Cogdell Spencer Inc. | |||||
Reconciliation of Net Income (Loss) to Funds from Operations Modified (FFOM) (1) | |||||
(In thousands, except per share and unit amounts) | |||||
(unaudited) | |||||
For the Three Months Ended | |||||
March 31, 2011 | March 31, 2010 | ||||
Net income (loss) | $ (1,876) | $ 4,195 | |||
Add: | |||||
Real estate related depreciation and amortization: | |||||
Wholly-owned and consolidated properties | 7,277 | 7,194 | |||
Unconsolidated real estate partnerships | 2 | 3 | |||
Less: | |||||
Noncontrolling interests in real estate partnerships, | |||||
before real estate related depreciation and amortization | (498) | (616) | |||
Dividends on preferred stock | (1,562) | - | |||
Funds from Operations (FFO) (1) | 3,343 | 10,776 | |||
Amortization of intangibles related to purchase accounting, net of income tax benefit | 231 | 373 | |||
Funds from Operations Modified (FFOM) (1) | $ 3,574 | $ 11,149 | |||
FFO per share and unit - basic and diluted | $ 0.06 | $ 0.21 | |||
FFOM per share and unit - basic and diluted | $ 0.06 | $ 0.22 | |||
Weighted average shares and units outstanding - basic and diluted | 58,438 | 50,559 | |||
(1) FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. We present FFO and FFOM because we consider them important supplemental measures of operational performance. We believe FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. We believe that FFOM allows securities analysts, investors and other interested parties to evaluate current period results to results prior to the acquisition of MEA Holdings, Inc. FFO and FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, they provide performance measures that, when compared year over year, reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO and FFOM utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. We adjust the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships before real estate related depreciation and amortization and deduct dividends on preferred stock. Further, FFO and FFOM do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and FFOM should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our performance, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. | |||||