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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, 2002
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
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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Reckson 401(k) Plan
Year Ended December 31, 2002
with Report of Independent Auditors
Reckson 401(k) Plan
Financial Statements
and Supplemental Schedule
Year ended December 31, 2002
CONTENTS
Report of Independent Auditors....................................................................... 1
Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2002 and
December 31, 2001................................................................................. 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2002 ..................................................................... 3
Notes to Financial Statements........................................................................ 4
Supplemental Schedule
Schedule H, Line 4(i)--Assets (Held at End of Year) at December 31, 2002.............................. 10
Report of Independent Auditors
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, 2002 and 2001 and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2002. 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 auditing standards generally accepted
in the 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, 2002 and 2001 and the changes in its net assets available for
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
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, 2002 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
---------------------
New York, New York
June 6, 2003
1
Reckson 401(k) Plan
Statements of Net Assets Available for Benefits
December 31,
---------------------
2002 2001
---- ----
ASSETS
Investments (Note 3) $2,940,203 $2,733,020
Receivables:
Participant contributions 26,216 26,724
Participant loans 151,893 84,475
Cash 624,496 559,479
---------- ----------
Net assets available for benefits $3,742,808 $3,403,698
========== ==========
See accompanying notes.
2
Reckson 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31, 2002
Additions:
Additions to net assets attributed to:
Interest and dividends $ 56,223
Participant contributions 1,076,365
-----------
Total additions 1,132,588
-----------
Deductions:
Net realized and unrealized depreciation in fair
value of investments (Note 3) (624,936)
Benefits paid to participants (168,542)
-----------
Total deductions (793,478)
-----------
Net increase in net assets available for benefits 339,110
Net assets available for benefits:
Beginning of the year 3,403,698
-----------
End of year $ 3,742,808
===========
See accompanying notes.
3
Reckson 401(k) Plan
Notes To Financial Statements
December 31, 2002
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 Class A 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 following Participating Employers who have
completed six months of service and are age twenty-one or older. The following
Participating Employers participated in the Plan during the years ended December
31, 2002 and 2001:
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").
Prior to January 1, 2001, eligible employees of the Participating Employers were
provided the opportunity to participate in the Reckson Management Group, Inc.
401(k) Plan (the "Prior Plan"). The Prior Plan provided eligible employees with
benefits similar to those of the Plan and was terminated during 2001 subject to
the provisions of ERISA. On January 1, 2001, all eligible employee accounts of
the Participating Employers were transferred to the Plan.
4
Reckson 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS
Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined in the Plan (subject to the limitations of section
401(k) of the Internal Revenue Code). Participants may also roll over amounts
representing distributions from other qualified benefit or defined contribution
plans. Participants direct the investment of their contributions into various
investment options offered by the Plan. As of December 31, 2002, the Plan
offered 13 mutual funds and the Class A 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.
During the year ended December 31, 2002 the Participating Employers did not
contribute to the Plan.
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 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 vests ratably in employer matching
contributions, if any, based on five years of credited service.
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.
5
Reckson 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer has 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.
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 accounting principles
generally accepted in the United States 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, 2002 and 2001:
DECEMBER 31,
----------------
2002 2001
---- ----
Growth Fund of America $913,412 $922,359
Reckson Associates Realty Corp.--
Class A Common Stock 401,346 402,893
MFS International New Discovery Fund 398,850 330,902
INVESCO Balanced Fund 267,036 282,520
BlackRock Index Equity Fund--Class A 227,643 236,302
Federated U.S. Government Bond Fund 202,510 *
INVESCO Technology Fund * 175,754
* Investment was less than 5% of the Plan's net assets available for benefits.
During the year ended December 31, 2002, the investments of the Plan appreciated
(depreciated) in fair value as follows:
BlackRock Money Market Fund $ 7,416
Federated US Government Bond Fund 15,226
INVESCO Balanced Fund (57,977)
Growth Fund of America (234,179)
American Century International Growth Fund (23,139)
Reckson Associates Realty Corp.--Class A Common Stock (44,472)
FrontLine Capital Group Common Stock (2,159)
MFS International New Discovery Fund (30,462)
BlackRock Index Equity Fund--Class A (63,673)
INVESCO Growth Fund (54,307)
Janus Advisor Capital Fund (6,953)
INVESCO Technology Fund (114,625)
MFS Value Fund (10,224)
American Balanced Fund (1,342)
Fidelity Advisor Mid-cap Fund (4,066)
---------
Net realized and unrealized depreciation in fair
value of investments $(624,936)
=========
7
Reckson 401(k) Plan
Notes To Financial Statements (continued)
4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORMS 5500
The Forms 5500 of the Plan was prepared on a cash basis. The following is a
reconciliation of net assets available for benefits per the financial statements
to the Forms 5500:
DECEMBER 31,
-------------------------
2002 2001
----------- -----------
Net assets available for benefits per the
financial statements $ 3,742,808 $ 3,403,698
Participant contributions receivable (26,216) (26,724)
----------- -----------
Net assets available for benefit per Form 5500 $ 3,716,592 $ 3,376,974
=========== ===========
5. RELATED PARTY TRANSACTIONS
During the years ended December 31, 2002 and 2001, the Plan received $31,078 and
$19,330, respectively in common stock dividends from Reckson.
6. 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, 2002
Fair
Market
INVESTMENT Value
---------- -----
Federated U.S. Government Bond Fund $ 202,510
Growth Fund of America 913,412
American Century International Growth Fund 108,379
Reckson Associates Realty Corp.--Class A Common Stock* 401,346
FrontLine Capital Group Common Stock 20
INVESCO Balanced Fund 267,036
MFS International New Discovery Fund 398,850
BlackRock Index Equity Fund--Class A 227,643
INVESCO Growth Fund 105,048
Janus Advisor Capital Fund 48,542
INVESCO Technology Fund 158,354
American Balanced Fund 12,663
Fidelity Advisor Mid-cap Fund 33,643
MFS Value Fund 62,757
----------
$2,940,203
==========
Loans to participants at per annum interest rates ranging between
5.5% and 10% $ 151,893
==========
(*) Indicates party-in-interest to the Plan as defined under ERISA.
10
RECKSON 401(k) PLAN
Exhibits
--------
23.0 Consent of Independent Auditors
99.1 Certification of Donald Rechler, Co-Chief Executive Officer of Reckson
Associates Realty Corp., pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code
99.2 Certification of Scott H. Rechler, Co-Chief Executive Officer of Reckson
Associates Realty Corp., pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code
99.3 Certification of Michael Maturo, Executive Vice President, Treasurer and
Chief Financial Officer of Reckson Associates Realty Corp., pursuant to
Section 1350 of Chapter 63 of Title 18 of the United States Code
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 24, 2003 By: /s/ Michael Maturo
---------------------------------
Michael Maturo
Executive Vice President, Treasurer
and Chief Financial Officer of
Reckson Associates Realty Corp.
11