SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996).
For the fiscal year ended December 31, 2001
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OR
(_) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEES REQUIRED).
For the transition period from ____________ to ____________
Commission file number 1-07533
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
FEDERAL REALTY INVESTMENT TRUST
SAVINGS AND RETIREMENT 401(K) PLAN
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B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
FEDERAL REALTY INVESTMENT TRUST
1626 EAST JEFFERSON STREET
ROCKVILLE, MARYLAND 20852
Report of Independent Certified Public Accountants
To the Trustees of the
Federal Realty Investment Trust Savings and Retirement 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Federal Realty Investment Trust Savings and Retirement 401(k) Plan
(the Plan) as of December 31, 2001, and the related statement of changes in net
assets available for plan benefits for the year then ended and the supplemental
schedule of assets held for investment purposes as of December 31, 2001. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the Plan as
of December 31, 2000, were audited by other auditors whose report dated June 22,
2001, expressed an unqualified opinion on those statements.
We conducted our audit 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 audit provides 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 plan benefits of the Federal
Realty Investment Trust Savings and Retirement 401(k) Plan as of December 31,
2001, and the changes in net assets available for plan benefits for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audit of the Plan's financial statements as of December 31, 2001, and for
the year ended, was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of assets held for
investment purposes 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. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements for the year ended December 31,
2001, and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
/s/ Grant Thornton, LLP
Vienna, Virginia
June 20, 2002
[This is a copy of the audit report previously issued by Andersen in connection
with the Plan's filing on Form 11-K for the year ended December 31, 2000. This
audit report has not been reissued by Andersen in connection with this filing on
Form 11-K. See exhibit 23.2 for further discussion.]
Report of independent public accountants
To the Trustees of the
Federal Realty Investment Trust Savings and Retirement 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of Federal Realty Investment Trust Savings and Retirement 401(k) Plan (the Plan)
as of December 31, 2000 and 1999, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2000. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and the schedule 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 Federal
Realty Investment Trust Savings and Retirement 401(k) Plan as of December 31,
2000 and 1999, and the changes in its net assets available for benefits for the
year ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.
Our audit of the Plan's financial statements as of December 31, 2000 and 1999,
and for the year ended December 31, 2000, was made for the purpose of forming an
opinion on the financial statements taken as a whole. The supplemental schedule
of assets held for investment purposes as of December 31, 2000, is presented for
purposes of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements as of December 31, 2000 and 1999, and for the year ended
December 31, 2000, and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Vienna, Virginia
June 22, 2001
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Statements of Net Assets Available for Plan Benefits
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December 31, 2000 2001
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Assets
Investments, at fair value $ 7,983,871 $ 9,531,581
Loans to participants 107,867 106,819
Contributions receivable 36,097 --
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Total Assets 8,127,835 9,638,400
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Net Assets Available for Plan Benefits $ 8,127,835 $ 9,638,400
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The accompanying notes are an integral part of these statements.
4
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Statement of Changes in Net Assets Available for Plan Benefits
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Year ended December 31, 2001
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Additions to Net Assets Attributed to:
Contributions
Employee contributions $ 815,661
Employer contributions 219,556
Rollover contributions 129,740
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Total contributions 1,164,957
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Investment income (loss)
Interest and dividends 231,585
Net depreciation in fair value of investments (1,663,031)
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Total investment income (loss) (1,431,446)
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Total Additions (Losses) $ (266,489)
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Deductions from Net Assets Attributed to:
Benefits paid to participants $ 1,240,242
Administrative expenses 3,834
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Total Deductions 1,244,076
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Net Decrease (1,510,565)
Net Assets Available for Plan Benefits, beginning of year 9,638,400
--------------
Net Assets Available for Plan Benefits, end of year $ 8,127,835
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The accompanying notes are an integral part of these statements.
5
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements
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December 31, 2001
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NOTE A--SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies of Federal Realty Investment
Trust (the Trust) Savings and Retirement 401(k) Plan (the Plan) is as
follows:
Basis of Accounting
The financial statements of the Plan were prepared under the accrual
method 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, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates.
Investments
The Plan's investments are stated at fair value. Fluctuations in fair
value are charged to participant's accounts.
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NOTE B--DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more comprehensive
description of the Plan's provisions.
General
The Plan is a defined contribution plan in accordance with the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA) and of Section
401(k) of the Internal Revenue Code of 1986, as amended. The Plan was
established on January 1, 1985, restated effective January 1, 1997, and was
most recently amended effective October 1, 2001. The most recent amendment
altered the allocation of forfeitures so that they reduce employer-matching
contributions.
Eligibility
All employees, except members of collective bargaining units, may
participate in the elective deferrals portion of the Plan immediately upon
employment. There are no members of a collective bargaining unit as of
December 31, 2001.
Contributions
Participants make contributions to the Plan by means of a salary deferral
agreement. Participants may defer their salary by an amount equal to not
less than 1 percent but not more than 20 percent of their compensation, to
the extent permitted by the law. The dollar value of contributions may not
exceed $10,500.
6
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements
================================================================================
December 31, 2001
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NOTE B--DESCRIPTION OF PLAN--Continued
The Trust will make employer-matching contributions to the Plan on behalf of
all qualified participants. The amount of employer matching contributions
for each eligible participant will be 50 percent of elective deferrals up to
5 percent of earnings. Employer matching and discretionary contributions
will be made after one year of service is rendered with 1,000 or more
hours completed by the participant, or if the participant retires, dies, or
becomes disabled during the Plan year.
Additionally, the Plan allows for discretionary contributions to be made at
the end of the Plan year in an amount to be determined by the Trust. There
were no such contributions made for the year ended December 31, 2001.
Vesting
Participants are always vested in elective deferral, employer matching, and
rollover contributions. Discretionary contributions are vested based on
years of service, with 100 percent vesting after five years of credited
service.
Participant Loans
Participants may borrow from their accounts a maximum equal to the lesser of
$50,000 or 50 percent of their vested account balance. Loan transactions are
treated as a transfer to (from) the investment fund from (to) the
Participant Loan Fund. Loan terms range from one to five years or up to a
reasonable time for the purchase of a principal residence. The loans are
secured by 50 percent of the vested balance in the participant's accounts
and bear interest at a rate determined by the Trust based on prevailing
market conditions. At December 31, 2001, interest rates ranged from 6.5
percent to 10.5 percent.
Payment of Benefits
Upon termination of services for reasons other than death, retirement, or
disability, a participant will receive the vested percentage of his or her
account balance plus earnings. The distribution can be a lump-sum
distribution or may be in the form of an annuity beginning at retirement age
if requested by the participant.
Participants should refer to their summary plan description for more
information regarding payment of benefits.
Administrative Expense
The Trust pays all third party expenses of maintaining the Plan. Total third
party administrative expense for the Plan was $3,834 for the year ended
December 31, 2001.
7
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements--Continued
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December 31, 2001
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NOTE B--DESCRIPTION OF PLAN--Continued
Investments
Putnam Fiduciary Trust Company (Putnam) is the trustee for the Plan
portfolio. All investments are self-directed by participants.
Investment Options
Following are the investment options offered under Putnam:
. Lazard Small Cap Fund--Seeks long-term capital appreciation by
investing primarily in the equity securities of relatively small U.S.
companies with market capitalizations in the range of the Russell 2000
Index, that the Investment Manager believes are undervalued based on
their earnings, cash flow, or asset values.
. Putnam Growth and Income Fund--Invests primarily in dividend paying
stocks to provide income in addition to the growth potential of
equities.
. Putnam Investors Fund--Seeks long-term growth of capital and increased
income that results from this growth by investing mainly in the common
stocks of U.S. companies, with a focus on growth stocks.
. Putnam Income Fund--Designated to provide a relatively dependable
income stream and to help reduce investment risk by spreading assets
across a variety of fixed-income market sectors including, but not
limited to, investment grade corporate bonds, mortgage-backed
securities, U.S. Treasuries, high-yield corporate bonds and foreign
bonds.
. Putnam Vista Fund--Targets the stocks of a broad group of dynamic
companies in many industries that Putnam's management believes are
well positioned for earnings acceleration.
. Putnam New Opportunities Fund--Seeks long-term capital appreciation
through investment in common stock in companies believed to have
above-average growth potential.
. Putnam International Growth Fund--Seeks capital appreciation through a
diversified portfolio of equity securities of companies located in a
country other than the United States.
. Putnam Money Market Fund--Seeks current income with stability of
principal.
. Putnam Asset Allocation Conservation--Invests in stocks, bonds, and
cash to pursue the maximum advantage of changing markets. Designed to
meet the needs of investors who seek to preserve principal yet have
some equity exposure to keep pace with inflation.
. Putnam Bond Index Fund--Seeks investment in government and corporate
bonds that match the performance of the bond index.
8
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements--Continued
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December 31, 2001
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NOTE B--DESCRIPTION OF PLAN--Continued
. Putnam Global Equity Fund--Invests in both U.S. and international
markets. Targets large, well established multinational companies whose
stocks are priced attractively and whose size, scale, and power give
them a competitive advantage.
. Putnam Growth Opportunities Fund--Invests primarily in stocks of very
large, highly competitive American growth companies that are world
leaders in their industries. Targeted companies have strong revenue
and earnings growth rates, and dominate both domestic and foreign
markets.
. Putnam Health Sciences Trust--Seeks growth potential through all areas
of the health-care industry, encompassing medical devices, health-care
services, pharmaceuticals, and others.
. Putnam New Century Growth Fund--Invests in companies ranging from
Internet, software, and telecommunications companies to more
traditional businesses such as broadcasting, retail, finance, and
electronics. Its portfolio may contain varying amounts of small-,
mid-, and large-cap growth stocks.
. Putnam Over-the-Counter & Emerging Growth Fund--Invests primarily in
common stocks of small to midsize companies whose sales and earnings
are growing at very strong rates. The portfolio may include common
stocks that are traded on the over-the-counter (OTC) market as well as
stocks of emerging growth companies listed on securities exchanges.
. Putnam S&P 500 Fund--Targets stocks in the S&P 500 that generate
returns similar to the S&P 500 Index.
. Putnam Small Cap Value Fund--Seeks capital appreciation. The fund
normally invests in common stocks of small and medium-sized companies
similar in size to the Russell 2000 Index. It typically invests in
companies that have market capitalizations of less than $500 million.
. Putnam Capital Opportunities Fund--Seeks long-term growth of capital.
The fund primarily invests in common stocks of U.S. companies. It
invests mainly in small and mid-sized companies. The fund may invest
in foreign securities.
. CSFBDirect Securities Account--Is a self-directed brokerage window in
which participants can establish a brokerage account, and subsequently
purchase individual stocks and bonds--as well as mutual funds.
. Putnam Money Market Fund--SDB-- Seeks current income with stability of
principal. The fund is only for the self-directed brokerage.
. Putnam Voyager Fund--Seeks capital appreciation. The fund invests
primarily in common stocks. It generally invests in securities of
large and midsize companies. The fund may employ leverage.
9
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements--Continued
================================================================================
December 31, 2001
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NOTE B--DESCRIPTION OF PLAN--Continued
. Putnam American Government Income Fund--Seeks high current income with
preservation of capital as its secondary objective. The fund normally
invests in bonds that are obligations of the U.S. Government, its
agencies and instrumentalities, such as U.S. Treasury bonds and Ginnie
Mae and Fannie Mae mortgage-backed bonds. The fund typically invests
in bonds that have intermediate to long-term maturities (three years
or longer).
. Putnam Balanced Retirement Fund--Seeks high current return and
relative stability of principal. The fund mainly invests in a
combination of bonds and U.S. value stocks in approximately equal
portions. The fund mainly invests in large companies. It typically
invests in government and private companies with intermediate- to
long-term maturities. Usually the fund will invest no more than 35
percent of assets in non-investment grade investments.
. Putnam Strategic Income Fund--Seeks current income consistent with
capital preservation. The fund invests mainly in bonds that are
obligations of corporations and governments worldwide. The fund will
usually not invest more than 85 percent of assets in higher-yield,
higher-risk debt investments rated below BBB or its equivalent. It
will typically not invest more than 20 percent of assets below CCC or
its equivalent.
. Putnam International Growth and Income Fund--Seeks capital growth. The
fund invests mainly in common stocks of companies outside the United
States. Although, the fund emphasizes investments in developed
countries, it may also invest in companies in emerging markets. It
invests mainly in value stocks and in mid-sized and large companies.
. Putnam Emerging Markets Fund--Seeks long-term capital appreciation.
The fund normally invests in common stocks of emerging market
companies. Emerging market companies are companies that are located in
or derive most of their revenues from business in countries with
developing markets. The fund typically invests significantly in small
and mid-sized companies.
. Putnam International Voyager Fund--Seeks long-term capital
appreciation. The fund normally invests at least 65 percent of assets
in issuers located in at least three foreign countries other than the
United States. It invests primarily in equities of small- to
mid-capitalization issuers, however it can invest in companies of any
size. The fund may invest in securities issued in developing, as well
as developed foreign countries.
. Putnam Global Growth and Income Fund--Seeks capital growth, with
current income as a secondary objective. The fund normally invests in
common stocks of companies worldwide. Typically it invests in value
stocks that offer the potential for income. The fund invests mainly in
mid-sized and large companies, although it can invest in companies of
any size. The fund emphasizes investments in developed countries; it
may also invest in companies located in emerging markets.
. Putnam New Value Fund--Seeks long-term capital appreciation. The fund
normally invests in common stocks of U.S. companies, with a focus on
value stocks--stocks that the fund's advisor believes are currently
undervalued by the market. It typically invests in mid-sized and large
companies.
10
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements--Continued
================================================================================
December 31, 2001
--------------------------------------------------------------------------------
NOTE B--DESCRIPTION OF PLAN--Continued
. Putnam Balanced Fund--Seeks capital growth and current income. The
fund typically invests in a combination of bonds and U.S. growth
stocks, with a greater focus on growth stocks. It usually invests in
mid-sized and large companies. The fund can invest in bonds of
government and private companies mostly investment-grade in quality
with intermediate- to long-term maturities. It can usually invest no
more than 20 percent of assets in non-investment grade investments.
. Putnam Equity Income Fund--Seeks current income; capital growth is a
secondary consideration. The fund normally invests in common stocks of
U.S. companies, with a focus on value stocks that offer the potential
for current income and may also offer the potential for capital
growth. It typically invests in large companies.
. Shares of Federal Realty Investment Trust
Significant Assets
At December 31, 2001 and 2000, the fair market values of individual assets
that represent 5 percent or more of the Plan's net assets were as follows:
December 31, 2001 2000
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Putnam Growth and Income Fund $ 1,630,692 $ 1,873,053
Putnam Vista Fund 1,869,269 3,323,236
Putnam New Opportunities Fund 997,622 1,310,729
Putnam International Growth Fund 734,262 1,001,139
Shares of Federal Realty Investment Trust 1,586,496 1,428,535
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NOTE C--TAX STATUS
The Plan obtained a determination letter on November 4, 1994, in which the
Internal Revenue Service stated that the Plan, as designed, was in
compliance with the applicable requirements of the Internal Revenue Code
(IRC) under Section 401(a). The Plan has been amended since receiving its
determination letter. The Plan's trustees believe that the Plan is
currently designed and operated in compliance with IRC and ERISA
requirements.
11
Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Notes to Financial Statements--Continued
================================================================================
December 31, 2001
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NOTE D--PARTY-IN-INTEREST TRANSACTIONS
Party-in-interest transactions include those with fiduciaries or employees of
the Plan, any person who provided services to the Plan, an employer whose
employees were covered by the Plan, an employee organization whose members
were covered by the Plan, a person who owned 50 percent or more of such an
employer or employee association, or relatives of such persons.
The Plan invests in shares of Federal Realty Investment Trust and funds
managed by Putnam; therefore these transactions qualify as parties-in-interest
transactions.
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NOTE E--PLAN TERMINATION
Although it has not expressed any intent to do so, Federal Realty Investment
Trust has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In the
event of the Plan termination, participants will become 100 percent vested in
their accounts.
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NOTE F--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
2001
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Net assets available for benefits per the financial statements $ 8,127,835
Less: contributions receivable at December 31, (36,097)
============
Net assets available for benefits per Form 5500 $ 8,091,738
============
The following is a reconciliation of contributions per the financial
statements to the Form 5500:
--------------------------------------------------------------------------------
2001
-----------------------------------------------------------------------------------------
Contributions per the financial statements $ 1,164,957
Less: contributions receivable at December 31, (36,097)
============
Contributions per the Form 5500 $ 1,128,860
============
Supplemental Information
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Federal Realty Investment Trust Savings and Retirement 401(k) Plan
Schedule of Assets Held for Investment Purposes
================================================================================
December 31, 2001
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Description Market Value
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Lazard Small Cap Fund $ 19,734
Putnam Growth and Income Fund 1,630,692
Putnam Investors Fund 168,546
Putnam Income Fund 345,592
Putnam Vista Fund 1,869,269
Putnam New Opportunities Fund 997,622
Putnam International Growth Fund 734,262
Putnam Money Market Fund 332,468
Putnam Asset Allocation Conservation 386
Putnam Bond Index Fund 85,154
Putnam Global Equity Fund 589
Putnam Growth Opportunities Fund 28,541
Putnam Health Sciences Trust 10,326
Putnam New Century Growth Fund 905
Putnam Over-the-Counter and Emergency Growth Fund 4,173
Putnam S&P 500 Fund 63,258
Putnam Small Cap Value Fund 13,535
Putnam Capital Opportunities Fund 4,933
CSFBDirect Securities Account 13,468
Putnam Money Market Fund--SDB 89
Putnam Voyager Fund 4,023
Putnam American Government Income Fund 6,555
Putnam Balanced Retirement Fund 441
Putnam Strategic Income Fund 567
Putnam International Growth and Income Fund 815
Putnam Emerging Markets Fund 1,027
Putnam International Voyager Fund 24,426
Putnam Global Growth and Income Fund 2,510
Putnam New Value Fund 11,782
Putnam Balanced Fund 949
Putnam Equity Income Fund 20,738
Shares of Federal Realty Investment Trust 1,586,496
Contributions Receivable 36,097
Participant Loans 107,867
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Total Assets $ 8,127,835
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Plan Administrator has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
FEDERAL REALTY INVESTMENT TRUST
SAVINGS AND RETIREMENT 401(K) PLAN
Dated: June 27, 2002 By:
/s/ Larry Finger
Name: Larry Finger, Senior Vice President
Chief Financial Officer & Treasurer
EXHIBIT INDEX
Exhibit Number Description
23.1 Consent of Independent Public Accountants
23.2 Notice Regarding Consent of Arthur Andersen LLP