SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal quarter ended March 31, 2005
Commission file number 1-31908
CATELLUS DEVELOPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
| Delaware | 94-2953477 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
201 Mission Street
San Francisco, California 94105
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code:
(415) 974-4500
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 12b-2 of the Exchange Act). x Yes ¨ No
As of May 2, 2005 there were 103,883,347 issued and outstanding shares of the Registrant’s Common Stock.
CATELLUS DEVELOPMENT CORPORATION
| Page No | ||||
| PART I. FINANCIAL INFORMATION |
||||
| Item 1. |
Financial Statements (Unaudited) |
|||
| Condensed Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004 |
3 | |||
| Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 |
4 | |||
| Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||
| Item 3. |
42 | |||
| Item 4. |
42 | |||
| 43 | ||||
| Item 1. |
43 | |||
| Item 2. |
43 | |||
| Item 3. |
43 | |||
| Item 4. |
43 | |||
| Item 5. |
43 | |||
| Item 6. |
43 | |||
| 44 | ||||
| Item 1. | Financial Statements (Unaudited) |
CATELLUS DEVELOPMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, 2005 |
December 31, 2004 |
|||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Properties |
$ | 2,370,210 | $ | 2,316,289 | ||||
| Less accumulated depreciation |
(507,639 | ) | (490,409 | ) | ||||
| 1,862,571 | 1,825,880 | |||||||
| Other assets and deferred charges, net |
215,727 | 224,932 | ||||||
| Notes receivable, less allowance |
296,150 | 329,758 | ||||||
| Accounts receivable, less allowance |
30,720 | 35,800 | ||||||
| Assets held for sale |
— | 10,336 | ||||||
| Restricted cash and investments |
12,867 | 29,569 | ||||||
| Cash and cash equivalents |
54,138 | 252,069 | ||||||
| Total |
$ | 2,472,173 | $ | 2,708,344 | ||||
| Liabilities and stockholders’ equity |
||||||||
| Mortgage and other debt |
$ | 1,255,104 | $ | 1,440,528 | ||||
| Accounts payable and accrued expenses |
125,392 | 201,238 | ||||||
| Deferred credits and other liabilities |
299,431 | 286,780 | ||||||
| Liabilities associated with assets held for sale |
— | 88 | ||||||
| Deferred income taxes |
37,896 | 36,119 | ||||||
| Total liabilities |
1,717,823 | 1,964,753 | ||||||
| Commitments and contingencies (Note 8) |
||||||||
| Stockholders’ equity |
||||||||
| Common stock, $0.01 par value, 105,027 and 104,720 shares issued, and 103,875 and 103,317 shares outstanding at March 31, 2005 and December 31, 2004, respectively |
1,050 | 1,047 | ||||||
| Paid-in capital |
515,787 | 509,407 | ||||||
| Unearned value of restricted stock and restricted stock unit grants (1,152 and 1,403 shares at March 31, 2005 and December 31, 2004, respectively) |
(24,018 | ) | (23,049 | ) | ||||
| Accumulated earnings |
261,531 | 256,186 | ||||||
| Total stockholders’ equity |
754,350 | 743,591 | ||||||
| Total |
$ | 2,472,173 | $ | 2,708,344 | ||||
See notes to Condensed Consolidated Financial Statements.
3
CATELLUS DEVELOPMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| (Unaudited) | ||||||||
| Revenues |
||||||||
| Rental revenue |
$ | 78,357 | $ | 76,037 | ||||
| Sales revenue |
33,144 | 37,691 | ||||||
| Management, development and other fees |
7,544 | 1,699 | ||||||
| 119,045 | 115,427 | |||||||
| Costs and expenses |
||||||||
| Property operating costs |
(22,256 | ) | (20,966 | ) | ||||
| Cost of sales |
(22,898 | ) | (23,090 | ) | ||||
| Selling, general and administrative expenses |
(12,290 | ) | (12,951 | ) | ||||
| Depreciation and amortization |
(18,691 | ) | (17,716 | ) | ||||
| (76,135 | ) | (74,723 | ) | |||||
| Operating income |
42,910 | 40,704 | ||||||
| Other income |
||||||||
| Equity in earnings of operating joint ventures, net |
2,833 | 2,414 | ||||||
| Equity in earnings of development joint ventures, net |
5,086 | 1,227 | ||||||
| Gain on non-strategic asset sales |
20 | 61 | ||||||
| Interest income |
8,895 | 2,777 | ||||||
| Other |
89 | 301 | ||||||
| 16,923 | 6,780 | |||||||
| Other expenses |
||||||||
| Interest expense |
(17,573 | ) | (15,503 | ) | ||||
| REIT transition costs |
— | (212 | ) | |||||
| Other |
(1,498 | ) | (430 | ) | ||||
| (19,071 | ) | (16,145 | ) | |||||
| Income before income taxes and discontinued operations |
40,762 | 31,339 | ||||||
| Income tax expense |
(8,148 | ) | (931 | ) | ||||
| Income from continuing operations |
32,614 | 30,408 | ||||||
| Discontinued operations, net of income tax: |
||||||||
| Gain from disposal of discontinued operations |
736 | 1,616 | ||||||
| (Loss) income from discontinued operations |
(32 | ) | 67 | |||||
| Net gain from discontinued operations |
704 | 1,683 | ||||||
| Net income |
$ | 33,318 | $ | 32,091 | ||||
| Income per share from continuing operations |
||||||||
| Basic |
$ | 0.31 | $ | 0.30 | ||||
| Assuming dilution |
$ | 0.31 | $ | 0.29 | ||||
| Income per share from discontinued operations |
||||||||
| Basic |
$ | 0.01 | $ | 0.01 | ||||
| Assuming dilution |
$ | 0.01 | $ | 0.02 | ||||
| Net income per share |
||||||||
| Basic |
$ | 0.32 | $ | 0.31 | ||||
| Assuming dilution |
$ | 0.32 | $ | 0.31 | ||||
| Average number of common shares outstanding—basic |
103,750 | 102,844 | ||||||
| Average number of common shares outstanding—diluted |
105,301 | 104,031 | ||||||
| Dividends declared per share |
$ | 0.27 | $ | 0.27 | ||||
See notes to Condensed Consolidated Financial Statements.
4
CATELLUS DEVELOPMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 33,318 | $ | 32,091 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
18,691 | 17,716 | ||||||
| Deferred income tax (benefit) provision |
1,777 | (4,099 | ) | |||||
| Deferred gain recognized |
(58 | ) | (7,990 | ) | ||||
| Amortization of deferred loan fees and other costs |
1,409 | 1,372 | ||||||
| Equity in earnings of joint ventures |
(7,919 | ) | (3,641 | ) | ||||
| Gain on sales of investment property |
(489 | ) | (1,616 | ) | ||||
| Operating distributions from joint ventures |
1,857 | 4,399 | ||||||
| Cost of development property and non-strategic assets sold |
22,912 | 43,216 | ||||||
| Capital expenditures for development property |
(17,438 | ) | (19,299 | ) | ||||
| Other, net |
1,686 | 2,159 | ||||||
| Change in notes receivable |
33,608 | 15,772 | ||||||
| Change in deferred credits and other liabilities |
13,845 | 19,263 | ||||||
| Change in other operating assets and liabilities |
(9,112 | ) | (33,224 | ) | ||||
| Net cash provided by operating activities |
94,087 | 66,119 | ||||||
| Cash flows from investing activities: |
||||||||
| Property acquisitions |
(16,388 | ) | (1,214 | ) | ||||
| Capital expenditures for investment property |
(37,832 | ) | (55,935 | ) | ||||
| Tenant improvements |
(911 | ) | (1,784 | ) | ||||
| Reimbursable construction costs |
— | (3,579 | ) | |||||
| Net proceeds from sale of investment property |
2,853 | 3,454 | ||||||
| Contributions to joint ventures |
(42 | ) | (259 | ) | ||||
| Decrease in restricted cash and investments |
16,702 | 35,327 | ||||||
| Net cash used in investing activities |
(35,618 | ) | (23,990 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Borrowings |
— | 91,351 | ||||||
| Repayment of borrowings |
(184,247 | ) | (110,427 | ) | ||||
| Dividends |
(74,291 | ) | (27,729 | ) | ||||
| Proceeds from issuance of common stock |
2,138 | 3,368 | ||||||
| Net cash used in financing activities |
(256,400 | ) | (43,437 | ) | ||||
| Net decrease in cash and cash equivalents |
(197,931 | ) | (1,308 | ) | ||||
| Cash and cash equivalents at beginning of period |
252,069 | 45,931 | ||||||
| Cash and cash equivalents at end of period |
$ | 54,138 | $ | 44,623 | ||||
| Supplemental disclosures of cash flow info | ||||||||