Vornado (NYSE:VNO) announced today that its fourth quarter 2013
financial results will include a $162,215,000, or $0.82 per diluted
share, non-cash impairment of its investment in Toys.
Vornado previously announced on December 24, 2013 that its fourth
quarter 2013 financial results will include a net loss of $130,851,000,
or $0.66 per diluted share, representing its 32.6% share of Toys’ third
quarter 2013 net loss.
These combined losses totaling $293,066,000, or $1.42 per diluted share,
reduce the carrying amount of Vornado’s investment in Toys to its
estimated fair value of $80,062,000 at December 31, 2013. In determining
the fair value of its investment in Toys, Vornado considered, among
other inputs, a December 31, 2013 third-party valuation of Toys.
Vornado will continue to assess the recoverability of its Toys
investment each quarter. To the extent that the estimated fair value of
its investment in Toys doesn’t change, Vornado will recognize a non-cash
impairment equal to its share of Toys’ fourth quarter net income, if
any, which it records in its first quarter 2014 financial results.
Attached is a reconciliation of Vornado’s total net loss from its
investment in Toys to total negative Funds From Operations (“FFO”) that
it will include in its fourth quarter 2013 financial results. Vornado’s
share of Toys’ negative FFO will be treated as non-comparable.
Certain statements contained herein may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such factors include, among others, risks associated with the timing of
and costs associated with property improvements, financing commitments
and general competitive factors.
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Funds From Operations – Unaudited
For the Quarter Ended December 31, 2013
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(Amounts in thousands)
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Reconciliation of Vornado's net loss from its
investment in
Toys to negative FFO (1):
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Net loss
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$
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(293,066
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)
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Depreciation and amortization of real property
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16,506
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Real estate impairment losses
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456
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Income tax effect of above adjustments
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(5,937
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)
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Vornado's share of Toys’ negative FFO (1)
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$
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(282,041
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)
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_________________
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(1)
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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.
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Copyright Business Wire 2014