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 September 30, 2002
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: 001-16765
TRIZEC PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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33-0387846 |
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(State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
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60606 |
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(Address of principal executive offices) |
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(Zip Code) |
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312-798-6000 |
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(Registrant's telephone number, including area code) |
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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 and 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 at least the past 90 days.
Yes [ X ] No [ ]
As of November 12, 2002, 150,033,310 shares of common stock, par value $0.01 per share, were issued and outstanding.
Table of Contents
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PART I - FINANCIAL INFORMATION |
Page |
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Item 1. |
Financial Statements |
3 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
54 |
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Item 4. |
Controls and Procedures |
54 |
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PART II - OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
55 |
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Item 2. |
Changes in Securities and Use of Proceeds |
55 |
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Item 3. |
Defaults Upon Senior Securities |
55 |
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Item 4. |
Submission of Matters to a Vote of Security Holders |
55 |
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Item 5. |
Other Information |
55 |
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Item 6. |
Exhibits and Reports on Form 8-K |
56 |
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Forward-Looking Statements
This Form 10-Q, including the discussion in "Part I - Financial Information - Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations," contains forward-looking statements relating to our business and financial outlook, which are based on our current expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect new information, the occurrence of future events or circumstances or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which our principal tenants compete; insolvency, bankruptcy, credit deterioration and other adverse financial pressures affecting our tenants, vendors and market segments generally; our ability to timely lease or re-lease space at current or anticipated rents; our ability to achieve economies of scale over time; the demand for tenant services beyond those traditionally provided by landlords; changes in interest rates; changes in operating costs; changes in environmental laws and regulations and contamination events; availability and affordability of insurance coverage; the occurrence of uninsured or underinsured events; changes in asset valuations; our ability to attract and retain high quality personnel at a reasonable cost in a highly competitive labor environment; future demand for our debt and equity securities; our ability to refinance our debt on reasonable terms at maturity; our ability to access adequate credit facilities or other debt financings on acceptable terms and our ability to satisfy the terms of credit facilities and other debt financings; our ability to maintain our REIT status under the Internal Revenue Code of 1986, as amended, including, but not limited to, making the required distributions to stockholders; our ability to complete current and future development projects on time and on schedule; the possibility that income tax treaties may be renegotiated, with a resulting increase in the withholding taxes applicable to us; market conditions in existence at the time we sell assets; the possibility of changes in law adverse to us and joint venture and partnership risks. Such factors include those set forth in more detail in the Risk Factors section in our Form 10-K for the year ended December 31, 2001 filed with the U.S. Securities and Exchange Commission.
2
PART I - FINANCIAL INFORMATION
Combined Consolidated Balance Sheets
(unaudited)
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September 30 |
December 31 |
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Assets |
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Real estate...................................................................................... |
$ 5,404,916 |
$ 5,399,031 |
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Less: accumulated depreciation............................................. |
(535,582) |
(438,584) |
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Real estate, net............................................................................... |
4,869,334 |
4,960,447 |
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Cash and cash equivalents........................................................... |
93,102 |
297,434 |
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Escrows and restricted cash.......................................................... |
53,864 |
28,180 |
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Investment in unconsolidated real estate joint ventures.......... |
243,928 |
289,242 |
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Investment in Sears Tower............................................................ |
23,600 |
70,000 |
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Investments, other......................................................................... |
68,829 |
- |
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Office tenant receivables, net....................................................... |
24,623 |
33,308 |
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Other receivables, net................................................................... |
31,878 |
34,201 |
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Deferred rent receivables, net....................................................... |
124,661 |
99,515 |
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Deferred charges, net.................................................................... |
138,172 |
138,054 |
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Prepaid expenses and other assets.............................................. |
78,651 |
55,421 |
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Advances to parent and affiliated companies............................ |
- |
90,633 |
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Total Assets.................................................................................... |
$ 5,750,642 |
$ 6,096,435 |
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Liabilities and Shareholders' and Owners' Equity |
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Liabilities |
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Mortgage debt and other loans...................................................... |
$ 3,510,459 |
$ 3,017,798 |
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Trade, construction and tenant improvements payables........... |
39,593 |
91,646 |
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Accrued interest expense................................................................ |
16,154 |
12,007 |
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Accrued operating expenses and property taxes........................ |
100,655 |
108,276 |
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Other accrued liabilities................................................................... |
86,050 |
76,266 |
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Taxes payable................................................................................. |
52,505 |
53,862 |
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Deferred income taxes.................................................................... |
60,000 |
60,000 |
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Advances from parent and affiliated companies......................... |
- |
236,619 |
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Total Liabilities.............................................................................. |
3,865,416 |
3,656,474 |
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Minority Interest............................................................................ |
3,114 |
4,386 |
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Redeemable Stock.......................................................................... |
200 |
200 |
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Commitments and Contingencies |
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Shareholders' and Owners' Equity |
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Shareholders' and owners' capital.................................................... |
2,182,623 |
2,437,380 |
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(Deficit) retained earnings................................................................. |
(255,861) |
6,514 |
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Unearned compensation.................................................................. |
(4,890) |
(6,701) |
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Accumulated other comprehensive loss......................................... |
(39,960) |
(1,818) |
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Total Shareholders' and Owners' Equity....................................... |
1,881,912 |
2,435,375 |
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Total Liabilities and Shareholders' and Owners' Equity............ |
$ 5,750,642 |
$ 6,096,435 |
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See accompanying notes to the combined consolidated financial statements
3
Combined Consolidated
Statements of Operations
and Comprehensive (Loss) Income
(unaudited)
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For the three months ended |
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For the nine months ended |
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| ($ thousands, except share and per share amounts) |
2002 |
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2001 |
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2002 |
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2001 |
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Revenues |
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Rentals............................................................. |
$ 180,745 |
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$ 169,440 |
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$ 530,647 |
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$ 496,126 |
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Recoveries from tenants............................... |
32,959 |
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30,355 |
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91,377 |
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84,478 |
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Parking and other........................................... |
26,660 |
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24,383 |
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78,849 |
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71,519 |
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Fee income...................................................... |
2,043 |
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2,598 |
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7,031 |
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9,120 |
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Interest............................................................. |
1,553 |
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4,052 |
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6,341 |
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11,487 |
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Total Revenues.................................................. |
243,960 |
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230,828 |
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714,245 |
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672,730 |
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Expenses |
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Operating......................................................... |
85,812 |
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70,223 |
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236,354 |
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204,344 |
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Property taxes................................................. |
26,229 |
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23,382 |
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76,765 |
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67,844 |
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General and administrative........................... |
13,932 |
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6,278 |
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32,616 |
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16,840 |
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Interest............................................................. |
49,506 |
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38,174 |
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143,991 |
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114,901 |
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Depreciation and amortization..................... |
44,351 |
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39,508 |
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124,387 |
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119,178 |
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Stock option grant expense.......................... |
2,779 |
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- |
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4,781 |
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- |
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Reorganization costs..................................... |
- |
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- |
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- |
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13,922 |
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Derivative losses............................................ |
- |
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- |
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- |
|
456 |
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Total Expenses.................................................. |
222,609 |
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177,565 |
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618,894 |
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537,485 |
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Income from Continuing
Operations before |
21,351 |
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53,263 |
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95,351 |
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135,245 |
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Provision for income and other corporate taxes |
(1,334) |
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(3,167) |
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(4,100) |
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(7,706) |
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Minority interest.................................................... |
1,514 |
|
87 |
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1,190 |
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(270) |
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(Loss) income from unconsolidated real estate |
(35,182) |
|
3,589 |
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(28,517) |
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14,287 |
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Gain (loss) on disposition and provision for loss |
(199,141) |
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(62,933) |
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(195,203) |
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(65,389) |
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Provision for loss on investments....................... |
(48,292) |
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- |
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(48,292) |
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(4,193) |
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Recovery on insurance claim............................... |
3,240 |
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- |
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3,240 |
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- |
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(Loss) Income from
Continuing Operations |
(257,844) |
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(9,161) |
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(176,331) |
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71,974 |
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See accompanying notes to the combined consolidated financial statements
4
Combined Consolidated
Statements of Operations
and Comprehensive (Loss) Income (continued)
(unaudited)
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For the three months ended |
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For the nine months ended |
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| ($ thousands, except share and per share amounts) |
2002 |
|
2001 |
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2002 |
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2001 |
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Income from discontinued operations................ |
290 |
|
673 |
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1,458 |
|
701 |
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Gain on disposition of discontinued real estate |
3,290 |
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- |
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3,168 |
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- |
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(Loss) Income before
Extraordinary Items and |
(254,264) |
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(8,488) |
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(171,705) |
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72,675 |
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Loss on early debt retirement............................... |
- |
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- |
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- |
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(17,966) |
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Cumulative effect of a change in accounting |
- |
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- |
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- |
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(4,631) |
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Net (Loss) Income.................................................. |
(254,264) |
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(8,488) |
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(171,705) |
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50,078 |
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Dividends paid to special voting shareholders. |
(281) |
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- |
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(585) |
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- |
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Net (Loss) Income
Available to Common |
$ (254,545) |
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$ (8,488) |
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$ (172,290) |
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$ 50,078 |
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See accompanying notes to the combined consolidated financial statements
5
Combined Consolidated
Statements of Operations
and Comprehensive (Loss) Income (continued)
(unaudited)
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For the three months ended |
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For the nine months ended |
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| ($ thousands, except share and per share amounts) |
2002 |
|
2001 |
|
2002 |
|
2001 |
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(Loss) income from continuing operations before |
$ (257,844) |
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$ (9,161) |
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$ (176,331) |
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$ 71,974 |
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Less: Dividends paid to
special voting |
(281) |
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- |
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(585) |
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- |
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(Loss) Income from
Continuing Operations |
(258,125) |
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(9,161) |
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(176,916) |
|
71,974 |
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Loss on early debt retirement............................... |
- |
|
- |
|
- |
|
(17,966) |
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Cumulative effect of a change in accounting |
- |
|
- |
|
- |
|
(4,631) |
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Income from discontinued operations................ |
290 |
|
673 |
|
1,458 |
|
701 |
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Gain on disposition of discontinued real estate |
3,290 |
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- |
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3,168 |
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- |
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Net (Loss) Income
Available to Common |
$ (254,545) |
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$ (8,488) |
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$ (172,290) |
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$ 50,078 |
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Basic Earnings per Common Share |
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(Loss) income from continuing operations |
$ (1.73) |
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$ (0.06) |
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$ (1.18) |
|
$ 0.48 |
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Loss on early debt retirement............................... |
- |
|
- |
|
- |
|
(0.12) |
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Cumulative effect of a change in accounting |
- |
|
- |
|
- |
|
(0.03) |
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Income from discontinued operations................ |
- |
|
- |
|
0.01 |
|
0.01 |
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Gain on disposition of discontinued real estate |
0.03 |
|
- |
|
0.02 |
|
- |
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Net (Loss) Income
Available to Common |
$ (1.70) |
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$ (0.06) |
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$ (1.15) |
|
$ 0.34 |
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Diluted Earnings per Common Share |
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(Loss) income from continuing operations |
$ (1.73) |
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$ (0.06) |
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$ (1.18) |
|
$ 0.48 |
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Loss on early debt retirement............................... |
- |
|
- |
|
- |
|
(0.12) |
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Cumulative effect of a change in accounting |
- |
|
- |
|
- |
|
(0.03) |
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Income from discontinued operations................ |
- |
|
- |
|
0.01 |
|
- |
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Gain on disposition of discontinued real estate |
0.03 |
|
- |
|
0.02 |
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- |
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Net (Loss) Income
Available to Common |
$ (1.70) |
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$ (0.06) |
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$ (1.15) |
|
$ 0.33 |
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Weighted average shares outstanding |
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Basic................................................................. |
149,535,079 |
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