Vornado Announces Its Third Quarter Share of Toys ''R'' Us Financial Results
PARAMUS, N.J.--(BUSINESS WIRE)--Sept. 13, 2006--
Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.9% share of Toys' second quarter results in its third quarter ending September 30, 2006. Vornado's results will include a net loss of $36,414,000 or $.21 per diluted share from Toys and negative Funds From Operations ("FFO") of $30,173,000, or $.18 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 July 29, 2006
Toys "R" Us, Inc.
-------------------------
Results on
a Basis of
Results on Vornado's
(Amounts in thousands) a Purchase
Historical Price
Basis Accounting
------------ ------------
Net sales $ 2,413,000 $ 2,413,000
Cost of sales 1,584,000 1,584,000
------------ ------------
Gross margin 829,000 829,000
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Selling, general and administrative expenses 719,000 734,000
Depreciation and amortization 99,000 93,000
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Total operating expenses 818,000 827,000
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Operating income 11,000 2,000
Interest expense (129,000) (133,000)
Interest income 5,000 5,000
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Loss before income tax benefit (113,000) (126,000)
Income tax benefit 3,000 9,000
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Net loss $ (110,000) $ (117,000)
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Vornado's 32.9% equity in Toys' $117,000 net
loss $ (38,435)
Management fee from Toys 1,155
Interest income on Vornado's share of a
bridge loan to Toys 866
------------
Total Vornado net loss from its investment in
Toys $ (36,414)
============
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 $ (36,414)
Interest and debt expense 43,691
Depreciation and amortization 30,551
Income tax benefit (2,957)
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Vornado's 32.9% share of Toys' EBITDA $ 34,871
============
(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 July 29, 2006
(Amounts in thousands)
Reconciliation of Vornado's net loss from its
investment in Toys to FFO (1):
Net loss $ (36,414)
Depreciation and amortization of real property 12,155
Net gain on sale of real estate (329)
Income tax effect of above adjustments (5,585)
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Vornado's share of FFO $ (30,173)
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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
Contact: Vornado Realty Trust Joseph Macnow, 201-587-1000