Securities Exchange Act of 1934 -- Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report:
August 5, 2003
CBL & ASSOCIATES PROPERTIES, INC.
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
---------------------- --------------------- ------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
2030 Hamilton Place Boulevard, Chattanooga, TN 37421
-----------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
-----------------------------------------------------------------------------
(423) 855-0001
1
ITEM 5. Other Events
On May 1, 2003, CBL & Associates Properties, Inc. (the "Company") filed a
Registration Statement on Form S-3, as amended on May 23, 2003 and June 10, 2003
(the "Registration Statement") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, which included a Prospectus relating to
the offer and sale from time to time pursuant to Rule 415 under the Securities
Act of one or more of the following securities for an aggregate initial offering
price not to exceed $562,000,000 on terms to be determined at the time or times
of offering: (i) shares of the Company's preferred stock, par value of $.01 per
share (the "Preferred Stock"), (ii) shares of the Company's common stock, par
value of $.01 per share (the "Common Stock"), (iii) warrants to purchase shares
of the Company's Common Stock, and (iv) depositary shares representing
fractional interests in the Common Stock or Preferred Stock.
The Registration Statement incorporates by reference the Company's Annual
Report on Form 10-K for the year ended December 31, 2002 (the "Form 10-K"),
which contains disclosures of certain non-GAAP financial measures.
To comply with Regulation G, promulgated under the Securities Exchange Act
of 1934, as amended, and because the Registration Statement was filed after
March 28, 2003, following which, for purposes of Regulation G, certain
disclosures of non-GAAP financial measures are required, the Company is filing
this Form 8-K to provide the disclosure required by Regulation G as it relates
to the non-GAAP financial measures included in the Form 10-K.
RECONCILIATION OF NET INCOME AVAIABLE TO COMMON SHAREHOLDERS TO FUNDS
FROM OPERATIONS
Funds from operations ("FFO") is a widely used measure of the operating
performance of real estate companies that supplements net income determined in
accordance with GAAP. The Company computes FFO in accordance with the National
Association of Real Estate Investment Trusts' definition of FFO, which is net
income (computed in accordance with GAAP) excluding gains or losses on sales of
operating properties, plus depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. The Company believes that
FFO provides an additional indicator of the operating performance of the
Company's properties without giving effect to real estate depreciation and
amortization, which assumes the value of real estate assets declines predictably
over time. Since values of well-maintained real estate assets have historically
risen or fallen with market conditions, the Company believes that FFO provides
investors with a better understanding of the Company's operating performance.
The following is a reconciliation of net income available to common
shareholders determined in accordance with GAAP to FFO, which is disclosed in
the section titled Selected Financial Data in the Form 10-K.
Year Ended December 31,
--------------------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------ -------------
Net income available to common shareholders $73,987 $54,440 $59,254 $48,127 $37,265
ADD:
Depreciation and amortization from consolidated properties 94,432 83,937 58,330 52,037 42,355
Depreciation and amortization from unconsolidated affiliates 4,490 3,765 1,511 1,619 1,427
Depreciation from discontinued operations 527 1,006 1,186 675 651
Minority interest in earnings of operating partnership 64,251 49,643 28,507 23,264 16,258
Extraordinary loss on extinguishment of debt 3,930 13,558 367 - 799
LESS:
Minority investors' share of depreciation and amortization (1,348) (1,096) (981) (920) (875)
Gain on disposal of discontinued operations (372) - - - -
Depreciation and amortization of non-real estate assets (493) (603) (151) (172) (205)
Gain on sales of real estate assets (2,804) (10,649) (15,989) (8,357) (4,183)
------------------------------------------------------ -------------
Total funds from operations $236,600 $194,001 $132,034 $116,273 $93,492
====================================================== =============
2
Beginning January 1, 2003, the Company revised its method of computing FFO
to comply with the National Association of Real Estate Investment Trust's
definition of FFO in accordance with the provisions of Regulation G. As a
result, the Company began including gains on sales of outparcels in FFO.
Additionally, as a result of a new accounting pronouncement that was effective
on January 1, 2003, loss on extinguishment of debt is no longer classified as an
extraordinary item. The following is a reconciliation of FFO previously reported
in the Form 10-K to what FFO would have been if computed in accordance with the
Company's current definition of FFO:
Year Ended December 31,
----------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------
Total funds from operations, as reported $236,600 $194,001 $132,034 $116,273 $93,492
Loss on extinguishment of debt (3,930) (13,558) (367) -- (799)
Gains on sales of outparcels 2,804 2,244 5,465 9,469 4,030
Total funds from operations, as revised ---------- ---------- ---------- ---------- ---------
$235,474 $182,287 $137,132 $125,742 $96,723
========== ========== ========== ========== =========
Computation of FFO Applicable to the Company
Year Ended December 31,
----------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------
Weighted average shares - earnings per share 28,690 25,358 24,881 24,647 24,079
Weighted average operating partnership units 24,873 23,426 11,968 11,920 10,558
----------------------------------------------------------------------
Weighted average shares - FFO per share 53,563 48,784 36,849 36,567 34,637
======================================================================
Ratio of weighted average shares
- earnings per share to weighted
average shares - FFO per share 53.6% 52.0% 67.5% 67.4% 69.5%
----------------------------------------------------------------------
FFO Applicable to the Company, as reported(1) $ 126,730 $ 100,842 $ 89,151 $ 78,370 $ 64,994
======================================================================
FFO Applicable to the Company, as revised $ 126,127 $ 94,961 $ 92,594 $ 84,753 $ 67,240
======================================================================
(1) The amount of FFO applicable to the Company differs from the
amounts reported in the section titled Selected Financial Data in the
Form 10-K due to rounding. The amounts reported in Selected Financial
Data were computed as the sum of the amounts reported in the Company's
earnings releases for each quarter during the applicable period. The
amounts above are computed based on the applicable annual amounts.
RECONCILIATION OF CONSOLIDATED DEBT TO THE COMPANY'S SHARE OF CONSOLIDATED
AND UNCONSOLIDATED DEBT
The Company presents its total share of consolidated and unconsolidated
debt because the Company believes that this amount provides investors with a
clearer understanding of the Company's total debt obligations. The following is
a reconciliation of consolidated debt to the Company's share of consolidated and
unconsolidated debt disclosed under Liquidity and Capital Resources in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section of the Form 10-K:
3
(Dollars in thousands)
December 31, 2002
Fixed Variable
Rate Rate Total
---------------------- ------------------ -------------------
Consolidated debt $1,867,915 $534,164 $2,402,079
Minority investors' share of consolidated debt (20,127) (1,796) (21,923)
Company's share of unconsolidated affiliates' debt 38,269 28,229 66,498
------------------------------------------------------------------
Company's share of consolidated and unconsolidated debt $1,886,057 $560,597 $2,446,654
==================================================================
Weighted average interest rate 7.18% 3.39% 6.31%
December 31, 2001
Fixed Variable
Rate Rate Total
---------------------- ------------------ -------------------
Consolidated debt $1,463,351 $852,604 $2,315,955
Minority investors' share of consolidated debt (23,401) (1,217) (24,618)
Company's share of unconsolidated affiliates' debt 70,042 31,225 101,267
------------------------------------------------------------------
Company's share of consolidated and unconsolidated debt $1,509,992 $882,612 $2,392,604
==================================================================
Weighted average interest rate 7.54% 3.38% 6.01%
RECONCILIATION OF CONSOLIDATED REVENUES TO THE COMPANY'S SHARE OF TOTAL REVENUES
In various sections of Part I of the Form 10-K, the Company discusses
various aspects related to its shopping center properties in relation to the
Company's total revenues. The Company's total revenues are determined as the sum
of consolidated revenues plus the Company's proportionate share of revenues from
unconsolidated affiliates less minority investors' share of revenues in
consolidated properties. The following is a reconciliation of consolidated
revenues to the Company's total revenues.
Reconciliation of Company's Share of Total Revenues
For the Year Ended December 31, 2002
Consolidated total revenues $599,094
Minority investors' share of consolidated total revenues (18,788)
Company's share of unconsolidated affiliates' total revenues 31,016
Other non property revenues (503)
-------------------
Company's share of consolidated and unconsolidated total revenues $610,819
===================
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.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
-------------------------------------------
John N. Foy
Vice Chairman,
Chief Financial Officer and Treasurer
(Authorized Officer of the Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: August 5, 2003