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DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
For the Year Ended December 31,
(in thousands, except per unit amounts)
| | Year Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | December 2002 | December 2001 | December 2000 | |||||||||||
| RENTAL OPERATIONS: | ||||||||||||||
| Revenues: | ||||||||||||||
| Rental income | $ | 682,432 | $ | 681,461 | $ | 691,397 | ||||||||
| Equity in earnings of unconsolidated companies | 27,180 | 31,391 | 14,556 | |||||||||||
| 709,612 | 712,852 | $ | 705,953 | |||||||||||
| Operating Expenses: | ||||||||||||||
| Rental expenses | 126,820 | 120,609 | 117,682 | |||||||||||
| Real estate taxes | 73,292 | 70,312 | 70,786 | |||||||||||
| Interest expense | 116,570 | 111,419 | 131,048 | |||||||||||
| Depreciation and amortization | 174,250 | 157,116 | 161,259 | |||||||||||
| 490,932 | 459,456 | 480,775 | ||||||||||||
| Earnings from rental operations | 218,680 | 253,396 | 225,178 | |||||||||||
| SERVICE OPERATIONS: | ||||||||||||||
| Revenues: | ||||||||||||||
| General contractor gross revenue | 194,439 | 264,455 | 292,661 | |||||||||||
| General contractor costs | (172,559 | ) | (229,845 | ) | (253,763 | ) | ||||||||
| Net general contractor revenue | 21,880 | 34,610 | 38,898 | |||||||||||
| Property management, maintenance, & leasing fees | 14,301 | 22,824 | 25,477 | |||||||||||
| Construction management and development activity income | 29,428 | 19,142 | 16,965 | |||||||||||
| Other income | 2,011 | 3,883 | 1,459 | |||||||||||
| Total revenue | 67,620 | 80,459 | 82,799 | |||||||||||
| Operating expenses | 38,100 | 45,344 | 50,039 | |||||||||||
| Earnings from service operations | 29,520 | 35,115 | 32,760 | |||||||||||
| General and administrative expense | (24,735 | ) | (15,553 | ) | (21,128 | ) | ||||||||
| Operating income | 223,465 | 272,958 | 236,810 | |||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||
| Interest income | 3,849 | 5,091 | 6,836 | |||||||||||
| Earnings from sale of land and depreciable property dispositions, net of impairment adjustment | 2,340 | 45,708 | 60,692 | |||||||||||
| Other revenue (expense) | 182 | (2,582 | ) | (963 | ) | |||||||||
| Other minority interest in earnings of subsidiaries | (1,093 | ) | (2,411 | ) | (2,145 | ) | ||||||||
| Income from continuing operations | 228,743 | 318,764 | 301,230 | |||||||||||
| Discontinued operations: | ||||||||||||||
| Net income from discontinued operations | 3,633 | 4,516 | 1,188 | |||||||||||
| Loss on sale of discontinued operations, net of impairment adjustments | (17 | ) | — | — | ||||||||||
| Income from discontinued operations | 3,616 | 4,516 | 1,188 | |||||||||||
| Net income | 232,359 | 323,280 | 302,418 | |||||||||||
| Dividends on preferred units | (52,613 | ) | (60,850 | ) | (57,389 | ) | ||||||||
| Net income available for common unitholders | $ | 179,746 | $ | 262,430 | $ | 245,029 | ||||||||
| Basic net income per common unit: | ||||||||||||||
| Continuing operations | $ | 1.18 | $ | 1.74 | $ | 1.67 | ||||||||
| Discontinued operations | 0.02 | 0.03 | 0.01 | |||||||||||
| Total | $ | 1.20 | $ | 1.77 | $ | 1.68 | ||||||||
| Diluted net income per common unit: | ||||||||||||||
| Continuing operations | $ | 1.17 | $ | 1.72 | $ | 1.65 | ||||||||
| Discontinued operations | 0.02 | 0.03 | 0.01 | |||||||||||
| Total | $ | 1.19 | $ | 1.75 | $ | 1.66 | ||||||||
| Weighted average number of common units outstanding | 149,423 | 147,961 | 145,906 | |||||||||||
| Weighted average number of common and dilutive potential common units | 150,839 | 151,710 | 147,441 | |||||||||||
See accompanying Notes to Consolidated Financial Statements.
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DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
(14) Discontinued Operations
During the period January 1, 2003 through June 30, 2003, the Partnership sold or held for sale four properties owned by the Partnership and not classified as assets held for sale as of December 31, 2002. The results of operations from such properties have been reclassified as income from discontinued operations for the years ended December 31, 2002, 2001, and 2000 in the consolidated statements of operations. The effect of these reclassifications resulted in a decrease to income from discontinued operations for the year ended December 31, 2002 of $2.3 million, which included a $2.7 million reclass of an impairment charge. For 2001 and 2000, these reclassifications resulted in an increase of $924,000 and $26,000, respectively.
In addition, the reclassifications of the operations of these four properties to discontinued operations result in the following restated segment disclosures:
| | 2002 | 2001 | 2000 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | |||||||||||||
| Rental Operations: | |||||||||||||
| Office | $ | 397,975 | $ | 378,955 | $ | 331,885 | |||||||
| Industrial | 274,633 | 284,517 | 327,283 | ||||||||||
| Retail | 6,933 | 18,213 | 28,467 | ||||||||||
| Service Operations | 67,620 | 80,459 | 82,799 | ||||||||||
| Total Segment Revenues | 747,161 | 762,144 | 770,434 | ||||||||||
| Non-Segment Revenue | 30,071 | 31,167 | 18,318 | ||||||||||
| Consolidated Revenue from continuing operations | 777,232 | 793,311 | 788,752 | ||||||||||
| Discontinued Operations | 9,405 | 10,497 | 5,873 | ||||||||||
| Consolidated Revenue | $ | 786,637 | $ | 803,808 | $ | 794,625 | |||||||
| Funds From Operations | |||||||||||||
| Rental Operations: | |||||||||||||
| Office | $ | 265,745 | $ | 255,128 | $ | 225,252 | |||||||
| Industrial | 211,097 | 221,691 | 256,010 | ||||||||||
| Retail | 5,990 | 15,036 | 23,008 | ||||||||||
| Services Operations | 29,520 | 35,115 | 32,760 | ||||||||||
| Total Segment FFO | 512,352 | 526,970 | 537,030 | ||||||||||
| Non-Segment FFO: | |||||||||||||
| Interest expense | (116,570 | ) | (111,419) | (131,048 | ) | ||||||||
| Interest income | 3,849 | 5,091 | 6,836 | ||||||||||
| General and administrative expense | (24,735 | ) | (15,553) | (21,128 | ) | ||||||||
| Gain on land sales | 4,478 | 5,080 | 9,165 | ||||||||||
| Other expenses | (330 | ) | (3,899) | (2,826 | ) | ||||||||
| Minority interest in earnings of subsidiaries | (1,093 | ) | (2,411) | (2,145 | ) | ||||||||
| Joint Venture FFO | 44,837 | 45,570 | 24,182 | ||||||||||
| Dividends on preferred units | (52,613 | ) | (60,850) | (57,389 | ) | ||||||||
| Discontinued operations | 6,279 | 7,114 | 2,452 | ||||||||||
| Consolidated FFO | 376,454 | 395,693 | 365,129 | ||||||||||
| Depreciation and amortization on continuing operations | (174,250 | ) | (157,116) | (161,259 | ) | ||||||||
| Depreciation and amortization on discontinued operations | (1,371 | ) | (2,598) | (1,264 | ) | ||||||||
| Share of joint venture adjustments | (17,657 | ) | (14,177) | (9,104 | ) | ||||||||
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| Earnings (loss) from depreciated property sales on continuing operations | (2,138 | ) | 40,628 | 51,527 | |||||||||
| Earnings (loss) from depreciated property sales on discontinued operations | (1,292 | ) | — | — | |||||||||
| Net income available for common shareholders | $ | 179,746 | $ | 262,430 | $ | 245,029 | |||||||
| Assets | |||||||||||||
| Rental Operations | |||||||||||||
| Office | $ | 2,677,427 | $ | 2,625,015 | |||||||||
| Industrial | 2,144,686 | 2,184,234 | |||||||||||
| Retail | 71,072 | 64,946 | |||||||||||
| Service Operations | 91,399 | 99,554 | |||||||||||
| Total Segment Assets | 4,984,584 | 4,973,749 | |||||||||||
| Non-Segment Assets | 362,471 | 356,497 | |||||||||||
| Consolidated Assets | $ | 5,347,055 | $ | 5,330,246 | |||||||||
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