Vornado Announces its Fourth Quarter Share of Toys ``R'' Us Financial Results
PARAMUS, N.J.--(BUSINESS WIRE)--Dec. 14, 2005--Vornado Realty Trust (NYSE:VNO) announced today that it will record in its fourth quarter of 2005, a Net loss from its 32.95% investment in Toys "R" Us ("Toys") of $39,575,000 or $.23 per share, and negative Funds From Operations of $32,996,000 representing Vornado's share of Toys third quarter 2005 financial results. This compares to a pro-forma Net loss of $24,267,000 and negative Funds From Operations of $23,047,000 for the same period in 2004. The business of Toys is highly seasonal; historically, Net income in Toys' fourth quarter accounts for more than 80% of its fiscal year Net income, which Vornado will report in its first quarter of 2006.
Attached is a summary of Toys' financial results and Vornado's 32.95% 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 Funds From Operations ("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.
Toys "R" Us, Inc.
Condensed Consolidated Statements of Operations - Unaudited
For the Quarter Ended October 29, 2005Toys "R" Us, Inc.
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Results on
a Basis of
Results Vornado's
on a Purchase
(Amounts in thousands) Historical Price
Basis Accounting
----------- -----------
Net sales $2,157,000 $2,157,000
Cost of sales 1,463,000 1,463,000
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Gross margin 694,000 694,000
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Selling, general and administrative expenses 678,000 684,000
Transaction and related costs 2,000 -
Depreciation and amortization 86,000 93,000
Restructuring and other charges (1,000) (1,000)
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Total operating expenses 765,000 776,000
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Operating loss (71,000) (82,000)
Interest expense (125,000) (130,000)
Interest income 2,000 2,000
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Loss before income taxes (194,000) (210,000)
Income tax benefit 68,000 74,000
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Net loss $ (126,000) $ (136,000)
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Vornado's 32.95% interest in Toys'
$136,000 Net loss $ (44,812)
Management fee to Vornado 1,259
Interest income on Vornado's share of a bridge
loan to Toys 3,978
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Total Vornado Net loss from its investment
in Toys $ (39,575)
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See page 3 for a reconciliation of Net loss to FFO.
Reconciliation to Vornado's share of EBITDA (1):
Net loss $ (39,575)
Interest and debt expense 42,835
Depreciation and amortization 30,644
Income tax benefit (24,383)
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Vornado's 32.95% share of Toys' EBITDA $ 9,521
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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. As properties are bought and sold based on a multiple
of EBITDA, management utilizes this measure to make investment
decisions as well as to compare the performance of its assets
to that of its peers. EBITDA should not be considered a
substitute for net income. EBITDA may not be comparable to
similarly titled measures employed by other companies.
Toys "R" Us, Inc.
Funds From Operations ("FFO") - Unaudited
For the Quarter Ended October 29, 2005
(Amounts in thousands)
Reconciliation of Vornado's share of Net loss to FFO (1):
Net loss $(39,575)
Depreciation and amortization of real property 9,226
Net loss on sale of real estate 989
Proportionate share of adjustments to equity in
income of partially-owned entities to arrive at FFO:
Depreciation and amortization of real property 659
Income tax (benefit) effect of above adjustments (4,295)
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Vornado's share of FFO $(32,996)
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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 net
income or loss determined in accordance with GAAP, excluding
extraordinary items as defined under GAAP and gains or losses
from sales of previously depreciated operating real estate
assets, plus specified non-cash items, such as real estate
asset depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. FFO is used by
management, investors and industry analysts as supplemental
measures of operating performance of equity REITs. FFO should
be evaluated along with GAAP net income and income per diluted
share (the most directly comparable GAAP measures), as well as
cash flow from operating activities, investing activities and
financing activities, in evaluating the operating performance
of equity REITs. Management believes that FFO is helpful to
investors as supplemental performance measures because these
measures exclude the effect of depreciation, amortization and
gains or losses from sales of real estate, all of which are
based on historical costs which implicitly assumes that the
value of real estate diminishes predictably over time. Since
real estate values instead have historically risen or fallen
with market conditions, these non-GAAP measures can facilitate
comparisons of operating performance between periods and among
other equity REITs. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs as
disclosed in the Company's Consolidated Statements of Cash
Flows. FFO should not be considered as an alternative to net
income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity.
A reconciliation of net income to FFO is provided above.
CONTACT: Vornado Realty Trust
Joseph Macnow, 201-587-1000
SOURCE: Vornado Realty Trust