EX-99 5 rex992.htm EXHIBIT 99.2 EXHIBIT 99

EXHIBIT 99.2

Item 6. Selected Financial Data

The following table sets forth selected consolidated financial data for the Company, its wholly-owned subsidiaries, and its majority-owned subsidiary (the Operating Partnership) and its subsidiaries. The selected financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto in Item 8, and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD & A") in Item 7 in this amendment to the Company's Annual Report on Form 10-K for the year end December 31, 2002.

The Company's net income and statement of cash flows have been prepared in accordance with GAAP. The Company has also included measures of its financial performance and economic profitability based on its "Funds from Operations" or "FFO" and "Earnings Before Interest, Taxes, Depreciation, and Amortization" or "EBITDA", each of which is a non-GAAP measure. The Company believes that FFO and EBITDA provide useful financial information to investors.

FFO is an important and widely used financial measure of the operating performance of REITs, which is not specifically defined by GAAP. However, FFO provides a relevant basis for comparison among REITs.

NAREIT defines "Funds from Operations" as net income (or loss) (computed in accordance with GAAP), excluding gains (or losses) from extraordinary items and sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. In calculating its Funds from Operations, the Company excludes gains or losses on sales from previously depreciated properties and includes gains (or losses) from the sale of peripheral land and earned cash flow support under the Support Agreement. In 2002, NAREIT clarified that FFO related to assets held for sale, sold or otherwise transferred and included in results of discontinued operations should continue to be included in consolidated FFO. The Company adopted this clarification with respect to Carlisle Plaza Mall and Oak Ridge Mall which were sold in 2002 and 2003, respectively, as further described in Notes 14 and 18 to the Consolidated Financial Statements. As further described in Note 2 to the Consolidated Financial Statements, the Company adopted SFAS 145 effective January 1, 2003 and accordingly reclassified losses on early debt extinguishments that occurred in prior periods from "extraordinary losses" to "income from continuing operations". The calculation of Funds from Operations, or FFO, has also been changed to reflect this reclassification. A reconciliation of net income determined in conformity with GAAP to its Funds from Operations is included in the Selected Financial Data table in this Item 6.

Management believes that Funds from Operations is an appropriate and valuable measure of the Company's operating performance because real estate generally appreciates over time or maintains a residual value to a much greater extent than personal property and, accordingly, reductions for real estate depreciation and amortization charges are not meaningful in evaluating the operating results of the Properties.

EBITDA is a second important and widely used financial measure of assessing the performance of real estate operations. The Company defines EBITDA as revenues and gain on sales of outparcel land, less mall operating costs and corporate general and administrative expenses, but before interest, and all depreciation and amortization. A reconciliation of net income determined in conformity with GAAP to EBITDA is included in Item 7 - MD & A. Management believes that EBITDA provides a meaningful measure of operating performance because (i) it is industry practice to evaluate the performance of real estate properties based on net operating income (or NOI), which is generally equivalent to EBITDA except that EBITDA is reduced for corporate general and administrative expenses; and (ii) both NOI and EBITDA are unaffected by the capital structure of the property owner.

Funds from Operations and EBITDA (i) do not represent cash flow from operations as defined by generally accepted accounting principles, (ii) are not necessarily indicative of cash available to fund all cash flow needs, (iii) should not be considered as an alternative to net income (loss) determined in conformity with GAAP for purposes of evaluating the Company's operating performance, and (iv) should not be considered as an alternative to cash flows as a measure of liquidity.

Other data that management believes is important in understanding trends in its business and properties are also included in the following table.

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Item 6. Selected Financial Data (continued)

Year Ended December 31,

2002

2001

2000

1999

1998

(10)

(10)

(10)

(10)

(10)

(in thousands, except per share data)

Operating Data:

Total revenues

$

186,004

$

178,603

$

173,186

$

162,170

$

151,196

Operating costs:

Property operating costs

(66,756)

(62,877)

(60,573)

(57,839)

(56,074)

Depreciation and amortization

(44,375)

(46,888)

(45,425)

(41,010)

(39,291)

General and administrative expenses

(6,822)

(5,393)

(5,093)

(4,663)

(4,971)

Restructuring costs

(369)

(2,251)

Operating income before interest

68,051

63,445

61,726

55,407

50,860

Interest

(50,736)

(52,702)

(54,306)

(47,955)

(42,325)

Loss on early extinguishment of debt

(4,314)

(243)

(22,512)

Gain on sale of property

369

437

700

1,761

1,210

Minority interest in Operating Partnership

(5,351)

(4,999)

(664)

1,734

8,363

Income (loss) from continuing operations before change

in accounting method and discontinued operations

8,019

6,181

7,213

10,947

(4,404)

Cumulative effect of change in accounting method

(1,659)

Loss from discontinued operations

(304)

(975)

(1,234)

(1,672)

(2,576)

Net income (loss)

7,715

5,206

5,979

9,275

(8,639)

Dividends on preferred shares

(13,613)

(13,613)

(13,695)

(13,750)

(13,750)

Net (loss) applicable to common shares

$

(5,898)

$

(8,407)

$

(7,716)

$

(4,475)

$

(22,389)

Per share data (after minority interest): (1)

Basic and diluted EPS:

Income (loss) from continuing operations before

extraordinary items and discontinued operations

$

(0.19)

$

(0.28)

$

(0.25)

$

(0.10)

$

(0.69)

Cumulative effect of change in accounting method

(0.06)

Loss from discontinued operations

(0.01)

(0.04)

(0.04)

(0.07)

(0.10)

Net (loss)

$

(0.20)

$

(0.32)

$

(0.29)

$

(0.17)

$

(0.85)

Other Data:

EBITDA (2 & 4)

$

117,836

$

116,731

$

117,080

$

108,288

$

98,499

Funds from Operations (FFO): (3, 4, & 5)

Net income (loss)

$

7,715

$

5,206

$

5,979

$

9,275

$

(8,639)

Adjustments:

Minority interest in Operating Partnership

5,351

4,999

664

(1,734)

(8,363)

Less gain (loss) on asset sales other than outparcels

(425)

224

(1,290)

Depreciation and amortization

44,375

46,888

47,348

42,010

39,291

Depreciation in JV and other line items

1,785

1,715

1,673

1,598

1,251

Operating covenant amortization

2,623

2,630

2,630

Cash flow support earned (11)

3,125

3,067

2,902

2,973

3,784

Cumulative effect of change in accounting method

1,703

Depreciation from discontinued operations

1,496

2,022

406

2,317

2,450

Funds from Operations before allocations to

preferred shares and minority interest

63,422

63,897

61,819

57,779

34,107

Less:

Amounts allocable to preferred shares

13,613

13,613

13,695

13,750

13,750

Amounts allocable to minority interest

12,412

13,722

13,249

12,121

5,533

Funds from Operations applicable to

common shares

$

37,397

$

36,562

$

34,875

$

31,908

$

14,824

Weighted average common shares outstanding -

basic and diluted

29,480

26,208

26,208

26,208

26,393

Weighted average common shares and Operating

Partnership units outstanding - basic and diluted

39,436

36,164

36,164

36,164

36,317

Cash Flows:

Net cash provided by operating activities

$

67,549

$

68,392

$

58,286

$

56,939

$

56,984

Net cash (used in) investing activities

(99,075)

(22,482)

(30,625)

(49,683)

(104,725)

Net cash (used in) provided by financing activities

28,649

(43,524)

(30,219)

(3,597)

51,781

(1), (2), (3), (4), (5), (10), (11) - See following page for explanation.

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Item 6. Selected Financial Data (continued)

December 31,

Balance Sheet Data:

2002

2001

2000

1999

1998

(10)

(10)

(10)

(10)

(10)

Income-producing properties (before accumulated

depreciation and amortization)

$

1,271,742

$

1,171,117

$

1,157,998

$

1,120,071

$

1,071,564

Total assets

879,432

826,780

855,501

875,208

869,288

Total debt and liabilities

796,087

761,657

758,929

746,630

708,047

Minority interest (debit) credit

(3,265)

(3,303)

(3,050)

2,727

11,724

Shareholders' equity

83,345

65,123

96,572

125,851

149,517

Portfolio Property Data (6):

Number of retail properties at end of year

27

25

25

26

26

Total GLA at end of year (000 sq. ft.) (7)

16,322

15,120

14,993

15,161

14,730

Mall shop GLA at end of year (000 sq. ft.)

5,717

5,302

5,279

5,366

5,343

Comparable store mall shop tenant sales per square foot (8)

$

272

$

271

$

267

$

262

$

245

Mall shop occupancy percentage at year end (9)

89%

89%

89%

86%

84%

(1)

All per share data are based on the weighted average common shares outstanding shown for the respective periods.

(2)

EBITDA represents revenues and gain on sales of outparcel land, less mall operating costs and corporate general and administrative

expenses, but before interest, and all depreciation and amortization. A reconciliation of EBITDA to net income is shown in Item 7 (c)

herein. As a REIT, the Company is generally not subject to federal or state income taxes.

(3)

Funds from Operations is defined on page 1 of this Exhibit 99.2.

(4)

EBITDA and Funds from Operations (i) do not represent cash flow from operations as defined by generally accepted accounting

principles, (ii) are not necessarily indicative of cash available to fund all cash flow needs, (iii) should not be considered as an

alternative to net income (loss) in conformity with GAAP for purposes of evaluating the Company's operating performance, and

(iv) should not be considered as an alternative to cash flows as a measure of liquidity.

(5)

The Company adopted NAREIT's 2002 changes in its definition of FFO and, accordingly, results from discontinued operations

related to Carlisle Plaza Mall and Oak Ridge Mall are included in FFO on the preceding page.

(6)

The above data reflects the impact of the Valley Mall acquisition completed in November 1997, the acquisition of

Crossroads and Jacksonville Malls and Greater Lewistown Plaza in May 1998, the sale of Middletown Mall in July 1998, the

sale of Greater Lewistown Plaza in June 2000, the acquisitions of Valley View Mall and Wiregrass Commons Mall in September 2002

and November 2002, respectively, the sale of Carlisle Plaza Mall in October 2002 and the sale of Oak Ridge Mall in March 2003.

See Notes 13, 14 and 18 to the Consolidated Financial Statements. This data also includes Palmer Park Mall, and enclosed mall

managed by a third party owner.

(7)

Total GLA includes anchor stores (company-owned and tenant-owned), mall shops, and freestanding space.

(8)

Total sales for all mall shop tenants, excluding freestanding space, movie theaters, and supermarkets, amounted to $1,055 million,

$1,031 million, $1,026 million, $985 million, and $885 million for 2002 to 1998, respectively. Sales reported for 2002 to 1998 for all

owned anchor stores were $1,174 million, $ 1,201 million, $1,200 million, $1,197 million, and $1,159 million, respectively. The

Company owns 88 of 107 anchor store premises as of December 31, 2002.

(9)

Includes both tenants in occupancy and tenants that have signed leases but have not yet taken occupancy as of the dates indicated.

(10)

Certain reclassifications have been made as described in Notes 2, 14 and 18 to the Consolidated Financial Statements.

(11)

The cash flow support agreement is with Crown Investments, as discussed in more detail in Item 1 "Business" and Notes 8 and 18

to the Consolidated Financial Statements.

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