We with our partners, Bain Capital and Kohlberg
Kravis Roberts, acquired Toys "R" Us in July 2005 for approximately $6.6 billion, of which $1.3 billion was in cash, our share being $428 million. Eight months in we
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were fortunate to recruit Gerald L. Storch, the former Vice Chairman of Target, as CEO. Below is an abstract of Toys' income statement:
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Toys' financial statements and the numbers abstracted above are prepared using "Recap Accounting" (historical cost), whereas our accounting for Toys must be on a "Purchase Accounting" basis. Also, we report their results on a one-quarter lag. Further, there are significant adjustments required to arrive at the Comparable FFO we report. But, any way you do the math, the stunning $200+ million run rate increase in the 2006 fiscal year ended February 3, 2007 reflects good to great improvements in each of Toys "R" Us' operating segments. While it's way too early to declare victory � we couldn't be more delighted. There is much hard work and rewarding work remaining to be done by Jerry Storch's very talented Toys team: Ron Boire, head of U.S. Toys "R� Us; Deb Derby, head of Babies "R" Us; the international country heads; and all of their manage
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ment teams, many of whom are newly recruited professionals and many of whom are incumbent professionals. Special thanks to Clay Creasey, Chief Financial Officer, who is our Joe Macnow's kindred spirit in the zero tolerance, "control, control, control" hall of fame.
In January 2006, Toys "R" Us announced a store closing program. Vornado handled the re-leasing and disposition of the real estate. In October 2006, we acquired from Toys "R" Us 37 of these stores, containing 1.5 million square feet, for $171 million. Eighteen of these stores are fee properties, eight are ground leased properties and eleven are space leased properties. Twenty-five of the stores have been leased and twelve are vacant.
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