DALLAS, April 15, 2003 (PRIMEZONE) -- American Realty Investors, Inc. (NYSE:ARL) announced Tuesday that the company reported fourth quarter net income of $7.61 million, or $.66 per share, on revenue of $43.26 million, for the three months ended Dec. 31, 2002, compared to net income of $2.46 million, or $.21 per share, on revenue of $39.48 million in the fourth quarter of 2001.
For the twelve months ended Dec. 31, 2002, ARI reported a net loss of $10.87 million, or $(.96) per share, on revenue of $159.09 million, compared to net income of $12.58 million, or $1.07 per share, on revenue of $174.82 million, in the twelve months of 2001.
Income, sales and related expenses and costs for the fourth quarter and twelve months of 2002 resulted in increased income from operations of $16.32 million and $45.32 million, compared to $3.97 million and $37.19 million in the 2001 periods, and included:
- Income from rents that decreased to $21.78 million and $89.54 million, compared to $23.13 million and $101.93 million in the 2001 periods, due to the sale of 17 apartments in 2001.
- Property operations expense that decreased to $17.79 million and $67.70 million, compared to $18.21 million and $76.62 million in the 2001 periods, due to decreased expenses at the hotels, apartments and land, partially offset by increased subleasing costs at three commercial properties.
- Pizza parlor sales that increased to $9.19 million and $36.74 million, compared to $8.93 million and $34.21 million in the 2001 periods, due to a 7.9 percent increase in same-store sales. Cost of sales increased to $7.60 million and $29.99 million, compared to $7.22 million and $27.93 million in the 2001 periods. Gross margins decreased to $1.59 million in the fourth quarter and increased in the twelve months of 2002 to $6.75 million, compared to $1.71 million and $6.28 million in the 2001 periods.
- Land sales, cost of sales and gain on land sales that increased to $88.37 million, $53.35 million and $10.75 million in fourth quarter 2002, compared to $10.04 million, $12.70 million and a loss of $2.66 million in fourth quarter 2001. Land sales, cost of sales and gain on land sales that increased to $127.75 million, $75.72 million and $16.73 million in the twelve months of 2002, compared to $51.84 million, $45.35 million and $5.60 million in 2001. The 2002 land sales included deferred gains of $36.14 million and recognition of $830,000 of previously deferred gains, compared to $895,000 in deferred gains in 2001.
Other income (loss) decreased to losses of $478,000 and $12.61 million in the fourth quarter and twelve months of 2002, compared to income of $23.26 million and $89.07 million in the 2001 periods. Other income in 2001 included gains on the sale of real estate $23.22 million and $77.82 million and equity in gains on real estate sales by equity investees of $4.57 million and $22.54 million. For 2002, the gains were included in Discontinued Operations. Other income (loss) included:
- Equity in the loss of investees that increased to $6.89 million and $20.91 million in the fourth quarter and twelve months of 2002, compared to losses of $4.93 million and $13.35 million in the 2001 periods, due to increased losses by affiliates. Loss on sale of investments in equity investees was $286,000 in the twelve months of 2002, compared to $387,000 in 2001.
- Other income that increased to $4.93 million and $5.45 million in the fourth quarter and twelve months of 2002, compared to a loss of $427,000 and $369,000 in the 2001 periods, due to receipt of a payment and a partial payment from settlements arising from two lawsuits.
Other expenses (excluding property operations expenses and costs of sales for pizza and land) increased in the fourth quarter and decreased in the twelve months of 2002 to $24.28 million and $92.73 million, compared to $22.86 million and $103.83 million in the 2001 periods, and included:
- Interest expense that decreased in the fourth quarter to $14.44 million due to lower amortization of deferred borrowing costs, and $57.69 million in the twelve months due to property sales, compared to $17.46 million and $65.05 million in the 2001 periods.
- Advisory, net income and incentive fees that increased to a total of $1.07 million in the three months and decreased to $5.90 million in the twelve months of 2002, compared to $(2.38) million and $10.71 million in the 2001 periods, due to a reduction in total assets and 2002 net income not meeting the threshold of 10 percent of annualized net income in excess of a 10 percent return on shareholders' equity. No income or incentive fees are paid unless net income has met the 10 percent threshold.
- Write-down of assets held for sale that increased to $3.73 million and $4.17 million for the three and twelve months of 2002, due to the reduction of carrying values of a shopping center sold in 2002 and a land parcel sold in 2003 to their net realizable values when sold. In 2001, a $2.5 million impairment of an asset was recognized.
Net income from discontinued operations (non-land properties sold after 2001) in the fourth quarter and twelve months of 2002 increased to $16.65 million and $51.56 million, compared to losses of $1.29 million and $7.35 million in the 2001 periods, due to 23 properties and leasehold interests in oil and gas properties sold in 2002 and eight properties sold in 2003. Included in the 2002 net income from discontinued operations were:
- Gains on real estate sales of $8.57 million in the three months and $31.71 million in the twelve months of 2002. In 2001, these gains were included in Other Income.
- Equity in gains on real estate sales by investees of $9.17 million and $24.07 million in the fourth quarter and twelve months of 2002. In 2001, these gains were included in Other Income.
American Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, hotels, shopping centers and developed and undeveloped land. For more information, go to ARI's web site at www.amrealtytrust.com .
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
------------------------ ----------------------
Income from rents $ 21,772 $ 23,134 $ 89,543 $ 101,927
Expense from
operations 17,789 18,209 67,701 76,617
----------- ----------- ---------- ----------
Operating income 3,983 4,925 21,842 25,310
Land sales 88,368 10,035 127,750 51,841
Cost of sales 53,349 12,697 75,718 45,348
Deferred gains 24,273 -- 36,135 895
Recognition of
previously
deferred gains -- -- 830 --
----------- ----------- ---------- ----------
Gain on land sales 10,746 (2,662) 16,727 5,598
Pizza sales 9,191 8,929 36,741 34,211
Cost of sales 7,599 7,219 29,991 27,934
----------- ----------- ---------- ----------
Gross margin 1,592 1,710 6,750 6,277
Income from
operations $ 16,321 $ 3,973 $ 45,319 $ 37,185
Interest and
other income 6,168 393 8,590 2,448
Equity in loss
of investees (6,891) (4,927) (20,914) (13,352)
Gain (loss) on
sale of investments
in equity investees 245 -- (286) (387)
Gain on the sale
of real estate -- 23,216 -- 77,816
Equity in gain on
real estate sales
by investees -- 4,573 -- 22,542
Other expense 24,283 22,860 92,734 103,829
----------- ----------- ---------- ----------
Net income (loss)
from continuing
operations (8,440) 4,368 (60,025) 22,423
Loss from
discontinued
operations (1,086) (1,288) (4,214) (7,354)
Gain on sale of
real estate 8,566 -- 31,706 --
Equity in gain on
real estate sales
by investees 9,173 -- 24,069 --
----------- ----------- ---------- ----------
Net income (loss)
from discontinued
operations 16,653 (1,288) 51,561 (7,354)
Net income (loss) $ 8,213 $ 3,080 $ (8,464) $ 15,069
Preferred dividend
requirement (600) (617) (2,401) (2,485)
----------- ----------- ---------- ----------
Net income (loss)
applicable to
Common shares $ 7,613 $ 2,463 $ (10,865) $ 12,584
=========== =========== ========== ==========
Earnings Per Share
Net loss from
continuing
operations $ (.80) $ .32 $ (5.49) $ 1.70
==========
Discontinued
operations 1.46 (.11) 4.53 (.63)
----------- ----------- ----------- ----------
Net income (loss)
applicable to
Common shares $ .66 $ .21 $ (.96) $ 1.07
=========== =========== =========== ==========
Weighted average
common shares
used to compute
earnings per
share 11,375,127 11,714,374 11,375,127 11,714,374