##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission File Number 1-31824
 FIRST POTOMAC REALTY TRUST
  MARYLAND
    
    37-1470730(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 7600 Wisconsin Avenue, 11 th Floor, Bethesda, MD 20814
 (301) 986-9200
 þ o
  o þ o
 o þ




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##### Table of Contents



FIRST POTOMAC REALTY TRUST
FORM 10-Q
 INDEX
 PagePart I:
    
    Financial InformationItem 1.
    
    Financial StatementsCondensed consolidated balance sheets as of June 30, 2006 (unaudited) and December 31, 2005
    
    
    3Condensed consolidated statements of operations (unaudited) for the three and six months ended June 30, 2006 and 2005
    
    
    4Condensed consolidated statements of cash flows (unaudited) for the six months ended June 30, 2006 and 2005
    
    
    5Notes to condensed consolidated financial statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    28Part II:
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3.
    
    Defaults Upon Senior Securities
    
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    29Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    29SignaturesEX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



FIRST POTOMAC REALTY TRUST
  June 30, 2006(unaudited)
    
    
    December 31, 2005Assets:Rental property, net
    
    $
    774,205
    
    
    $
    668,730Cash and cash equivalents
    
    
    4,352
    
    
    
    3,356Escrows and reserves
    
    
    10,520
    
    
    
    9,818Accounts and other receivables, net of
allowance for doubtful accounts of $244 and
$339, respectively
    
    
    2,732
    
    
    
    2,705Accrued straight-line rents, net of
allowance for doubtful accounts of $30 and
$35, respectively
    
    
    3,967
    
    
    
    3,638Deferred costs, net
    
    
    8,089
    
    
    
    6,676Prepaid expenses and other assets
    
    
    3,965
    
    
    
    3,322Intangible assets, net
    
    
    31,913
    
    
    
    29,518Total assets
    
    $
    839,743
    
    
    $
    727,763Liabilities:Mortgage loans
    
    $
    379,390
    
    
    $
    369,266Senior notes payable
    
    
    75,000
    
    
    
    Credit facility
    
    
    55,000
    
    
    
    26,999Accounts payable and accrued expenses
    
    
    4,975
    
    
    
    4,734Accrued interest
    
    
    2,233
    
    
    
    1,618Rents received in advance
    
    
    2,571
    
    
    
    2,932Tenant security deposits
    
    
    4,297
    
    
    
    3,973Deferred market rent
    
    
    8,553
    
    
    
    7,281Total liabilities
    
    
    532,019
    
    
    
    416,803Minority interests
    
    
    16,055
    
    
    
    21,629Shareholders equity:Common stock, $0.001 par value, 100,000,000
shares authorized: 20,538,647 and 20,072,755
shares issued and outstanding at June 30, 2006
and
December 31, 2005, respectively
    
    
    21
    
    
    
    20Additional paid-in capital
    
    
    344,876
    
    
    
    338,564Dividends in excess of accumulated earnings
    
    
    (53,228
    )
    
    
    (49,253
    )Total shareholders equity
    
    
    291,669
    
    
    
    289,331Total liabilities and shareholders equity
    
    $
    839,743
    
    
    $
    727,763
  3




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##### Table of Contents



FIRST POTOMAC REALTY TRUST
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Rental revenue
    
    $
    21,093
    
    
    $
    15,616
    
    
    $
    41,412
    
    
    $
    29,510Tenant reimbursements and other
    
    
    4,130
    
    
    
    2,128
    
    
    
    8,186
    
    
    
    4,369Total revenues
    
    
    25,223
    
    
    
    17,744
    
    
    
    49,598
    
    
    
    33,879Operating expenses:Property operating
    
    
    4,413
    
    
    
    3,136
    
    
    
    9,115
    
    
    
    6,134Real estate taxes and insurance
    
    
    2,149
    
    
    
    1,493
    
    
    
    4,321
    
    
    
    2,852General and administrative
    
    
    2,529
    
    
    
    1,767
    
    
    
    5,064
    
    
    
    3,637Depreciation and amortization
    
    
    7,957
    
    
    
    5,793
    
    
    
    15,820
    
    
    
    10,834Total operating expenses
    
    
    17,048
    
    
    
    12,189
    
    
    
    34,320
    
    
    
    23,457Operating income
    
    
    8,175
    
    
    
    5,555
    
    
    
    15,278
    
    
    
    10,422Other expenses (income):Interest expense
    
    
    7,253
    
    
    
    4,588
    
    
    
    13,843
    
    
    
    9,017Interest and other income
    
    
    (165
    )
    
    
    (23
    )
    
    
    (568
    )
    
    
    (37
    )Loss on interestrate lock agreement
    
    
    671
    
    
    
    
    
    
    
    671
    
    
    
    Loss on early retirement of debt
    
    
    121
    
    
    
    
    
    
    
    121
    
    
    
    Total other expenses
    
    
    7,880
    
    
    
    4,565
    
    
    
    14,067
    
    
    
    8,980Income from continuing operations before
minority interests
    
    
    295
    
    
    
    990
    
    
    
    1,211
    
    
    
    1,442Minority interests
    
    
    (15
    )
    
    
    (68
    )
    
    
    (67
    )
    
    
    (108
    )Income from continuing operations
    
    
    280
    
    
    
    922
    
    
    
    1,144
    
    
    
    1,334Discontinued operations:Income from operations of disposed property
    
    
    116
    
    
    
    125
    
    
    
    376
    
    
    
    251Gain on sale of disposed property
    
    
    7,475
    
    
    
    
    
    
    
    7,475
    
    
    
    Minority interests in discontinued operations
    
    
    (370
    )
    
    
    (9
    )
    
    
    (386
    )
    
    
    (20
    )Income from discontinued operations
    
    
    7,221
    
    
    
    116
    
    
    
    7,465
    
    
    
    231Net income
    
    $
    7,501
    
    
    $
    1,038
    
    
    $
    8,609
    
    
    $
    1,565Basic net income per share:Income from continuing operations
    
    $
    0.01
    
    
    $
    0.05
    
    
    $
    0.06
    
    
    $
    0.09Income from discontinued operations
    
    
    0.36
    
    
    
    0.01
    
    
    
    0.36
    
    
    
    0.01Net income per share
    
    $
    0.37
    
    
    $
    0.06
    
    
    $
    0.42
    
    
    $
    0.10Weighted average common shares outstanding 
basic
    
    
    20,401
    
    
    
    16,440
    
    
    
    20,285
    
    
    
    15,345Diluted net income per share:Income from continuing operations
    
    $
    0.01
    
    
    $
    0.05
    
    
    $
    0.06
    
    
    $
    0.09Income from discontinued operations
    
    
    0.35
    
    
    
    0.01
    
    
    
    0.36
    
    
    
    0.01Net income per share
    
    $
    0.36
    
    
    $
    0.06
    
    
    $
    0.42
    
    
    $
    0.10Weighted average common shares outstanding 
diluted
    
    
    20,611
    
    
    
    16,635
    
    
    
    20,512
    
    
    
    15,529
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FIRST POTOMAC REALTY TRUST
 Six Months Ended June 30,2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    8,609
    
    
    $
    1,565Adjustments to reconcile net income to net cash provided by
operating activities:Discontinued operations:Gain on sale of property disposed
    
    
    (7,475
    )
    
    
    Depreciation and amortization
    
    
    3
    
    
    
    71Minority interests
    
    
    386
    
    
    
    20Depreciation and amortization
    
    
    15,985
    
    
    
    11,271Bad debt (recovery) expense
    
    
    (73
    )
    
    
    309Stock based compensation
    
    
    761
    
    
    
    172Amortization of deferred market rent
    
    
    (1,029
    )
    
    
    (565
    )Amortization of deferred financing costs
    
    
    453
    
    
    
    Amortization of rent abatement
    
    
    92
    
    
    
    Minority interests
    
    
    67
    
    
    
    108Loss from early retirement of debt
    
    
    121
    
    
    
    Loss on interest-rate lock agreement
    
    
    671
    
    
    
    Changes in assets and liabilities:Escrows and reserves
    
    
    (702
    )
    
    
    (4,080
    )Accounts and other receivables
    
    
    41
    
    
    
    (695
    )Accrued straight-line rents
    
    
    (323
    )
    
    
    (692
    )Prepaid expenses and other assets
    
    
    (180
    )
    
    
    440Tenant security deposits
    
    
    324
    
    
    
    595Accounts payable and accrued expenses
    
    
    378
    
    
    
    (222
    )Accrued interest
    
    
    615
    
    
    
    861Rent received in advance
    
    
    (361
    )
    
    
    1,017Deferred costs
    
    
    (885
    )
    
    
    (570
    )Total adjustments
    
    
    8,869
    
    
    
    8,040Net cash provided by operating activities
    
    
    17,478
    
    
    
    9,605Cash flows from investing activitiesPurchase deposit on future acquisitions
    
    
    (600
    )
    
    
    (1,530
    )Proceeds from sale of real estate assets
    
    
    14,939
    
    
    
    Additions to rental property
    
    
    (3,225
    )
    
    
    (1,710
    )Additions to construction in process
    
    
    (603
    )
    
    
    Acquisition of land parcels
    
    
    (716
    )
    
    
    Acquisition of rental property and associated intangible assets
    
    
    (110,554
    )
    
    
    (45,778
    )Net cash used in investing activities
    
    
    (100,759
    )
    
    
    (49,018
    )Cash flows from financing activitiesFinancing costs
    
    
    (2,253
    )
    
    
    (360
    )Repayments of debt
    
    
    (39,774
    )
    
    
    (48,905
    )Dividends to shareholders
    
    
    (12,584
    )
    
    
    (8,203
    )Distributions to minority interests
    
    
    (761
    )
    
    
    (710
    )Proceeds from debt
    
    
    139,500
    
    
    
    51,800Proceeds from issuance of shares, net
    
    
    
    
    
    
    44,961Stock option exercises
    
    
    149
    
    
    
    Net cash provided by financing activities
    
    
    84,277
    
    
    
    38,583Net increase (decrease) in cash and cash equivalents
    
    
    996
    
    
    
    (830
    )Cash and cash equivalents, beginning of period
    
    
    3,356
    
    
    
    2,532Cash and cash equivalents, end of period
    
    $
    4,352
    
    
    $
    1,702
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FIRST POTOMAC REALTY TRUST
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (1) Summary of Significant Accounting Policies
 (a) Description of Business
    (b) Principles of Consolidation
    (c) Reclassifications
  (d) Use of Estimates
  (e) Revenue Recognition
  6




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Accounting for Leases
  (f) Cash and Cash Equivalents
  (g) Escrows and Reserves
  (h) Rental Property
  Buildings
    
    39 yearsBuildings improvements
    
    5 to 15 yearsFurniture, fixtures, and equipment
    
    5 to 15 yearsTenant improvements
    
    Shorter of the useful lives of the
assets or the terms of the related
leases
   Capitalization of Interest Cost
 7




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##### Table of Contents



(i) Purchase Accounting
 Business Combinations,
 §
    
    origination value of leases based on the unamortized capitalized leasing costs at the
date of the acquisition, which approximates the market value of the lease origination costs
had the in-place leases been originated on the date of acquisition; the value of in-place
leases represents absorption costs for the estimated lease-up period in which vacancy and
foregone revenue are incurred;§
    
    the value of above and below market in-place leases based on the present values (using a
discount rate that reflects the risks associated with the leases acquired) of the
difference between the contractual rent amounts and market rents over the remaining
non-cancelable lease terms, ranging from one to eleven years; and§
    
    the intangible value of tenant or customer relationships
  (j) Intangible Assets
   8




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##### Table of Contents



Goodwill and Other Intangibles
 (k) Derivatives
    (l) Income Taxes
  (m) Minority Interests
   9




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##### Table of Contents



(n) Earnings Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2005
    
    
    June 30, 2006
    
    
    June 30, 2005Numerator for basic and diluted per share
calculations:Income from continuing operations
    
    $
    280
    
    
    $
    922
    
    
    $
    1,144
    
    
    $
    1,334Income from discontinued operations
    
    
    7,221
    
    
    
    116
    
    
    
    7,465
    
    
    
    231Net income
    
    $
    7,501
    
    
    $
    1,038
    
    
    $
    8,609
    
    
    $
    1,565Denominator for basic per share calculations:Weighted average shares outstanding  basic:
    
    
    20,401
    
    
    
    16,440
    
    
    
    20,285
    
    
    
    15,345Denominator for diluted per share calculations:Weighted average shares outstanding  diluted
    
    
    20,401
    
    
    
    16,440
    
    
    
    20,285
    
    
    
    15,345Effect of dilutive shares:Employee stock options and nonvested shares
    
    
    238
    
    
    
    195
    
    
    
    227
    
    
    
    184Denominator for diluted per share amounts
    
    
    20,639
    
    
    
    16,635
    
    
    
    20,512
    
    
    
    15,529Basic net income per share:Continuing operations
    
    $
    0.01
    
    
    $
    0.05
    
    
    $
    0.06
    
    
    $
    0.09Discontinued operations
    
    
    0.36
    
    
    
    0.01
    
    
    
    0.36
    
    
    
    0.01Net income
    
    $
    0.37
    
    
    $
    0.06
    
    
    $
    0.42
    
    
    $
    0.10Diluted net income per share:Continuing operations
    
    $
    0.01
    
    
    $
    0.05
    
    
    $
    0.06
    
    
    $
    0.09Discontinued operations
    
    
    0.35
    
    
    
    0.01
    
    
    
    0.36
    
    
    
    0.01Net income
    
    $
    0.36
    
    
    $
    0.06
    
    
    $
    0.42
    
    
    $
    0.10
 (0) Share Based Compensation
 Share-Based Payment
 Accounting for Stock Based
Compensation Accounting for Stock Issued to
Employees
 10




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##### Table of Contents



Option Awards
   WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Term
    
    
    ValueOutstanding, December 31, 2005
    
    
    588,095
    
    
    $
    15.49Granted
    
    
    66,650
    
    
    
    26.60Exercised
    
    
    (7,000
    )
    
    
    15.54Forfeited
    
    
    (3,000
    )
    
    
    23.31Outstanding, March 31, 2006
    
    
    644,745
    
    
    $
    17.70
    
    
    8.0 years
    
    $
    6,558,819Granted
    
    
    
    
    
    
    Exercised
    
    
    (2,343
    )
    
    
    17.51Forfeited
    
    
    (1,094
    )
    
    
    25.32Outstanding, June 30, 2006
    
    
    641,308
    
    
    
    17.69
    
    
    7.8 years
    
    $
    7,510,286Exercisable, June 30, 2006
    
    
    300,658
    
    
    $
    16.18
    
    
    7.5 years
    
    $
    4,090,697
   11




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2006
    
    
    2005Weighted average risk free interest rate
    
    
    4.31
    %
    
    
    3.68
    %Expected volatility
    
    
    21.0
    %
    
    
    15.4
    %Expected dividend yield
    
    
    5
    %
    
    
    5
    %Weighted average expected life of options
    
    5 years
    
    5 years
 Nonvested share awards
    Weighted-Average GrantNonvested shares
    
    Shares
    
    
    Date Fair ValueNonvested at December 31, 2005
    
    
    56,124
    
    
    $
    26.40Granted
    
    
    5,167
    
    
    $
    26.60Vested
    
    
    (19,198
    )
    
    $
    26.45Forfeited
    
    
    
    
    
    
    Nonvested at March 31, 2006
    
    
    42,093
    
    
    $
    26.40Granted
    
    
    80,049
    
    
    $
    22.49Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested at June 30, 2006
    
    
    122,142
    
    
    $
    23.84
  12




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005Net income, as reported
    
    $
    1,038
    
    
    $
    1,565Add: total stock-based compensation included in
reported net income
    
    
    85
    
    
    
    161Deduct: total stock-based employee compensation
expense determined under fair value based method
for all awards, net of minority interests
    
    
    (150
    )
    
    
    (290
    )Pro forma net income
    
    $
    973
    
    
    $
    1,436Net income per share, as reported  basic and
diluted
    
    $
    0.06
    
    
    $
    0.10Pro forma net income per share  basic and diluted
    
    $
    0.06
    
    
    $
    0.09
 (2) Rental Property
  June 30, 2006
    
    
    December 31, 2005Land
    
    $
    182,979
    
    
    $
    153,762Buildings and improvements
    
    
    609,659
    
    
    
    529,673Construction in process
    
    
    772
    
    
    
    169Tenant improvements
    
    
    22,179
    
    
    
    17,558Furniture, fixtures and equipment
    
    
    9,880
    
    
    
    9,794825,469
    
    
    
    710,956Less: accumulated depreciation
    
    
    (51,264
    )
    
    
    (42,226
    )$
    774,205
    
    
    $
    668,730
 Acquisitions
    
    
    Airpark Business Center, a two-building 42,178 square-foot multi-tenanted flex/office
property in Richmond, Virginia. The property was 100% leased to eight tenants.
    
    Chesterfield Business Center, an eight-building 190,049 square-foot multi-tenanted
flex/office property in Richmond, Virginia. The property was 93% leased to 45 tenants.
    
    Hanover Business Center, a four-building 183,612 square-foot multi-tenanted
flex/office property in Ashland, Virginia. The property was 93% leased to 29 tenants.
  13




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##### Table of Contents



Above andAcquired
    
    
    
    
    
    
    In-place
    
    
    Customer
    
    
    (below)tenant
    
    
    Building and
    
    
    leases
    
    
    relations
    
    
    market leases(in thousands)
    
    Land
    
    
    improvements
    
    
    improvements
    
    
    intangible
    
    
    intangible
    
    
    acquired, net
    
    
    TotalRivers Bend Center
    
    $
    3,153
    
    
    $
    1,976
    
    
    $
    24,816
    
    
    $
    2,130
    
    
    $
    
    
    
    $
    (729
    )
    
    $
    31,346Northridge I & II
    
    
    1,172
    
    
    
    870
    
    
    
    6,683
    
    
    
    628
    
    
    
    
    
    
    
    (460
    )
    
    
    8,893Crossways I
    
    
    2,657
    
    
    
    769
    
    
    
    10,981
    
    
    
    1,183
    
    
    
    16
    
    
    
    12
    
    
    
    15,618Sterling Park Business Center
    
    
    19,898
    
    
    
    376
    
    
    
    10,418
    
    
    
    732
    
    
    
    
    
    
    
    (360
    )
    
    
    31,0641408 Stephanie Way
    
    
    1,292
    
    
    
    
    
    
    
    3,872
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,164Airpark Business Center
    
    
    250
    
    
    
    33
    
    
    
    2,761
    
    
    
    168
    
    
    
    
    
    
    
    38
    
    
    
    3,250Chesterfield Business Center
    
    
    900
    
    
    
    188
    
    
    
    13,145
    
    
    
    630
    
    
    
    
    
    
    
    (228
    )
    
    
    14,635Hanover Business Center
    
    
    1,795
    
    
    
    425
    
    
    
    11,289
    
    
    
    817
    
    
    
    7
    
    
    
    (350
    )
    
    
    13,983Total
    
    $
    31,117
    
    
    $
    4,637
    
    
    $
    83,965
    
    
    $
    6,288
    
    
    $
    23
    
    
    $
    (2,077
    )
    
    $
    123,953
  Three Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2005
    
    
    June 30, 2006
    
    
    June 30, 2005Pro forma total revenues
    
    $
    26,025
    
    
    $
    25,272
    
    
    $
    51,856
    
    
    $
    50,636Pro forma net income
from continuing
operations per share
    
    
    210
    
    
    
    398
    
    
    
    603
    
    
    
    546Pro forma diluted net
income from continuing
operations per share
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.03
 (3) Discontinued Operations
   Three Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2006Revenue
    
    $
    136
    
    
    $
    442Property operating expenses
    
    
    20
    
    
    
    63Depreciation and amortization
    
    
    
    
    
    
    3Income from operations of disposed
property
    
    
    116
    
    
    
    376Gain on sale of disposed property
    
    
    7,475
    
    
    
    7,475Minority interests in discontinued
operations
    
    
    (370
    )
    
    
    (386
    )Income from discontinued operations
    
    $
    7,221
    
    
    $
    7,465
 (4) Mortgage Loans and Other Debt
  June 30,
    
    
    December 31,2006
    
    
    2005Mortgage debt with fixed interest rates ranging from 5.13% to
8.53% maturing at various dates through June 2021.
    
    $
    379,390
    
    
    $
    369,266Senior notes with fixed interest rates ranging from 6.41% to 6.55%
    
    
    75,000
    
    
    
    Credit facility with a variable rate of LIBOR + 1.20%.
    
    
    55,000
    
    
    
    26,999$
    509,390
    
    
    $
    396,265
 14




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##### Table of Contents



(a) Mortgage Debt
  June 30,
    
    
    December 31,2006
    
    
    20054200 Tech Court, 8.07%, matures October 2009.
    
    $
    1,786
    
    
    $
    1,7984212 Tech
Court, 8.53%, matures June 2010.
    
    
    1,739
    
    
    
    1,748Crossways Commerce Center, 6.70%, matures October 2012.
    
    
    25,891
    
    
    
    26,054Newington Business Park Center, 6.70%, matures October 2012.
    
    
    16,332
    
    
    
    16,435Interstate Plaza, 7.45%, effective interest rate of 5.30%, matures January 2007.
    
    
    8,411
    
    
    
    8,546Herndon Corporate Center, 5.11%, effective interest rate of 5.66%, matures April 2008.
    
    
    8,710
    
    
    
    8,764Aquia Commerce Center, 6.50%, matures February 2013.
    
    
    882
    
    
    
    931Suburban Maryland Portfolio, 6.71%, effective interest rate of 5.54%, matures September 2008.
    
    
    76,956
    
    
    
    78,012Norfolk Commerce Park II, 6.90%, effective interest rate of 5.28%, matures August 2008.
    
    
    7,578
    
    
    
    7,7004612 Navistar Drive, 7.48%, effective interest rate of 5.20%, matures July 2011.
    
    
    14,180
    
    
    
    14,371Campus at Metro Park North, 7.11%, effective interest rate of 5.25%, matures February 2012.
    
    
    25,936
    
    
    
    26,259Plaza 500, Van Buren Office Park, Rumsey Center, Snowden Center, Greenbrier Technology Center, Norfolk
Business Center and Alexandria Corporate Park, 5.19%, matures August 2015.
    
    
    100,000
    
    
    
    100,000Enterprise Center, 8.03%, effective interest rate of 5.20%, matures December 2010.
    
    
    19,717
    
    
    
    20,016Glenn Dale Business Center, 7.83%, effective interest rate of 5.13%, matures May 2009.
    
    
    8,982
    
    
    
    9,128Gateway Centre Manassas, 7.35%, effective interest rate of 5.88%, matures November 2016.
    
    
    1,851
    
    
    
    1,9051434 Crossways Blvd, 6.25% and 7.05%, effective interest rate of 5.38%, matures March 2013 and August 2012.
    
    
    20,340
    
    
    
    20,605403 and 405 Glenn Drive, 7.60%, effective interest rate of 5.50%, matures July 2011.
    
    
    9,156
    
    
    
    9,265Linden Business Center, 6.01%, effective interest rate of 5.58%, matures October 2013.
    
    
    7,706
    
    
    
    7,760Owings Mills Business, Center 5.85%, effective interest rate of 5.75%, matures March 2014.
    
    
    5,870
    
    
    
    5,911Prosperity Business Center, 6.25%, effective interest rate of 5.75%, matures January 2013.
    
    
    4,015
    
    
    
    4,058Airpark Business Center, 7.45%, effective interest rate of 6.63%, matures June 2021.
    
    
    1,640
    
    
    
    Hanover Business Center:Hanover Building II A, 8.00%, matures June 2015.
    
    
    1,304
    
    
    
    Hanover
Building II B, 4.00%, effective interest rate of 8.00%, matures June 2016.
    
    
    1,975
    
    
    
    Hanover Building C, 7.88%, effective interest rate of 6.63%, matures December 2017.
    
    
    1,491
    
    
    
    Hanover
Building D, 8.88%, effective interest rate of 6.63%, matures August 2015.
    
    
    1,094
    
    
    
    Chesterfield Business Center:Chesterfield Buildings ABEF, 7.45%, effective interest rate of 6.63%, matures August 2015.
    
    
    2,990
    
    
    
    Chesterfield Buildings CDGH, 8.50%, effective interest rate of 6.63%, matures August 2015.
    
    
    2,858
    
    
    
    $
    379,390
    
    
    $
    369,266
 (b) Senior Notes
  (c) Credit Facility
  (d) Term Loan
 15




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##### Table of Contents



(5) Segment Information
  (6) Supplemental Disclosure of Cash Flow Information
  2006
    
    
    2005Cash paid for interest
    
    $
    13,849
    
    
    $
    8,951Non-cash investing and financing activities:Issuance of common shares to trustees
    
    
    137
    
    
    
    56Debt assumed in connection with acquisitions of
real estate
    
    
    13,400
    
    
    
    29,848Conversion of operating partnership units into
common shares
    
    
    5,265
    
    
    
    3,664
  (7) Subsequent Events
    16




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##### Table of Contents



The following discussion and analysis of the Companys financial condition and results of
operations should be read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-Q . The discussion and analysis is derived from the consolidated
operating results and activities of First Potomac Realty Trust.
   Executive Summary
   Significant Second Quarter Transactions
 
    
    Acquired the following properties:
 o
    
    1408 Stephanie Way, a 51,209 square-foot unoccupied flex/office property
in Chesapeake, Virginia, for $5.2 million. The acquisition was funded with a
portion of the proceeds from the sale of 6600 Business Parkway, through a 1031
like-kind exchange;o
    
    Landmark Portfolio, a 14-building 415,839 square-foot multi-tenanted
portfolio of flex/office properties in Richmond, Virginia, for total consideration
of $31.0 million. The purchase price was comprised of $18.2 million in cash and the
assumption of $12.8 million with a fair value of $13.4 million in debt secured by
the properties. The cash portion of the purchase was funded with a combination of
the proceeds from the sale of 6600 Business Parkway in Elkridge (see below),
Maryland through a 1031 like-kind exchange and a portion of the proceeds from
private placement of unsecured notes. The portfolio is comprised of the following:
 
    
    Airpark Business Center, a two-building 42,178 square-foot multi-tenanted
flex/office property in
 17




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##### Table of Contents



Richmond, Virginia. The property was 100% leased to eight tenants.§
    
    Chesterfield Business Center, an eight-building 190,049 square-foot
multi-tenanted flex/office property in Richmond, Virginia. The property
was 93% leased to 45 tenants.§
    
    Hanover Business Center, a four-building 183,612 square-foot
multi-tenanted flex/office property in Ashland, Virginia. The property
was 93% leased to 29 tenants.
 Other Activity
 
    
    The Company entered into an amendment to its unsecured revolving credit
facility, which increased the permitted borrowings under the facility from $100.0
million to $125.0 million and extended the maturity to May 2009;
    
    The Company sold its property located at 6600 Business Parkway in Elkridge,
Maryland recognizing a gain on sale of $7.5 million. The proceeds from sale were
used to fund the acquisition of the Landmark Portfolio and to complete a Section
1031 like-kind exchange;
    
    The Company completed a private placement of unsecured Senior Notes totaling
$75.0 million of fixed rate debt comprised of $37.5 million bearing interest at
6.41% and $37.5 million bearing interest at 6.55%; and
    
    Recognized $0.8 million of charges including $0.7 million due to a loss on an
interest-rate lock agreement that did not qualify for hedge accounting treatment
and $0.1 million due to the write-off of unamortized debt issue costs associated
with the repayment of a $50.0 million Term Loan in June 2006.
 Development Activity
   
    
    John Marshall Highway  a 112,000 square foot flex/warehouse building expansion is
underway and fully pre-leased to the current sole tenant of this property. The total
estimated cost is approximately $8.1 million. Development efforts through June 30,
2006 include design, architecture, and other site planning activities;
    
    Crossways Commerce Center I  a 30,000 square foot office/flex building is planned
with initial development costs incurred during the second quarter of 2006;
    
    Snowden Center  4,500 square foot new building is planned. Development costs
incurred through June 30, 2006 include design, architecture, survey and site planning;
and
    
    Sterling Park Business Center  the Company began development efforts on two parcels
of land representing approximately 16% of the total land associated with this property.
The planned development for this portion of Sterling Park Business Center is to
construct an approximately 100,000 square foot flex building. Costs incurred to date
include design, site planning and road completion expenditures.
  18




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##### Table of Contents



Critical Accounting Policies and Estimates
   Revenue Recognition
   Investments in Real Estate and Real Estate Entities
   Buildings
    
    39 yearsBuildings improvements
    
    5 to 15 yearsFurniture, fixtures, and equipment
    
    5 to 15 yearsTenant improvements
    
    Shorter of the useful lives of the
assets or the terms of the related
leases
   19




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##### Table of Contents



Purchase Accounting
 Business Combinations,
 §
    
    origination value of leases based on the unamortized capitalized leasing costs at the
date of the acquisition, which approximates the market value of the lease origination costs
had the in-place leases been originated on the date of acquisition; the value of in-place
leases represents absorption costs for the estimated lease-up period in which vacancy and
foregone revenue are incurred;§
    
    the value of above and below market in-place leases based on the present values (using a
discount rate that reflects the risks associated with the leases acquired) of the
difference between the contractual rent amounts including amounts related to the
reimbursement of fixed operating costs and market rents over the remaining non-cancelable
lease terms, ranging from one to eleven years; and§
    
    the intangible value of tenant or customer relationships.
  Results of Operations
 Comparison of the Three and Six Months Ended June 30, 2006 to the Three and Six Months Ended
June 30, 2005
  2006 Acquisitions
  2005 Acquisitions
  20




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##### Table of Contents



2004 Acquisitions
   Total Revenues
  Three Months
    
    
    Six Months(amounts in thousands)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    Increase
    
    
    Change
    
    
    Increase
    
    
    ChangeRental revenue
    
    
    21,093
    
    
    
    15,616
    
    
    
    41,412
    
    
    
    29,510
    
    
    
    5,477
    
    
    
    35
    %
    
    
    11,902
    
    
    
    40
    %Tenant reimbursements & other
    
    
    4,130
    
    
    
    2,128
    
    
    
    8,186
    
    
    
    4,369
    
    
    
    2,002
    
    
    
    94
    %
    
    
    3,817
    
    
    
    87
    %
 Rental Revenues
   Tenant Reimbursement and Other Revenues
  21




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##### Table of Contents



Total Expenses
 Property Operating Expenses
  Three Months
    
    Six Months(amounts in thousands)
    
    Three Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent2006
    
    2005
    
    2006
    
    2005
    
    Increase
    
    Change
    
    Increase
    
    ChangeProperty operating expenses
    
    
    4,413
    
    
    
    3,136
    
    
    
    9,115
    
    
    
    6,134
    
    
    
    1,277
    
    
    
    41
    %
    
    
    2,981
    
    
    
    49
    %Real estate taxes & insurance
    
    
    2,149
    
    
    
    1,493
    
    
    
    4,321
    
    
    
    2,852
    
    
    
    656
    
    
    
    44
    %
    
    
    1,469
    
    
    
    52
    %
   Other Operating Expenses
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Increase
    
    Change
    
    Increase
    
    Change2,529
    
    
    
    1,767
    
    
    
    5,064
    
    
    
    3,637
    
    
    
    762
    
    
    
    43
    %
    
    
    1,427
    
    
    
    39
    %
 Share-Based Payment
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Increase
    
    Change
    
    Increase
    
    Change7,957
    
    
    
    5,793
    
    
    
    15,820
    
    
    
    10,834
    
    
    
    2,164
    
    
    
    37
    %
    
    
    4,986
    
    
    
    46
    %
  22




---



##### Table of Contents



Other Expense
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Increase
    
    Change
    
    Increase
    
    Change7,253
    
    
    
    4,588
    
    
    
    13,843
    
    
    
    9,017
    
    
    
    2,665
    
    
    
    58
    %
    
    
    4,826
    
    
    
    54
    %
   Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Change
    
    Change
    
    Change
    
    Change165
    
    
    
    23
    
    
    
    568
    
    
    
    37
    
    
    
    142
    
    
    
    617
    %
    
    
    531
    
    
    
    1,435
    %
   Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Change
    
    Change
    
    Change
    
    Change671
    
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    671
    
    
    
    
   23




---



##### Table of Contents



Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Change
    
    Change
    
    Change
    
    Change121
    
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    121
    
    
    
    
  Minority Interests from Continuing Operations
  Three Months
    
    Six MonthsThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent(amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005
    
    Change
    
    Change
    
    Change
    
    Change15
    
    
    
    68
    
    
    
    67
    
    
    
    108
    
    
    
    (53
    )
    
    
    (78
    %)
    
    
    (41
    )
    
    
    (38
    %)
  Income from Discontinued Operations
 (amounts in thousands)
    
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Income from operations of disposed
property
    
    
    116
    
    
    
    125
    
    
    
    376
    
    
    
    251Gain on sale of disposed property
    
    
    7,475
    
    
    
    
    
    
    
    7,475
    
    
    
    Minority interests in discontinued
operations
    
    
    (370
    )
    
    
    (9
    )
    
    
    (386
    )
    
    
    (20
    )Income from discontinued operations
    
    
    7,221
    
    
    
    116
    
    
    
    7,465
    
    
    
    231
  Liquidity and Capital Resources
   24




---



##### Table of Contents



Cash Flows
  Six Months EndedJune 30,(amounts in thousands)
    
    2006
    
    
    2005
    
    
    IncreaseCash provided by operating activities
    
    $
    17,478
    
    
    $
    9,605
    
    
    $
    7,873Cash used in investing activities
    
    
    (100,759
    )
    
    
    (49,018
    )
    
    
    (51,741
    )Cash provided by financing activities
    
    
    84,277
    
    
    
    38,583
    
    
    
    45,694
 25




---



##### Table of Contents



Dividends and Distributions
    Funds From Operations
    26




---



##### Table of Contents



Funds From Operations
    
    
    Funds From OperationsThree Months Ended June 30,
    
    
    Six Months Ended June 30,(amounts in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    7,501
    
    
    $
    1,038
    
    
    $
    8,609
    
    
    $
    1,565Add: Depreciation and
amortization of real
estate assets
    
    
    7,957
    
    
    
    5,793
    
    
    
    15,820
    
    
    
    10,834Add: Discontinued
operations depreciation
and amortization
    
    
    
    
    
    
    35
    
    
    
    3
    
    
    
    71Add: Minority interests
    
    
    385
    
    
    
    77
    
    
    
    452
    
    
    
    128Less: Gain on sale of
disposed property
    
    
    (7,475
    )
    
    
    
    
    
    
    (7,475
    )
    
    
    FFO available to common
shareholders and
unitholders
    
    $
    8,368
    
    
    $
    6,943
    
    
    $
    17,409
    
    
    $
    12,598Weighted average number
of diluted common shares
and Operating
Partnership units
outstanding
    
    
    21,661
    
    
    
    17,750
    
    
    
    21,672
    
    
    
    16,645
 Forward Looking Statements
  27




---



##### Table of Contents



28




---



##### Table of Contents



PART II: OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
   Votes AgainstName
    
    Votes For
    
    
    or Withheld
    
    
    TotalRobert H. Arnold
    
    
    18,655,154.99
    
    
    
    489,616.00
    
    
    
    91.37Richard B. Chess
    
    
    19,044,136.99
    
    
    
    100,634.00
    
    
    
    93.28Douglas J. Donatelli
    
    
    18,648,654.99
    
    
    
    496,116.00
    
    
    
    91.34Louis T. Donatelli
    
    
    17,455,013.99
    
    
    
    1,689,757.00
    
    
    
    85.50J. Roderick Heller
    
    
    19,115,164.99
    
    
    
    29,606.00
    
    
    
    93.63R. Michael McCullough
    
    
    19,041,836.99
    
    
    
    102,934.00
    
    
    
    93.27Alan G. Merten
    
    
    19,111,764.99
    
    
    
    33,006.00
    
    
    
    93.61Terry L. Stevens
    
    
    19,044,136.99
    
    
    
    100,634.00
    
    
    
    93.28
 Item 5. Other Information.
 Item 6. Exhibits.
 No.
    
    Description3.1
    
    Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on
October 1, 2003.3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants
Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.1
    
    Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated
September 15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration Statement on
Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.3
    
    Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed with the
SEC
on June 23, 2006).
 29




---



##### Table of Contents



No.
    
    Description4.4
    
    Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited Partnership
and the several Purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 4.3
to the Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).4.5
    
    Guaranty Agreement, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference to
Exhibit 4.4 to the Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).4.6
    
    Subsidiary Guaranty Agreement, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the
Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).10.1
    
    Form of Restricted Common Shares Award Agreement for officers (incorporated by reference to Exhibit 10.1 to
the Registrants Current Report on Form 8-K as filed with the SEC on July 13, 2006).10.2
    
    Form of Restricted Common Shares Award Agreement for trustees (incorporated by reference to Exhibit 10.2 to
the Registrants Current Report on Form 8-K as filed with the SEC on July 13, 2006).10.3
    
    Amended and Restated Revolving Credit Agreement among First Potomac Realty Investment Limited Partnership
and Key Bank N.A., Wachovia Bank, N.A., Wells Fargo Bank N.A., Bank of Montreal and Key Bank N.A. as
Administrative Agent, dated as of April 26, 2006 (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K as filed with the SEC on April 28, 2006).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
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##### Table of Contents



FIRST POTOMAC REALTY TRUSTDate: August 9, 2006
    
    /s/ Douglas J. DonatelliDouglas J. DonatelliPresident and Chief Executive OfficerDate: August 9, 2006
    
    /s/ Barry H. BassBarry H. BassExecutive Vice President and Chief Financial Officer
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##### Table of Contents



EXHIBIT INDEX
 No.
    
    Description3.1
    
    Amended and Restated Declaration of Trust of the Registrant (incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on
October 1, 2003.3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants
Registration Statement on Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.1
    
    Amended and Restated Agreement of Limited Partnership of First Potomac Realty Investment, L.P. dated
September 15, 2003 (incorporated by reference to Exhibit 3.3 to the Registrants Registration Statement on
Form S-11 (Registration No. 333-107172), as filed with the SEC on October 1, 2003.4.3
    
    Form of First Potomac Realty Investment Limited Partnership 6.55% Senior Notes, Series B, due 2016
(incorporated by reference to Exhibit 4.2 to the Registrants Current Report on Form 8-K as filed with the
SEC on June 23, 2006).4.4
    
    Note Purchase Agreement by and among the Registrant, First Potomac Realty Investment Limited Partnership
and the several Purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 4.3
to the Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).4.5
    
    Guaranty Agreement, entered into by the Registrant, dated as of June 22, 2006 (incorporated by reference to
Exhibit 4.4 to the Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).4.6
    
    Subsidiary Guaranty Agreement, dated as of June 22, 2006 (incorporated by reference to Exhibit 4.5 to the
Registrants Current Report on Form 8-K as filed with the SEC on June 23, 2006).10.1
    
    Form of Restricted Common Shares Award Agreement for officers (incorporated by reference to Exhibit 10.1 to
the Registrants Current Report on Form 8-K as filed with the SEC on July 13, 2006).10.2
    
    Form of Restricted Common Shares Award Agreement for trustees (incorporated by reference to Exhibit 10.2 to
the Registrants Current Report on Form 8-K as filed with the SEC on July 13, 2006).10.3
    
    Amended and Restated Revolving Credit Agreement among First Potomac Realty Investment Limited Partnership
and Key Bank N.A., Wachovia Bank, N.A., Wells Fargo Bank N.A., Bank of Montreal and Key Bank N.A. as
Administrative Agent, dated as of April 26, 2006 (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K as filed with the SEC on April 28, 2006).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (This exhibit shall not be deemed filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)