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Vornado Announces Its Share Of Toys “R” Us Third Quarter Financial Results

Stocks in this article: VNO

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, 2011. Vornado’s results will include a net loss of $32,254,000, or $0.16 per diluted share, compared to a net loss of $30,685,000, or $0.15 per diluted share recorded in the quarter ended December 31, 2010.

Vornado’s share of negative Funds From Operations (“FFO”) before income taxes for the quarter ended December 31, 2011 will be $45,261,000, or $0.22 per diluted share, compared to negative FFO before income taxes of $57,311,000, or $0.28 per diluted share in the prior year’s quarter. Vornado’s share of negative FFO after income taxes for the quarter ended December 31, 2011 will be $20,529,000, or $0.10 per diluted share, compared to negative FFO after income taxes of $19,714,000, or $0.10 per diluted share in the prior year’s quarter.

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 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
October 29, 2011     October 30, 2010
(Amounts in thousands) Results on aHistoricalBasis     Results onVornado’sPurchase PriceAccountingBasis Results onVornado’sPurchase PriceAccountingBasis
Net sales $ 2,700,000 $ 2,700,000 $ 2,719,000
Cost of sales 1,714,000 1,714,000 1,732,000
Gross margin 986,000 986,000 987,000
 
Selling, general and administrative expenses 973,000 980,300 965,000
Depreciation and amortization 99,000 101,300 96,100
Other (income) expense, net (11,000 ) (1,800 ) 600
Total operating expenses 1,061,000 1,079,800 1,061,700
Operating loss (75,000 ) (93,800 ) (74,700 )
Interest expense (106,000 ) (108,900 ) (163,500 )
Interest income 2,000 2,000 2,000
Loss before income taxes (179,000 ) (200,700 ) (236,200 )
Income tax benefit 86,000 95,000 133,000
Net loss attributable to Toys “R” Us, Inc. $ (93,000 ) $ (105,700 ) $ (103,200 )
 
Vornado’s 32.7% equity in Toys’ net loss $ (34,543 ) $ (33,757 )
Management fee from Toys, net 2,289 2,984
Interest income on credit facility - 88
Total Vornado net loss from its investment in Toys $ (32,254 ) $ (30,685 )
 
See page 3 for a reconciliation of net loss to negative FFO.
 

Reconciliation of Vornado’s net loss from its  investment in Toys to EBITDA (1):

Net loss $ (32,254 ) $ (30,685 )
Interest and debt expense 35,589 53,481
Depreciation and amortization 33,105 31,434
Income tax benefit (31,046 ) (43,504 )
Vornado’s share of Toys’ EBITDA (1) $ 5,394 $ 10,726
 

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