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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 12b-25
NOTIFICATION OF LATE FILING SEC FILE NUMBER: 001-13301
(Check One):
[X] Form 10-K and Form 10-KSB [ ] Form 20-F [ ] Form 11-K
[ ] Form 10-Q and Form 10-QSB [ ] Form N-SAR
For Period Ended: December 31, 1999
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:_____________________________
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates: N/A
PART I
REGISTRANT INFORMATION
<TABLE>
<S> <C>
Full Name of Registrant: Prime Retail, Inc.
Former Name if Applicable: N/A
Address of Principal Executive 100 East Pratt Street
Office (Street and Number): Nineteenth Floor
City, State and Zip Code: Baltimore, Maryland 21202
</TABLE>
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PART II
RULES 12b-25(b) and (c)
If the subject report could not be filed without unreasonable effort or expense
and the Registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
[X] (a) The reasons described in reasonable detail in Part III of
this form could not be eliminated without unreasonable effort
or expense;
[X] (b) The subject annual report, semi-annual report, transition
report on Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion
thereof, will be filed on or before the fifteenth calendar day
following the prescribed due date; or the subject quarterly
report or transition report on Form 10-Q, or portion thereof,
will be filed on or before the fifth calendar day following
the prescribed due date; and
[ ] (c) The accountant's statement or other exhibit required by
Rule 12b-25(c) has been attached if applicable.
PART III
NARRATIVE
State below in reasonable detail the reasons why Form 10-K and Form 10-KSB,
20-F, 11-K, 10-Q and Form 10-QSB, N-SAR, or the transition report, or portion
thereof, could not be filed within the prescribed period.
The Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the
"Form 10-K") cannot be filed within the prescribed time period because the
Registrant is experiencing delays in the collection and compilation of certain
financial and other information required to be included in the Form 10-K. Such
delays could not be eliminated by the Registrant without unreasonable effort or
expense. The Form 10-K will be filed as soon as practicable, but in no event
later than the fifteenth calendar day following the prescribed due date.
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification is C. Alan Schroeder at (410) 234-0782.
2
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(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment
Company Act of 1940 during the preceding 12 months or for such shorter
period that the Registrant was required to file such report(s) been
filed? If the answer is no, identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject
report, or portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
Attached as Exhibit A is an explanation of the anticipated change.
Prime Retail, Inc. has caused this notification to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: March 31, 2000 By: /s/ C. Alan Schroeder
------------------------------------------
Name: C. Alan Schroeder
Title: Executive Vice President,
General Counsel and Secretary
3
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Exhibit A
Funds from operations ("FFO") for Prime Retail, Inc. (the "Company")
was ($12.8) million, or ($0.42) per diluted share, for the three months ended
December 31, 1999 compared to $29.2 million, or $0.40 per diluted share, for the
three months ended December 31, 1998. FFO was $68.3 million, or $0.79 per
diluted share, for the year ended December 31, 1999 compared to $90.0 million,
or $1.43 per diluted share, for the year ended December 31, 1998. The 1999
results reflect fourth quarter non-recurring charges and other expenses
aggregating $37.9 million, or $0.70 per diluted share, including (i) a provision
for asset impairment of $15.8 million, (ii) a provision for abandoned
development projects of $16.0 million, and (iii) certain other charges and other
expenses of $6.1 million. Excluding the fourth quarter non-recurring charges and
other expenses, FFO was $25.2 million, or $0.36 per diluted share, for the three
months ended December 31, 1999 and $106.3 million, or $1.51 per diluted share,
for the year ended December 31, 1999.
The provision for asset impairment represents the write-down of two of the
Company's factory outlet centers (Prime Outlets at Jeffersonville II and Prime
Outlets at Oxnard) to their current estimated fair value in accordance with
Statement of Financial Accounting Standards No. 121. The provision for abandoned
projects is based on the Company's decision to discontinue its pre-development
efforts associated with certain projects and, therefore, to write-off their
corresponding capitalized costs. Certain other charges and expenses include
(i) the write-off of $3.1 million of capitalized costs associated with the
Company's expired option to purchase its joint venture partner's 50.0%
ownership interest in Prime Outlets at New River and (ii) $3.0 million of
start-up and organizational expenses associated with the Company's
eOutlets.com subsidiary. During the year ended December 31, 1999, the Company
had incurred $7.0 million of total costs for eOutlets.com, of which $3.5
million were capitalized and $3.5 million were expensed.
For the three months ended December 31, 1999 and for the year ended
December 31, 1999, same-space sales in outlet centers owned by the Company
increased by 0.2% and 0.9%,
A-1
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respectively, compared to the same periods in 1998. "Same-space sales" is
defined as the weighted average sales per square foot reported by merchants for
space opened and occupied since January 1, 1998. For the three months ended
December 31, 1999 and for the year ended December 31, 1999, same-store sales
decreased by 2.1% and 0.6%, respectively, compared to the same period in 1998.
"Same-store sales" is defined as the weighted average sales per square foot
reported by merchants for stores opened and operated by the same tenant since
January 1, 1998. The weighted average sales per square foot reported by all
tenants was $257 for the year ended December 31, 1999 representing a 1.2%
increase from the prior year.
Income (loss) before loss on sale of real estate and minority interests
(GAAP basis) was ($36.4) million and $10.3 million for three months ended
December 31, 1999 and 1998, respectively. For the year ended December 31, 1999
and 1998, income (loss) before loss on sale of real estate and minority
interests was ($12.9) million and $35.4 million, respectively.
During the fourth quarter of 1999, the Company incurred a loss on the sale
of real estate aggregating $15.2 million in connection with its agreement to
sell three factory outlet centers to a joint venture (the "Venture") between an
affiliate of Estein & Associates USA, Ltd., a real estate investment company,
and the Company. The loss on the sale of real estate reflects (i) a $9.3 million
loss resulting from the sale of Prime Outlets at Birch Run to the Venture for
aggregate consideration of $117.0 million on November 19, 1999 and (ii) a $5.8
million write-down of the carrying value of Prime Outlets at Williamsburg which
was sold to the Venture for aggregate consideration of $59.0 million on
February 23, 2000. Additionally, the Company expects to close on the sale of
Prime Outlets at Hagerstown to the Venture for aggregate consideration of
$80.5 million on or about May 15, 2000. Completion of this transaction,
however, remains subject to various conditions and there can be no assurance
as to whether or when this transaction will be consummated. Assuming this
transaction occurs on the terms presently contemplated, the Company expects
to report a gain of $8.4 million upon the sale of Prime Outlets of
Hagerstown. Consequently, the Company expects to realize an overall loss on
the Estein joint venture sale of $6.8 million on a GAAP basis. As of December
31, 1999, the Company classified the aggregate carrying value of Prime
Outlets at Williamsburg and Prime Outlets at Hagerstown as Assets Held for
Sale in its Consolidated Balance Sheet.
During the fourth quarter of 1999, the Company established a plan to
discontinue the operations of its Designer Connection outlet stores.
Accordingly, the Company recorded a non-recurring charge of $3.7
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million to cover the expected cash and non-cash costs of the closure. This
charge primarily consists of (i) employee termination costs, (ii) lease
obligations, and (iii) the write-down of assets to their net realizable value.
The Company expects that the operations of Designer Connection will cease
by July 31, 2000. FFO and FFO per share exclude losses of $6,561 and $1,067
incurred by Designer Connection in 1999 and 1998, respectively.
A-3
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PRIME RETAIL, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE INFORMATION
GAAP BASIS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
--------------------------- ---------------------------
STATEMENTS OF OPERATIONS(1) 1999 1998 1999 1998
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
REVENUES
Base rents $ 47,143 $ 49,730 $ 193,979 $ 148,376
Percentage rents 2,089 2,385 8,085 6,384
Tenant reimbursements 21,622 21,837 90,063 67,152
Interest and other 4,283 2,995 13,829 9,897
--------- --------- --------- ---------
TOTAL REVENUES 75,137 76,947 305,956 231,809
EXPENSES
Property operating 16,944 17,223 70,862 52,684
Real estate taxes 5,359 5,105 22,405 16,705
Depreciation and amortization 17,473 18,598 73,640 52,727
Corporate general and administrative 4,911 2,427 12,687 7,980
Interest 25,920 21,305 93,934 60,704
Provision for abandoned projects 16,039 -- 16,039 --
Provision for asset impairment 15,842 -- 15,842 --
Loss on retail outlet stores 5,553 163 6,561 1,067
Other charges 3,455 1,861 6,918 4,495
--------- --------- --------- ---------
TOTAL EXPENSES 111,496 66,682 318,888 196,362
--------- --------- --------- ---------
INCOME (LOSS) BEFORE LOSS ON SALE OF REAL ESTATE,
MINORITY INTERESTS AND EXTRAORDINARY LOSS (36,359) 10,265 (12,932) 35,447
Loss on sale of real estate (15,153) -- (15,153) (15,461)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE MINORITY INTERESTS
AND EXTRAORDINARY LOSS (51,512) 10,265 (28,085) 19,986
Income allocated to minority interests (2,770) -- (3,226) (2,456)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS (54,282) 10,265 (31,311) 17,530
Extraordinary loss on early extinguishment of debt,
net of minority interests of $353 and $887 (1,412) -- (3,518) --
--------- --------- --------- ---------
NET INCOME (LOSS) (55,694) 10,265 (34,829) 17,530
Income allocated to preferred shareholders (5,668) (6,956) (9,962) (24,604)
--------- --------- --------- ---------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES $ (61,362) $ 3,309 $ (44,791) $ (7,074)
========= ========= ========= =========
EARNINGS PER COMMON SHARE - BASIC(2):
Income (loss) before extraordinary loss $ (1.39) $ 0.08 $ (0.96) $ (0.20)
Extraordinary loss (0.03) -- (0.08) --
--------- --------- --------- ---------
Net income (loss) $ (1.42) $ 0.08 $ (1.04) $ (0.20)
========= ========= ========= =========
EARNINGS PER COMMON SHARE - DILUTED(2):
Income (loss) before extraordinary loss $ (1.39) $ 0.08 $ (1.22) $ (0.20)
Extraordinary loss (0.03) -- (0.08) --
--------- --------- --------- ---------
Net income (loss) $ (1.42) $ 0.08 $ (1.30) $ (0.20)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING(2):
Basic 43,357 42,736 43,196 35,612
========= ========= ========= =========
Diluted 43,357 42,736 44,260 35,612
========= ========= ========= =========
</TABLE>
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PRIME RETAIL, INC.
SELECTED FINANCIAL DATA (UNAUDITED) -- CONTINUED
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AND PER UNIT INFORMATION
FUNDS FROM OPERATIONS (FFO) and DIVIDEND DISTRIBUTION SUMMARY
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
--------------------------- -----------------------------
1999 1998 1999 1998
----------- ---------- ----------- -----------
RECONCILIATION OF GAAP INCOME TO FFO
<S> <C> <C> <C> <C>
Income (loss) before minority interests and
extraordinary loss (GAAP basis) $(51,512) $ 10,265 $(28,085) $ 19,986
Adjustments:
Loss on sale of real estate 15,153 -- 15,153 15,461
Discontinued operations - Designer Connection 5,553 163 6,561 1,067
Depreciation and amortization 17,473 18,598 73,640 52,727
Amortization of deferred financing costs and
interest rate protection contracts 1,952 669 4,379 2,868
Unconsolidated joint venture adjustments 737 303 1,639 1,211
----------- ---------- ----------- -----------
Distributable net cash flow(3) (10,644) 29,998 73,287 93,320
Non-real estate depreciation and amortization (2,107) (792) (4,966) (3,300)
----------- ---------- ----------- -----------
FUNDS FROM OPERATIONS ("FFO") (4) $(12,751) $ 29,206 $ 68,321 $ 90,020
=========== ========== =========== ===========
DISTRIBUTION SUMMARY
Distributable net cash flow $ -- $ 29,998 $ 73,287 $ 93,320
Preferred stock distribution - Series A -- (1,509) (4,528) (6,037)
Preferred stock distribution - Series B -- (4,159) (12,477) (14,061)
Preferred stock distribution - Series C -- (1,288) (1,602) (5,152)
----------- ---------- ----------- -----------
Net cash flow after preferred distributions -- 23,042 54,680 68,070
Common stock and common unit distributions -- (15,944) (47,927) (58,394)
----------- ---------- ----------- -----------
Retained cash flow $ -- $ 7,098 $ 6,753 $ 9,676
=========== ========== =========== ===========
PER SHARE/UNIT AMOUNTS
Preferred stock:
Series A $ -- $ 0.656 $ 1.969 $ 2.625
=========== ========== =========== ===========
Series B $ -- $ 0.531 $ 1.594 $ 2.125
=========== ========== =========== ===========
Series C $ -- $ 0.295 $ 0.590 $ 1.180
=========== ========== =========== ===========
Common stock $ -- $ 0.295 $ 0.885 $ 1.180
=========== ========== =========== ===========
Limited partner unit $ -- $ 0.295 $ 0.885 $ 1.180
=========== ========== =========== ===========
</TABLE>
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PRIME RETAIL, INC.
SELECTED FINANCIAL DATA (UNAUDITED) -- CONTINUED AMOUNTS IN THOUSANDS EXCEPT PER
SHARE AND PER UNIT INFORMATION
FUNDS FROM OPERATIONS (FFO) and DIVIDEND DISTRIBUTION SUMMARY --
FFO PER SHARE SUMMARY
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
FFO $(12,751) $ 29,206 $ 68,321 $ 90,020
FFO allocations to minority interests
and preferred shareholders (5,663) (7,014) (24,379) (25,460)
--------------- --------------- --------------- ----------------
FFO after minority interests and preferred
stock distributions (18,414) 22,192 43,942 64,560
Allocation to limited partners -- (3,337) (9,682) (12,780)
--------------- --------------- --------------- ----------------
Allocation to common shares outstanding $(18,414) $ 18,855 $ 34,260 $ 51,780
=============== =============== =============== ================
PER SHARE INFORMATION:
FFO per common share outstanding - basic(5) $ (0.42) $ 0.44 $ 0.79 $ 1.45
=============== =============== =============== ================
FFO per common share equivalent - diluted(6) $ (0.42) $ 0.40 $ 0.79 $ 1.43
=============== =============== =============== ================
WEIGHTED AVERAGE SHARES AND UNITS OUTSTANDING(6):
Common shares - basic 43,357 42,736 43,196 35,612
Limited partner common units -- 11,313 -- 10,188
Series C preferred stock -- 4,363 -- 4,363
Common stock options -- -- -- 11
--------------- --------------- --------------- ----------------
Total diluted shares 43,357 58,412 43,196 50,174
=============== =============== =============== ================
END OF PERIOD SHARES OUTSTANDING AFTER CONVERSION:
Common shares 43,369 42,737 43,369 42,737
Limited partner common units 10,840 11,312 10,840 11,312
Series B conversion shares 9,364 9,364 9,364 9,364
Series C conversion shares -- 4,363 -- 4,363
--------------- --------------- --------------- ----------------
Total shares 63,573 67,776 63,573 67,776
=============== =============== =============== ================
</TABLE>
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PRIME RETAIL, INC.
SELECTED FINANCIAL DATA (UNAUDITED) -- CONTINUED
AMOUNTS IN THOUSANDS, EXCEPT SHARE INFORMATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
ASSETS
Investment in rental property:
Land $ 181,854 $ 206,386
Buildings and improvements 1,560,710 1,753,641
Property under development 66,581 45,068
Furniture and equipment 17,406 10,627
----------------- -----------------
1,826,551 2,015,722
Accumulated depreciation (183,954) (127,747)
----------------- -----------------
1,642,597 1,887,975
Cash and cash equivalents 7,343 5,765
Restricted cash 28,131 34,969
Accounts receivable, net 18,926 21,233
Deferred charges, net 13,503 12,518
Investment in partnerships 18,941 8,386
Assets held for sale 97,639 --
Due from affiliates, net 4,140 988
Other assets 24,838 4,630
----------------- -----------------
Total assets $ 1,856,058 $ 1,976,464
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Bonds payable $ 32,900 $ 32,900
Notes payable 1,227,770 1,184,607
Accrued interest 8,033 7,878
Real estate taxes payable 10,700 11,229
Construction costs payable 5,123 3,754
Accounts payable and other liabilities 73,340 69,879
----------------- -----------------
Total liabilities 1,357,866 1,310,247
Minority interests 1,505 22,483
Shareholders' equity:
Shares of preferred stock, 24,315,000 shares authorized:
10.5% Series A Senior Cumulative Preferred Stock, $0.01
par value (liquidation preference of $57,500), 2,300,000
shares issued and outstanding 23 23
8.5% Series B Cumulative Participating Convertible Preferred Stock, $0.01
par value (liquidation preference of $195,703),
7,828,125 shares issued and outstanding 78 78
Series C Cumulative Participating Convertible Redeemable Preferred Stock,
$0.01 par value, 4,363,636 shares issued
and outstanding at December 31, 1998 -- 44
Shares of common stock, 150,000,000 shares authorized:
Common stock, $0.01 par value, 43,368,620 and 42,736,742
shares issued and outstanding, respectively 434 427
Additional paid-in capital 709,122 759,105
Distributions in excess of net income (212,970) (115,943)
----------------- -----------------
Total shareholders' equity 496,687 643,734
----------------- -----------------
Total liabilities and shareholders' equity $ 1,856,058 $ 1,976,464
================= =================
</TABLE>
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SELECTED FINANCIAL DATA (UNAUDITED) -- CONTINUED
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AND PER UNIT INFORMATION
NOTES TO FINANCIAL PRESENTATION
(1) Certain prior period financial information has been reclassified to conform
to the current period presentation.
(2) The Company reports earnings per share ("EPS") in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share"
which specifies the method of computation, presentation, and disclosure.
SFAS No. 128 requires the presentation of basic EPS and diluted EPS. Basic
EPS is calculated by dividing net income available to common shareholders
by the weighted average number of common shares outstanding during the
period. Diluted EPS includes the potentially dilutive effect, if any, which
would occur if outstanding (i) options to purchase Common Stock were
exercised, (ii) Common Units were converted into shares of Common Stock,
(iii) shares of Series C Preferred Stock and Units were converted into
shares of Common Stock, and (iv) shares of Series B Preferred Stock were
converted into shares of Common Stock. For the year ended December 31,
1999, a redemption discount and dividends aggregating $12,710 related to
the Company's repurchase of its Series C Preferred Stock were excluded from
the numerator and incremental shares of 1,064 were included in the
denominator of the computation of diluted EPS. For the three months ended
December 31, 1999 and 1998 and for the year ended December 31, 1998,
diluted EPS is equivalent to basic EPS as the inclusion of the effect of
assumed exercises and conversions was anti-dilutive.
(3) In accordance with the Partnership Agreement governing Prime Retail, L.P.
(the "Operating Partnership"), non-cash charges, if any, are excluded in
the determination of distributable net cash flow.
(4) Management believes that in order to facilitate a clear understanding of
the consolidated historical operating results of the Company, Funds from
Operations ("FFO") should be considered in conjunction with net income
(loss) as presented in the statements of operations included elsewhere
herein. Management generally considers FFO to be an appropriate measure of
the performance of an equity real estate investment trust ("REIT") because
industry analysts have accepted it as a performance measure of equity
REITs. FFO represents net income (loss) (computed in accordance with
generally accepted accounting principles ("GAAP")), excluding gains or
losses from debt restructuring and sales of property, plus depreciation and
amortization and after adjustments for unconsolidated investment
partnerships and joint ventures. Prime cautions that the calculation of FFO
may vary from entity to entity and as such the presentation of FFO by the
Company may not be comparable to other similarly titled measures of other
reporting companies. FFO does not represent cash flow from operating
activities in accordance with GAAP and is not indicative of cash available
to fund all of the Company's cash needs. FFO should not be considered as an
alternative to net income or any other GAAP measure as an indicator of
performance and should not be considered as an alternative to cash flow as
a measure of liquidity or the ability to service debt or to pay dividends.
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(5) "FFO per common share outstanding - basic" is equal to FFO after minority
interests less Series A, Series B, and Series C preferred distributions and
distributions to Limited Partners divided by the weighted average number of
common shares outstanding.
(6) "FFO per common share equivalent - diluted" is equal to FFO after minority
interests less Series A and Series B preferred distributions divided by the
total of the potentially dilutive effect, if any, of (i) the weighted
average number of common shares, (ii) the weighted average number of common
units owned by the Limited Partners, (iii) the weighted average number of
common shares issuable upon exercise of stock options, (iv) the weighted
average number of common shares issuable upon full conversion of all
Series B Convertible Preferred Stock, and (v) the weighted average number
of common shares issuable upon full conversion of all shares of Series C
Preferred Securities. FFO per common share -diluted for the year ended
December 31, 1998 excludes the pro rata cash distribution for the period
April 1 through June 15, 1998 made in respect to the Series B Preferred
Stock issued to former Horizon Group, Inc. ("Horizon") shareholders in
connection with the Company's and Horizon's merger.
