UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one) |
|
|
x |
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
|
|
For the fiscal year ended December 31, 2005 |
|
|
|
|
|
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:
FORM 11-K
|
PAGE |
|
Report of Independent Registered Public Accounting Firm |
|
3 |
|
|
|
Financial Statements |
|
|
Statements of Net Assets Available for Benefits |
|
4 |
Statement of Changes in Net Assets Available for Benefits |
|
5 |
Notes to Financial Statements |
|
6 |
|
|
|
Supplemental Schedules * |
|
|
Schedule of Delinquent Participant Contributions |
|
9 |
Schedule of Assets (Held at End of Year) |
|
10 |
|
|
|
Signatures |
|
11 |
|
|
|
Exhibit Index |
|
12 |
|
|
|
Consent of Independent Registered Public Accounting Firm |
|
Exhibit 23 |
* Other supplemental schedules required by 29 CFR 2520.103-10 of the Department of Labors 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.
2
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, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plans 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) as of December 31, 2005 and Schedule of Delinquent Participant Contributions for the year ended December 31, 2005 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended. These supplemental schedules are the responsibility of the Plans management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Baltimore, MD
July 14, 2006
3
Corporate Office Properties, L.P. Employee Retirement Savings Plan
Statements of Net Assets Available for Benefits
|
December 31, |
|
|||||
|
|
2005 |
|
2004 |
|
||
Assets |
|
|
|
|
|
||
Investments, at fair value |
|
|
|
|
|
||
Mutual funds |
|
$ |
7,337,213 |
|
$ |
5,523,283 |
|
Common/collective fund |
|
175,295 |
|
198,316 |
|
||
Corporate Office Properties Trust common shares |
|
257,059 |
|
63,000 |
|
||
Participant loans |
|
29,256 |
|
45,007 |
|
||
Plan investments |
|
7,798,823 |
|
5,829,606 |
|
||
Receivables |
|
|
|
|
|
||
Participant contributions |
|
103,536 |
|
52,322 |
|
||
Employer contribution (Note 4) |
|
139,183 |
|
16,897 |
|
||
Total receivables |
|
242,719 |
|
69,219 |
|
||
Total assets |
|
8,041,542 |
|
5,898,825 |
|
||
Liabilities |
|
|
|
|
|
||
Corrective distributions payable (Note 4) |
|
86,384 |
|
|
|
||
Net assets available for benefits |
|
$7,955,158 |
|
$5,898,825 |
|
||
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, 2005
Additions |
|
|
|
|
Investment Income |
|
|
|
|
Interest and dividend income |
|
$ |
257,112 |
|
Net appreciation in fair value of investments |
|
384,738 |
|
|
Total investment income |
|
641,850 |
|
|
Contributions |
|
|
|
|
Employee |
|
1,386,639 |
|
|
Employer (Note 4) |
|
433,378 |
|
|
Total contributions |
|
1,820,017 |
|
|
Net additions |
|
2,461,867 |
|
|
|
|
|
|
|
Deductions |
|
|
|
|
Benefits paid |
|
318,950 |
|
|
Corrective distributions (Note 4) |
|
86,384 |
|
|
Administrative expense (Note 2) |
|
200 |
|
|
Total deductions |
|
405,534 |
|
|
Net increase |
|
2,056,333 |
|
|
|
|
|
|
|
Net assets available for benefits |
|
|
|
|
Beginning of year |
|
5,898,825 |
|
|
End of year |
|
$ |
7,955,158 |
|
See accompanying notes to financial statements.
5
Corporate Office
Properties, L.P. Employee Retirement Savings Plan
Notes to Financial Statements
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 Plans provisions.
Corporate Office Properties, L.P. (the Company), which conducts almost all of Corporate Office Properties Trusts operations and for which Corporate Office Properties Trust is the sole general partner, maintains the Plan for the benefit of the Companys 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 participants account is credited with the participants contributions, Company matching contributions and an allocation of Plan earnings (losses). 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 participants vested account.
Participants immediately vest in their contributions and related earnings thereon. Vesting in the Companys contributions portion of Participant accounts is based on years of continuous service. A participant is 30% vested in Company matching contributions after one year of credited service, 60% vested after two years of credited service and 100% vested after three years of credited 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 participants account. The loans are secured by the balance in the participants account and bear interest at rates that are commensurate with local prevailing rates, as determined by the Plan administrator. At December 31, 2005, interest rates on participant loans ranged from 5.0% to 9.5% and the maturity dates on such loans ranged from February 2006 through March 2008. Repayment of Participants loan principal and interest is submitted through bi-weekly payroll deductions from such Participants.
Upon termination of service, whether by death, disability, retirement or otherwise leaving the Company and its qualifying subsidiaries, a participant may elect to receive either a lump sum amount equal to the value of the participants 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.
6
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 accounts totaled $60,905 at December 31, 2005 and $34,655 at December 31, 2004. No forfeited nonvested accounts were used to reduce Company contributions during 2005.
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, the participants of the Plan may also choose to invest in Corporate Office Properties Trusts 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 Plans 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 T. Rowe Price Stable Asset Fund is benefit-responsive and, therefore, is valued at contract value, which approximates fair value. Investments in Corporate Office Properties Trusts 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.
Recent Accounting Pronouncement
On December 29, 2005, the Financial Accounting Standards Board (the FASB) released FASB Staff Position Nos. AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution, Health and Welfare and Pension Plans (the FSP). The FSP clarifies the definition of fully benefit-responsive investment contracts for contracts held by defined contribution plans. The FSP also establishes enhanced financial statement presentation and disclosure requirements for defined contribution plans subject to the FSP effective for financial statements for annual periods ending after December 15, 2006.
Management intends to adopt the FSP in the Plans financial statements for the year ended December 31, 2006. The effect of the FSP on the Plans financial statements is expected to be enhanced financial statement presentation and disclosure requirements including the following: (1) benefit-responsive investment contracts (investments in bank collective investment funds that hold benefit-responsive investment contracts) will be presented at fair value on the Statement of Net Assets Available for Benefits and (2) the amount representing the difference between fair value and contract value of the investment contracts (or bank collective investment fund) shall be presented on the face of the Statement of Net Assets Available for Benefits as a single amount, calculated as the sum of the amounts necessary to adjust the portion of net assets attributable to each fully benefit-responsive investment contract from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits shall be prepared on a basis that reflects income credited to participants in the Plan and net appreciation or depreciation in the fair value of only those investment contracts that are not deemed to be fully benefit-responsive.
7
The following presents the value and number of shares held of each investment that represents five percent or more of the Plans net assets as of the end of the respective periods:
|
Value of Investments at |
|
Number of Shares Held |
|
|||||||
|
|
2005 |
|
2004 |
|
2005 |
|
2004 |
|
||
T. Rowe Price Mid-Cap Growth Fund |
|
$ |
1,570,157 |
|
$ |
1,211,146 |
|
29,002 |
|
24,281 |
|
T. Rowe Price Equity Index 500 Fund |
|
1,003,057 |
|
832,945 |
|
29,897 |
|
25,582 |
|
||
T. Rowe Price Small-Cap Value Fund |
|
911,280 |
|
738,076 |
|
24,689 |
|
20,686 |
|
||
T. Rowe Price Growth Stock Fund |
|
787,812 |
|
658,543 |
|
27,740 |
|
24,692 |
|
||
T. Rowe Price Equity Income Fund |
|
546,347 |
|
442,498 |
|
21,078 |
|
16,642 |
|
||
T. Rowe Price Balanced Fund |
|
444,127 |
|
331,570 |
|
22,465 |
|
16,831 |
|
||
The Plans investments appreciated in value by $384,738 in the year ended December 31, 2005 (including realized gains and losses on investments bought and sold, as well as unrealized gains and losses on investments held during the year). This appreciation was attributable to the following: $343,093 to investments in registered investment companies; $41,645 to investments in Corporate Office Properties Trust common shares; and $0 to investments in a common/collective fund.
The Statement of Changes in Net Assets Available for Benefits reflects corrective distributions totaling $86,384 to Participants classified as Highly Compensated Employees under IRC section 414(q) (HCEs) in order to remediate excess contributions made by such Participants to the Plan; this amount is also reflected in distributions payable on the Statement of Net Assets Available for Benefits as of December 31, 2005.
The Plan financial statements also reflect $74,416 in additional employer contributions being made to Participants not classified as HCEs to complete the remediation of a portion of the excess contributions made by HCEs described above; this amount is included in (a) employer contributions reported on the Statement of Changes in Net Assets Available for Benefits and (b) employer contribution receivable on the Statement of Net Assets Available for Benefits as of December 31, 2005.
5. 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.
6. 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 2005, the Plan purchased 5,789 common shares of Corporate Office Properties Trust for $171,646 and sold 702 of such shares for $19,232. The Plan held 7,233 common shares valued at $257,059 at December 31, 2005 and 2,146 common shares valued at $63,000 at December 31, 2004.
7. Income Tax Status
The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. The plan administrator received a favorable determination letter dated July 13, 2005.
8. 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.
8
Corporate Office
Properties, L.P. Employee Retirement Savings Plan
Schedule H, Line 4a Schedule of Delinquent Participant Contributions
Year Ended December 31, 2005
Participant Contributions Transferred Late to Plan |
|
|
|
Total that Constitute Nonexempt |
|
|
5/20/2005 Payroll date - $37,585 |
|
$37,585 |
9
Corporate
Office Properties, L.P. Employee Retirement Savings Plan
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 31, 2005
|
|
|
(c) |
|
|
|
|
|
(a) |
|
(b) |
|
Description of investment |
|
(d) |
|
(e) |
* |
|
T. Rowe Price Mid-Cap Growth Fund |
|
Registered investment company |
|
|
|
$1,570,157 |
* |
|
T. Rowe Price Equity Index 500 Fund |
|
Registered investment company |
|
|
|
1,003,057 |
* |
|
T. Rowe Price Small-Cap Value Fund |
|
Registered investment company |
|
|
|
911,280 |
* |
|
T. Rowe Price Growth Stock Fund |
|
Registered investment company |
|
|
|
787,812 |
* |
|
T. Rowe Price Equity Income Fund |
|
Registered investment company |
|
|
|
546,347 |
* |
|
T. Rowe Price Balanced Fund |
|
Registered investment company |
|
|
|
444,127 |
* |
|
T. Rowe Price New Horizons Fund |
|
Registered investment company |
|
|
|
379,707 |
* |
|
T. Rowe Price International Stock Fund |
|
Registered investment company |
|
|
|
319,171 |
* |
|
T. Rowe Price New Income Fund |
|
Registered investment company |
|
|
|
290,916 |
* |
|
T. Rowe Price Retirement 2020 Fund |
|
Registered investment company |
|
|
|
274,842 |
* |
|
T. Rowe Price Retirement 2030 Fund |
|
Registered investment company |
|
|
|
192,887 |
* |
|
T. Rowe Price Science & Technology Fund |
|
Registered investment company |
|
|
|
188,606 |
* |
|
T. Rowe Price Media & Telecommunications |
|
Registered investment company |
|
|
|
176,844 |
* |
|
T. Rowe Price Retirement 2040 Fund |
|
Registered investment company |
|
|
|
90,975 |
* |
|
T. Rowe Price Retirement 2035 Fund |
|
Registered investment company |
|
|
|
86,054 |
* |
|
T. Rowe Price Retirement 2025 Fund |
|
Registered investment company |
|
|
|
35,578 |
* |
|
T. Rowe Price Retirement 2010 Fund |
|
Registered investment company |
|
|
|
16,933 |
* |
|
T. Rowe Price Extended Equity Market Index |
|
Registered investment company |
|
|
|
11,619 |
* |
|
T. Rowe Price Retirement Income Fund |
|
Registered investment company |
|
|
|
9,798 |
* |
|
T. Rowe Price Retirement 2005 Fund |
|
Registered investment company |
|
|
|
503 |
|
|
Registered investment companies |
|
|
|
|
|
7,337,213 |
* |
|
T. Rowe Price Stable Value Fund |
|
Common/collective fund |
|
|
|
175,295 |
* |
|
Corporate Office Properties Trust common shares |
|
Common shares of the Company |
|
|
|
257,059 |
* |
|
Participant loans |
|
Interest rates ranging from 5.0% to 9.5%, maturity dates ranging from February 2006 through March 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
$7,798,823 |
* Denotes party-in-interest as defined by ERISA.
** Cost information not required for participant-directed accounts.
10
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
CORPORATE OFFICE PROPERTIES, L.P. EMPLOYEE |
|||
|
|
RETIREMENT SAVINGS PLAN |
||
|
|
|
||
|
|
|
||
|
|
By: |
|
CORPORATE OFFICE PROPERTIES, L.P., |
|
|
|
|
|
|
|
By: |
|
CORPORATE OFFICE PROPERTIES TRUST, |
|
|
|
|
|
Date: July 14, 2006 |
|
By: |
|
/s/ Randall M. Griffin |
|
|
|
|
Randall M. Griffin |
|
|
|
|
President and Chief Executive Officer |
11
Exhibit Number |
|
Exhibit Title |
23 |
|
Consent of Independent Registered Public Accounting Firm |
12