Vornado Announces its Share of Toys "R" Us Second 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' second quarter financial results in its third quarter ending September 30, 2009. Vornado's results will include net income of $22,083,000 or $.11 per diluted share compared to a net loss of $8,141,000 or $.04 per diluted share recorded in the quarter ended September 30, 2008.
Vornado's share of Funds From Operations ("FFO") before income taxes for the quarter ending September 30, 2009 is $3,482,000 or $.02 per share as compared to negative FFO before income taxes of $1,359,000 or $.01 per share in the prior year's quarter. Vornado's share of FFO after income taxes for the quarter ending September 30, 2009 is $33,472,000, or $.17 per share as compared to FFO after income taxes of $3,381,000 or $.02 per share in the quarter ended September 30, 2008.
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
August 1, 2009 August 2, 2008
Results on Results on
Results on a Vornado's Vornado's
(Amounts in thousands) Historical Purchase Price Purchase Price
Basis Accounting Accounting
Basis Basis
Net sales $ 2,567,000 $ 2,567,000 $ 2,771,000
Cost of sales 1,616,000 1,616,000 1,757,000
Gross margin 951,000 951,000 1,014,000
Selling, general and 828,000 839,100 883,400
administrative expenses
Depreciation and 101,000 109,200 111,300
amortization
Other income, net (64,000 ) (64,200 ) (10,200 )
Total operating expenses 865,000 884,100 984,500
Operating income 86,000 66,900 29,500
Interest expense (117,000 ) (121,400 ) (103,600 )
Interest income 2,000 2,000 4,000
Loss before income tax
benefit and noncontrolling (29,000 ) (52,500 ) (70,100 )
interest
Income tax benefit 54,000 112,100 35,700
Net earnings (loss) 25,000 59,600 (34,400 )
Less: Net loss attributable 2,000 2,000 3,500
to noncontrolling interest
Net earnings (loss)
attributable to Toys "R" Us, $ 27,000 $ 61,600 $ (30,900 )
Inc.
Vornado's 32.7% equity in $ 20,137 $ (10,107 )
Toys' net income (loss)
Management fee from Toys, 1,570 1,447
net
Interest income on credit 376 519
facility
Total Vornado net income
(loss) from its investment $ 22,083 $ (8,141 )
in Toys
See page 3 for a
reconciliation of net income
to FFO.
Reconciliation of Vornado's
net income (loss) from its
investment in Toys to EBITDA
(1):
Net income (loss) $ 22,083 $ (8,141 )
Interest and debt expense 39,136 33,570
Depreciation and 34,357 35,155
amortization
Income tax benefit (36,122 ) (10,945 )
Vornado's share of Toys' $ 59,454 $ 49,639
EBITDA (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
(1) 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
August 1, 2009 August 2, 2008
Reconciliation of Vornado's net income
(loss)
from its investment in Toys to FFO (1):
Net income (loss) $ 22,083 $ (8,141 )
Depreciation and amortization of real 17,521 17,891
property
Net gains on sale of real estate -- (164)
Income tax effect of above adjustments (6,132 ) (6,205 )
Vornado's share of Toys' FFO (1) $ 33,472 $ 3,381
____________________________________________________
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
(1) 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