Vornado Announces its Second Quarter Share of Toys ``R'' Us Financial Results
PARAMUS, N.J.--(BUSINESS WIRE)--June 15, 2006--
Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.9% share of Toys' first quarter results in its second quarter ending June 30, 2006. Vornado's results will include a net loss of $7,835,000 or $.05 per diluted share from Toys and Funds From Operations ("FFO") of $49,000, a zero effect per diluted share. 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 32.9% 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.
Toys "R" Us, Inc.
Condensed Consolidated Statements of Operations - Unaudited
For the Quarter Ended April 29, 2006
Toys "R" Us, Inc.
-----------------------
Results on
a Basis
of
Vornado's
Results on a Purchase
(Amounts in thousands) Historical Price
Basis Accounting
----------- -----------
Net sales $2,389,000 $2,389,000
Cost of sales 1,556,000 1,556,000
----------- -----------
Gross margin 833,000 833,000
----------- -----------
Selling, general and administrative expenses 724,000 741,000
Depreciation and amortization 114,000 99,000
Restructuring and other charges 5,000 (1,000)
----------- -----------
Total operating expenses 843,000 839,000
----------- -----------
Operating loss (10,000) (6,000)
Interest expense (130,000) (135,000)
Interest income 8,000 8,000
----------- -----------
Loss before income tax benefit (132,000) (133,000)
Income tax benefit 99,000 99,000
----------- -----------
Net loss $(33,000) $(34,000)
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Vornado's 32.9% equity in Toys' $34,000 net
loss $(11,169)
Management fee from Toys 1,125
Interest income on Vornado's share of a bridge loan to Toys 2,209
-----------
Total Vornado net loss from its investment in Toys $(7,835)
===========
See page 3 for a reconciliation of net loss to FFO.
Reconciliation of Vornado's net loss from its
investment in Toys to EBITDA (1):
Net loss $(7,835)
Interest and debt expense 44,348
Depreciation and amortization 32,522
Income tax benefit (32,522)
-----------
Vornado's 32.9% share of Toys' EBITDA $36,513
===========
(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 - Unaudited
For the Quarter Ended April 29, 2006
(Amounts in thousands)
Reconciliation of Vornado's net loss from its
investment in Toys to FFO (1):
Net loss $(7,835)
Depreciation and amortization of real property 12,155
Net gain on sale of real estate 657
Income tax effect of above adjustments (4,928)
---------------------
Vornado's share of FFO $49
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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.
Source: Vornado Realty Trust