Exhibit 99.1
PRESS RELEASE Franklin Street Properties Corp.
- --------------------------------------------------------------------------------
401 Edgewater Place o Suite 200 o Wakefield, Massachusetts 01880-6210 o
(781) 557-1300 o www.franklinstreetproperties.com
Contact: Donna Brownell 877-686-9496 FOR IMMEDIATE RELEASE
FRANKLIN STREET PROPERTIES CORP. ANNOUNCES
SECOND QUARTER AND FIRST HALF 2006 RESULTS
Wakefield, MA--August 2, 2006--Franklin Street Properties Corp. (the "Company"
or "FSP") (AMEX: FSP) announced today net income and Earnings Per Share (EPS)
for the three and six months ended June 30, 2006. The Company also announced
Adjusted Funds From Operations (AFFO) and provided an update on recent property
acquisitions.
The Company evaluates its performance based on net income, EPS and AFFO, and
believes each is an important measure. The Company considers these measurements
in determining distributions paid to equity holders. A reconciliation of net
income to AFFO, a non-GAAP financial measure, is provided on page 2 of this
press release.
o EPS for the three months ended June 30, 2006 increased $0.43 per share to
$0.60 per share compared to the three months ended June 30, 2005. Net
income was $40.5 million or $0.60 per share (based on 67.1 million
shares), compared to $9.5 million or $0.17 per share (based on 56.8
million shares) in 2005.
o AFFO for the three months ended June 30, 2006 increased $0.02 per share to
$0.30 per share compared to the three months ended June 30, 2005. AFFO was
$20.1 million or $0.30 per share (based on 67.1 million shares), compared
to $15.7 million or $0.28 per share (based on 56.8 million shares) in
2005.
o EPS for the six months ended June 30, 2006 increased $0.47 per share to
$0.84 per share compared to the six months ended June 30, 2005. Net income
was $53.6 million or $0.84 per share (based on 63.5 million shares),
compared to $19.9 million or $0.37 per share (based on 53.2 million
shares) in 2005.
o AFFO for the six months ended June 30, 2006 increased $0.09 per share to
$0.64 per share compared to the six months ended June 30, 2005. AFFO was
$40.4 million or $0.64 per share (based on 63.5 million shares), compared
to $29.3 million or $0.55 per share (based on 53.2 million shares) in
2005.
The following significant factors affected net income, EPS and AFFO for the
three and six months ended June 30, 2006 compared to results for the same
periods in 2005:
o Gain on sale of three properties during the three months ended June 30,
2006 generated sales proceeds of approximately $87.8 million and resulted
in a gain of approximately $28.1 million.
o Increased net operating income from the real estate portfolio included:
o The benefits of four properties acquired by merger in April 2005 and
five properties acquired by merger in April 2006, which were
accretive to our per share calculations in all periods.
o The benefits of two suburban office properties acquired in 2005 and
two suburban office properties acquired in 2006.
o Termination payments of $0.2 million in the second quarter of 2006
from a tenant at a FSP property in Texas and $4.6 million received
in the first quarter of 2006 from a tenant at a FSP property in
Illinois. Both properties have subsequently been re-leased.
o Improved investment banking results compared to the same periods in 2005.
Gross proceeds on the sale of securities increased $30.9 million and $23.1
million for the three and six months of 2006, compared to the same periods
in 2005.
-more-
-2-
o Interest income increased $0.4 million and $0.7 million in the three and
six months ended June 30, 2006, respectively, compared to the same periods
in 2005 as a result of higher bank balances during the periods and rising
interest rates.
o These benefits were partially offset by increases in general and
administrative costs of approximately $0.2 million in the three and $0.2
million in the six months ended June 30, 2006 compared to 2005, which were
primarily from costs of monitoring and managing a larger portfolio of
REITs and expenses incurred related to the public listing of our stock on
the American Stock Exchange, which commenced on June 2, 2005.
o Net increase of 10.2 million weighted average shares of FSP common stock
for the three and six months ended June 30, 2006 compared to 2005 due to
the merger completed on April 30, 2006.
A reconciliation of net income to AFFO is shown below and a definition of AFFO
is provided on Supplemental Schedule F. We believe AFFO is used broadly
throughout the REIT industry as a measurement of liquidity and is generally
calculated in a similar manner to our calculation.
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
(In thousands except per share amounts) 2006 2005 2006 2005
---- ---- ---- ----
Net income $ 40,477 $ 9,454 $ 53,616 $ 19,877
(Gain) Loss on sale of assets (28,108) 1,055 (28,108) 1,055
GAAP income from non-consolidated REITs (156) (303) (431) (968)
Distributions from non-consolidated REITs 491 381 609 980
Depreciation of real estate & intangible amortization 7,513 5,485 14,646 9,117
Straight-line rent (139) (417) 61 (724)
Capital expenditures (1,516) (1,601) (1,784) (1,928)
Payments of deferred leasing costs (2,617) (216) (2,773) (311)
Proceeds from funded reserves 4,133 1,817 4,557 2,239
------------------------ ------------------------
Adjusted Funds From Operations (AFFO) $ 20,078 $ 15,655 $ 40,393 $ 29,337
======================== ========================
Per Share Data
EPS $ 0.60 $ 0.17 $ 0.84 $ 0.37
AFFO $ 0.30 $ 0.28 $ 0.64 $ 0.55
Weighted average shares (basic and diluted) 67,149 56,815 63,492 53,242
======================== ========================
Dividend announcement:
On July 14, 2006 the Board of Directors of the Company declared a cash
distribution of $0.31 per share of common stock payable on August 21, 2006 to
stockholders of record as of July 31, 2006.
Real Estate Update
During April 2006 we acquired five suburban office properties by merger with a
total of approximately 1.1 million square feet of rentable space. Two properties
are located in Texas, and the other three are located in Colorado, Florida and
Virginia. In late June 2006 we acquired a suburban office building in Atlanta,
Georgia with approximately 0.4 million square feet of rentable space. This
purchase was financed by property sales. In May 2006 we sold an apartment
property located in Katy, Texas, and office properties located in Fairfax,
Virginia and Santa Clara, California, each at a gain. The gain recognition from
the sale of the properties in Texas and Virginia was deferred for tax purposes
through the use of a Section 1031 exchange. We also have another property under
agreement to be sold, which we expect to close during the third quarter of 2006.
As of June 30, 2006, this property was classified on our balance sheet as an
asset held-for-sale. Supplemental Schedule D presents our continuing real estate
portfolio of 31 properties as of June 30, 2006.
-more-
-3-
George J. Carter, President and CEO, commented as follows:
"Net Income/EPS and AFFO levels for the first half of 2006 were anticipated and,
consequently, planned for within the FSP business/investment model. Six-month
earnings of $0.84 per share and AFFO of $0.64 per share showed measurable
increases over the same period last year. Quarterly dividends paid during the
first half, and declared for the third quarter, remain unchanged at $0.31 per
share/per quarter, or an annual rate of $1.24 per share. I continue to be
confident about the Company's current competitive position within the broader
capital/real estate markets and optimistic about its financial performance for
the balance of 2006.
More specifically, results for the first half of 2006 reflected: (#1) solid
performance in rental operations from the Company's portfolio of properties;
(#2) real estate dispositions totaling approximately $88 million, and the
reinvestment of the bulk of those sale proceeds; and (#3) the closing of real
estate investment banking business totaling $84.4 million.
#1. As of June 30, 2006, the Company's continuing portfolio of 31 properties was
91% leased. Most of FSP's properties are suburban office buildings, and, in most
markets, we are continuing to find improving conditions for both occupancy and
rental rates. However, there are still tenant leases which were signed at the
height of the most recent office market cycle (approximately 1997-2001).
Consequently, FSP and many other office property owners continue to face some
rent roll downs as old leases expire and new ones are signed. National occupancy
levels continue to improve, but rent levels in most office markets are still
only modestly increasing from a very low level. We believe that significant
broad-based rental increases, above the 1997-2001 peak, are probably one to
three years away, assuming continued overall U.S. economic growth and
traditional cyclical real estate dynamics. FSP is aggressively managing its
lease turnover to maximize rental operations' contribution as the office markets
continue to climb back up their cyclical curve. Concern always remains about the
possibility of a new, significant downturn in the broader economy that would
reverse the positive trends our markets are starting to see. Lofty worldwide
energy prices, inflation and interest rates, as well as geopolitical events, are
likely to be influencing factors.
#2. During the first half of 2006, the Company disposed of three properties.
Proceeds from the property sales totaled approximately $88 million and, along
with some remaining proceeds from fourth quarter 2005 property sales, have been
substantially reinvested in other properties. All properties acquired directly
for the FSP portfolio (i.e., not held for investment banking syndication) were
purchased for all cash and continue to be owned without any mortgage debt, as is
every other property in FSP's portfolio. There continue to be existing real
estate assets in our portfolio which we believe are potential sale candidates,
either because of property specific or market driven reasons. In general,
property sales will be considered only if we believe the potential exists to
reinvest the sale proceeds in new assets that have better near-term or long-term
return potential than the assets we sold. Without any permanent mortgage debt,
cash from property sales can be used to acquire new real estate assets, purchase
stock under our stock repurchase plan and/or add to property reserves if needed.
Current high market pricing and competition for potentially acceptable property
acquisitions continue to present challenges, but new opportunities are always
being reviewed. Upgrading FSP's portfolio is an ongoing objective.
#3. First half investment banking business closed on $84.4 million of investor
capital consisting of the partial syndication of one office property. FSP's
Investment Banking group has had a difficult time during the last few years
finding properties that meet its investment criteria. Higher pricing and greater
competition for quality commercial real estate have reduced the number of
attractive potential acquisitions we would consider. The prospects for property
acquisitions for FSP's Investment Banking group remain uncertain."
-more-
-4-
Today's news release, along with other news about Franklin Street Properties
Corp., is available on the Internet at www.franklinstreetproperties.com.
A conference call is scheduled for August 3, 2006 at 10:00 a.m. (ET) to discuss
the second quarter and first half 2006 results. The toll free number is
1-866-770-7146, passcode 59304669. Internationally, the call may be accessed by
dialing 1-617-213-8068, passcode 59304669. The call will also be available via a
live webcast, which can be accessed at least 10 minutes before the start time
through the Webcasts & Presentations section of our Investor Relations section
at www.franklinstreetproperties.com. A replay of the conference call will be
available on the Company's website one hour after the call.
About Franklin Street Properties Corp.
Franklin Street Properties Corp. is a real estate investment trust based in
Wakefield, Massachusetts, focused on achieving current income and long-term
growth through investments in commercial properties. FSP operates in two
business segments: real estate operations and investment banking/investment
services. FSP owns an unleveraged portfolio of real estate. The majority of
FSP's property portfolio is suburban office buildings. FSP's subsidiary, FSP
Investments LLC (member, NASD and SIPC), is a real estate investment banking
firm and a registered broker/dealer. To learn more about FSP please visit our
website at www.franklinstreetproperties.com.
Forward-Looking Statements
Statements made in this press release that state FSP's or management's
intentions, beliefs, expectations, or predictions for the future are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. This press release may also contain
forward-looking statements based on current judgments and current knowledge of
management, which are subject to certain risks, trends and uncertainties that
could cause actual results to differ materially from those indicated in such
forward looking statements. Accordingly, readers are cautioned not to place
undue reliance on forward-looking statements. Investors are cautioned that our
forward-looking statements involve risks and uncertainty, including without
limitation changes in economic conditions in the markets in which we own
properties, changes in the demand by investors for investment in Sponsored REITs
(as defined in our Quarterly Report on Form 10-Q for the three months ended
March 31, 2006), risks of a lessening of demand for the types of real estate
owned by us, changes in government regulations, and expenditures that cannot be
anticipated such as utility rate and usage increases, unanticipated repairs,
additional staffing, insurance increases and real estate tax valuation
reassessments. See the "Risk Factors" set forth in Item 1A of our Quarterly
Report on Form 10-Q for the three months ended March 31, 2006 and subsequent
filings with the Securities and Exchange Commission. Although we believe the
expectations reflected in the forward looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. We will not update any of the forward looking statements after the
date of this press release to conform them to actual results or to changes in
our expectations that occur after such date, other than as required by law.
-more-
-5-
Franklin Street Properties
Earnings Release
Supplementary information
Table of contents
Franklin Street Properties Financial Results A-C
Real estate portfolio summary information D
Other supplementary information E
Definition of Adjusted Funds From Operations F
-more-
-6-
Franklin Street Properties Financial Results
Supplementary Schedule A
Income Statement
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
- -------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts) 2006 2005 2006 2005
===================================================================================================================
Revenue:
Rental $21,463 $ 16,191 $44,844 $ 27,791
Related party revenue:
Syndication fees 3,505 1,603 5,426 4,122
Transaction fees 3,469 1,595 5,408 4,038
Management fees and interest income from loans 698 481 869 1,451
Other 1 -- 22 --
- -------------------------------------------------------------------------------------------------------------------
Total revenue 29,136 19,870 56,569 37,402
- -------------------------------------------------------------------------------------------------------------------
Expenses:
Real estate operating expenses 5,010 3,253 9,783 5,593
Real estate taxes and insurance 3,357 2,205 5,944 3,874
Depreciation and amortization 5,569 3,487 10,733 5,896
Selling, general and administrative 1,954 1,741 3,758 3,567
Commissions 1,809 867 2,832 2,191
Interest 546 788 1,140 1,743
- -------------------------------------------------------------------------------------------------------------------
Total expenses 18,245 12,341 34,190 22,864
- -------------------------------------------------------------------------------------------------------------------
Income before interest income, equity in earnings of
non-consolidated REITs and taxes on income 10,891 7,529 22,379 14,538
Interest income 756 367 1,345 597
Equity in earnings of non-consolidated REITs 156 302 236 968
- -------------------------------------------------------------------------------------------------------------------
Income before taxes on income 11,803 8,198 23,960 16,103
Income tax expense 347 70 404 114
- -------------------------------------------------------------------------------------------------------------------
Income from continuing operations 11,456 8,128 23,556 15,989
Income (Loss) from discontinued operations 913 2,381 1,952 4,943
Gain on sale of assets, net 28,108 -- 28,108 --
Estimated loss on asset held for sale -- (1,055) -- (1,055)
- -------------------------------------------------------------------------------------------------------------------
Net income $40,477 $ 9,454 $53,616 $ 19,877
===================================================================================================================
Weighted average number of shares outstanding,
basic and diluted 67,149 56,815 63,492 53,242
===================================================================================================================
Earnings per share, basic and diluted, attributable to:
Continuing operations $ 0.17 $ 0.15 $ 0.37 $ 0.30
Discontinued operations 0.01 0.04 0.03 0.09
Gains (losses) on sales of assets, net 0.42 (0.02) 0.44 (0.02)
- -------------------------------------------------------------------------------------------------------------------
Net income per share, basic and diluted $ 0.60 $ 0.17 $ 0.84 $ 0.37
===================================================================================================================
-more-
-7-
Franklin Street Properties Financial Results
Supplementary Schedule B
Condensed Balance Sheet
(Unaudited)
(in thousands, except shares and par value amounts) June 30, December 31,
2006 2005
---- ----
Assets:
Real estate investments, net $ 799,305 $ 491,399
Acquired real estate leases, less accumulated amortization
of $15,804 and $10,402, respectively 49,014 30,172
Investment in non-consolidated REITs 877 5,006
Assets held for syndication, net 9,197 --
Assets held for sale 9,628 69,952
Cash and cash equivalents 57,605 69,715
Restricted cash 466 461
Tenant rent receivables, less allowance for doubtful accounts
of $350 and $350, respectively 592 1,447
Straight-line rent receivable. Less allowance for doubtful accounts
of $163 and $163, respectively 4,512 4,569
Prepaid expenses 940 805
Other assets 320 1,200
Office computers and furniture, net of accumulated depreciation
of $795 and $729, respectively 305 311
Deferred leasing commissions, net of accumulated amortization
of $1,008, and $731, respectively 4,632 2,136
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 937,393 $ 677,173
===================================================================================================================
Liabilities and Stockholders' Equity:
Liabilities:
Bank note payable $ 9,192 $ --
Accounts payable and accrued expenses 14,359 11,583
Accrued compensation 1,301 1,891
Tenant security deposits 1,479 1,293
Acquired unfavorable real estate leases, less accumulated amortization
of $288, and $134, respectively 2,538 823
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 28,869 15,590
- -------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.0001 par value, 20,000,000 shares
authorized, none issued or outstanding -- --
Common stock, $.0001 par value, 180,000,000 shares authorized,
70,766,305 and 59,794,608 shares issued and outstanding, respectively 7 6
Additional paid-in capital 907,794 677,397
Treasury stock, 731,898 and 731,898 shares at cost, respectively (14,008) (14,008)
Earnings (distributions) in excess of accumulated earnings/distributions 14,731 (1,812)
- -------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 908,524 661,583
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 937,393 $ 677,173
===================================================================================================================
-more-
-8-
Franklin Street Properties Financial Results
Supplementary Schedule C
Condensed Statement of Cash Flows
(Unaudited)
For the six months ended
June 30,
-----------------------------
2006 2005
---- ----
Cash flows from operating activities:
Net income $ 53,616 $ 19,877
Adjustments to reconcile net income to net cash
provided by operating activities:
(Gains) and estimated loss on assets sold or held for sale (28,108) 1,055
Depreciation and amortization expense 11,407 8,230
Amortization of above market lease 3,240 887
Equity in earnings from non-consolidated REITs (431) (968)
Distributions from non-consolidated REITs 609 980
Shares issued as compensation -- 31
Changes in operating assets and liabilities:
Restricted cash (5) (293)
Tenant rent receivables, net 855 90
Straight-line rents, net 61 (724)
Operations of assets held for syndication, net -- (1,295)
Prepaid expenses and other assets, net 1,232 (843)
Accounts payable and accrued expenses (1,226) (1,144)
Accrued compensation (590) 235
Tenant security deposits 186 293
Payment of deferred leasing commissions (2,773) (311)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 38,073 26,100
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash acquired through issuance of common stock in merger transaction 13,849 10,621
Purchase of real estate assets, office computers and
furniture, capitalized merger costs (108,280) (45,928)
Merger costs paid (838) (402)
Purchase of acquired favorable and unfavorable leases (5,108) --
Investment in non-consolidated REITs (11) 43
Investment in assets held for syndication, net (9,545) 50,265
Proceeds received on sale of real estate assets 87,750 --
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities (22,183) 14,599
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Distibutions to stockholders (37,073) (35,734)
Purchase of treasury shares (16)
Offering Costs (119) --
Borrowings (repayments) under bank note payable, net 9,192 (6,226)
- ----------------------------------------------------------------------------------------------------------
Net cash used for financing activities (28,000) (41,976)
- ----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (12,110) (1,277)
Cash and cash equivalents, beginning of period 69,715 52,752
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 57,605 $ 51,475
===========================================================================================================
-more-
-9-
Franklin Street Properties Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary
(Unaudited)
June 30, 2006
30-Jun-2006 31-Dec-2005
----------- -----------
Commercial real estate
Number of properties 31 26
Square feet 5,301,380 3,978,264
Leased percentage 91% 92%
Residential real estate
Number of properties -- 1
Number of apartments -- 228
Square feet -- 231,363
Leased percentage -- 97%
Combined portfolio
Number of properties 31 27
Square feet 5,301,380 4,209,627
Leased percentage 91% 92%
(In Thousands) As of June 30, 2006
-------------------------------------------------------------------
# of % of Square % of
State Properties Investment Portfolio Feet Portfolio
- ----- ---------- ---------- --------- ---- ---------
Texas 7 $ 218,875 27.4% 1,401 26.4%
Georgia 2 104,590 13.1% 549 10.4%
Virginia 3 92,951 11.6% 591 11.1%
Colorado 3 87,588 11.0% 550 10.4%
Missouri 2 58,528 7.3% 349 6.6%
Florida 1 52,235 6.5% 213 4.0%
California 3 40,922 5.1% 324 6.1%
Indiana 1 39,004 4.9% 205 3.9%
Illinois 1 27,231 3.4% 177 3.3%
Massachusetts 2 16,699 2.1% 197 3.7%
North Carolina 2 15,194 1.9% 172 3.2%
Michigan 1 14,959 1.9% 215 4.1%
Washington 1 14,686 1.8% 117 2.2%
South Carolina 1 10,515 1.3% 144 2.7%
Maryland 1 5,293 0.7% 99 1.9%
--------------------------------------- ---------------------
Total 31 $ 799,271 100.0% 5,301 100.0%
======================================= =====================
-more-
-10-
Franklin Street Properties Earnings Release
Supplementary Schedule E
(Unaudited)
June 30, 2006
Property by type:
(In Thousands) As of June 30, 2006
--------------------------------------------------------------------------------
# of % of Square % of
Type Properties Investment Portfolio Feet Portfolio
- ---- ---------- ---------- --------- ---- ---------
Office 30 793,978 99.3% 5,203 98.1%
Industrial 1 5,293 0.7% 99 1.9%
--------------------------------------------- -------------------------------
Total 31 $ 799,271 100.0% 5,301 100.0%
============================================= ===============================
Commercial portfolio lease expirations (1)
Total % of
Year Square Feet Portfolio
---- ----------- ---------
2006 384,276 7.3%
2007 631,414 11.9%
2008 500,855 9.5%
2009 718,052 13.5%
2010 717,345 13.5%
2011 205,733 3.9%
Thereafter 2,143,705 40.4%(2)
-----------------------------
5,301,380 100%
=============================
(1) Percentages are determined based upon square footage of expiring
commercial leases.
(2) Includes current vacancies.
-more-
-11-
Franklin Street Properties Earnings Release
Supplementary Schedule F
Definition of Adjusted Funds From Operations ("AFFO")
The Company evaluates the performance of its reportable segments based on
several measures including Adjusted Funds From Operations ("AFFO") as management
believes that AFFO represents an important measure of the reportable segment's
activity and is an important consideration in determining distributions paid to
equity holders. The Company defines AFFO as: net income as computed in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"); excluding gains or losses on the sale of real estate and
non-cash income from Sponsored REITs; plus certain non-cash items included in
the computation of net income (depreciation and amortization and straight-line
rent adjustments); plus distributions received from Sponsored REITs; plus the
net proceeds from the sale of land; less recurring purchases of property and
equipment incurred to maintain the assets' value or for tenant improvements
("Capital Expenditures") and payments for deferred leasing commissions, plus
proceeds from (payments to) cash reserves. Depreciation and amortization, gain
or loss on the sale of real estate and straight-line rents are an adjustment to
AFFO, as these are non-cash items included in net income. Capital Expenditures,
payments of deferred leasing commissions and the proceeds from (payments to) the
funded reserve are an adjustment to AFFO, as they represent cash items not
reflected in net income.
The cash reserve represents funds that the Company has set aside from time to
time in anticipation of future capital needs. These reserves are typically used
for the payment of Capital Expenditures, deferred leasing commissions and
certain tenant allowances; however, there are no legal restrictions on their use
and they may be used for any Company purpose. AFFO should not be considered as
an alternative to net income (determined in accordance with GAAP), as an
indicator of the Company's financial performance, nor as an alternative to cash
flows from operating activities (determined in accordance with GAAP), nor as a
measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs. Other real estate
companies may define AFFO in a different manner. It is at the Company's
discretion to retain a portion of AFFO for operational needs. We believe that in
order to facilitate a clear understanding of the results of the Company, AFFO
should be examined in connection with net income and cash flows from operating,
investing and financing activities in the consolidated financial statements.