Exhibit 99.1
Item 6. Selected Financial Data
The following table sets forth selected financial data on a consolidated historical basis for the Company. This information should be read in conjunction with the discussions set forth in Item 7—”Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Certain prior year amounts have been reclassified to conform to the 2005 presentation.
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| For the Years Ended December 31, |
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| 2005 |
| 2004 |
| 2003 |
| 2002 |
| 2001 |
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| (In thousands, except per share data and ratios) |
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OPERATING DATA: |
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Interest income |
| $ | 406,668 |
| $ | 351,972 |
| $ | 302,915 |
| $ | 254,746 |
| $ | 254,119 |
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Operating lease income |
| 305,120 |
| 278,262 |
| 223,721 |
| 200,792 |
| 146,598 |
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Other income |
| 81,440 |
| 56,063 |
| 38,153 |
| 28,878 |
| 30,921 |
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Total revenue |
| 793,228 |
| 686,297 |
| 564,789 |
| 484,416 |
| 431,638 |
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Interest expense |
| 313,053 |
| 232,728 |
| 194,662 |
| 185,012 |
| 169,585 |
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Operating costs—corporate tenant lease assets |
| 22,639 |
| 21,645 |
| 10,939 |
| 6,397 |
| 4,929 |
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Depreciation and amortization |
| 71,512 |
| 62,904 |
| 49,070 |
| 41,025 |
| 29,093 |
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General and administrative |
| 61,229 |
| 47,912 |
| 38,153 |
| 30,449 |
| 24,151 |
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General and administrative—stock based compensation |
| 2,758 |
| 109,676 |
| 3,633 |
| 17,998 |
| 3,574 |
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Provision for loan losses |
| 2,250 |
| 9,000 |
| 7,500 |
| 8,250 |
| 7,000 |
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Loss on early extinguishment of debt |
| 46,004 |
| 13,091 |
| — |
| 12,166 |
| 1,620 |
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Total costs and expenses |
| 519,445 |
| 496,956 |
| 303,957 |
| 301,297 |
| 239,952 |
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Income before equity in earnings from joint ventures, minority interest and other items |
| 273,783 |
| 189,341 |
| 260,832 |
| 183,119 |
| 191,686 |
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Equity in earnings (loss) from joint ventures |
| 3,016 |
| 2,909 |
| (4,284 | ) | 1,222 |
| 7,361 |
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Minority interest in consolidated entities |
| (980 | ) | (716 | ) | (249 | ) | (162 | ) | (218 | ) | |||||
Cumulative effect of change in accounting principle(1) |
| — |
| — |
| — |
| — |
| (282 | ) | |||||
Income from continuing operations |
| 275,819 |
| 191,534 |
| 256,299 |
| 184,179 |
| 198,547 |
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Income from discontinued operations |
| 5,740 |
| 25,538 |
| 30,691 |
| 30,374 |
| 30,220 |
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Gain from discontinued operations |
| 6,354 |
| 43,375 |
| 5,167 |
| 717 |
| 1,145 |
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Net income |
| $ | 287,913 |
| $ | 260,447 |
| $ | 292,157 |
| $ | 215,270 |
| $ | 229,912 |
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Preferred dividend requirements |
| (42,320 | ) | (51,340 | ) | (36,908 | ) | (36,908 | ) | (36,908 | ) | |||||
Net income allocable to common shareholders and HPU holders(2) |
| $ | 245,593 |
| $ | 209,107 |
| $ | 255,249 |
| $ | 178,362 |
| $ | 193,004 |
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Basic earnings per common share(3) |
| $ | 2.13 |
| $ | 1.87 |
| $ | 2.52 |
| $ | 1.98 |
| $ | 2.24 |
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Diluted earnings per common share(3)(4) |
| $ | 2.11 |
| $ | 1.83 |
| $ | 2.43 |
| $ | 1.93 |
| $ | 2.19 |
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Dividends declared per common share(5) |
| $ | 2.93 |
| $ | 2.79 |
| $ | 2.65 |
| $ | 2.52 |
| $ | 2.45 |
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SUPPLEMENTAL DATA: |
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Adjusted diluted earnings allocable to common shareholders and HPU holders(6)(8) |
| $ | 391,884 |
| $ | 270,946 |
| $ | 341,777 |
| $ | 262,786 |
| $ | 254,095 |
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EBITDA(7)(8) |
| $ | 677,241 |
| $ | 561,849 |
| $ | 543,235 |
| $ | 448,673 |
| $ | 435,675 |
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Ratio of EBITDA to interest expense |
| 2.16 | x | 2.41 | x | 2.79 | x | 2.42 | x | 2.56 | x | |||||
Ratio of EBITDA to combined fixed charges(9) |
| 1.91 | x | 1.98 | x | 2.34 | x | 2.02 | x | 2.10 | x | |||||
Ratio of earnings to fixed charges(10) |
| 1.89 | x | 1.84 | x | 2.35 | x | 2.01 | x | 2.14 | x | |||||
Ratio of earnings to fixed charges and preferred stock dividends(10) |
| 1.67 | x | 1.51 | x | 1.97 | x | 1.68 | x | 1.76 | x | |||||
Weighted average common shares outstanding basic |
| 112,513 |
| 110,205 |
| 100,314 |
| 89,886 |
| 86,349 |
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Weighted average common shares outstanding diluted |
| 113,703 |
| 112,464 |
| 104,101 |
| 92,649 |
| 88,234 |
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Cash flows from: |
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Operating activities |
| $ | 515,919 |
| $ | 353,566 |
| $ | 334,673 |
| $ | 344,979 |
| $ | 287,710 |
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Investing activities |
| (1,406,121 | ) | (465,636 | ) | (970,765 | ) | (1,149,206 | ) | (345,012 | ) | |||||
Financing activities |
| 917,150 |
| 120,402 |
| 700,248 |
| 804,491 |
| 50,220 |
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| For the Years Ended December 31, |
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| 2005 |
| 2004 |
| 2003 |
| 2002 |
| 2001 |
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| (In thousands, except per share data and ratios) |
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BALANCE SHEET DATA: |
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Loans and other lending investments, net |
| $ | 4,661,915 |
| $ | 3,938,427 |
| $ | 3,694,709 |
| $ | 3,045,966 |
| $ | 2,373,251 |
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Corporate tenant lease assets, net |
| 3,115,361 |
| 2,877,042 |
| 2,535,885 |
| 2,291,805 |
| 1,781,565 |
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Total assets |
| 8,532,296 |
| 7,220,237 |
| 6,660,590 |
| 5,611,697 |
| 4,380,640 |
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Debt obligations |
| 5,859,592 |
| 4,605,674 |
| 4,113,732 |
| 3,461,590 |
| 2,495,369 |
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Minority interest in consolidated entities |
| 33,511 |
| 19,246 |
| 5,106 |
| 2,581 |
| 2,650 |
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Shareholders’ equity |
| 2,446,671 |
| 2,455,242 |
| 2,415,228 |
| 2,025,300 |
| 1,787,778 |
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SUPPLEMENTAL DATA: |
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Total debt to shareholders’ equity |
| 2.4 | x | 1.9 | x | 1.7 | x | 1.7 | x | 1.4 | x | |||||
Explanatory Notes:
(1) Represents one-time effect of adoption of Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” as of January 1, 2001.
(2) HPU holders are Company employees who purchased high performance common stock units under the Company’s High Performance Unit Program.
(3) For the 12 months ended December 31, 2005, net income used to calculate earnings per basic and diluted common share excludes $6,043 and $5,983 of net income allocable to HPU holders, respectively. For the 12 months ended December 31, 2004, net income used to calculate earnings per basic and diluted common share excludes $3,314 and $3,265 of net income allocable to HPU holders, respectively. For the 12 months ended December 31, 2003, net income used to calculate earnings per basic and diluted common share excludes $2,066 and $1,994 of net income allocable to HPU holders, respectively.
(4) For the 12 months ended December 31, 2005, 2004 and 2003, net income used to calculate earnings per diluted common share includes joint venture income of $28, $3 and $167, respectively.
(5) The Company generally declares common and preferred dividends in the month subsequent to the end of the quarter.
(6) Adjusted earnings represents net income allocable to common shareholders and HPU holders computed in accordance with GAAP, before depreciation, depletion, amortization, gain (loss) from discontinued operations, extraordinary items and cumulative effect of change in accounting principle. For the year ended December 31, 2004, adjusted earnings includes a $106.9 million charge related to performance-based vesting of 100,000 restricted shares granted under the Company’s long-term incentive plan to the Chief Financial Officer, the vesting of 2.0 million phantom shares on March 30, 2004 to the Chief Executive Officer, the one-time award of Common Stock with a value of $10.0 million to the Chief Executive Officer, the vesting of 155,000 restricted shares granted to several employees and the Company’s share of taxes associated with these transactions. For the year ended December 31, 2002, adjusted earnings includes the $15.0 million charge related to the performance based vesting of restricted shares granted under the Company’s long-term incentive plan. For years ended December 31, 2005, 2004, 2003, 2002 and 2001, adjusted diluted earnings includes approximately $7.5 million, $9.8 million, $0, $4.0 million and $1.0 million, respectively, of cash paid for prepayment penalties associated with early extinguishment of debt. (See Item 7—”Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a reconciliation of adjusted earnings to net income).
(7) EBITDA is calculated as net income plus the sum of interest expense, depreciation, depletion and amortization (which includes the interest expense, depreciation, depletion and amortization reclassed to income from discontinued operations).
| For the Years Ended December 31, |
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| 2005 |
| 2004 |
| 2003 |
| 2002 |
| 2001 |
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| (In thousands) |
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Net income |
| $ | 287,913 |
| $ | 260,447 |
| $ | 292,157 |
| $ | 215,270 |
| $ | 229,912 |
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Add: Interest expense(1) |
| 313,053 |
| 232,919 |
| 194,999 |
| 185,362 |
| 170,121 |
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Add: Depreciation, depletion and amortization(2) |
| 76,275 |
| 68,483 |
| 56,079 |
| 48,041 |
| 35,642 |
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EBITDA |
| $ | 677,241 |
| $ | 561,849 |
| $ | 543,235 |
| $ | 448,673 |
| $ | 435,675 |
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Explanatory Notes:
(1) For the years ended December 31, 2005, 2004, 2003, 2002 and 2001, interest expense includes $0, $190, $337, $348 and $536, respectively, of interest expense reclassed to discontinued operations.
(2) For the years ended December 31, 2005, 2004, 2003, 2002 and 2001, depreciation and amortization includes $1,558, $5,579, $7,009, $7,016 and $6,549, respectively, of depreciation and amortization reclassed to discontinued operations.
(8) Both adjusted earnings and EBITDA should be examined in conjunction with net income as shown in the Consolidated Statements of Operations. Neither adjusted earnings nor EBITDA should be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company’s performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is either measure indicative of funds available to fund the Company’s cash needs or available for distribution to shareholders. Rather, adjusted earnings and EBITDA are additional measures the Company uses to analyze how its business is performing. Its should be noted that the Company’s manner of calculating adjusted earnings and EBITDA may differ from the calculations of similarly-titled measures by other companies.
(9) Combined fixed charges are comprised of interest expense (including amortization of original issue discount) and preferred stock dividend requirements.
(10) For the purposes of calculating the ratio of earnings to fixed charges, “earnings” consist of income from continuing operations before adjustment for minority interest in consolidated subsidiaries, or income or loss from equity investees, income taxes and cumulative effect of change in accounting principle plus “fixed charges” and certain other adjustments. “Fixed charges” consist of interest incurred on all indebtedness related to continuing and discontinued operations (including amortization of original issue discount) and the implied interest component of the Company’s rent obligations in the years presented.