Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - Toys R Us Property Co II, LLC | Financial_Report.xls |
| EX-31.1 - CERTIFICATION OF P.E.O. AND P.F.O. PURSUANT TO SECTION 302 - Toys R Us Property Co II, LLC | truprop207282012-exx311.htm |
| EX-32.1 - CERTIFICATION OF P.E.O. AND P.F.O. PURSUANT TO SECTION 906 - Toys R Us Property Co II, LLC | truprop207282012-exx321.htm |
UNITED STATES
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 quarterly period ended July 28, 2012
Commission file number 333-168515
_________________________________
Toys “R” Us Property Company II, LLC
(Exact name of registrant as specified in its charter)
_________________________________
Delaware | 37-1512919 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |
One Geoffrey Way Wayne, New Jersey | 07470 | |
(Address of principal executive offices) | (Zip code) | |
(973) 617-3500
(Registrant’s telephone number, including area code)
_________________________________
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
As of September 11, 2012, all of our outstanding membership interests were privately held by our sole member, Giraffe Junior Holdings, LLC.
TOYS “R” US PROPERTY COMPANY II, LLC
TABLE OF CONTENTS
PAGE | |
PART 1 – FINANCIAL INFORMATION
Item 1. | Financial Statements |
TOYS “R” US PROPERTY COMPANY II, LLC
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands) | July 28, 2012 | January 28, 2012 | ||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 13,067 | $ | 9,609 | ||||
Due from affiliate, net | 6,296 | 5,944 | ||||||
Prepaid expenses | 570 | 905 | ||||||
Total current assets | 19,933 | 16,458 | ||||||
Real Estate, Net: | ||||||||
Land | 169,937 | 169,937 | ||||||
Buildings, net | 163,464 | 166,181 | ||||||
Property and leasehold improvements, net | 42,626 | 46,249 | ||||||
Total real estate, net | 376,027 | 382,367 | ||||||
Straight-line rent receivable from affiliate | 64,026 | 57,800 | ||||||
Debt issuance costs | 19,248 | 21,055 | ||||||
Total Assets | $ | 479,234 | $ | 477,680 | ||||
LIABILITIES AND MEMBER’S DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accrued interest | $ | 9,766 | $ | 9,934 | ||||
Real estate taxes payable | 5,778 | 5,668 | ||||||
Deferred related party revenue | 730 | 730 | ||||||
Other current liabilities | 220 | 481 | ||||||
Total current liabilities | 16,494 | 16,813 | ||||||
Long-term debt | 717,395 | 716,849 | ||||||
Deferred third party rent liabilities | 14,368 | 14,420 | ||||||
Member's deficit | (269,023 | ) | (270,402 | ) | ||||
Total Liabilities and Member's Deficit | $ | 479,234 | $ | 477,680 | ||||
See accompanying notes to the Condensed Financial Statements.
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TOYS “R” US PROPERTY COMPANY II, LLC
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(In thousands) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | ||||||||||||
Rental revenues: | ||||||||||||||||
Base rents | $ | 26,328 | $ | 26,433 | $ | 52,990 | $ | 53,607 | ||||||||
Tenant reimbursements | 3,149 | 3,495 | 6,396 | 6,897 | ||||||||||||
Total revenues | 29,477 | 29,928 | 59,386 | 60,504 | ||||||||||||
Depreciation | 3,180 | 3,022 | 6,340 | 6,043 | ||||||||||||
Rental expense | 649 | 814 | 1,274 | 1,630 | ||||||||||||
Common area maintenance expenses | 3,149 | 3,495 | 6,396 | 6,897 | ||||||||||||
Other operating expenses | 441 | 447 | 847 | 863 | ||||||||||||
Total operating expenses | 7,419 | 7,778 | 14,857 | 15,433 | ||||||||||||
Operating earnings | 22,058 | 22,150 | 44,529 | 45,071 | ||||||||||||
Interest expense | 16,502 | 16,509 | 32,997 | 33,073 | ||||||||||||
Net earnings | $ | 5,556 | $ | 5,641 | $ | 11,532 | $ | 11,998 | ||||||||
See accompanying notes to the Condensed Financial Statements.
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TOYS “R” US PROPERTY COMPANY II, LLC
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
26 Weeks Ended | ||||||||
(In thousands) | July 28, 2012 | July 30, 2011 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net earnings | $ | 11,532 | $ | 11,998 | ||||
Adjustments to reconcile Net earnings to net cash provided by operating activities: | ||||||||
Depreciation | 6,340 | 6,043 | ||||||
Amortization of debt issuance costs | 1,807 | 1,812 | ||||||
Amortization of original issue discount | 546 | 504 | ||||||
Changes in operating assets and liabilities: | ||||||||
Due from affiliate, net | (352 | ) | (1,828 | ) | ||||
Prepaid expenses | 335 | 744 | ||||||
Straight-line rent receivable from affiliate and Deferred third party rent liabilities | (6,278 | ) | (6,329 | ) | ||||
Accrued interest, Real estate taxes payable and Other current liabilities | (319 | ) | 941 | |||||
Deferred related party revenue | — | (243 | ) | |||||
Net cash provided by operating activities | 13,611 | 13,642 | ||||||
Cash Flows from Financing Activities: | ||||||||
Distributions | (10,153 | ) | (14,024 | ) | ||||
Net cash used in financing activities | (10,153 | ) | (14,024 | ) | ||||
Cash: | ||||||||
Net increase (decrease) during period | 3,458 | (382 | ) | |||||
Cash at beginning of period | 9,609 | 10,419 | ||||||
Cash at end of period | $ | 13,067 | $ | 10,037 | ||||
See accompanying notes to the Condensed Financial Statements.
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TOYS “R” US PROPERTY COMPANY II, LLC
CONDENSED STATEMENTS OF CHANGES IN MEMBER’S DEFICIT
(Unaudited)
(In thousands) | Member's Deficit | |||
Balance, January 29, 2011 | $ | (266,010 | ) | |
Net earnings | 11,998 | |||
Distributions | (14,024 | ) | ||
Balance, July 30, 2011 | $ | (268,036 | ) | |
Balance, January 28, 2012 | $ | (270,402 | ) | |
Net earnings | 11,532 | |||
Distributions | (10,153 | ) | ||
Balance, July 28, 2012 | $ | (269,023 | ) | |
See accompanying notes to the Condensed Financial Statements.
TOYS “R” US PROPERTY COMPANY II, LLC
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of presentation
As used herein, the “Company,” “we,” “us,” or “our” means Toys “R” Us Property Company II, LLC (“TRU Propco II”), except as expressly indicated or unless the context otherwise requires. TRU Propco II was formed on July 21, 2005 as part of a legal reorganization of the businesses of Toys “R” Us, Inc. (“TRU”). TRU, through various subsidiaries, operates or licenses Toys “R” Us and Babies “R” Us stores in the United States and foreign countries and jurisdictions. We are ultimately owned by TRU through our indirect parent, Toys “R” Us – Delaware, Inc. (“Toys-Delaware”), to whom we lease or sublease substantially all of our properties and from whom we derive substantially all of our revenues and cash flows. The Company is one reportable segment.
As a result of the reorganization, the Company received, as contributions from Toys-Delaware and other affiliates, certain properties which we now lease to Toys-Delaware. As the reorganization was between entities under common control, the net assets transferred were recorded at their carrying value.
The Condensed Balance Sheets as of July 28, 2012 and January 28, 2012, the Condensed Statements of Operations for the thirteen and twenty-six weeks ended July 28, 2012 and July 30, 2011, the Condensed Statements of Cash Flows and the Condensed Statements of Changes in Member’s Deficit for the twenty-six weeks ended July 28, 2012 and July 30, 2011, have been prepared by us in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting, and in accordance with the requirements of this Quarterly Report on Form 10-Q. Our interim Condensed Financial Statements are unaudited and are subject to year-end adjustments. In the opinion of management, the financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and twenty-six weeks then ended. The Condensed Balance Sheet at January 28, 2012, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012, but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the financial statements and footnotes thereto included within our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.
2. Real estate, net
(In thousands) | July 28, 2012 | January 28, 2012 | ||||||
Land | $ | 169,937 | $ | 169,937 | ||||
Buildings | 273,285 | 273,285 | ||||||
Property and leasehold improvements | 132,173 | 132,173 | ||||||
575,395 | 575,395 | |||||||
Less: accumulated depreciation | (199,368 | ) | (193,028 | ) | ||||
Total | $ | 376,027 | $ | 382,367 | ||||
3. Long-term debt
As of July 28, 2012 and January 28, 2012, the carrying value of our debt was $717 million, respectively, with fair values of approximately $776 million and $785 million, respectively. The fair value of our long-term debt was estimated using Level 2 inputs, which represent quoted market prices of our debt instrument.
4. Member’s deficit
Giraffe Junior Holdings, LLC, an indirect wholly-owned subsidiary of TRU, is the direct owner of 100% of our limited liability company interests. We evaluate our cash balances on an ongoing basis and periodically distribute cash to our parent companies. During the twenty-six weeks ended July 28, 2012, we made cash distributions of approximately $10 million in dividends. During the twenty-six weeks ended July 30, 2011, we made cash distributions of approximately $12 million and $2 million in dividends and return of capital, respectively.
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5. Related party transactions
Rental Revenues
Our Rental revenues are derived from payments received under the Amended and Restated Master Lease Agreement (the "TRU Propco II Master Lease") we have entered into with Toys-Delaware. The TRU Propco II Master Lease provides for Toys-Delaware to reimburse us for property related costs including, among others, real estate taxes and common area maintenance charges. Some of these costs are directly paid by Toys-Delaware and are recorded as both an expense and a tenant reimbursement. During each of the thirteen weeks ended July 28, 2012 and July 30, 2011, we earned related party Base rent revenues of approximately $26 million. During each of the twenty-six weeks ended July 28, 2012 and July 30, 2011, we earned related party Base rent revenues of approximately $53 million. In addition, we recorded Tenant reimbursements of approximately $3 million under our leasing arrangements with Toys-Delaware during each of the thirteen weeks ended July 28, 2012 and July 30, 2011. During the twenty-six weeks ended July 28, 2012 and July 30, 2011, we recorded Tenant reimbursements of approximately $6 million and $7 million, respectively.
Management Service Fees
Toys-Delaware provides a majority of the centralized corporate functions, including accounting, human resources, legal, tax and treasury services to TRU, other affiliates and us under a Domestic Services Agreement (“Agreement”). The costs are based on a formula for each affiliate, as defined in the Agreement, and are recorded in Other operating expenses on the Condensed Statements of Operations. During each of the thirteen weeks ended July 28, 2012 and July 30, 2011, the amounts charged to us for these services were less than $1 million. During each of the twenty-six weeks ended July 28, 2012 and July 30, 2011, the amounts charged to us for these services were approximately $1 million.
Due from affiliate, net
As of July 28, 2012 and January 28, 2012, Due from affiliate, net of $6 million, respectively, primarily represents real estate taxes, base rents and certain property reimbursements owed to us by Toys-Delaware.
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
As used herein the “Company,” “we,” “us,” or “our” means Toys “R” Us Property Company II, LLC (“TRU Propco II”), except as expressly indicated or unless the content otherwise requires. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help facilitate an understanding of our financial condition and our historical results of operations for the periods presented. This MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 28, 2012 and Condensed Financial Statements and the accompanying notes thereto, and contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” below.
Our Business
We are a special purpose entity, owned indirectly by Toys “R” Us, Inc. (“TRU”) through Toys “R” Us – Delaware, Inc. (“Toys-Delaware”) and formed in July 2005. We own fee and ground leasehold interests in 129 properties in various retail markets throughout the United States. Under an operating company/property company structure, we lease these properties on a triple-net basis, to Toys-Delaware, the operating entity for all of TRU’s North American businesses, which operates the properties as Toys “R” Us stores, Babies “R” Us stores or side-by-side stores, or subleases them to alternative retailers. Substantially all of our revenues and cash flows are derived from payments from Toys-Delaware under the Amended and Restated Master Lease Agreement (the “TRU Propco II Master Lease”). For quarterly financial statements and other information about our master tenant, Toys-Delaware, see Exhibit 99.1 to this report.
Results of Operations
Net Earnings
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Net earnings | $ | 5,556 | $ | 5,641 | $ | (85 | ) | (1.5 | )% | $ | 11,532 | $ | 11,998 | $ | (466 | ) | (3.9 | )% | ||||||||||||
Net earnings had a nominal decrease for the thirteen weeks ended July 28, 2012, compared to the same period last year.
Net earnings decreased by $0.5 million, or 3.9%, to $11.5 million for the twenty-six weeks ended July 28, 2012, compared to $12.0 million for the twenty-six weeks ended July 30, 2011, primarily due to a decline in Base rents.
Total Revenues
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Total revenues | $ | 29,477 | $ | 29,928 | $ | (451 | ) | (1.5 | )% | $ | 59,386 | $ | 60,504 | $ | (1,118 | ) | (1.8 | )% | ||||||||||||
Total revenues decreased by $0.4 million, or 1.5%, to $29.5 million for the thirteen weeks ended July 28, 2012, compared to $29.9 million for the thirteen weeks ended July 30, 2011. The decrease was related to a decline in Tenant reimbursements.
Total revenues decreased by $1.1 million, or 1.8%, to $59.4 million for the twenty-six weeks ended July 28, 2012, compared to $60.5 million for the twenty-six weeks ended July 30, 2011. The decrease was related to a decline in Base rents and Tenant reimbursements.
Depreciation
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Depreciation | $ | 3,180 | $ | 3,022 | $ | 158 | 5.2 | % | $ | 6,340 | $ | 6,043 | $ | 297 | 4.9 | % | ||||||||||||||
Depreciation had a nominal increase for the thirteen and twenty-six weeks ended July 28, 2012, compared to the same periods last year.
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Rental Expense
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Rental expense | $ | 649 | $ | 814 | $ | (165 | ) | (20.3 | )% | $ | 1,274 | $ | 1,630 | $ | (356 | ) | (21.8 | )% | ||||||||||||
Rental expense had a nominal decrease for the thirteen weeks ended July 28, 2012, compared to the same period last year.
Rental expense decreased by $0.3 million, or 21.8%, to $1.3 million for the twenty-six weeks ended July 28, 2012, compared to $1.6 million for the twenty-six weeks ended July 30, 2011. The decrease was primarily due to an adjustment to the non-cash straight-line third party rent amounts related to a change in estimated lease terms.
Common Area Maintenance Expenses
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Common area maintenance expenses | $ | 3,149 | $ | 3,495 | $ | (346 | ) | (9.9 | )% | $ | 6,396 | $ | 6,897 | $ | (501 | ) | (7.3 | )% | ||||||||||||
Common area maintenance expenses decreased by $0.4 million, or 9.9%, to $3.1 million for the thirteen weeks ended July 28, 2012, compared to $3.5 million for the thirteen weeks ended July 30, 2011, and decreased by $0.5 million, or 7.3%, to $6.4 million for the twenty-six weeks ended July 28, 2012, compared to $6.9 million for the twenty-six weeks ended July 30, 2011. These expenses are fully reimbursed by our tenant under the TRU Propco II Master Lease, and are reflected in Base rents, which is a component of Total revenues.
Other Operating Expenses
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Other operating expenses | $ | 441 | $ | 447 | $ | (6 | ) | (1.3 | )% | $ | 847 | $ | 863 | $ | (16 | ) | (1.9 | )% | ||||||||||||
Other operating expenses had a nominal decrease for the thirteen and twenty-six weeks ended July 28, 2012, compared to the same periods last year.
Interest Expense
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||||||||||
($ In thousands) | July 28, 2012 | July 30, 2011 | $ Change | % Change | July 28, 2012 | July 30, 2011 | $ Change | % Change | ||||||||||||||||||||||
Interest expense | $ | 16,502 | $ | 16,509 | $ | (7 | ) | — | % | $ | 32,997 | $ | 33,073 | $ | (76 | ) | (0.2 | )% | ||||||||||||
Interest expense had a nominal decrease for the thirteen and twenty-six weeks ended July 28, 2012, compared to the same periods last year.
Liquidity and Capital Resources
Overview
As of July 28, 2012, we were in compliance with all of our covenants related to the 8.50% senior secured notes due fiscal 2017 (the “Secured Notes”).
Our largest source of operating cash flows is cash collections from our lessee, Toys-Delaware. In general, we utilize our cash to service debt, pay normal operating costs and at the discretion of our sole member, based on the recommendation of our management, and as permitted by the indenture governing the Secured Notes, declare and pay dividends or make distributions.
Additionally, the indenture governing the Secured Notes allows us to re-invest net cash proceeds from the sale of properties within 720 days subsequent to the receipt of the proceeds. When the aggregate amount of net cash proceeds from the sale of properties exceeds $10.0 million and is not reinvested, in accordance with the indenture governing the Secured Notes (“Excess Proceeds”), we are required to make an offer to all holders of the Secured Notes within 30 days to purchase Secured Notes with
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Excess Proceeds. As of July 28, 2012, we have not recognized sales proceeds in excess of $10.0 million.
We have been able to meet our operating cash needs principally by using cash on hand and cash flows from operations and we believe that cash generated from operations along with existing cash will be sufficient to fund expected cash flow requirements for the next twelve months.
Cash Flows
26 Weeks Ended | ||||||||||||
(In thousands) | July 28, 2012 | July 30, 2011 | Change | |||||||||
Net cash provided by operating activities | $ | 13,611 | $ | 13,642 | $ | (31 | ) | |||||
Net cash used in financing activities | (10,153 | ) | (14,024 | ) | 3,871 | |||||||
Net increase (decrease) during period in cash | $ | 3,458 | $ | (382 | ) | $ | 3,840 | |||||
Cash Flows Provided by Operating Activities
During the twenty-six weeks ended July 28, 2012, net cash provided by operating activities remained consistent with the same period last year.
Cash Flows Used in Financing Activities
During the twenty-six weeks ended July 28, 2012, net cash used in financing activities was $10.2 million compared to $14.0 million for the same period last year. The decrease in net cash used in financing activities was due to a $3.8 million decrease in Distributions.
Debt
Refer to the Annual Report on Form 10-K and Note 3 to the Condensed Financial Statements entitled “Long-term debt” for further details regarding our debt.
Contractual Obligations and Commitments
Our contractual obligations consist mainly of payments related to Long-term debt and related interest and operating leases related to real estate used in the operation of our business. Refer to the “Contractual Obligations and Commitments” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012, for details on our contractual obligations and commitments.
Critical Accounting Policies
Our Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods. We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and could have a material impact on our Condensed Financial Statements. Refer to the Annual Report on Form 10-K for the fiscal year ended January 28, 2012, for a discussion of critical accounting policies.
Recently Adopted Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). The amendments in this ASU generally represent clarification of Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards (“IFRS”). As of January 29, 2012, the Company has adopted ASU 2011-04 and has applied this guidance prospectively. The adoption of ASU 2011-04 did not have an impact on our Condensed Financial Statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q, the other reports and documents that we have filed or may in the future file with the
Securities and Exchange Commission and other publicly released materials and statements, both oral and written, that we have
made or may make in the future, may contain “forward looking” statements within the meaning of Section 27A of the
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Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. All statements herein or therein that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. We generally identify these statements by words or phrases, such as “anticipate,” “estimate,” “plan,” “project,” “expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “outlook,” and similar words or phrases. These statements discuss, among other things, our strategy, future financial or operational performance, anticipated cost savings, results of restructurings, cash flows generated from operating activities, anticipated developments, future financings, targets and future occurrences and trends.
These statements are subject to risks, uncertainties, and other factors, including, among others, competition in the retail industry, seasonality of Toys-Delaware’s business, changes in consumer preferences and consumer spending patterns, general economic conditions in the United States and other countries in which Toys-Delaware conducts its business, Toys-Delaware’s ability to implement its strategy, our, Toys-Delaware’s and TRU’s respective substantial levels of indebtedness and related debt-service obligations and the covenants in their and our respective debt agreements, availability of adequate financing to us, Toys-Delaware and TRU, Toys-Delaware’s dependence on key vendors of merchandise, international events affecting the delivery of toys and other products to Toys-Delaware’s stores, and such risks, uncertainties and factors set forth under Item 1A entitled “RISK FACTORS” of our Annual Report on Form 10-K filed on April 27, 2012 and in our reports and documents filed with the Securities and Exchange Commission (which reports and documents should be read in conjunction with this Quarterly Report on Form 10-Q). We believe that all forward-looking statements are based on reasonable assumptions when made; however, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that, accordingly, one should not place undue reliance on these statements. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update these statements in light of subsequent events or developments, unless required by the Securities and Exchange Commission's rules and regulations. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in any forward-looking statement.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
There has been no material change in our exposure to market risk during the twenty-six weeks ended July 28, 2012. For a discussion of our exposure to market risk, refer to Item 7A entitled “QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK” in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.
Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
Disclosure controls and procedures are the controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
We have evaluated, under the supervision and with the participation of our management, including our principal executive and principal financial officer, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report.
Based on that evaluation, our principal executive and principal financial officer has concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the second quarter of fiscal 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. | Legal Proceedings |
Although we do not currently have material legal proceedings pending against us, in the future, we may be involved in various lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty.
Item 1A. | Risk Factors |
As of the date of this report, there have been no material changes to the information related to Item 1A entitled “RISK FACTORS” disclosed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
Item 3. | Defaults Upon Senior Securities |
None.
Item 4. | Mine Safety Disclosures |
None
Item 5. | Other Information |
None.
Item 6. | Exhibits |
See the Index to Exhibits immediately following the signature page hereto, which Index to Exhibits is incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TOYS “R” US PROPERTY COMPANY II, LLC | ||
(Registrant) | ||
Date: September 11, 2012 | /s/ F. Clay Creasey, Jr. | |
F. Clay Creasey, Jr. | ||
President and Chief Financial Officer | ||
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INDEX TO EXHIBITS
The following is a list of all exhibits filed or furnished as part of this report:
Exhibit No. | Description | |
3.1 | Amended and Restated Certificate of Formation of Toys “R” Us Property Company II, LLC (filed as Exhibit 3.1 to Registrant’s Form S-4 registration statement, filed on August 4, 2010 and incorporated herein by reference). | |
3.2 | Second Amended and Restated Limited Liability Company Agreement of Toys “R” Us Property Company II, LLC (filed as Exhibit 3.2 to the Registrant’s Form S-4 registration statement, filed on August 4, 2010 and incorporated herein by reference). | |
31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a – 14(a) and Rule 15d – 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
99.1 | Toys “R” Us – Delaware, Inc. financial statements for the thirteen and twenty-six weeks ended July 28, 2012 (filed as Exhibit 99.1 to the Form 8-K filed by Toys “R” Us, Inc. on September 11, 2012 and incorporated herein by reference). | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
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