Vornado Announces Its Share of Toys "R" Us Third 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' third quarter financial results in its fourth quarter ending December 31, 2009. Vornado's results will include a net loss of $26,631,000 or $.13 per diluted share compared to a net loss of $39,130,000 or $.22 per diluted share recorded in the quarter ended December 31, 2008.
Vornado's share of negative Funds From Operations ("FFO") before income taxes for the quarter ending December 31, 2009 is $31,624,000 or $.16 per share as compared to negative FFO before income taxes of $47,279,000 or $.26 per share in the prior year's quarter. Vornado's share of negative FFO after income taxes for the quarter ending December 31, 2009 is $16,538,000, or $.08 per share as compared to negative FFO after income taxes of $29,395,000 or $.16 per share in the quarter ended December 31, 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
October 31, 2009 November 1, 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 $ 2,667,000 $ 2,667,000 $ 2,773,000
Cost of sales 1,717,000 1,717,000 1,813,000
Gross margin 950,000 950,000 960,000
Selling, general and 892,000 905,000 952,000
administrative expenses
Depreciation and 85,000 98,200 103,400
amortization
Other income, net (18,000 ) (15,300 ) (12,700 )
Total operating expenses 959,000 987,900 1,042,700
Operating loss (9,000 ) (37,900 ) (82,700 )
Interest expense (113,000 ) (117,000 ) (119,000 )
Interest income 1,000 1,000 2,000
Loss before income taxes (121,000 ) (153,900 ) (199,700 )
Income tax benefit 52,000 64,500 71,400
Net loss (69,000 ) (89,400 ) (128,300 )
Less: Net loss
attributable to 2,000 2,000 1,900
noncontrolling interest
Net loss attributable to $ (67,000 ) $ (87,400 ) $ (126,400 )
Toys "R" Us, Inc.
Vornado's 32.7% equity $ (28,571 ) $ (41,335 )
in Toys' net loss
Management fee from 1,570 1,668
Toys, net
Interest income on 370 537
credit facility
Total Vornado net loss
from its investment in $ (26,631 ) $ (39,130 )
Toys
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 $ (26,631 ) $ (39,130 )
Interest expense 37,493 38,841
Depreciation and 30,859 33,343
amortization
Income tax benefit (20,520 ) (23,126 )
Vornado's share of Toys' $ 21,201 $ 9,928
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
October 31, 2009 November 1, 2008
Reconciliation of Vornado's net loss
from its investment in Toys to FFO (1):
Net loss $ (26,631 ) $ (39,130 )
Depreciation and amortization of real 15,527 15,533
property
Net gains on sale of real estate -- (556 )
Income tax effect of above adjustments (5,434 ) (5,242 )
Vornado's share of Toys' FFO (1) $ (16,538 ) $ (29,395 )
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