Vornado Announces its Share of Toys ''R'' Us Fourth Quarter Financial Results
PARAMUS, N.J.--(BUSINESS WIRE)--
Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.7% share of Toys "R" Us' fourth quarter financial results in its first quarter ending March 31, 2008. Vornado's results will include net income of $80,362,000 or $.45 per diluted share compared to net income of $58,661,000 or $.32 per diluted share recorded in the quarter ended March 31, 2007.
Vornado's share of Funds From Operations ("FFO") before income taxes for the quarter ended March 31, 2008 is $190,933,000 or $1.06 per share as compared to FFO before income taxes of $145,803,000 or $.81 per share in the prior year's quarter. In the quarter ended March 31, 2008, Vornado's results will include FFO of $91,186,000, or $.51 per share as compared to FFO of $80,700,000, or $.45 per share in the quarter ended March 31, 2007.
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 32.7% share of its equity in Toys' net income, as well as reconciliations of net income 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
--------------------------------
February
February 2, 2008 3, 2007
--------------------- ----------
Results on Results on
Vornado's Vornado's
Results on Purchase Purchase
a Price Price
Historical Accounting Accounting
(Amounts in thousands) Basis Basis Basis
---------- ---------- ----------
Net sales $5,827,000 $5,827,000 $5,679,000
Cost of sales 3,843,000 3,843,000 3,825,000
--------- --------- ---------
Gross margin 1,984,000 1,984,000 1,854,000
--------- --------- ---------
Selling, general and administrative
expenses 1,212,000 1,214,000 1,200,000
Depreciation and amortization 103,000 108,300 172,800
Net gains on sales of properties -- -- (1,500)
Restructuring (reversals) charges
and other (2,000) (2,000) 10,000
--------- --------- ---------
Total operating expenses 1,313,000 1,320,300 1,381,300
--------- --------- ---------
Operating income 671,000 663,700 472,700
Interest expense (125,000) (127,200) (138,000)
Interest income 12,000 12,000 14,000
--------- --------- ---------
Income before income tax expense and
minority interest 558,000 548,500 348,700
Income tax expense (235,000) (296,400) (168,800)
Minority interest (11,000) (12,600) (7,000)
--------- --------- ---------
Net income $ 312,000 $ 239,500 $ 172,900
========= ========= =========
Vornado's 32.7% equity in Toys' net
income $ 78,355 $ 56,798
Management fee from Toys, net 1,378 1,147
Interest income on credit facility 629 716
--------- ---------
Total Vornado net income from its
investment in Toys $ 80,362 $ 58,661
========= =========
See page 3 for a reconciliation of
net income to FFO.
Reconciliation of Vornado's net
income from its
investment in Toys to EBITDA (1):
Net income $ 80,362 $ 58,661
Interest and debt expense 41,495 46,634
Depreciation and amortization 34,102 55,396
Income tax expense 93,919 53,397
--------- ---------
Vornado's 32.7% share of Toys'
EBITDA (1) $ 249,878 $ 214,088
========= =========
(1) EBITDA represents "Earnings Before Interest, Taxes, Depreciation
and Amortization." Management considers EBITDA a supplemental measure
for making decisions and assessing the un-levered 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
(Amounts in thousands) For the Quarter Ended
-------------------------
February 2, February 3,
2008 2007
----------- -----------
Reconciliation of Vornado's net income
from its investment in Toys to FFO (1):
Net income $ 80,362 $ 58,661
Depreciation and amortization of real
property 16,652 33,745
Income tax effect of above adjustments (5,828) (11,706)
----------- -----------
Vornado's share of FFO (1) $ 91,186 $ 80,700
=========== ===========
(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 Generally Accepted Accounting
Principles ("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
Contact: Vornado Realty Trust JOSEPH MACNOW, 201-587-1000