EX-12.2 5 dex122.txt EXHIBIT 12.2 Exhibit 12.2 The Rouse Company and Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements (dollars in thousands)
Year ended December 31, --------------------------------------------------------- 2001 2000 1999 1998 1997 --------- --------- --------- --------- --------- Earnings (loss) before income taxes, equity in earnings of unconsolidated real estate ventures, net gains (losses) on operating properties, extraordinary items and cumulative effect of change in accounting principle $ 108,324 $ 5,833 $ (954) $ 9,531 $ 68,309 Equity in earnings of unconsolidated real estate ventures 32,806 129,556 101,171 101,663 27,881 Net gains (losses) on operating properties (432) 33,150 41,173 (6,109) (22,426) Fixed charges: Interest costs 265,328 256,397 253,585 220,854 225,810 Capitalized interest (36,563) (19,653) (19,719) (19,511) (23,359) Distributions on Company-obligated mandatorily redeemable preferred securities of a trust holding solely Parent Company subordinated debt securities 12,719 12,719 12,719 12,719 12,719 Portion of rental expense representative of interest factor (1) 8,666 9,411 9,276 6,008 7,260 Adjustments to earnings: Minority interest in earnings of majority-owned subsidiaries having fixed charges 2,094 1,801 1,638 2,270 3,178 Decrease (increase) in undistributed earnings of unconsolidated real estate ventures (2) (4,396) (36,457) (44,480) (55,015) 2,300 Previously capitalized interest amortized into earnings: Depreciation of operating properties and other investments(3) 5,287 4,929 4,554 4,192 3,962 Cost of land sales (4) 5,431 -- -- -- 5,025 --------- --------- --------- --------- --------- Earnings available for fixed charges and Preferred stock dividend requirements $ 399,264 $ 397,686 $ 358,963 $ 276,602 $ 310,659 ========= ========= ========= ========= ========= Combined fixed charges and Preferred stock dividend requirements: Interest costs $ 265,328 $ 256,397 $ 253,585 $ 220,854 $ 225,810 Distributions on Company-obligated mandatorily redeemable preferred securities of a trust holding solely Parent Company subordinated debt securities 12,719 12,719 12,719 12,719 12,719 Portion of rental expense representative of interest factor (1) 8,666 9,411 9,276 6,008 7,260 Preferred stock dividend requirements 12,150 12,150 12,150 12,150 10,313 --------- --------- --------- --------- --------- Total combined fixed charges and Preferred stock dividend requirements $ 298,863 $ 290,677 $ 287,730 $ 251,731 $ 256,102 ========= ========= ========= ========= ========= Ratio of earnings to combined fixed charges and Preferred stock dividend requirements 1.34 1.37 1.25 1.10 1.21 ========= ========= ========= ========= =========
(1) Includes (a) 80% of minimum rentals, the portion of such rentals considered to be a reasonable estimate of the interest factor and (b) 100% of contingent rentals of $2.5 million, $3.8 million, $4.5 million, $1.6 million and $2.7 million, for the years ended December 31, 2001, 2000, 1999, 1998 and 1997 respectively. (2) Includes undistributed earnings of certain unconsolidated real estate ventures, formed December 31, 1997, in which we held substantially all (at least 98%) of the financial interest but did not own a majority voting interest. In January 2001, we acquired all of the shares of voting stock (91%) of these ventures that we did not own, and from the date of acquisition, these ventures are included in our consolidated financial statements. Our share of undistributed earnings of these ventures was $31.7 million in 2000, $32.5 million in 1999 and $42.5 million in 1998. (3) Represents an estimate of depreciation of capitalized interest costs based on our established depreciation policy and an analysis of interest costs capitalized since 1971. Exhibit 12.2, continued The Rouse Company and Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements (4) Represents 10% of the cost of Columbia land sales and 5% of the cost of Summerlin land sales, the portions of such costs considered to be reasonable estimates of the interest factor. On December 31, 1997, certain wholly owned subsidiaries, including those that conducted substantially all of our land sales and community development activities, issued 91% of their voting common stock to The Rouse Company Incentive Compensation Statutory Trust. These sales were made at fair value and as part of our plan to meet the qualifications for REIT status. We retained the remaining voting stock of the ventures and held shares of nonvoting common and/or preferred stock which, taken together, comprised substantially all (at least 98%) of the financial interest in them. As a result of our disposition of the majority voting interests in the ventures, we began accounting for our investment in them using the equity method effective December 31, 1997. In January 2001, we acquired all of the shares of voting stock (91%) in these ventures that we did not own, and from the date of acquisition, these ventures are included in our consolidated financial statements. As a result of these transactions, no adjustment for the interest portion of the cost of land sales has been included for the period from January 1, 1998 through December 31, 2000.