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Catellus Announces Fourth Quarter Results and Annual Meeting of
Stockholders Record Date
SAN FRANCISCO, Feb. 24 /PRNewswire-FirstCall/ -- Catellus Development
Corporation (NYSE:CDX) today reported earnings per fully diluted share ("EPS")
for the fourth quarter of 2004 of $0.71, compared to $1.65 for the same period
in 2003. EPS for the year ended December 31, 2004, was $1.64, compared to
$2.30 for the same period in 2003.
Net income for the fourth quarter of 2004 was $74.6 million, compared to $171.2
million for the same period in 2003. Net income for the year ended December
31, 2004, was $171.8 million, compared to $234.8 million for the same period in
2003.
The extraordinary year-over-year decrease in net income was due, in part, to
the 2003 reversal of certain deferred taxes associated with the company's
conversion to a real estate investment trust, or REIT. Without the tax
reversal effects in 2003, EPS would have increased 44.9 percent year-over-year
as a result of lower income tax expense in 2004 -- due to the REIT conversion
-- and higher gains from the sale of discontinued operations.
"For our first full year operating as a REIT, 2004 was a year of notable
accomplishments for Catellus," said Nelson C. Rising, chairman and CEO of
Catellus. "We sold or placed under contract for sale the vast majority of our
remaining non-core assets -- freeing up capital for our investors and our core
business. We completed development on and added to our portfolio over 3.3
million square feet of 100 percent leased rental property, and we acquired more
land in northern New Jersey -- increasing significantly our presence in one of
the country's key distribution markets where we look forward to continuing to
invest and develop over time."
Rental Portfolio
-- For the fourth quarter of 2004, rental revenue less property operating
costs, including equity in earnings from operating joint ventures and before
adjustments for discontinued operations, was $55.7 million, compared to $52.2
million for the same period in 2003. For the year ended December 31, 2004,
rental revenue less property operating costs, including equity in earnings from
operating joint ventures and before adjustments for discontinued operations,
was $228.7 million, compared to $219.0 million for the same period in 2003.
-- At December 31, 2004, the rental portfolio totaled 40.5 million square feet
and was 94.7 percent occupied, compared to 94.2 percent at September 30, 2004,
and 95.2 percent at December 31, 2003.
-- Of the 40.5 million square feet of rental property, approximately 89.8
percent is industrial property that was 95.3 percent occupied at December 31,
2004, compared to 94.8 percent at September 30, 2004, and 96.1 percent at
December 31, 2003.
Development and Investment Activity
-- At December 31, 2004, construction in progress in the company's Core Segment
(defined below) was 4.3 million square feet, of which 2.8 million square feet
will be added to Catellus' rental portfolio upon completion; 992,000 square
feet is build-to-sell; and 527,000 square feet is included in a joint venture.
-- For the 2.8 million square feet under construction that will be added to
Catellus' rental portfolio upon completion, the projected total cost of
development is $136.8 million. These buildings are 25 percent preleased and,
when fully leased, are projected to yield a return on cost of approximately
10.5 percent.
-- During the quarter, construction commenced on 1.9 million square feet in
eight projects: a 758,000 square foot industrial building in San Bernardino,
California; a 545,000 square foot industrial building at Kaiser Commerce Center
in Fontana, California; a 138,000 square foot expansion to an industrial
building in Grand Prairie, Texas, leased to an existing tenant; two retail
buildings in Fremont, California, at 7,000 and 14,000 square feet; a 105,000
square foot build-to-sell industrial building at Kaiser Commerce Center; a
96,000 square foot industrial facility in Manteca, California, that upon
completion will be sold to Dreyers Ice Cream; and a 206,000 square foot office
building being developed in joint venture for the Air Force at Los Angeles Air
Force Base.
-- In December, the Austin City Council approved a master development agreement
for the redevelopment of Robert Mueller Municipal Airport in Austin, Texas.
The master plan for the 709-acre project includes 4,600 residential units, 2.3
million square feet of office space, one million square feet of
hospital/medical office space, and 500,000 square feet of retail space. As
part of the one million square feet of hospital/medical office space planned,
Seton Healthcare Network acquired a 32-acre parcel on which it is developing
the 450,000 square foot Dell Children's Medical Center of Central Texas and a
120,000 square foot medical office building.
Urban, Residential and Other
-- During the year, Catellus made significant progress in monetizing non-core
assets held in the Urban, Residential and Other Segment. The company realized
$411 million, net of taxes and the continued investment required in that
segment, while still leaving, at year-end, approximately $93.1 million of net
book value to be monetized.
-- Several transactions contributed to the net $416 million monetized in 2004,
the largest of which was the previously announced sale to an affiliate of
Farallon Capital Management, L.L.C. of a significant portion of Catellus'
remaining urban and residential assets, in December. Other notable
transactions include the sale of Catellus' interest in Mission Place, a
multifamily development at Mission Bay that was owned in joint venture, the
sale of remaining desert land in California, and the sale of a five-block land
site in Oceanside, California.
-- At December 31, 2004, remaining non-core assets included a 9.65-acre site
entitled for approximately one million square feet of commercial space at
Mission Bay, in San Francisco, California, that, as previously announced,
Catellus is in negotiations to ground lease to University of California; the
remaining 36.5 acres of development land at Los Angeles Union Station entitled
for 5.2 million square feet of space; Parkway and Serrano, two residential
community developments in Sacramento, California; an office building currently
under development at Los Angeles Union Station that Catellus expects to sell to
the tenant in the first quarter of 2005; and cash flow from tax increment and
profit participation at Victoria-by-the-Bay, a completed residential
development in Hercules, California. A retail condominium unit at Mission Bay
was sold in January 2005.
Annual Meeting of Stockholders Record Date
-- The record date for Catellus' 2005 Annual Meeting of Stockholders is March
15, 2005. The meeting will be held on May 3, 2005, at 9:00 a.m. local time at
the Ritz Carlton in San Francisco, California. At the Annual Meeting,
stockholders of record will be asked to elect the company's directors and to
vote upon any and all such other matters as may properly come before the Annual
Meeting. The mailing of the proxy statement, Annual Report to Stockholders,
voting materials, and meeting information is expected to begin on or about
March 31, 2005.
Supplemental Reporting Measure
-- Catellus provides Funds From Operations ("FFO") as a supplemental measure of
performance, in two segments: Core Segment and Urban, Residential and Other
Segment. The first segment, or Core Segment, reflects that part of Catellus'
business it expects will be ongoing and central to its future operations.
-- The second segment, or Urban, Residential and Other Segment, reflects the
company's urban and residential businesses, including residential lot
development, urban development, and desert land sales, which the company
intends to transition out of over time. This segment also includes REIT
conversion costs-primarily accounting charges relating to the November 2003
stock option exchange offer that will continue through 2006. These costs also
include third party costs, which have been substantially recognized.
-- In presenting FFO prior to beginning operations as a REIT (effective January
1, 2004), Catellus includes "hypothetical tax savings" (including the tax
effects of the REIT conversion) that would have occurred had it been a REIT
during the prior periods presented.
-- FFO, including both segments as defined above, for the fourth quarter of
2004 was $81.7 million, compared to $77.5 million for the same period in 2003,
and for the years ended December 31, 2004, and December 31, 2003, FFO was
$222.4 million and $209.0 million, respectively.
-- Core Segment FFO for the fourth quarter of 2004 was $34.5 million, compared
to $28.4 million for the same period in 2003. On a fully diluted per share
basis, Core Segment FFO for the fourth quarter of 2004 was $0.33, compared to
$0.27 for the same period in 2003. Core Segment FFO for the year ended
December 31, 2004, was $155.1 million, compared to $138.0 million for the same
period in 2003. On a fully diluted per share basis, Core Segment FFO for the
year ended December 31, 2004, was $1.48, compared to $1.35 for the same period
in 2003.
Catellus Development Corporation will host a conference call on Friday,
February 25, 2005, at 9:00 a.m. Pacific Time (10:00 a.m. Mountain, 11:00 a.m.
Central, and Noon Eastern) to discuss fourth quarter results. Catellus will
release financial results for the fourth quarter on Thursday, February 24,
2005, after the close of the day's trading on the New York Stock Exchange. To
participate in the conference call, dial 800-299-9086 (domestic) or
617-786-2903 (international) and enter access code 63263303 prior to the
beginning of the call. Access the live webcast of the conference call from the
Investor Relations section of Catellus' website at http://www.catellus.com/.
You may also access the live webcast through http://www.streetevents.com/. The
telephonic replay will be available to March 11, 2005, at 888-286-8010
(domestic) or 617-801-6888 (international) with the access code 94579183. The
webcast replay will be available to February 25, 2006, from the Investor
Relations section of Catellus' website at http://www.catellus.com/ or at
http://www.streetevents.com/. The fourth quarter 2003 Supplemental Financial
Package will be available from our home page and the Investor Relations section
of our website at http://www.catellus.com/. These materials are also available
by contacting Investor Relations at 415-974-4500 or by sending an email to .
Catellus Development Corporation is a publicly traded real estate development
company that began operating as a real estate investment trust effective
January 1, 2004. The company owns and operates approximately 40.5 million
square feet of predominantly industrial property in many of the country's major
distribution centers and transportation corridors. Catellus' principal
objective is sustainable, long-term growth in earnings, which it seeks to
achieve by applying its strategic resources: a lower-risk/ higher-return
rental portfolio, a focus on expanding that portfolio through development, and
the deployment of its proven land development skills to select opportunities
where it can generate profits to recycle back into its core business. More
information on the company is available at http://www.catellus.com/.
Except for historical matters, the matters discussed in this release are
forward-looking statements that involve risks and uncertainties.
Forward-looking statements include, but are not limited to, statements about
plans, opportunities, and development. We caution you not to place undue
reliance on these forward-looking statements, which reflect our current beliefs
and are based on information currently available to us. We do not undertake any
obligation to publicly revise these forward-looking statements to reflect
future events or changes in circumstances, except as may be required by law.
These forward-looking statements are subject to risks and uncertainties that
could cause our actual results, performance, or achievements to differ
materially from those expressed in or implied by these statements. In
particular, among the factors that could cause actual results to differ
materially are: changes in the real estate market or in general economic
conditions, including a worsening economic slowdown or recession; non-renewal
of leases by tenants or renewal at lower than expected rates; difficulties in
identifying properties to acquire and in effecting acquisitions on advantageous
terms and the failure of acquisitions to perform as we expect; our failure to
divest of properties on advantageous terms or to timely reinvest proceeds from
any such divestitures; our failure to qualify and maintain our status as a real
estate investment trust under the Internal Revenue Code; product and
geographical concentration; industry competition; availability of financing and
changes in interest rates and capital markets; changes in insurance markets;
losses in excess of our insurance coverage; discretionary government decisions
affecting the use of land, including the issuance of permits and acceptance of
the design and construction of infrastructure improvements, and delays
resulting therefrom; disputes related to and delays in the payment of bond
reimbursements for infrastructure costs; changes in the management team;
weather conditions and other natural occurrences that may affect construction
or cause damage to assets; changes in income taxes or tax laws; actions by
taxing authorities, or necessary recalculations by the company, requiring
retroactive changes to the tax treatment of distributions to shareholders;
environmental uncertainties, including liability for environmental remediation
and changes in environmental laws and regulations; failure or inability of
parties or third parties to fulfill their commitments or to perform their
obligations under agreements; failure of parties to reach agreement on
definitive terms or to close transactions; increases in the cost of land and
construction materials and availability of properties for future development;
limitations on, or challenges to, title to our properties; risks related to the
financial strength of joint venture projects, co-owners, and owners for whom we
provide development services; changes in policies and practices of organized
labor groups; shortages or increased costs of electrical power; risks and
uncertainties affecting property development and renovation (including
construction delays and cost overruns); other risks inherent in the real estate
business; and acts of war, other geopolitical events and terrorists activities
that could adversely affect any of the above factors. For further information,
including more detailed risk factors, you should refer to Catellus Development
Corporation's annual report on Form 10-K for the fiscal year ended December 31,
2003, and its report on Form 10-Q for the quarter ended September 30, 2004,
filed with the Securities and Exchange Commission.
Contacts:
Margan Mitchell Minnie Wright
Corporate Communications Investor Relations
415-974-4616 415-974-4649
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
December 31, December 31,
2004 2003
----------- -----------
Assets
Properties $2,316,289 $2,498,015
Less accumulated depreciation (490,409) (446,872)
----------- -----------
1,825,880 2,051,143
Other assets and deferred charges, net 224,932 292,312
Notes receivable, less allowance 329,758 119,202
Accounts receivable, less allowance 35,800 19,752
Assets held for sale 10,336 2,352
Restricted cash and investments 29,569 64,617
Cash and cash equivalents 252,069 45,931
----------- -----------
Total $2,708,344 $2,595,309
=========== ===========
Liabilities and stockholders' equity
Mortgage and other debt $1,440,528 $1,378,054
Accounts payable and accrued expenses 201,238 157,036
Deferred credits and other
liabilities 286,780 291,530
Liabilities associated with assets
held for sale 88 2,296
Deferred income taxes 36,119 56,712
----------- -----------
Total liabilities 1,964,753 1,885,628
----------- -----------
Stockholders' equity
Common stock - 104,720 and 103,822
shares issued, and 103,317 and
102,724 shares outstanding at
December 31, 2004 and 2003,
respectively 1,047 1,039
Paid-in capital 509,407 489,143
Unearned value of restricted stock
and restricted stock units (1,403
and 1,098 shares at December 31,
2004 and 2003, respectively) (23,049) (22,720)
Accumulated earnings 256,186 242,219
----------- -----------
Total stockholders' equity 743,591 709,681
----------- -----------
Total $2,708,344 $2,595,309
=========== ===========
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
------- ------- ------- -------
Revenue
Rental revenue $75,270 $73,040 $304,330 $292,318
Sales revenue 419,981 125,846 504,458 204,271
Management, development and
other fees 2,855 1,228 5,706 11,129
------- ------- ------- -------
498,106 200,114 814,494 507,718
------- ------- ------- -------
Costs and expenses
Property operating costs (21,802) (23,233) (84,257) (84,480)
Cost of sales (350,834) (62,544) (401,942) (112,968)
Selling, general and
administrative expenses (15,256) (20,324) (54,437) (55,747)
Depreciation and amortization (17,199) (17,548) (73,869) (68,584)
------- ------- ------- -------
(405,091) (123,649) (614,505) (321,779)
------- ------- ------- -------
Operating income 93,015 76,465 199,989 185,939
------- ------- ------- -------
Other income
Equity in earnings of operating
joint ventures, net 2,141 1,699 6,132 6,898
Equity in earnings of
development joint ventures, net 9,622 16,015 15,444 32,849
Gain on non-strategic asset
sales 567 14,665 17,008 22,950
Interest income 9,469 1,836 16,850 7,294
Other 1,330 1,209 3,753 3,739
------- ------- ------- -------
23,129 35,424 59,187 73,730
------- ------- ------- -------
Other expenses
Interest expense (17,774) (11,791) (65,535) (60,395)
REIT transition costs -- (2,483) (420) (7,262)
Other (6,594) (8,630) (10,536) (9,237)
------- ------- ------- -------
(24,368) (22,904) (76,491) (76,894)
------- ------- ------- -------
Income before income taxes and
discontinued operations 91,776 88,985 182,685 182,775
Income tax (expense) benefit (28,027) 80,402 (35,845) 45,504
------- ------- ------- -------
Income from continuing
operations 63,749 169,387 146,840 228,279
------- ------- ------- -------
Discontinued operations, net of
income tax:
Gain from disposal of
discontinued operations 10,993 1,911 24,624 6,129
Income (loss) from
discontinued operations (182) (113) 334 391
------- ------- ------- -------
Net gain from discontinued
operations 10,811 1,798 24,958 6,520
------- ------- ------- -------
Net income $74,560 $171,185 $171,798 $234,799
------- ------- ------- -------
Income per share from continuing
operations
Basic $0.62 $1.65 $1.42 $2.28
------- ------- ------- -------
Assuming dilution $0.61 $1.63 $1.40 $2.23
------- ------- ------- -------
Income per share from
discontinued operations
Basic $0.10 $0.02 $0.25 $0.07
------- ------- ------- -------
Assuming dilution $0.10 $0.02 $0.24 $0.07
------- ------- ------- -------
Net income per share
Basic $0.72 $1.67 $1.67 $2.35
------- ------- ------- -------
Assuming dilution $0.71 $1.65 $1.64 $2.30
------- ------- ------- -------
Average number of common shares
outstanding - basic 103,334 102,545 103,064 99,941
------- ------- ------- -------
Average number of common shares
outstanding - diluted 105,065 103,698 104,520 102,171
------- ------- ------- -------
Dividends declared per share $0.72 $0.57 $1.53 $0.57
------- ------- ------- -------
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
Three Months ended
December 31, 2004
----------------------------------
Urban/Res.
Core & Other
Segment Segment Consolidated
-------- ------- --------
Net income $27,494 $47,066 $74,560
Add depreciation 18,002 106 18,108
Less gain on rental property sales (10,956) -- (10,956)
-------- ------- --------
FFO $34,540 $47,172 $81,712
======== ======= ========
FFO per share:
Basic $0.33 $0.46 $0.79
======== ======= ========
Assuming dilution $0.33 $0.45 $0.78
======== ======= ========
Average number of common shares
outstanding-basic 103,334 103,334 103,334
======== ======= ========
Average number of common shares
outstanding-diluted 105,065 105,065 105,065
======== ======= ========
Three Months ended
December 31, 2003
----------------------------------
Urban/Res.
Core & Other
Segment Segment Consolidated
-------- ------- --------
Net income $121,896 $49,289 $171,185
Add depreciation 18,314 (145) 18,169
Less gain on rental property sales (3,212) -- (3,212)
-------- ------- --------
FFO 136,998 49,144 186,142
Hypothetical tax savings (108,640) -- (108,640)
-------- ------- --------
FFO as adjusted for hypothetical tax
savings $28,358 $49,144 $77,502
======== ======= ========
FFO as adjusted for hypothetical tax
savings per share:
Basic $0.28 $0.48 $0.76
======== ======= ========
Assuming dilution $0.27 $0.48 $0.75
======== ======= ========
Average number of common shares
outstanding-basic 102,545 102,545 102,545
======== ======= ========
Average number of common shares
outstanding-diluted 103,698 103,698 103,698
======== ======= ========
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
Twelve Months ended
December 31, 2004
----------------------------------
Urban/Res.
Core & Other
Segment Segment Consolidated
-------- ------- --------
Net income $105,132 $66,666 $171,798
Add depreciation 76,983 645 77,628
Less gain on rental property sales (26,979) -- (26,979)
-------- ------- --------
FFO $155,136 $67,311 $222,447
======== ======= ========
FFO per share:
Basic $1.51 $0.65 $2.16
======== ======= ========
Assuming dilution $1.48 $0.65 $2.13
======== ======= ========
Average number of common shares
outstanding-basic 103,064 103,064 103,064
======== ======= ========
Average number of common shares
outstanding-diluted 104,520 104,520 104,520
======== ======= ========
Twelve Months ended
December 31, 2003
----------------------------------
Urban/Res.
Core & Other
Segment Segment Consolidated
-------- ------- --------
Net income $164,135 $70,664 $234,799
Add depreciation 70,318 284 70,602
Less gain on rental property sales (10,364) -- (10,364)
-------- ------- --------
FFO 224,089 70,948 295,037
Hypothetical tax savings (86,082) -- (86,082)
-------- ------- --------
FFO as adjusted for hypothetical tax
savings $138,007 $70,948 $208,955
======== ======= ========
FFO as adjusted for hypothetical tax
savings per share:
Basic $1.38 $0.71 $2.09
======== ======= ========
Assuming dilution $1.35 $0.70 $2.05
======== ======= ========
Average number of common shares
outstanding-basic 99,941 99,941 99,941
======== ======= ========
Average number of common shares
outstanding-diluted 102,171 102,171 102,171
======== ======= ========
CATELLUS DEVELOPMENT CORPORATION
(In thousands and unaudited)
Rental revenue less property operating costs (including the portion from
discontinued operations) includes equity in earnings of operating
joint ventures, net (as reflected in the accompanying statements of
operations). Rental revenue less property operating costs is commonly
used by stockholders, company management and industry analysts as a
measurement of operating performance of the company's rental portfolio
and is calculated as follows:
Three Months ended Twelve Months ended
December 31, December 31,
---------------- -----------------
2004 2003 2004 2003
------ ------ ------- -------
Rental revenue $75,270 $73,040 $304,330 $292,318
Property operating costs (21,802) (23,233) (84,257) (84,480)
Equity in earnings of operating
joint ventures, net 2,141 1,699 6,132 6,898
Rental revenue from discontinued
operations 307 1,173 3,966 6,415
Property operating costs from
discontinued operations (192) (477) (1,450) (2,112)
------ ------ ------- -------
Rental revenue less property
operating costs $55,724 $52,202 $228,721 $219,039
====== ====== ======= =======
DATASOURCE: Catellus Development Corporation
CONTACT: Margan Mitchell of Corporate Communications, +1-415-974-4616,
or Minnie Wright of Investor Relations, +1-415-974-4649, both of Catellus
Development Corporation
Web site: http://www.catellus.com/