certain guarantees. It states that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of its obligation. Saul Centers has guaranteed portions  of its Partnership debt obligations, all of which are presented on the consolidated financial statements as mortgage notes payable. Saul Centers has guaranteed $95,921,000 of the notes payable which are recourse loans made by the Operating Partnership as of December 31, 2002. The balance of the mortgage notes payable totaling $284,822,000 are non-recourse, however, as is customary when obtaining long term non-recourse financing, Saul Centers has agreed to assume certain obligations should they arise specific to individual mortgages. No additional liabilities must be recognized as a result of the adoption of FIN 45 and the Company does not expect the adoption of FIN 45 to have a material impact on its financial condition or results of operations. The Company made an election to be treated,  and intends to continue operating so as to qualify  as a REIT under sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ending December 31, 1993. A REIT generally will not be subject to federal income taxation on that portion  of its income that qualifies as REIT taxable income  to the extent that it distributes at least 90% of its REIT taxable income to stockholders and complies with certain other requirements. Therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. As of December 31, 2002 and 2001, the total tax basis of the Company’s assets was $410,497,000 and $377,704,000, and the tax basis of the liabilities was $392,157,000 and $362,464,000, respectively. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” which amended SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 outlines alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company has not made a voluntary change to the fair value based method. As a result, the adoption of SFAS No. 148 will not have an impact upon the consolidated financial statements. In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities,” which changes the guidelines for consolidation of and disclosure related to unconsolidated entities, if those unconsolidated entities qualify as variable interest entities, as defined in FIN 46. The Company does not have any unconsolidated entities or variable interest entities and therefore the adoption of FIN  46 will not have an impact upon the consolidated financial statements. Cash and cash equivalents includes cash and  short-term investments with maturities of three months or less measured from the acquisition date. In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. (“FIN”) 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Direct Guarantees of Indebtedness of Others.” FIN 45 outlines the disclosures to be made by a guarantor in its financial statements about its obligations under Beginning in 1999, pursuant to the Plan, 100 shares of the Company’s common stock are awarded annually as additional compensation to each director serving on the Board of Directors as of the record date for the Annual Meeting of Stockholders. The shares are issued on the date of the Annual Meeting, their issuance may not be deferred and transfer of the shares is restricted for a period of twelve months following the date of issue. Saul Centers has established a Deferred Compensation and Stock Plan for Directors (the “Plan”) for the benefit of its directors and their beneficiaries. A director may elect to defer all or part of his or her director's fees and has the option  to have the fees paid in cash, in shares of common stock or in a combination of cash and shares of common stock upon termination from the Board of Directors. If the director elects to have fees paid in stock, the number of shares allocated to the director is determined by the market price of the common stock on the day the fee is earned. As of December 31, 2002, 170,000 shares were authorized and registered for use under the Plan, and 130,000 shares had been credited to the directors' deferred fee accounts. Income Taxes Deferred Compensation  and Stock Plan for Directors Recent Accounting Pronouncements Cash and Cash Equivalents 21 NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS