KIMCO REALTY CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2004

	OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission file number 1-10899

	Kimco Realty Corporation

	(Exact name of registrant as specified in its charter)


Maryland	13-2744380

(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

3333 New Hyde Park Road, New Hyde Park, NY 11042

(Address of principal executive offices – zip code)

(516) 869-9000

(Registrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12-b of the Act).

Yes X No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

111,214,468 shares outstanding as of June 30, 2004.

1 of 33

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Financial Statements —
Condensed Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003.

Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2004 and 2003.

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2004 and 2003.

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003.

Notes to Condensed Consolidated Financial Statements.

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)


		June 30, 2004			December 31, 2003

Assets:
	Operating real estate, net of accumulated depreciation
	of $600,537 and $568,015, respectively	$	3,011,337		$	3,264,223
	Investments and advances in real estate joint ventures		494,012			487,394
	Real estate under development		290,256			304,286
	Other real estate investments		129,195			113,085
	Mortgages and other financing receivables		109,491			101,691
	Cash and cash equivalents		55,346			48,288
	Marketable securities		45,610			45,677
	Accounts and notes receivable		48,342			50,408
	Other assets		138,099			188,872

		$	4,321,688		$	4,603,924


Liabilities:
	Notes payable	$	1,362,250		$	1,686,250
	Mortgages payable		369,525			375,914
	Construction loans payable		107,197			92,784
	Other liabilities		215,344			213,213

			2,054,316			2,368,161

	Minority interests in partnerships		97,311			99,917


Stockholders’ equity:
	Preferred stock , $1.00 par value, authorized 3,600,000 shares
	Class F Preferred Stock, $1.00 par value, authorized 700,000 shares
	Issued and outstanding 700,000 shares		700			700
	Aggregate liquidation preference $175,000
	Common stock, $.01 par value, authorized 200,000,000 shares
	Issued and outstanding 111,214,468 and 110,623,967 shares, respectively		1,112			1,106
	Paid-in capital		2,164,454			2,147,286
	Cumulative distributions in excess of net income		(19,806	)		(30,112	)

			2,146,460			2,118,980
	Accumulated other comprehensive income		23,601			16,866

			2,170,061			2,135,846

		$	4,321,688		$	4,603,924

The accompanying notes are an integral part of these condensed consolidated financial statements.

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2004 and 2003
(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2004			2003			2004			2003

Revenues from rental property	$	131,026		$	114,645		$	270,378		$	233,871


Rental property expenses:
Rent		2,965			2,695			5,791			5,384
Real estate taxes		17,046			15,024			33,627			29,294
Operating and maintenance		13,582			12,545			30,491			28,233

		33,593			30,264			69,909			62,911


		97,433			84,381			200,469			170,960

Income from other real estate investments		9,124			4,909			15,295			9,809
Mortgage financing income		2,898			6,676			6,458			12,250
Management and other fee income		7,068			3,661			12,829			6,563
Depreciation and amortization		(26,182	)		(19,790	)		(52,973	)		(38,770	)

		90,341			79,837			182,078			160,812


Interest, dividends and other investment income		1,572			5,231			4,575			7,571
Other income/(expense), net		4,385			(1,419	)		8,295			(1,101	)

Interest expense		(28,381	)		(24,810	)		(55,824	)		(47,771	)
General and administrative expenses		(10,395	)		(8,886	)		(20,626	)		(17,489	)
Gain on early extinguishment of debt		—			—			—			2,921


		57,522			49,953			118,498			104,943

Provision for income taxes		(3,316	)		(1,241	)		(5,419	)		(2,514	)

Equity in income of real estate joint ventures, net		11,924			10,138			25,928			19,292
Minority interests in income of partnerships, net		(3,001	)		(1,806	)		(5,230	)		(3,396	)


Income from continuing operations		63,129			57,044			133,777			118,325


Discontinued operations:
Income from discontinued operating properties		1,493			1,790			1,248			4,025
Gain on early extinguishment of debt		—			—			—			3,341
Loss on operating properties held for sale/sold		—			—			(4,151	)		—
Gain/(loss) on disposition of operating properties		4,875			(867	)		6,112			2,413

Income from discontinued operations		6,368			923			3,209			9,779


Gain on sale of development properties
net of tax of $1,289, $2,253, $3,888 and $2,802, respectively		1,933			3,379			5,833			4,203


Net Income		71,430			61,346			142,819			132,307

Original issuance costs associated with the redemption
of preferred stock		—			(7,787	)		—			(7,787	)
Preferred stock dividends		(2,909	)		(4,241	)		(5,819	)		(8,850	)


Net income available to common shareholders	$	68,521		$	49,318		$	137,000		$	115,670



Per common share:
Income from continuing operations:
-Basic	$	0.56		$	0.46		$	1.21		$	1.01

-Diluted	$	0.55		$	0.45		$	1.18		$	1.00

Net income:
-Basic	$	0.62		$	0.47		$	1.23		$	1.10

-Diluted	$	0.61		$	0.46		$	1.21		$	1.09

The accompanying notes are an integral part of these condensed consolidated financial statements.

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Six Months ended June 30, 2004 and 2003
(in thousands)


	Three Months Ended June 30,							Six Months Ended June 30,

			2004			2003			2004			2003


Net income		$	71,430		$	61,346		$	142,819		$	132,307

Other comprehensive income:
Unrealized gain on marketable securities			2,190			1,324			6,257			2,756
Unrealized gain on interest rate swaps			-			132			-			197
Unrealized gain/(loss) gain on warrants			(910	)		2,856			1,251			3,473
Unrealized gain/(loss) on foreign currency hedge agreements			2,658			(14,212	)		2,849			(11,495	)
Foreign currency translation adjustment			(3,175	)		13,486			(3,622	)		12,146

Other comprehensive income			763			3,586			6,735			7,077




Comprehensive income		$	72,193		$	64,932		$	149,554		$	139,384

The accompanying notes are an integral part of these condensed consolidated financial statements.

KIMCO REALTY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

			Six Months Ended June 30,

				2004			2003

Cash flow from operating activities:
	Net income		$	142,819		$	132,307
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization		53,213			40,580
		Loss on operating properties held for sale/sold		4,151			—
		Gain on sale of development properties		(9,721	)		(7,005	)
		Gain on sale of operating properties		(6,112	)		(2,413	)
		Gain on early extinguishment of debt		—			(6,262	)
		Minority interests in income of partnerships, net		5,230			3,396
		Equity in income of real estate joint ventures, net		(25,928	)		(19,292	)
		Income from other real estate investments		(11,058	)		(8,330	)
		Distributions of unconsolidated investments		44,243			31,740
		Change in accounts and notes receivable		2,172			827
		Change in accounts payable and accrued expenses		1,289			(9,551	)
		Change in other operating assets and liabilities		(9,461	)		(1,038	)

		Net cash flow provided by operating activities		190,837			154,959

Cash flow from investing activities:
		Acquisition of and improvements to operating real estate		(151,886	)		(263,104	)
		Acquisition of and improvements to real estate under development		(74,577	)		(83,006	)
		Investment in marketable securities		(8,484	)		(20,698	)
		Proceeds from sale of marketable securities		16,249			36,024
		Investments and advances to real estate joint ventures		(68,151	)		(93,504	)
		Proceeds from transferred operating properties		254,663			—
		Reimbursements of advances to real estate joint ventures		44,974			29,712
		Other real estate investments		(27,885	)		(13,761	)
		Reimbursements of advances to other real estate investments		7,835			—
		Redemption of minority interests in real estate partnerships		(3,781	)		(3,465	)
		Investment in mortgage loans receivable		(39,281	)		(24,057	)
		Collection of mortgage loans receivable		36,757			21,144
		Proceeds from sale of mortgage loan receivable		—			36,723
		Proceeds from sale of operating properties		20,786			76,584
		Proceeds from sale of development properties		86,658			34,512

		Net cash flow provided by (used for) investing activities		93,877			(266,896	)

Cash flow from financing activities:
		Principal payments on debt, excluding normal amortization of rental property debt		(6,565	)		(12,476	)
		Principal payments on rental property debt		(4,129	)		(2,770	)
		Principal payments on construction loan financings		(26,596	)		(14,998	)
		Proceeds from mortgage/construction loan financings		199,569			53,860
		Borrowings under revolving credit facilities		55,000			150,000
		Proceeds from issuance of medium-term note		—			50,000
		Repayment of unsecured notes		(379,000	)		—
		Dividends paid		(132,178	)		(124,575	)
		Proceeds from issuance of stock		16,243			259,883
		Redemption of preferred stock		—			(225,000	)

		Net cash flow provided by (used for) financing activities		(277,656	)		133,924

		Change in cash and cash equivalents		7,058			21,987

		Cash and cash equivalents, beginning of period		48,288			35,962

Cash and cash equivalents, end of period			$	55,346		$	57,949

Interest paid during the period (net of capitalized interest of $4,605 and $4,274, respectively)			$	57,221		$	46,228

Income taxes paid during the period			$	6,892		$	9,255

The accompanying notes are an integral part of these condensed consolidated financial statements.

KIMCO REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Financial Statements

Principles of Consolidation -

The accompanying Condensed Consolidated Financial Statements include the accounts of Kimco Realty Corporation (the “Company”), its subsidiaries, all of which are wholly owned, and all entities in which the Company has a controlling interest or has been determined to be a primary beneficiary of a variable interest entity. The information furnished is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K and Current Report on Form 8-K dated May 18, 2004.

Certain 2003 amounts have been reclassified to conform to the 2004 financial statement presentation.

Income Taxes -

The Company and its qualified REIT subsidiaries file a consolidated federal income tax return. The Company has made an election to qualify, and believes it is operating so as to qualify, as a Real Estate Investment Trust (a “REIT”) for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under Section 856 through 860 of the Internal Revenue Code, as amended (the “Code”). However, in connection with the Tax Relief Extension Act of 1999, which became effective January 1, 2001, the Company is now permitted to participate in certain activities which it was previously precluded from in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable REIT subsidiaries under the Code. As such, the Company will be subject to federal and state income taxes on the income from these activities. During the six months ended June 30, 2004, the Company’s provision for federal and state income taxes was approximately $9.3 million relating to activities conducted in its taxable REIT subsidiaries.