The restatement results from the correction of two accounting errors. First, the number of weighted average shares outstanding, which is used in the calculation of Funds From Operations (ìFFOî) per share and net income per share, was incorrectly reported. The revised weighted average number of shares, which is calculated assuming the full conversion of OP Units and debentures, was 43.2 million shares for the quarter ended September 30, 1997 and 39.8 million shares for the nine months ended September 30, 1997. Second, construction period interest of $1.4 million on redevelopment projects which should have been capitalized was expensed. This correction had the impact of reducing interest expense to $16.2 million for the quarter ended September 30, 1997 and to $47.4 million for the nine months ended September 30, 1997.
As a result of the revisions, FFO per share, assuming full conversion of debentures, was $0.54 for the quarter ended September 30, 1997 and $1.58 for the nine months ended September 30, 1997, compared to previously reported FFO per share of $0.55 and $1.60, respectively. The restated FFO per share for the third quarter of 1997 reflects a 10% increase compared to the same period in 1996. The restated FFO per share for the nine months ended September 30, 1997 reflects an increase of 12% over the same period in 1996.
After giving effect to the restatement, net income for the quarter was $1.9 million, compared to the previously reported $0.9 million, and net income for the nine months ended September 30, 1997 was $14.8 million compared to the previously reported $13.8 million. Net income per share was $0.07, compared to the previously reported $0.03 for the quarter ended September 30, 1997, and net income per share as restated was $0.57 for the nine months ended September 30, 1997, compared to $0.51 as previously reported.
The Macerich Company is a fully integrated, self-administered and self-managed Real Estate Investment Trust which focuses on the acquisition and redevelopment of regional malls throughout the United States. The company is the sole general partner of, and holds a 68 percent ownership interest in, The Macerich Partnership, L.P. Macerich owns interest in 26 malls and three community centers totaling 21.6 million square feet. In the past twelve months, the company has acquired interests in 9 regional centers with a combined purchase price of approximately $525 million. Additional information can be obtained by accessing the companyís Web site at www.macerich.com.
| THE MACERICH COMPANY FINANCIAL
HIGHLIGHTS as revised (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |
||||
| Results of Operations: | ||||
| for the three months ended September 30 (UNAUDITED) |
for the nine months ended September 30 (UNAUDITED) |
|||
|
As Restated |
As Reported |
As Restated |
As Reported |
|
| Total Revenues |
$57,032 |
$57,032 |
$159,685 |
$159,685 |
| Shopping Center Expenses |
$19,896 |
$19,896 |
$51,830 |
$51,830 |
| Depreciation and amortization |
$10,134 |
$10,134 |
$29,815 |
$29,815 |
| General, administrative and other expenses |
$910 |
$910 |
$2,099 |
$2,099 |
| Interest expense |
$16,239 |
$17,654 |
$47,402 |
$48,817 |
| Gain on sale of land |
$1,620 |
$1,620 |
$1,620 |
$,1620 |
| Pro rata income (loss) of unconsolidated entities (c) |
-$8,681 |
-$8,681 |
-$7,608 |
-$7,608 |
| Income before minority interest & extraordinary items |
$2,792 |
$1,377 |
$22,551 |
$21,136 |
| Income allocated to minority interests |
$871 |
$421 |
$7,195 |
$,6745 |
| Extraordinary loss on early extinguishment of debt |
$51 |
$51 |
$563 |
$563 |
| Net income |
$1,870 |
$905 |
$14,793 |
$13,828 |
| Average # of shares outstanding during the period |
25,956 |
27,279 |
25,886 |
27,228 |
| Average shares outstanding, assuming full conversion of OP units and debentures (d) |
43,185 |
39,384 |
39,769 |
38,381 |
| Net income per share |
$0.07 |
$0.03 |
$0.57 |
$0.51 |
| Dividend declared per share |
$0.44 |
$0.44 |
$1.32 |
$1.32 |
| Funds from operations "FFO" (a) (b) |
$23,242 |
$21,827 |
$62,791 |
$61,376 |
| Funds from operations per share |
$0.54 |
$0.55 |
$1.58 |
$1.60 |
(a) Funds from Operations ("FFO") is defined as: "net income (computed in accordance with GAAP) excluding gains or losses from debt restructuring and sales of property, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument cost) and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis.
(b) Assumes full conversion of debentures.
(c) Includes a write-down of the historical carrying value of the Company's joint venture interest on North Valley Plaza of $9,138 in the quarter ended September 30, 1997.
(d) Convertible debentures totaling $161,115, were sold in June and July , 1997 and are convertible into common stock at a price of $31.125. In addition the Company has operating partnership units ("OP units"). Each OP unit , subject to certain restrictions, can be converted into a share of Company stock. Conversion of the OP units and the debentures has been assumed for purposes of calculating FFO and weighted average number of shares outstanding.a
Sept 30, 1997
Dec. 31,1996
(UNAUDITED)
$12,820
$15,643
$1,286,044
$1,108,668
$1,366,282
$1,187,753
$827,821
$789,239
$161,115
$0
$90.4%
$3.7%
$47.1%
Summarized Balance Sheet Information
Cash and cash equivalents
Investment in real estate, net
Total Assets
Mortgage and notes payable
Convertible debentures
Additional financial data as of September
30, 1997
Occupancy of centers (e)
Year to date increase in same center sales (e) (f)
Debt as a percentage of total market capitalization (g)
(e) excludes redevelopment properties- Huntington Center and Pacific View Mall- acquired in December , 1996.
(f) includes mall and freestanding stores
(g) includes 161.1 million of convertible debentures, plus joint venture debt at pro rata. The calculation is based on the closing stock price on September 30, 1997 of $29.00
As Restated As Reported As Restated As Reported $1,870
$905
$14,793
$13,828
$871
$421
$7,195
$6,745
$51
$51
$563
$563
-$1,620
-$1,620
-$1,620
-$1,620
$9,138
$9,138
$9,072
$9,072
$10,134
$10,134
$29,815
$29,815
$578
$578
$1,690
$1,690
$2928
$2,928
$3,048
$3,048
-$708
-$708
-$1,765
-$1,765
$23,242
$21,827
$62,791
$61,376
43,185
39,384
39,769
38,381
THE MACERICH COMPANY FINANCIAL
HIGHLIGHTS
As Revised (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)Reconciliation of Net Income to FFO:
for the three months ended
September 30
(UNAUDITED)for the three months ended
September 30
(UNAUDITED)
1997
1997
1997
1997
Net income
Adjustments to reconcile net income to FFO:
Minority interest
Loss on early extinguishment of debt
( Gain) on sale of assets from wholly owned centers
( Gain) loss on sale or write-down of assets from joint ventures
(pro rata)
Depreciation and amortization on wholly owned centers
Depreciation and amortization on joint ventures and from the
management companies (pro rata)
Interest expense on the debentures (d)
Less: depreciation on personal property and
amortization of loan costs and interest rate caps
Total FFO
Weighted average shares outstanding (d)