-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WTiCwWcquSNS7M3r5ZxyaKgRqaXL4LyClAuM0cv9WlgFURqvHEc2paaHL3fgQInb XNU/BuPr8W83NgxINdKU9g== 0000950123-97-004229.txt : 19970514 0000950123-97-004229.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950123-97-004229 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALEXANDERS INC CENTRAL INDEX KEY: 0000003499 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 510100517 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06064 FILM NUMBER: 97602887 BUSINESS ADDRESS: STREET 1: 31 WEST 34TH ST CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2125602121 MAIL ADDRESS: STREET 1: 31 WEST 34TH ST STREET 2: 7TH FLOOR CITY: NEW YOK STATE: NY ZIP: 10001 10-Q 1 FORM 10-Q / ALEXANDER'S INC. 1 EXHIBIT INDEX ON PAGE 13 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 31, 1997 ----------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ______________________ Commission File Number: 1-6064 ALEXANDER'S, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 51-0100517 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number) PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (201)587-8541 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No As of May 2, 1997 there were 5,000,850 common shares outstanding. Page 1 of 14 2 ALEXANDER'S, INC. INDEX Page Number ----------- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996.................................. 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and March 31, 1996......... 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and March 31, 1996......... 5 Notes to Consolidated Financial Statements............. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 8 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K....................... 11 Signatures ....................................................... 12 Exhibit Index ...................................................... 13 Exhibit 27 ....................................................... 14 Page 2 of 14 3 PART I. FINANCIAL INFORMATION ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
MARCH 31, DECEMBER 31, 1997 1996 --------- ------------ ASSETS: Real estate, at cost: Land $ 45,999 $ 45,999 Buildings, leaseholds and improvements (including $366 and $242 of construction in progress at March 31, 1997 and December 31, 1996) 114,646 114,280 Capitalized expenses and predevelopment costs 51,520 47,488 --------- --------- Total 212,165 207,767 Less accumulated depreciation and amortization (39,809) (39,375) --------- --------- 172,356 168,392 Investment in unconsolidated joint venture 11,550 12,613 --------- --------- Real estate, net 183,906 181,005 Cash and cash equivalents 17,354 5,480 Restricted cash 5,039 5,620 Accounts receivable, net of allowance for doubtful accounts of $147 in each period 265 201 Receivable arising from the straight-lining of rents, net 6,496 5,984 Deferred lease and other expenses 13,125 9,966 Deferred debt expense 2,046 2,364 Other assets 2,517 965 --------- --------- TOTAL ASSETS $ 230,748 $ 211,585 ========= =========
MARCH 31, DECEMBER 31, 1997 1996 --------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Debt $ 208,685 $ 192,347 Amounts due to Vornado Realty Trust and its affiliate 8,962 6,207 Accounts payable and accrued liabilities 4,773 4,246 Other liabilities from discontinued operations 2,373 2,622 Minority interest 600 600 --------- --------- TOTAL LIABILITIES 225,393 206,022 --------- --------- Commitments and contingencies Stockholders' Equity: Common stock; $1.00 par value per share; authorized, 10,000,000 shares; issued 5,173,450 5,174 5,174 Additional capital 24,843 24,843 Deficit (23,702) (23,494) --------- --------- 6,315 6,523 Less treasury shares, 172,600 shares at cost (960) (960) --------- --------- Total stockholders' equity 5,355 5,563 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 230,748 $ 211,585 ========= =========
See notes to consolidated financial statements. Page 3 of 14 4 ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share amounts)
FOR THE THREE MONTHS ENDED -------------------------- MARCH 31, MARCH 31, 1997 1996 ----------- ----------- Revenues: Property rentals $ 4,220 $ 3,127 Expense reimbursements 491 290 Equity in income of unconsolidated joint venture 1,287 1,267 ----------- ----------- Total revenues 5,998 4,684 ----------- ----------- Expenses: Operating (including management fee to Vornado of $210 in 1997 and 1996) 1,612 1,024 General and administrative (including management fee to Vornado of $540 in 1997 and 1996) 981 1,160 Depreciation and amortization 571 267 ----------- ----------- Total expenses 3,164 2,451 ----------- ----------- Operating income 2,834 2,233 Interest and debt expense (including interest on loan from Vornado) (3,294) (3,317) Interest and other income, net 252 622 ----------- ----------- Net loss $ (208) $ (462) =========== =========== Net loss per share $ (.04) $ (.09) =========== =========== Weighted average number of common shares outstanding during period 5,000,850 5,000,850 =========== ===========
See notes to consolidated financial statements. Page 4 of 14 5 ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands)
FOR THE THREE MONTHS ENDED -------------------------- MARCH 31, MARCH 31, 1997 1996 ----------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (208) $ (462) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization (including debt issuance costs) 1,057 776 Straight-lining of rental income (512) (384) Equity in income of unconsolidated joint venture (net of distributions of $2,350 and $2,634 in 1997 and 1996) 1,063 1,367 Change in assets and liabilities: Accounts receivable (64) (264) Amounts due to Vornado Realty Trust and its affiliate (542) (532) Liability for postretirement healthcare benefits -- (504) Accounts payable and accrued liabilities 527 (21) Other liabilities from discontinued operations (249) (109) Other (1,552) 1,181 -------- ------- Net cash (used in) provided by operating activities (480) 1,048 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to real estate (4,398) (9,394) Cash restricted for construction financing 2 (72) Cash restricted for operating liabilities 579 3,262 -------- ------- Net cash used in investing activities (3,817) (6,204) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt 16,667 5,056 Debt repayments (329) (215) Deferred debt expense (167) -- -------- ------- Net cash provided by financing activities 16,171 4,841 -------- ------- Net increase (decrease) cash and cash equivalents 11,874 (315) Cash and cash equivalents at beginning of period 5,480 8,471 -------- ------- Cash and cash equivalents at end of period $ 17,354 $ 8,156 ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash payments for interest (including capitalized interest of $2,254 and $2,240) $ 5,063 $ 5,048 ======== =======
See notes to consolidated financial statements. Page 5 of 14 6 ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of March 31, 1997, the consolidated statements of operations for the three months ended March 31, 1997, and the consolidated statements of cash flows for the three months ended March 31, 1997 are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's 1996 Annual Report to Shareholders. The results of operations for the three months ended March 31, 1997 are not necessarily indicative of the operating results for the full year. 2. RELATED PARTY TRANSACTIONS Under a three-year management and development agreement (the "Management Agreement") with Vornado Realty Trust ("Vornado"), which commenced March 2, 1995, Alexander's incurred fees of $938,000 and $1,088,000 in the three months ended March 31, 1997 and 1996. In addition to the fee payable pursuant to the Management Agreement, the Company pays Vornado a leasing fee under the terms of its leasing agreement. Alexander's incurred leasing fees of $625,000 in the three months ended March 31, 1997 and 1996. Vornado is due $8,318,000 at March 31, 1997 under such agreement, subject to the payment of rents by tenants. In March 1995, the Company borrowed $45,000,000 from Vornado, the subordinated tranche of a $75,000,000 secured financing. The loan has a three-year term and presently bears interest at 15.60% (previously bore interest at 16.43% through March 1997). The Company incurred interest on its loan from Vornado of $1,830,000 and $1,869,000 in the three months ended March 31, 1997 and 1996, of which $1,216,000 was capitalized this year and $614,000 was capitalized last year. 3. CONTINGENCIES Paramus Property The Company owns 39.3 acres of land, including its former store building, located in Paramus, New Jersey. Approximately 9 acres located on the property's periphery are subject to condemnation by the State of New Jersey. Alexander's and the New Jersey Department of Transportation ("DOT") are negotiating an agreement, pursuant to which the DOT will pay approximately $14,700,000 for the property subject to condemnation and grant the Company the right to develop up to 550,000 square feet on the remaining acreage. The agreement with the DOT is subject to negotiation of final documentation and to certain municipal approvals. Page 6 of 14 7 ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Environmental Matters The results of a 1993 Phase I environmental study at the Kings Plaza Shopping Center's ("Center") property show that certain adjacent properties owned by third parties have experienced petroleum hydrocarbon contamination. Based on this study and preliminary investigation of the Center's property and its history, there is potential for contamination on the property. If contamination is found on the property, the Center may be required to engage in remediation activities; management is unable to estimate the financial impact of potential contamination if any is discovered in the future. If further investigations reveal that there is contamination on its site, since the Center believes such contamination would have resulted from activities of third parties, the Center intends to pursue all available remedies against any of these third parties. The Company is aware of the presence of asbestos-containing materials at several of its properties and believes that it manages such asbestos in accordance with applicable laws. The Company plans to abate or remove such asbestos as appropriate. Caldor Corporation ("Caldor") Property rentals from Caldor, which filed for relief under Chapter 11 of the United States Bankruptcy Code in September 1995, represented approximately 36% of the Company's consolidated revenues for the three months ended March 31, 1997 and the year ended December 31, 1996. On April 17, 1997, Caldor filed for Bankruptcy Court approval to reject its Fordham Road lease effective June 20, 1997. After the Bankruptcy Court's approval, Caldor would no longer have any obligation to pay rent under this lease. Alexander's will file a claim for damages based on such rejection. The annual base rental under this lease is $3,537,000 (approximately 19% of the Company's consolidated revenues). The loss of property rental payments under the Caldor leases (for the Flushing and Fordham Road Properties) could have a material adverse effect on the financial condition and results of operations of the Company. Page 7 of 14 8 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's revenues, which consist of property rentals, tenant expense reimbursements and equity in income of unconsolidated joint venture were $5,998,000 in the quarter ended March 31, 1997, compared to $4,684,000 in the prior year's quarter, an increase of $1,314,000. Property rentals were $4,220,000 in the quarter ended March 31, 1997, compared to $3,127,000 in the prior year's quarter, an increase of $1,093,000. This increase resulted primarily from a full quarter this year of rents and paid parking at the Company's Rego Park I property compared to one month in 1996. The Company expects its property rentals to be adversely affected by the rejection of Caldor's Fordham Road lease - see Liquidity and Capital Resources. Tenant expense reimbursements were $491,000 in the quarter ended March 31, 1997 compared to $290,000 in the prior year's quarter, an increase of $201,000. This increase reflects a corresponding increase in operating expenses passed through to tenants and was largely the result of a full quarter of operations at the Company's Rego Park I property this year compared to one month in 1996. Equity in income of unconsolidated joint venture ("the Kings Plaza Shopping Center") in the quarter ended March 31, 1997 did not change significantly from the prior year's quarter. Operating expenses were $1,612,000 in the quarter ended March 31, 1997, compared to $1,024,000 in the prior year's quarter, an increase of $588,000. This increase resulted primarily from a full quarter of operations at the Rego Park I property this year compared to one month in 1996. General and administrative expenses were $981,000 in the quarter ended March 31, 1997, compared to $1,160,000 in the prior year's quarter, a decrease of $179,000. This decrease resulted primarily from lower professional fees. Interest and debt expense was $3,294,000 for the quarter ended March 31, 1997 compared to $3,317,000 for the prior year's quarter, a decrease of $23,000. This decrease resulted primarily from more interest expense being capitalized on other redevelopment projects in the quarter ended March 31, 1997, offset by interest on the Rego Park I debt being charged to income this year whereas in the prior year's quarter such interest was capitalized through mid-March at which time the property became operational. Interest and other income, net was $252,000 in the quarter ended March 31, 1997, compared to $622,000 in the prior year's quarter, a decrease of $370,000. This decrease resulted primarily from (i) lower average cash invested this year than in the prior year, and (ii) the amortization of deferred gains in connection with the Company's postretirement healthcare benefits and refunds in the prior year. Page 8 of 14 9 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Alexander's current operating properties (five of its nine properties) do not generate sufficient cash flow to pay all of its expenses. The Company's four non-operating properties (Lexington Avenue, Paramus, the Kings Plaza Store and Rego Park II) are in various stages of redevelopment. As rents commence from a portion of the redevelopment properties, the Company expects that cash flow will become positive. The Company estimates that its capital expenditure requirements for redevelopment projects will include: (i) approximately $3,000,000 to complete the Rego Park I project, (ii) the redevelopment of the Paramus property, which may include razing the existing building (in which case, the carrying cost of approximately $5,400,000 would be written-off), at a cost of approximately $60,000,000 to $70,000,000, (iii) the redevelopment of the Kings Plaza Store property at a cost of approximately $5,000,000 to $10,000,000 and (iv) improvements to the Kings Plaza Shopping Center at a cost of approximately $15,000,000. Further, the Company is evaluating redevelopment plans for the Lexington Avenue site, which may involve razing the existing buildings (in which case, the carrying cost of approximately $15,000,000 would be written-off) and developing a large multi-use building requiring capital in excess of $300,000,000 to be expended. While the Company anticipates that financing will be available after tenants have been obtained for these redevelopment projects, there can be no assurance that such financing will be obtained or if obtained, that such financings will be on terms that are acceptable to the Company. In addition, it is uncertain as to when these projects will commence. Property rentals from Caldor, which filed for relief under Chapter ll of the United States Bankruptcy Code in September 1995, represented approximately 36% of the Company's consolidated revenues for the three months ended March 31, 1997 and the year ended December 31, 1996. On April 17, 1997, Caldor filed for Bankruptcy Court approval to reject its Fordham Road lease effective June 20, 1997. After the Bankruptcy Court's approval, Caldor would no longer have any obligation to pay rent under this lease. Alexander's will file a claim for damages based on such rejection. The annual base rental revenue under this lease is $3,537,000 (approximately 19% of the Company's consolidated revenues). The loss of property rental payments under the Caldor leases (for the Flushing and Fordham Road Properties) could have a material adverse effect on the financial condition and results of operations of the Company. In addition, Caldor failed to meet certain financial tests required under the Company's Fordham Road mortgage. As a result, the Company is required to remit the net cash flow from the Fordham Road Property into an account of the lender as additional payments under the loan. The amount remitted to the lender for the three months ended March 31, 1997 was $204,000. The Company's leases with Circuit City, Bed Bath & Beyond and Old Navy for the remaining 112,000 square feet at its Rego Park I property are expected to commence during the second quarter of 1997. In addition, Sears, which leased 289,000 square feet of the Company's Kings Plaza Store property for use as a full-line department store, is expected to commence in the last quarter of 1997. During the quarter, the Company extended its Rego Park construction loan for one year maturing on March 30, 1998. As of March 31, 1997, $75,000,000 was funded under such construction loan (approximately $16,667,000 was borrowed in the quarter ended March 31, 1997). The loan bears interest at LIBOR plus 1.00% (6.30% at March 31, 1997). The Company has also agreed with the bank to refinance the existing loan through the issuance of rated commercial mortgage backed securities later this year. Page 9 of 14 10 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company estimates that the fair market values of its assets are substantially in excess of their historical cost and that there is additional borrowing capacity. Alexander's continues to evaluate its needs for capital which may be raised through (a) property specific or corporate borrowing, (b) the sale of securities and (c) asset sales. In addition, the Company may receive proceeds from condemnation proceedings of a portion of its Paramus property. Although there can be no assurance, the Company believes that these cash sources will be adequate to fund cash requirements until its operations generate adequate cash flow. CASH FLOWS Three Months Ended March 31, 1997 Cash used in operating activities of $480,000 was comprised of (i) a net loss of $208,000, (ii) the payment of liabilities of discontinued operations of $249,000 and (iii) the net change in operating assets and liabilities of $1,631,000, offset by adjustments for non-cash items of $1,608,000. The adjustments for non-cash items are comprised of (i) depreciation and amortization of $1,057,000 and (ii) equity in income of unconsolidated joint venture of $1,063,000, offset by the effect of straight-lining of rental income of $512,000. Net cash used in investing activities of $3,817,000 was comprised of capital expenditures of $4,398,000, offset by the release of cash restricted for both operating liabilities and construction financing of $581,000. Net cash provided by financing activities of $16,171,000 was comprised of proceeds from the issuance of debt (net of deferred debt expense) of $16,500,000 on the Rego Park I property, offset by repayments of debt of $329,000. Three Months Ended March 31, 1996 Cash provided by operating activities of $1,048,000 was comprised of $1,297,000 from results of operations (net loss of $462,000 offset by non-cash items of $1,759,000), offset by a net change in operating assets and liabilities of $249,000. Net cash used in investing activities of $6,204,000 was comprised primarily of capital expenditures of $9,394,000, offset by the release of cash restricted for operating liabilities of $3,262,000. Net cash provided by financing activities of $4,841,000 was comprised of proceeds from the issuance of debt of $5,056,000 (net of deferred debt expense), offset by repayments of debt of $215,000. RECENTLY ISSUED ACCOUNTING STANDARD In February 1997, the Financial Accounting Standards Board adopted Statement No. 128 "Earnings Per Share". The statement is effective for fiscal years ending after December 15, 1997. The Company believes that this pronouncement will not have a material effect on its net income (loss) per share. Page 10 of 14 11 ALEXANDER'S, INC. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: The following exhibits are filed with this Quarterly Report on Form 10-Q. 27 Financial Data Schedule (b) Reports on Form 8-K None Page 11 of 14 12 ALEXANDER'S, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALEXANDER'S, INC. ------------------------------------ (Registrant) Date: May 8, 1997 /s/ Joseph Macnow ------------------------------------ JOSEPH MACNOW Vice President - Chief Financial Officer and Chief Accounting Officer Page 12 of 14 13 ALEXANDER'S, INC. EXHIBIT INDEX PAGE NUMBER IN SEQUENTIAL EXHIBIT NO. NUMBERING ----------- --------------- 27 Financial Data Schedule 14 Page 13 of 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 17,354 0 412 (147) 0 0 223,715 (39,809) 230,748 0 208,685 0 0 5,174 181 230,748 0 5,998 0 3,164 0 0 3,294 (208) 0 (208) 0 0 0 (208) (0.04) (0.04)
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