Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.6% share of Toys "R" Us' third quarter financial results in its fourth quarter ending December 31, 2013. Based on Toys information currently available to Vornado, Vornado’s results will include in its fourth quarter a net loss of $130,851,000, or $0.66 per diluted share, attributable to Toys 2013 third quarter, compared to a net loss of $73,837,000, or $0.37 per diluted share in Vornado’s fourth quarter ending December 31, 2012, attributable to Toys’ 2012 third quarter which includes a $40,000,000 non-cash impairment loss on Vornado’s investment in Toys.
Vornado’s share of Toys’ negative Funds From Operations (“FFO”) before income taxes for the fourth quarter 2013 will be $91,316,000 or $0.46 per diluted share, compared to negative FFO before income taxes and impairment of $49,241,000, or $0.25 per diluted share in the prior year’s quarter. Vornado’s share of negative FFO after income taxes for the fourth quarter 2013 will be $119,826,000 or $0.60 per diluted share, compared to negative FFO after income taxes of $61,358,000 or $0.31 per diluted share in the prior year’s quarter. Included in this year’s negative FFO after income taxes is Vornado’s $41,330,000 share of Toys’ non-cash charge for the valuation allowance of certain deferred tax assets. Included in last year’s negative FFO after income taxes is a $40,000,000 non-cash impairment loss on Vornado’s investment in Toys. Vornado’s share of Toys’ negative FFO after income taxes will be treated as non-comparable in both periods.
Vornado records its proportionate share of Toys’ results based on purchase price accounting, which differs from Toys’ publicly reported historical accounting. As required under purchase price accounting, Toys has recorded an additional $690,000,000 (of which Vornado’s share is $225,000,000) of intangible assets and goodwill which is net of prior quarter impairments that Vornado previously recorded. Toys is evaluating these intangible assets and goodwill for possible impairment. Depending upon the outcome of that evaluation, Vornado’s 32.6% share of Toys' third quarter net loss and negative FFO may increase.
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