vested interest in his or her account.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are prepared under the accrual basis of
accounting in accordance with U.S. generally accepted accounting principles.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year-end. The participant loans are valued at
their outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
6
Reckson 401(k) Plan
Notes To Financial Statements (continued)
3. INVESTMENTS
The following investments represent 5% or more of the Plan's net assets
available for benefits at December 31, 2003 and 2002:
DECEMBER 31,
--------------------------
2003 2002
---------- ---------
Growth Fund of America $1,518,473 $913,412
Reckson Associates Realty Corp.--Common Stock 495,458 401,346
MFS International New Discovery Fund 699,227 398,850
INVESCO Balanced Fund (a) 267,036
BlackRock Index Equity Fund-- Class A 340,852 227,643
Federated U.S. Government Bond Fund 335,695 202,510
INVESCO Technology Fund 317,490 *
American Balanced Fund 519,934 *
----------------
* Investment was less than 5% of the Plan's net assets available for benefits.
During the year ended December 31, 2003, the investments of the Plan appreciated
(depreciated) in fair value as follows:
BlackRock Money Market Fund $ 3,002
Federated US Government Bond Fund (8,773)
INVESCO Balanced Fund (5,113)(a)
Growth Fund of America 361,784
American Century International Growth Fund 28,866
Reckson Associates Realty Corp.--Common Stock 69,805
FrontLine Capital Group-- Common Stock 41
MFS International New Discovery Fund 221,863
BlackRock Index Equity Fund-- Class A 66,419
Cohen & Steers Realty Shares 2,599
Royce Low Price Stock 276
INVESCO Growth Fund (4,255)(a)
Janus Advisor Capital Fund 16,553
INVESCO Technology Fund 85,417
MFS Value Fund 17,277
American Balanced Fund 90,182
Fidelity Advisor Mid-cap Fund 39,696
AIM Global Healthcare Fund 911
--------
Net realized and unrealized appreciation in
fair value of investments $986,550
========
---------------
(a) These investment options were terminated during 2003. Any amounts in
the INVESCO Balanced Fund and the INVESCO Growth Fund not transferred by
employees to another investment alternative were transferred to the
American Balanced Fund and Growth Fund of America, respectively.
7
Reckson 401(k) Plan
Notes To Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS
During the years ended December 31, 2003 and 2002, the Plan received $34,063 and
$31,078, respectively, in common stock dividends from Reckson.
5. INCOME TAX STATUS
The Plan has not received a determination letter from the Internal Revenue
Service stating that the Plan is qualified under Section 401(a) of the Internal
Revenue Code. However, the Plan Administrator believes that the Plan is
qualified and, therefore, the related trust is exempt from taxation.
8
Supplemental Schedule
Reckson 401(k) Plan
Schedule H, Line 4(i)-Assets (Held at End of Year)
December 31, 2003
FAIR
INVESTMENT MARKET VALUE
---------- ------------
Federated U.S. Government Bond Fund $ 335,695
Growth Fund of America 1,518,473
American Century International Growth Fund 156,229
Reckson Associates Realty Corp.-- Common Stock* 495,458
FrontLine Capital Group Common Stock 58
MFS International New Discovery Fund 699,227
BlackRock Index Equity Fund-- Class A* 340,852
Janus Advisor Capital Fund 121,604
INVESCO Technology Fund 317,490
American Balanced Fund 519,934
Fidelity Advisor Mid-cap Fund 144,091
MFS Value Fund 84,617
Cohen & Steers Realty Shares 13,403
AIM Global Health Care Fund 5,773
Royce Low Price Stock 1,872
----------
$4,754,776
==========
Loans to participants at per annum interest
rates ranging between 4.5% and 8.75%. $ 157,715
==========
------------------
(*) Indicates party-in-interest to the Plan.
9
RECKSON 401(K) PLAN
Exhibits
--------
23.0 Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
Reckson 401(k) Plan
By: Reckson Management Group, Inc.,
as Plan Administrator
Date: June 28, 2004 By: /s/ Michael Maturo
-----------------------------------
Michael Maturo
Executive Vice President, Treasurer
and Chief Financial Officer of
Reckson Associates Realty Corp.