News Release (2003)Full Document 

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OVERVIEW:
       
Selected Financial Information
    1  
 
       
FINANCIAL STATEMENTS:
       
Consolidated Statements of Earnings (Loss)
    2  
 
       
Consolidated Statements of Funds From Operations
    3  
 
       
Consolidated Statements of EBITDA
    4  
 
       
Reconciliation of Net Earnings (Loss) to Funds From Operations and EBITDA
    5  
 
       
Consolidated Balance Sheets
    6  
 
       
Investments in Unconsolidated Investees
    7  
 
       
Notes to Consolidated Financial Statements
    8 & 8a  
 
       
SELECTED FINANCIAL INFORMATION:
       
Components of Net Asset Value and Related Comments
    9 & 9a  
 
       
Calculations of Return on Capital and Related Comments
    10 & 10a  
 
       
ProLogis Property Funds — EBITDA, Funds From Operations and Net Earnings (Loss)
    11 & 11a  
 
       
ProLogis Property Funds — Balance Sheets
    12  
 
       
Temperature-Controlled Distribution Investees
    13  
 
       
SELECTED STATISTICAL INFORMATION:
       
Leased and Physical Occupancy Analysis
    14 & 14a  
 
       
Lease Expirations/Top 25 Customers
    15  
 
       
Leasing Activity/Actual Capital Expenditures
    16  
 
       
Same Store Sales Growth
    17  
 
       
SELECTED INVESTMENT INFORMATION:
       
Acquisitions, Dispositions and Land Held for Development
    18  
 
       
CDFS Business Summary
    19  
 
       
Development Summary
    20  
 
       
SELECTED OTHER INFORMATION:
       
Capital Structure
    21  
 
       
Debt Analysis
    22  
 
       
Geographic Distribution
    23  

Executive Office Address:
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292


 

ProLogis

Third Quarter 2003
Unaudited Financial Results

Selected Financial Information (1)
(in thousands, except per share amounts)

                                                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
     
 
      2003   2002   % Change   2003   2002   % Change
     
 
 
 
 
 
Net Earnings (Loss) (see pages 2 and 5):
                                               
 
Net Earnings (Loss) attributable to Common Shares
  $ (7,379 )   $ 25,212       -129.3 %   $ 78,807     $ 137,043       -42.5 %
 
Net Earnings (Loss) per diluted Common Share
  $ (0.04 )   $ 0.14       -128.6 %   $ 0.43     $ 0.76       -43.4 %
Funds From Operations (see pages 3 and 5):
                                               
 
Funds From Operations attributable to Common Shares before preferred share redemption charge in 2003 and impairment charges in both periods
  $ 96,916     $ 110,119       -12.0 %   $ 297,014     $ 324,788       -8.6 %
 
Funds From Operations attributable to Common Shares
  $ 55,043     $ 72,893       -24.5 %   $ 255,141     $ 287,562       -11.3 %
 
Funds From Operations attributable to Common Shares per diluted share before preferred share redemption charge in 2003 and impairment charges in both periods
  $ 0.52     $ 0.60       -13.3 %   $ 1.61     $ 1.78       -9.6 %
 
Funds From Operations per diluted Common Share
  $ 0.30     $ 0.40       -25.0 %   $ 1.39     $ 1.58       -12.0 %
EBITDA (see pages 4 and 5):
                                               
 
EBITDA
  $ 164,725     $ 182,731       -9.9 %   $ 498,976     $ 541,220       -7.8 %
Distributions:
                                               
 
Actual distributions per Common Share (2)
  $ 0.360     $ 0.355       1.4 %   $ 1.080     $ 1.065       1.4 %

 

                               
          September 30,   December 31,    
          2003   2002   % Change
         
 
 
Total Assets, net of accumulated depreciation (see page 6)
  $ 6,083,072     $ 5,923,525       2.7 %
 
   
     
     
 
Total Book Assets (see page 10):
                       
 
Direct investment
  $ 5,723,781     $ 5,551,820       3.1 %
 
ProLogis’ share of total book assets of unconsolidated investees
    1,929,481       1,711,809       12.7 %
 
   
     
     
 
     
Totals
  $ 7,653,262     $ 7,263,629       5.4 %
 
   
     
     
 
Market Capitalization (see page 21)
  $ 9,762,201     $ 8,445,729       15.6 %
 
   
     
     
 
Assets Owned and Under Management:
                       
 
Real estate assets owned directly by ProLogis, before depreciation (see page 6)
  $ 5,538,063     $ 5,395,527       2.6 %
 
Assets owned by ProLogis’ unconsolidated investees:
                       
   
Real estate assets owned by ProLogis Property Funds, before depreciation (weighted ownership interest of 29.0%) (see page 12)
    5,624,393       4,595,452       22.4 %
   
Real estate assets owned by CDFS Joint Ventures, before depreciation (weighted ownership interest of 50%) (3)
    147,133       132,766       10.8 %
   
ProLogis’ investment in and share of third party debt of temperature-controlled distribution investee (ownership interest in excess of 99%) (see page 13) (4)
    158,465       178,658       -11.3 %
 
   
     
     
 
 
    5,929,991       4,906,876       20.9 %
 
   
     
     
 
     
Totals
  $ 11,468,054     $ 10,302,403       11.3 %
 
   
     
     
 

Footnote references are to pages 8 and 8a.

Supplemental Information Page 1

 


 

ProLogis

Third Quarter 2003
Unaudited Financial Results

Consolidated Statements of Earnings (Loss) (1)
(in thousands, except per share amounts)

                                             
                                         
        Three Months Ended   Nine Months Ended   Pro Forma (1)
        September 30,   September 30,   Nine Months Ended
       
 
  September 30,
        2003   2002   2003   2002   2002
       
 
 
 
 
Revenues:
                                       
 
Rental income (5)(6)
  $ 108,896     $ 108,577     $ 336,243     $ 332,631     $ 334,352  
 
Income from CDFS business (3)(7)(8)
    26,398       40,191       87,920       121,444       112,500  
 
Income from ProLogis Property Funds (including fees earned by ProLogis)
    15,762       14,131       48,505       44,238       44,358  
 
Loss from temperature-controlled distribution investees (9)
    (34,502 )     (29,107 )     (27,812 )     (17,034 )     (17,034 )
 
Income (loss) from other unconsolidated investees (10)
          622       52       (1,447 )     (1,447 )
 
Interest and other income
    223       536       1,199       1,911       2,036  
 
 
   
     
     
     
     
 
 
    116,777       134,950       446,107       481,743       474,765  
 
 
   
     
     
     
     
 
Expenses:
                                       
 
Rental expenses, net of recoveries (5)(11)
    8,266       8,478       28,156       24,995       25,051  
 
General and administrative
    16,432       14,222       46,671       40,650       42,226  
 
Depreciation and amortization
    41,378       38,357       123,613       110,533       110,795  
 
Interest (12)
    39,069       35,759       115,856       116,790       109,807  
 
Other
    1,307       1,336       3,006       3,181       3,264  
 
 
   
     
     
     
     
 
 
    106,452       98,152       317,302       296,149       291,143  
 
 
   
     
     
     
     
 
Earnings from operations
    10,325       36,798       128,805       185,594       183,622  
Minority interest
    1,186       1,285       3,796       3,875       3,773  
 
 
   
     
     
     
     
 
Earnings before net gains (losses) on disposition of non-CDFS assets and net foreign currency exchange gains (expenses/losses)
    9,139       35,513       125,009       181,719       179,849  
Gains (losses) on disposition of non-CDFS assets, net (7)
    (216 )     482       3,374       5,129       5,129  
Foreign currency exchange gains (expenses/losses), net (13)
    (1,970 )     4,404       (10,741 )     (2,468 )     1,995  
 
 
   
     
     
     
     
 
Earnings before income taxes
    6,953       40,399       117,642       184,380       186,973  
Income taxes:
                                       
 
Current income tax expense (benefit)
    (727 )     3,207       1,869       6,703       9,296  
 
Deferred income tax expense
    4,380       3,801       9,929       16,097       16,097  
 
 
   
     
     
     
     
 
   
Total income taxes
    3,653       7,008       11,798       22,800       25,393  
 
 
   
     
     
     
     
 
Net Earnings
    3,300       33,391       105,844       161,580       161,580  
Less preferred share dividends
    7,092       8,179       23,450       24,537       24,537  
Less excess of redemption value over carrying value of preferred shares redeemed (14)
    3,587             3,587              
 
 
   
     
     
     
     
 
Net Earnings (Loss) Attributable to Common Shares
  $ (7,379 )   $ 25,212     $ 78,807     $ 137,043     $ 137,043  
 
 
   
     
     
     
     
 
Weighted average Common Shares outstanding — basic (15)
    179,458       178,336       179,023       177,626       177,626  
Weighted average Common Shares outstanding — diluted (16)
    179,458       180,785       181,906       179,809       179,809  
Net Earnings (Loss) per Common Share:
                                       
   
Basic
  $ (0.04 )   $ 0.14     $ 0.44     $ 0.77     $ 0.77  
 
 
   
     
     
     
     
 
   
Diluted (16)
  $ (0.04 )   $ 0.14     $ 0.43     $ 0.76     $ 0.76  
 
 
   
     
     
     
     
 

Footnote references are to pages 8 and 8a.

Supplemental Information Page 2

 


 

ProLogis

Third Quarter 2003
Unaudited Financial Results

Consolidated Statements of Funds From Operations (1)
(in thousands, except per share amounts)

                                           
                                      Pro Forma (1)
      Three Months Ended   Nine Months Ended   Nine Months Ended
      September 30,   September 30,   September 30,
     
 
 
      2003   2002   2003   2002   2002
     
 
 
 
 
Revenues:
                                       
 
Rental income (5)(6)
  $ 108,896     $ 108,577     $ 336,243     $ 332,631     $ 334,352  
 
Funds From Operations from CDFS business (3)(7)(8)
    26,398       40,219       87,920       117,041       112,611  
 
ProLogis’ share of Funds From Operations of ProLogis Property Funds
    18,257       15,261       53,625       41,605       41,605  
 
Fees earned from ProLogis Property Funds
    11,012       7,739       32,449       23,655       23,655  
 
ProLogis’ share of Funds From Operations of temperature-controlled distribution investees (9)
    (30,749 )     (24,201 )     (21,744 )     574       574  
 
Income (loss) from other unconsolidated investees (10)
          622       52       (1,447 )     (1,447 )
 
Interest and other income
    223       536       1,199       1,911       2,036  
 
 
   
     
     
     
     
 
 
    134,037       148,753       489,744       515,970       513,386  
 
 
   
     
     
     
     
 
Expenses:
                                       
 
Rental expenses, net of recoveries (5)(11)
    8,266       8,478       28,156       24,995       25,051  
 
General and administrative
    16,432       14,222       46,671       40,650       42,226  
 
Depreciation of non-real estate assets
    1,941       2,122       6,002       5,785       5,985  
 
Interest (12)
    39,069       35,759       115,856       116,790       109,807  
 
Foreign currency exchange expenses/losses, net (13)
    841       1,272       2,210       1,892       1,885  
 
Current income tax expense (benefit)
    (727 )     3,207       1,869       6,703       9,296  
 
Other
    1,307       1,336       3,006       3,181       3,264  
 
 
   
     
     
     
     
 
 
    67,129       66,396       203,770       199,996       197,514  
 
 
   
     
     
     
     
 
Funds From Operations
    66,908       82,357       285,974       315,974       315,872  
Less preferred share dividends
    7,092       8,179       23,450       24,537       24,537  
Less excess of redemption value over carrying value of preferred shares redeemed (14)
    3,587             3,587              
Less minority interest
    1,186       1,285       3,796       3,875       3,773  
 
 
   
     
     
     
     
 
Funds From Operations Attributable to Common Shares
  $ 55,043     $ 72,893     $ 255,141     $ 287,562     $ 287,562  
 
 
   
     
     
     
     
 
Weighted average Common Shares outstanding — basic (15)
    179,458       178,336       179,023       177,626       177,626  
Weighted average Common Shares outstanding — diluted (17)
    187,461       185,699       186,697       184,789       184,789  
Funds From Operations per Common Share:
                                       
 
Basic
  $ 0.31     $ 0.41     $ 1.43     $ 1.62     $ 1.62  
 
 
   
     
     
     
     
 
 
Diluted(17)
  $ 0.30     $ 0.40     $ 1.39     $ 1.58     $ 1.58  
 
 
   
     
     
     
     
 

See ProLogis’ Consolidated Statements of Earnings (Loss) on Page 2 and the Reconciliation of Net Earnings (Loss) to Funds From Operations on Page 5.

Funds From Operations Discussion

Funds From Operations is a supplemental financial measure that is commonly used in the real estate industry, although it is subject to varying definitions within the industry. The National Association of Real Estate Investment Trusts (“NAREIT”) has defined Funds From Operations generally as net earnings attributable to common equity (computed in accordance with generally accepted accounting principles in the United States (“GAAP”)), excluding real estate related depreciation and amortization, gains and losses from sales of properties, except those gains and losses from sales of properties upon completion or stabilization under pre-sale agreements, and after adjustments from unconsolidated investees to reflect their Funds From Operations on the same basis. ProLogis includes the income generated by its CDFS business segment, including the gains and losses from the contributions or sales of its CDFS assets in Funds From Operations. See note 3 on page 8 for a discussion of ProLogis’ CDFS business segment activities.

ProLogis considers Funds From Operations to be a useful supplemental measure of comparative period operating performance. However, ProLogis believes that financial analysts, potential investors and shareholders are primarily interested in, and are best served by, its defined Funds From Operations measure that incorporates adjustments to Net Earnings in addition to those adjustments included in the NAREIT Defined Funds From Operations measure. Further ProLogis believes that its measure provides a clearer presentation of its comparable period operating results. The ProLogis Defined Funds From Operations measure, which is presented in this Supplemental Information package unless otherwise noted, does not represent Net Earnings or Cash from Operating Activities that are computed in accordance with GAAP and is not indicative of cash available to fund cash needs, which ProLogis presents in its Consolidated Statements of Cash Flows and includes in its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the Securities and Exchange Commission.

Funds From Operations should not be considered as an alternative to Net Earnings as an indicator of ProLogis’ operating performance, or as an alternative to Cash Flows from Operating, Investing or Financing Activities as a measure of liquidity. Additionally, the Funds From Operations measure presented by ProLogis will not be comparable to similarly titled measures of other REITs.

The items that ProLogis excludes from Net Earnings that are not excluded in the NAREIT Defined Funds From Operations measure, while not infrequent or unusual, are subject to fluctuations from period to period causing both positive and negative effects on ProLogis’ results from operations. The primary reasons for these fluctuations are unrelated to factors that ProLogis considers to be key in evaluating and analyzing its operating performance. The ProLogis Defined Funds From Operations measure excludes the following items that are recognized in Net Earnings: (i) deferred income tax benefits and deferred income tax expenses recognized by ProLogis’ taxable subsidiaries; (ii) foreign currency exchange gains and losses resulting from certain debt transactions between ProLogis and its foreign consolidated subsidiaries and its foreign unconsolidated investees; (iii) foreign currency exchange gains and losses from the remeasurement (based on current foreign currency exchange rates) of certain third party debt of ProLogis’ foreign consolidated subsidiaries and its foreign unconsolidated investees; and (iv) mark-to-market adjustments associated with derivative financial instruments utilized to manage ProLogis’ foreign currency risks.

Footnote references are to pages 8 and 8a.

Supplemental Information Page 3

 


 

ProLogis

Third Quarter 2003
Unaudited Financial Results

Consolidated Statements of EBITDA (1)
(in thousands)

                                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
     
 
      2003   2002   2003   2002
     
 
 
 
Revenues:
                               
 
Rental income (5)(6)
  $ 108,896     $ 108,577     $ 336,243     $ 332,631  
 
EBITDA from CDFS business (3)(7)(8)
    32,837       50,625       102,669       140,665  
 
ProLogis’ share of EBITDA of ProLogis Property Funds
    31,507       26,088       91,334       72,270  
 
Fees earned from ProLogis Property Funds
    11,012       7,739       32,449       23,655  
 
ProLogis’ share of EBITDA of temperature-controlled distribution investees (9)
    8,282       15,137       18,869       46,128  
 
Income (loss) from other unconsolidated investees (10)
          622       52       (1,447 )
 
Interest and other income
    223       536       1,199       1,911  
 
 
   
     
     
     
 
 
    192,757       209,324       582,815       615,813  
 
 
   
     
     
     
 
Expenses:
                               
 
Rental expenses, net of recoveries (5)(11)
    8,266       8,478       28,156       24,995  
 
General and administrative
    16,432       14,222       46,671       40,650  
 
Foreign currency exchange expenses/losses, net (13)
    841       1,272       2,210       1,892  
 
Other
    1,307       1,336       3,006       3,181  
 
 
   
     
     
     
 
 
    26,846       25,308       80,043       70,718  
 
 
   
     
     
     
 
EBITDA before minority interest
    165,911       184,016       502,772       545,095  
Less minority interest
    1,186       1,285       3,796       3,875  
 
 
   
     
     
     
 
EBITDA
  $ 164,725     $ 182,731     $ 498,976     $ 541,220  
 
 
   
     
     
     
 

See ProLogis’ Consolidated Statements of Earnings (Loss) on Page 2 and the Reconciliation of Net Earnings (Loss) to EBITDA on Page 5.

EBITDA Discussion

ProLogis believes that EBITDA is a supplemental measure that is useful in the calculation of Return on Capital measures (see page 10), which ProLogis believes are useful in analyzing the financial returns resulting from capital deployment decisions and for comparing returns associated with alternative investment decisions. EBITDA, as computed by ProLogis, does not represent Net Earnings or Cash from Operating Activities that are computed in accordance with GAAP and is not indicative of cash available to fund cash needs, which ProLogis presents in its Consolidated Statements of Cash Flows and includes in its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the Securities and Exchange Commission. Accordingly, the EBITDA measure presented by ProLogis should not be considered as an alternative to Net Earnings as an indicator of ProLogis’ operating performance, or as an alternative to Cash Flows from Operating, Investing, or Financing Activities as a measure of liquidity. The EBITDA measure presented by ProLogis will not be comparable to similarly titled measures of other REITs.

EBITDA, as defined, represents Net Earnings (computed in accordance with GAAP) excluding: (i) interest expense; (ii) income tax expenses and benefits; and (iii) depreciation and amortization expenses. In ProLogis’ computation of EBITDA these items are also excluded: (i) preferred dividends and charges related to the redemption of preferred shares; (ii) the foreign currency exchange gains and losses that are also excluded in the ProLogis Defined Funds From Operations measure (presented on page 3); and (iii) impairment charges. In addition, ProLogis adjusts the gains and losses from the contributions and sales of developed properties recognized as CDFS income to reflect these gains and losses as if no interest cost had been capitalized during the development of the properties (i.e. the gains are larger since capitalized interest is not included in the basis of the assets contributed and sold). EBITDA of ProLogis’ unconsolidated investees is calculated on the same basis as ProLogis.

Footnote references are to pages 8 and 8a.

Supplemental Information Page 4

 


 

ProLogis

Third Quarter 2003
Unaudited Financial Results

Reconciliation of Net Earnings (Loss) to Funds From Operations and EBITDA (1)
(in thousands)

                                                 
                                            Pro Forma (1)
            Three Months Ended   Nine Months Ended   Nine Months Ended
            September 30,   September 30,   September 30,
           
 
 
            2003   2002   2003   2002   2002
           
 
 
 
 
Reconciliation of Net Earnings (Loss) to Funds From Operations:
                                       
 
Net Earnings (Loss) Attributable to Common Shares (see page 2)
  $ (7,379 )   $ 25,212     $ 78,807     $ 137,043     $ 137,043  
   
Add (Deduct) NAREIT Defined Adjustments:
                                       
   
Real estate related depreciation and amortization
    39,437       36,235       117,611       104,748       104,810  
   
(Gains) losses on disposition of non-CDFS assets, net
    216       (482 )     (3,374 )     (5,129 )     (5,129 )
   
ProLogis’ share of reconciling items from unconsolidated investees (18):
                                       
     
ProLogis Property Funds (see page 11):
                                       
       
Real estate related depreciation and amortization
    9,847       8,814       27,677       20,282       20,162  
       
(Gains) losses on disposition of non-CDFS assets, net
    1       67       (18 )     (688 )     (688 )
       
Other amortization items (19)
    (363 )     (602 )     (2,089 )     (1,854 )     (1,854 )
 
   

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