NOTES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 31 8. STOCKHOLDERS’ EQUITY (DEFICIT) AND MINORITY INTERESTS The consolidated statement of operations for the year ended December 31, 2004 includes a charge for minority interests of $8,105,000, consisting of $6,386,000 related to The Saul Organization’s share of the net income for the year and $1,719,000 related to distributions to minority interests in excess of allocated net income for the year. The charge for the year ended December 31, 2003 of $8,086,000, consisting of $6,495,000 related to The Saul Organization’s share of the net income for the year and $1,591,000 related to distributions to minority interests in excess of allocated net income for the year. The charge for the year ended December 31, 2002 of $8,070,000, consisting of $7,130,000 related to The Saul Organization’s share of the net income for the year and $940,000 related to distributions to minority interests in excess of allocated net income for the year. On July 16, 2003, the Company filed a shelf registration statement (the “Shelf Registration Statement”) with the SEC relating to the future offering of up to an aggregate of $100 million of preferred stock and depositary shares. On November 5, 2003, the Company sold 3,500,000 depositary shares, each representing 1/100th of a share of 8% Series A Cumulative Redeemable Preferred Stock. The underwriters exercised an over-allotment option, purchasing an additional 500,000 depositary shares on November 26, 2003. The depositary shares may be redeemed, in whole or in part, at the $25.00 liquidation preference at the Company’s option on or after November 5, 2008. The depositary shares will pay an annual dividend of $2.00 per share, equivalent to 8% of the $25.00 liquidation preference. The first dividend, paid on January 15, 2004, was for less than a full quarter and covered the period from November 5 through December 31, 2003. The Series A preferred stock has no stated maturity,  is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. 9. RELATED PARTY TRANSACTIONS Chevy Chase Bank, an affiliate of The Saul Organization, leases space in 14 of the Company’s properties. Total rental income from Chevy Chase Bank  amounted to $1,733,000, $1,495,000 and $1,368,000, for the years ended December 31, 2004, 2003 and 2002, respectively. The Company utilizes Chevy Chase Bank for its various checking accounts and as of December 31, 2004 had $32.9 million deposited in cash and short-term investment accounts. The Chairman and Chief Executive Officer, the President and the Chief Accounting Officer of the Company are also officers of various members of The Saul Organization and their management time is shared  with The Saul Organization. Their annual compensation is fixed by the Compensation Committee of the Board of Directors. The Company participates in a multiemployer profit sharing retirement plan with other entities within The Saul Organization which covers those full-time employees who meet the requirements as specified in the plan. Beginning January 1, 2002, only employer contributions are made to the plan. Each participant who is entitled to be credited with at least one hour  of service on or after January 1, 2002, shall be 100% vested in his or her employer contribution account  and no portion of such account shall be forfeitable. Employer contributions, included in general and administrative expense or property operating expenses in the consolidated statements of operations, at the discretionary amount of up to six percent of the employee’s cash compensation, subject to certain limits, were $269,000, $199,000 and $155,000 for 2004, 2003 and 2002, respectively. There are no  past service costs associated with the plan since it  is of the defined-contribution type. The Company also participates in a multiemployer nonqualified deferred plan with entities in The Saul Organization which covers those full-time employees who meet the requirements as specified in the plan. The plan, which can be modified or discontinued at any time, requires participating employees to defer 2% of their compensation over a specified amount. For the years ending December 31, 2004, 2003 and 2002,  the Company is required to contribute three times the amount deferred by employees. The Company’s expense, included in general and administrative expense, totaled $650,000, $31,000, and $8,000 for the years ended December 31, 2004, 2003 and 2002, respectively. All amounts deferred by employees and the Company are fully vested. The cumulative unfunded liability under this plan was $452,000 and $92,000 at December 31, 2004 and 2003 respectively, and is included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.