Vornado Realty Trust (NYSE:VNO) announced today that it will record its
32.5% share of Toys “R” Us’ third quarter financial results in its
fourth quarter ending December 31, 2012. Vornado’s results will include
a net loss of $33,753,000, or $0.17 per diluted share, compared to a net
loss of $32,254,000, or $0.16 per diluted share recorded in the quarter
ended December 31, 2011.
Vornado’s share of negative Funds From Operations (“FFO”) before income
taxes for the quarter ending December 31, 2012 will be $49,158,000, or
$0.25 per diluted share, compared to negative FFO before income taxes of
$45,261,000, or $0.22 per diluted share in the prior year’s quarter.
Vornado’s share of negative FFO after income taxes for the quarter
ending December 31, 2012 will be $21,273,000, or $0.11 per diluted
share, compared to negative FFO after income taxes of $20,529,000, or
$0.10 per diluted share in the prior year’s quarter.
The business of Toys is highly seasonal; historically, Toys’ fourth
quarter net income accounts for more than 80% of its fiscal year net
income.
Attached is a summary of Toys’ financial results and Vornado’s 32.5%
share of its equity in Toys’ net loss, as well as reconciliations of net
loss to earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and FFO.
Vornado Realty Trust is a fully-integrated equity real estate investment
trust.
Certain statements contained herein may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such factors include, among others, risks associated with the timing of
and costs associated with property improvements, financing commitments
and general competitive factors.
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Toys "R" Us, Inc.
Condensed Consolidated Statements of Operations – Unaudited
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For the Quarter Ended
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October 27, 2012
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October 29, 2011
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(Amounts in thousands)
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Results on a
Historical
Basis
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Results on
Vornado’s
Purchase Price
Accounting
Basis
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Results on
Vornado’s
Purchase Price
Accounting
Basis
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Net sales
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$
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2,609,000
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$
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2,609,000
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$
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2,700,000
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Cost of sales
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1,642,000
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1,642,000
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1,714,000
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Gross margin
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967,000
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967,000
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986,000
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Selling, general and administrative expenses
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962,000
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965,600
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980,300
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Depreciation and amortization
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97,000
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108,000
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101,300
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Other income, net
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(17,000
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)
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(21,000
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)
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(1,800
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Total operating expenses
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1,042,000
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1,052,600
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1,079,800
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Operating loss
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(75,000
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)
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(85,600
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)
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(93,800
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Interest expense
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(135,000
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)
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(136,900
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)
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(108,900
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)
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Interest income
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4,000
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4,000
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2,000
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Loss before income taxes
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(206,000
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)
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(218,500
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)
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(200,700
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)
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Income tax benefit
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101,000
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106,500
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95,000
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Net loss
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$
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(105,000
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)
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$
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(112,000
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)
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$
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(105,700
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Vornado’s 32.5% equity in Toys’ net loss
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$
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(36,400
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$
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(34,543
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)
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Management fee from Toys, net
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2,647
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2,289
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Total Vornado net loss from its investment in Toys
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$
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(33,753
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$
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(32,254
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)
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See page 3 for a reconciliation of net loss to negative FFO.
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Reconciliation of Vornado’s net loss from its
investment in
Toys to EBITDA (1):
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Net loss
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$
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(33,753
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)
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$
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(32,254
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)
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Interest and debt expense
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44,493
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35,589
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Depreciation and amortization
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34,808
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33,105
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Income tax benefit
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(34,613
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)
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(31,046
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)
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Vornado’s share of Toys’ EBITDA (1) |
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$
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10,935
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$
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5,394
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_________________
(1) EBITDA represents “Earnings Before Interest, Taxes, Depreciation and
Amortization.” Management considers EBITDA a supplemental measure for
making decisions and assessing the unlevered performance of its segments
as it relates to the total return on assets as opposed to the levered
return on equity. EBITDA should not be considered a substitute for net
income or loss. EBITDA may not be comparable to similarly titled
measures employed by other companies.
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Toys "R" Us, Inc.
Funds From Operations - Unaudited
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(Amounts in thousands)
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For the Quarter Ended
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October 27, 2012
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October 29, 2011
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Reconciliation of Vornado's net loss from its investment in Toys to
negative FFO:
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Net loss
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$
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(33,753
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)
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$
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(32,254
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)
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Depreciation and amortization of real property
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17,778
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18,039
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Real estate impairment losses
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1,430
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-
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Income tax effect of above adjustments
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(6,728
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)
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(6,314
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)
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Vornado's share of Toys’ negative FFO (1) |
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$
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(21,273
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)
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$
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(20,529
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_________________
(1) FFO is computed in accordance with the definition adopted by the
Board of Governors of the National Association of Real Estate Investment
Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss
adjusted to exclude net gains from sales of depreciated real estate
assets, real estate impairment losses, depreciation and amortization
expense from real estate assets, extraordinary items and other specified
non-cash items, including the pro rata share of such adjustments of
unconsolidated subsidiaries. FFO and FFO per diluted share are used by
management, investors and analysts to facilitate meaningful comparisons
of operating performance between periods and among our peers because it
excludes the effect of real estate depreciation and amortization and net
gains on sales, which are based on historical costs and implicitly
assume that the value of real estate diminishes predictably over time,
rather than fluctuating based on existing market conditions. FFO does
not represent cash generated from operating activities and is not
necessarily indicative of cash available to fund cash requirements and
should not be considered as an alternative to net income as a
performance measure or cash flows as a liquidity measure. FFO may not be
comparable to similarly titled measures employed by other companies.
