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Exhibit 99.3
On March 12, 1999, the Company and Crescent Operating Inc. ("Crescent
Operating") formed a new partnership that has purchased all of the non-real
estate assets of the cold storage companies which do business under the name of
AmeriCold Logistics encompassing the operations of the cold storage business for
approximately $48 million from the Vornado/Crescent Partnership. The new
partnership leases 88 cold storage warehouses used in this business from the
Vornado/Crescent Partnership, which continues to own the real estate. In
addition to the leased warehouses AmeriCold Logistics manages 13 additional
warehouses containing approximately 80 million cubic feet of space.
The Company owns 60% of the new partnership through Company L.P. and
Crescent Operating indirectly owns 40% of the new partnership. The Company is
the sole general partner of, and owns a 90.1% partnership interest in, Company
L.P.
To fund its share of the purchase price, the Company utilized $4.6 million
of cash and borrowed $18.6 million under its revolving credit facility. Further,
the Company will pay $6 million to close the warehousing operation of one of the
leased facilities.
The following unaudited data presents the combination of the historical
income statements of the separate component companies of AmeriCold Logistics as
follows: (1) AMERICOLD CORPORATION year ended December 31, 1998, URS Logistics,
Inc. year ended December 31, 1998, the Freezer Services Companies (acquired
6/12/98) and The Carmar Group of Companies (acquired 7/1/98), (2) AMERICOLD
CORPORATION ten months ended December 31, 1997 and URS Logistics, Inc. year
ended December 31, 1997 and (3) AMERICOLD CORPORATION year ended February 28,
1997 and URS Logistics, Inc. year ended December 31, 1996. Such companies are
considered to be predecessors.
COMBINED STATEMENT OF INCOME
(amounts in thousands) For the Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------- ----------- -----------
Revenues........................... $ 567,867 $ 414,280 $ 454,996
Expenses:
Cost of services ............. 411,874 286,314 323,693
General & administrative ..... 26,877 39,957 45,086
Depreciation & amortization .. 59,337 37,151 17,080
Compensation expense ......... -- 12,115 --
------------- ----------- -----------
Total Expenses .................... 498,088 375,537 385,859
------------- ----------- -----------
Operating income .................. 69,779 38,743 69,137
Interest expense .................. (45,828) (63,263) (74,715)
Other income (expense) ............ 2,275 3,210 1,125
------------- ----------- -----------
Income (loss) before income tax ... 26,226 (21,310) (4,453)
Income taxes (benefit) ............ 9,238 (7,278) (777)
------------- ----------- -----------
Income (loss) before extraordinary
item .............................. 16,988 (14,032) (3,676)
Extraordinary item ................ -- (4,649) --
------------- ----------- -----------
Net income (loss) ................. $ 16,988 $(18,681) $ (3,676)
============= =========== ===========
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The following unaudited proforma Balance Sheet as of December 31, 1998
presents the Company on a historical basis and reflects proforma adjustments for
the purchase of the non-real estate assets of AmeriCold Logistics and the
disposition of the Company's interest in CESCR.
December 31, 1998
----------------------------------------
(amounts in thousands)
Proforma
Historical Adjustments Proforma
---------- ----------- --------
Assets:
Cash .......................... $ 11,832 $ (4,647)(1) $20,105
12,920 (2)
Investment in partnership -
AmeriCold .................... 23,234 (1) 23,234
Investment in partnership -
CESCR ........................ 12,920 (12,920)(2)
Prepaid insurance ............. 475 475
-------- ----------- -------
$ 25,227 $ 18,587 $43,814
======== =========== =======
Liabilities and Stockholders'
Equity:
Due to Vornado Realty Trust ... $ 1,067 $ 1,067
Debt .......................... $ 18,587 18,587
Accrued expenses .............. 127 127
Minority interest ............. 2,379 2,379
Commitments and contingencies..
Stockholders' equity .......... 21,654 21,654
-------- ----------- -------
Total stockholders' equity. $ 25,227 $ 18,587 $43,814
======== =========== =======
(1) Purchase of 60% of the non-real estate assets of AmeriCold Logistics
(2) Put of investment in CESCR to Vornado
The following unaudited proforma income data reflects the purchase of the
non-real estate assets of AmeriCold Logistics as if it had occurred on January
1, 1998:
December 31, 1998
------------------------------------------
(amounts in thousands)
Proforma
Historical Adjustments Proforma
---------- ----------- --------
Revenues $567,867 $ 44,458 (3) $612,325
Expenses:
Cost of services .............. 411,874 27,775 (3) 439,649
Rent expense .................. -- 146,568 (4) 146,568
General & administrative ...... 26,877 2,404 (3) 29,281
Depreciation and amortization . 59,337 (51,371)(5) 7,966
-------- -------- -------
Total expenses .................... 498,088 125,376 623,464
-------- -------- -------
Operating income (loss) ........... 69,779 (80,918) (11,139)
Interest expense .................. (45,828) 42,304 (6) (3,524)
Other income (expense) ............ 2,275 -- 2,275
-------- -------- -------
Income (loss) before income tax ... 26,226 (38,614) (12,388)
Income taxes (benefit) ............ 9,238 (9,238)(7) --
-------- -------- -------
Net income ........................ $ 16,988 $ (29,376) $(12,388)
======== ======== =======
The Company's share of net
income (60%) ................... $ 10,193 $ (7,433)
======== =======
Footnotes 3-7 are explained on the following page.
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(3) To reflect operations of Freezer Services Inc. and the Carmar Group prior
to their respective dates of acquisition (June 12, 1998 and July 1, 1998)
(4) To record rent expense under leases with the Vornado/Crescent Partnership.
(5) To adjust (i) depreciation expense for assets not acquired and (ii)
amortization of the purchase price over a period of 20 years. Valuations
and other studies are not yet complete. Accordingly, they are subject to
change as such information is finalized.
(6) To reflect (i) interest for debt under the revolving credit agreement of
$18,587 at LIBOR plus 3% per annum (currently 8.02%), (ii) elimination
of interest on historical debt not asummed and (iii) reduced interest
income for cash portion of the purchase price ($4,657 at 5% per annum).
(7) Tax effect of proforma adjustments.
