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Catellus Announces Fourth Quarter Results and Annual Meeting of Stockholders
Record Date
SAN FRANCISCO, Feb. 18 /PRNewswire-FirstCall/ -- Catellus Development
Corporation today reported earnings per fully diluted share ("EPS") for the
fourth quarter of 2003 of $1.65, compared to $0.21 for the same period in 2002.
EPS for the year ended December 31, 2003, was $2.30, compared to $1.01 for the
same period in 2002.
Net income for the fourth quarter of 2003 was $171.2 million, compared to $20.9
million for the same period in 2002. Net income for the year ended December 31,
2003, was $234.8 million, compared to $100.7 million for the same period in
2002.
The extraordinary year-over-year increase in net income was due, in large part,
to the reversal of certain deferred taxes associated with the company's
conversion to a real estate investment trust, or REIT. The per share numbers
are affected by the stock portion of the earnings and profits dividend in the
fourth quarter of 2003, resulting in aretroactive increase in shares
outstanding in prior years. Without the effects of the REIT conversion, EPS
would have increased 23 percent year-over-year.
"2003 was a great year for Catellus. We successfully completed our conversion
from a C corporation to a REIT, which we believe will provide the best structure
for continuing to grow shareholder value. We posted strong operating results,
and we made significant progress toward monetizing our non-core assets,
providing future capital to reinvest in our core industrial business," said
Nelson C. Rising, chairman and CEO of Catellus.
Rental Portfolio
-- For the fourth quarter of 2003, rental revenue less property operating
costs, including equity in earnings of operating joint ventures, was
$52.2 million, compared to $53.9 million for the same period in 2002.
For the year ended December 31, 2003, rental revenue less property
operating costs, including equity in earnings of operating joint
ventures, was $219.0million, compared to $204.2 million for the same
period in 2002.
-- At December 31, 2003, the rental portfolio totaled 38.2 million
square feet and was 95.2 percent occupied, compared to 95.3 percent at
September 30, 2003, and 94.5percent at year-end 2002.
-- As announced during the quarter, Toto USA, Inc., a wholly owned
subsidiary of Toto Ltd., signed a 62-month lease for an existing
406,000 square foot building located at Ontario Pacific Distribution
Center in Ontario, California.
-- Also announced during the quarter, TSA Stores Inc., a wholly owned
subsidiary of The Sports Authority, Inc., signed a 123-month lease for
a 616,500 square foot speculative development building at Kaiser
Commerce Center in Fontana, California.
-- During the quarter, Catellus executed a lease for an 84,000 square
foot speculative warehouse development in Portland, Oregon.
Development and Investment Activity
-- At December 31, 2003, Core Segment construction in progress was
4.3 million square feet, of which 3.3 million square feet will be
added to Catellus' rental portfolio upon completion; 58,000 square
feet is build-to-suit-for-sale; and one million square feet is
development for fee.
-- For the 3.3 million square feet under construction that will be added
to Catellus' rental portfolio upon completion, the projected total
cost of development is $103.9 million. These buildings are 77 percent
preleased and when fully leased are projected to yield a return on
cost of 10.2 percent.
-- During the quarter, construction commenced on 1.9 million square feet
in three projects: a 758,000 square foot speculative warehouse in San
Bernardino County in Southern California, for which a lease for
100 percent of the space is out for signature; a 117,000 square foot
expansion of an existing 240,000 square foot distribution facility
leased to APL Logistics in Woodridge, Illinois; and a one million
square foot fee development in Southern California.
-- During the quarter, construction was completed on a 200,000 square
foot build-to-suit-for-sale development in Gresham, Oregon.
Urban, Residential& Other
-- During the year, Catellus made significant progress in monetizing
assets in the Urban, Residential & Other Segment. The company
realized $96 million, net of taxes and the continued investment
required in that segment, while still leaving approximately
$408 million of net book value remaining to be monetized.
-- Several significant residential land transactions contributed to the
net $96 million monetized in 2003, including the previously announced
redemption of a wholly owned subsidiary's interest in Talega, a
residential-community development project located in San Clemente,
California, for a pre-tax gain of $41.9 million; and the divesture of
Catellus' interest in Vista Range in Denver, Colorado, for a pre-tax
gain of $11.7 million.
-- During the year, Catellus executed three separate land transactions
at two of its three urban projects for a total pre-tax gain of
$15.7 million.
-- During the fourthquarter, Catellus sold 84,500 acres of desert land
in seven transactions for a pre-tax gain of $14.7 million. Desert
sales for the full year totaled $27.1 million, for a pre-tax gain of
$23.0 million.
Annual Meeting of Stockholders Record Date
-- The record date for Catellus' 2004 Annual Meeting of Stockholders is
March 16, 2004. The meeting will be held on May 4, 2004, at 9:00 a.m.
local time at the Palace Hotel 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 will begin on or about April 1, 2004.
REIT Conversion
-- As previously announced, Catellus completed its conversion from a C
corporation to a REIT, effective January 1, 2004.
-- As previously announced, during the fourth quarter, the company
distributed a one time, special dividend of accumulated earnings and
profits, as part of its REIT conversion. The stock issued in the E&P
distribution was approximately 10.655 million shares, and the cash
portion was approximately $100 million.
Supplemental Reporting Measure
-- The company provides a supplemental performance measure of Funds From
Operations ("FFO"), as defined by the National Association of Real
Estate Investment Trusts ("NAREIT"), which Catellus believes provides
a useful measure, along with GAAP net income, of its operating
performance.
-- Additionally, the company provides FFO in two segments: Core Segment
and Urban, Residential & 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 & 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, including third party costs, and the
effects of the stock option exchange offer, which will continue for
three years.
-- In presenting FFO prior to operating as a REIT (which began
January 1, 2004), Catellus included "hypothetical tax savings"
(including the tax effects of the REIT conversion) that would have
occurred had it been a REIT during the periods presented.
-- FFO, including both segments as defined above, for the fourth quarter
of 2003 was $77.5 million, compared to $41.0 million for the same
period in 2002, and for the years ended December 31, 2003, and
December 31, 2002, FFO was $209.0 million and $174.4 million,
respectively.
-- Core Segment FFO for the fourth quarter of 2003 was $28.4 million,
compared to $31.9 million for the same period in 2002. On a fully
diluted per share basis, Core Segment FFO for the fourth quarter of
2003 was $0.27, compared to $0.32 for the same period in 2002. Core
Segment FFO for the year ended December 31, 2003, was $138.0 million,
compared to $134.8 million for the same period in 2002. On a fully
diluted per share basis, Core Segment FFO for the year ended
December 31, 2003, was $1.35, compared to $1.35 for the same period in
2002.
Catellus Development Corporation will host a conference call on Thursday,
February 19, 2004, at 9:00 a.m. Pacific Time (10:00 a.m. Mountain, 11:00 a.m.
Central, and noon Eastern)to discuss the fourth quarter results. To
participate in the conference call, dial 800-884-5695 (domestic) or 617-786-2960
(international) and enter access code 64863687 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 through March 4, 2004, at 888-286-8010
(domestic) or 617-801-6888 (international) with the access code 90980546. The
webcast replay will be available through February 19, 2005, 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 38.2 million square feet
of predominately 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
itsstrategic 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 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; product and geographical concentration; industry
competition; availability of financing and changes in interest rates and capital
markets; changes in insurance markets; discretionary government decisions
affecting the use of land, and delays resulting therefrom; 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; liability for environmental remediation and changes in environmental laws
and regulations; failure or inability of third parties to fulfill their
commitments or to perform their obligations under agreements; failure of parties
to reach agreement or 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 and co-owners;
changes in policies and practices of organized labor groups; shortages or
increased costs of electrical power; other risks inherent in the real estate
business; and acts ofwar, 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 Form10-K/A for the fiscal year ended December
31, 2002, and its reports on Form 10-Q for the quarters ended March 31, 2003,
June 30, 2003, and September 30, 2003, filed with the Securities and Exchange
Commission ("SEC"), as well as the proxy statement/prospectus filed with the SEC
on August 15, 2003.
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,
2003 2002
Assets
Properties $2,498,015 $2,448,081
Less accumulated depreciation (446,872) (399,923)
2,051,143 2,048,158
Other assets and deferred charges,
net 292,312 273,853
Notes receivable, less allowance 119,202 44,947
Accounts receivable, less allowance 19,752 14,211
Assets held for sale 2,352 2,760
Restricted cash and investments 64,617 36,593
Cash and cash equivalents 45,931 274,927
Total $2,595,309 $2,695,449
Liabilities and stockholders' equity
Mortgage and other debt $1,378,054 $1,500,955
Accounts payable and accrued expenses 157,036 117,493
Deferred credits and other
liabilities 291,530 151,466
Liabilities associated with assets
held for sale 2,296 3,233
Deferred income taxes 56,712 318,970
Minority interests -- 57,363
Total liabilities 1,885,628 2,149,480
Stockholders' equity
Common stock - 102,724 and 110,817
shares issued at December 31, 2003
and 2002, respectively 1,039 1,108
Paid-in capital 489,143 531,362
Unearned value of restricted stock
and restricted stock units (22,720) --
Treasury stock, at cost (23,647
shares at December 31, 2002) -- (401,082)
Accumulated earnings 242,219 414,581
Total stockholders' equity 709,681 545,969
Total $2,595,309 $2,695,449
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenue
Rental revenue $73,936 $71,779 $296,522 $263,809
Sales revenue 125,846 30,613 204,271 139,604
Management, development and
other fees 1,228 1,437 11,129 7,088
201,010 103,829 511,922 410,501
Costs and expenses
Property operating costs (23,559) (20,261) (85,693) (70,686)
Cost of sales (69,240) (19,938) (119,664) (89,661)
Selling, general and
administrative expenses (20,324) (11,143) (55,747) (43,695)
Depreciation and amortization (17,939) (16,874) (70,156) (62,407)
(131,062) (68,216) (331,260) (266,449)
Operating income 69,948 35,613 180,662 144,052
Other income
Equity in earnings of operating
joint ventures, net 1,699 1,439 6,898 8,277
Equity in earnings of
development joint ventures, net 16,015 9,407 32,849 29,232
Gain on non-strategic asset
sales 14,665 22 22,950 7,264
Interest income 1,836 2,031 7,294 9,871
Other 1,214 127 3,744 9,196
35,429 13,026 73,735 63,840
Other expenses
Interest expense (12,181) (17,203) (61,849) (59,735)
REIT transition costs (2,483) -- (7,262) --
Other (1,934) (844) (2,541) (2,021)
(16,598) (18,047) (71,652) (61,756)
Income before minority
interests, income taxes, and
discontinued operations 88,779 30,592 182,745 146,136
Minority interests -- (1,526) -- (6,106)
Income before income taxes and
discontinued operations 88,779 29,066 182,745 140,030
Income tax benefit (expense) 80,485 (8,891) 45,516 (53,543)
Income from continuing
operations 169,264 20,175 228,261 86,487
Discontinued operations, net of
income tax:
Gain from disposal of
discontinued operations 1,911 416 6,129 13,748
Income from discontinued
operations 10 287 409 421
Net gain from discontinued
operations 1,921 703 6,538 14,169
Net income $171,185 $20,878 $234,799 $100,656
Incomeper share from continuing
operations
Basic $1.65 $0.21 $2.28 $0.89
Assuming dilution $1.63 $0.20 $2.23 $0.86
Income per share from
discontinued operations
Basic $0.02 $-- $0.07 $0.14
Assuming dilution $0.02 $0.01 $0.07 $0.15
Net income per share
Basic $1.67 $0.21 $2.35 $1.03
Assuming dilution $1.65 $0.21 $2.30 $1.01
Average number of common shares
outstanding - basic 102,545 97,816 99,941 97,642
Average number of common shares
outstanding - diluted 103,698 99,995 102,171 100,118
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
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 benefit (108,640) -- (108,640)
FFO as adjusted for hypothetical tax
benefit $28,358 $49,144 $77,502
FFO as adjusted for hypothetical tax
benefit 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
Three Months ended
December 31, 2002
Urban/Res.
Core & Other
Segment Segment Consolidated
Net income $12,046 $8,832 $20,878
Add depreciation 17,271 208 17,479
Less gain on rental property sales (641) -- (641)
FFO 28,676 9,040 37,716
Hypothetical tax savings 3,259 -- 3,259
FFO as adjusted for hypothetical tax
savings $31,935 $9,040 $40,975
FFO as adjusted for hypothetical tax
savings per share:
Basic $0.33 $0.09 $0.42
Assuming dilution $0.32 $0.09 $0.41
Average number of common shares
outstanding - basic 97,816 97,816 97,816
Average number of common shares
outstanding - diluted 99,995 99,995 99,995
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
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 benefit (86,082) -- (86,082)
FFO as adjusted for hypothetical tax
benefit $138,007 $70,948 $208,955
FFO as adjusted for hypothetical tax
benefit 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
Twelve Months ended
December 31, 2002
Urban/Res.
Core & Other
Segment Segment Consolidated
Net income $61,987 $38,669 $100,656
Add depreciation 62,880 935 63,815
Less gain on rental property sales (25,742) -- (25,742)
FFO 99,125 39,604 138,729
Hypothetical tax savings 35,653 -- 35,653
FFO as adjusted for hypothetical tax
savings $134,778 $39,604 $174,382
FFO as adjusted for hypothetical tax
savings per share:
Basic $1.38 $0.41 $1.79
Assuming dilution $1.35 $0.39 $1.74
Average number of common shares
outstanding-basic 97,642 97,642 97,642
Average number of common shares
outstanding-diluted 100,118 100,118 100,118
CATELLUS DEVELOPMENT CORPORATION
(In thousands and unaudited)
Rental revenue less property operating costs (including the portion from
discontinued operations) and 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 shareholders, 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
Dcember 31, December 31,
2003 2002 2003 2002
Rental revenue $73,936 $71,779 $296,522 $263,809
Property operating costs (23,559) (20,261) (85,693) (70,686)
Equity in earnings of
operating joint ventures,
net 1,699 1,439 6,898 8,277
Rental revenue from
discontinued operations 277 1,278 2,211 3,998
Property operating costs from
discontinued operations (151) (313) (899) (1,243)
Rental revenue less property
operating costs $52,202 $53,922 $219,039 $204,155
CATELLUS DEVELOPMENT CORPORATION
Reconciliation showing effects of REIT
conversion on EPS
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended
December 31,
2003 2002
Net income $234,799
Tax impact of REIT conversion (118,896)
REIT transition costs, net of tax
(a) 10,391
Adjusted net income $126,294 $100,656
Adjusted net income per share $1.24 $1.01
% increase 23%
Average number of common shares
outstanding - diluted 102,171 100,118
(a) The REIT transition costs above includes $7,262 of third party REIT
conversion costs and $10,100 of REIT related G&A expense, net of tax.
DATASOURCE: Catellus, Inc.
CONTACT: Margan Mitchell, Corporate Communications, +1-415-974-4616, or
Minnie Wright, Investor Relations, +1-415-974-4649, both of Catellus, Inc.
Web site: http://www.catellus.com/