-----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, GtlzkEe3gjisYjGflAA2t/fRtmq+kPHQpLhAlbsDRPk3xP7sJk50Shg4Ih0Cp/wR N8xApg2v3pvfdCy8LfevGQ== 0000950123-97-006817.txt : 19970814 0000950123-97-006817.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950123-97-006817 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97659427 BUSINESS ADDRESS: STREET 1: PARK 80 WEST STREET 2: PLAZA II CITY: SADDLEBROOK STATE: NJ ZIP: 07663 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 1 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: JUNE 30, 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 August 1, 1997 there were 5,000,850 common shares outstanding. Page 1 of 18 2 ALEXANDER'S, INC. INDEX Page Number ----------- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996.................................. 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1997 and June 30, 1996....... 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and June 30, 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 4. Submission of Matters to a Vote of Security Holders.... 12 Item 6. Exhibits and Reports on Form 8-K....................... 12 Signatures ....................................................... 13 Exhibit Index ...................................................... 14 Exhibit 10 ....................................................... 15 Exhibit 27 ....................................................... 18 Page 2 of 18 3 PART I. FINANCIAL INFORMATION ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31, 1997 1996 --------- ------------ ASSETS: Real estate, at cost: Land $ 45,999 $ 45,999 Buildings, leaseholds and Improvements (including $483 and $242 of construction in progress at June 30, 1997 and December 31, 1996) 114,763 114,280 Capitalized expenses and predevelopment costs 55,935 47,488 --------- --------- Total 216,697 207,767 Less accumulated depreciation and amortization (40,243) (39,375) --------- --------- 176,454 168,392 Investment in unconsolidated joint venture 10,953 12,613 --------- --------- Real estate, net 187,407 181,005 Cash and cash equivalents 14,204 5,480 Restricted cash 4,087 5,620 Accounts receivable, net of allowance for doubtful accounts of $147 in each period 528 201 Receivable arising from the straight-lining of rents, net 6,397 5,984 Deferred lease and other expenses 12,294 9,966 Deferred debt expense 1,647 2,364 Other assets 1,761 965 --------- --------- TOTAL ASSETS $ 228,325 $ 211,585 ========= ========= LIABILITIES AND DEFICIENCY IN NET ASSETS: Liabilities: Debt $ 208,353 $ 192,347 Amounts due to Vornado Realty Trust and its affiliate 7,570 6,207 Accounts payable and accrued liabilities 3,925 4,246 Other liabilities from discontinued operations 2,339 2,622 Minority interest 600 600 --------- --------- TOTAL LIABILITIES 222,787 206,022 --------- --------- 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 (23,519) (23,494) --------- --------- 6,498 6,523 Less treasury shares, 172,600 shares at cost (960) (960) --------- --------- Total stockholders' equity 5,538 5,563 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,325 $ 211,585 ========= =========
See notes to consolidated financial statements. Page 3 of 18 4 ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share amounts)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED --------------------------- --------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues: Property rentals $ 4,630 $ 4,504 $ 8,850 $ 7,453 Expense reimbursements 803 499 1,294 967 Equity in income of unconsolidated joint venture 1,328 683 2,615 1,950 ----------- ----------- ----------- ----------- Total revenues 6,761 5,686 12,759 10,370 ----------- ----------- ----------- ----------- Expenses: Operating (including management fee to Vornado of $210 and $420 each for the three and six months ended 1997 and 1996, respectively) 2,265 1,429 3,877 2,453 General and administrative (including management fee to Vornado of $540 and $1,080 each for the three and six months ended 1997 and 1996, respectively) 1,032 1,262 2,013 2,422 Depreciation and amortization 582 556 1,153 823 ----------- ----------- ----------- ----------- Total expenses 3,879 3,247 7,043 5,698 ----------- ----------- ----------- ----------- Operating income 2,882 2,439 5,716 4,672 Interest and debt expense (including interest on loan from Vornado) (3,311) (3,419) (6,605) (6,736) Interest and other income, net 612 1,033 864 1,655 ----------- ----------- ----------- ----------- Income (loss) from continuing operations 183 53 (25) (409) Income from discontinued operations -- 11,602 -- 11,602 ----------- ----------- ----------- ----------- Net income (loss) $ 183 $ 11,655 $ (25) $ 11,193 =========== =========== =========== =========== Net income (loss) per share: Continuing operations $ .04 $ .01 $ -- $ (.08) Discontinued operations -- 2.32 -- 2.32 ----------- ----------- ----------- ----------- Net income (loss) $ .04 $ 2.33 $ -- $ 2.24 =========== =========== =========== =========== Weighted average number of common shares outstanding during period 5,000,850 5,000,850 5,000,850 5,000,850
See notes to consolidated financial statements. Page 4 of 18 5 ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands)
FOR THE SIX MONTHS ENDED ------------------------ JUNE 30, JUNE 30, 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Loss from continuing operations $ (25) $ (409) Adjustments to reconcile loss from continuing operations to net cash provided by continuing operating activities: Depreciation and amortization (including debt issuance costs) 2,069 1,827 Straight-lining of rental income (413) (971) Equity in income of unconsolidated joint venture (net of distributions of $4,275 and $4,149 in 1997 and 1996) 1,660 2,199 Change in assets and liabilities: Accounts receivable (327) (336) Amounts due to Vornado Realty Trust and its affiliate (1,090) 371 Liability for postretirement healthcare benefits -- (810) Accounts payable and accrued liabilities (321) 805 Other liabilities from discontinued operations (283) (1,038) Other (956) (718) -------- -------- Net cash provided by operating activities 314 920 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to real estate (8,930) (24,051) Cash restricted for construction financing 965 (122) Cash restricted for operating liabilities 568 7,846 -------- -------- Net cash used in investing activities (7,397) (16,327) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt 16,667 10,527 Debt repayments (661) (522) Deferred debt expense (199) -- -------- -------- Net cash provided by financing activities 15,807 10,005 -------- -------- Net increase (decrease) in cash and cash equivalents 8,724 (5,402) Cash and cash equivalents at beginning of period 5,480 8,471 -------- -------- Cash and cash equivalents at end of period $ 14,204 $ 3,069 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash payments for interest (including capitalized interest of $4,579 and $4,455) $ 10,268 $ 10,187 ======== ========
See notes to consolidated financial statements. Page 5 of 18 6 ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of June 30, 1997, the consolidated statements of operations for the three and six months ended June 30, 1997 and June 30, 1996, and the consolidated statements of cash flows for the six months ended June 30, 1997 and June 30, 1996 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 and six months ended June 30, 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 in each of the three months ended June 30, 1997 and 1996 and $1,875,000 and $3,468,000 in the six months ended June 30, 1997 and 1996. The fees for the six months ended June 30, 1996, included $1,443,000 related to the completion of the redevelopment of the Rego Park I property in the quarter ended March 31, 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 each of the three months ended June 30, 1997 and 1996 and $1,250,000 in each of the six months ended June 30, 1997 and 1996. Vornado is due $5,490,000 at June 30, 1997 under such agreement, subject to the payment of rents by tenants. The lease which Vornado had previously negotiated with Caldor on behalf of the Company for its Fordham Road property was rejected in June 1997 in Caldor's bankruptcy proceedings, resulting in $1,254,000 of previously recorded leasing fees payable and $1,507,000 of deferred lease expense being reversed in the quarter ended June 30, 1997. 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 $1,775,000 and $1,889,000 in the three months ended June 30, 1997 and 1996, of which $1,250,000 and $1,203,000 were capitalized. Interest on the loan was $3,626,000 and $3,758,000 in the six months ended June 30, 1997 and 1996, of which $2,479,000 and $1,857,000 were capitalized. Page 6 of 18 7 ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Environmental Matters The results of a 1993 Phase I Environmental Study at the Kings Plaza Shopping Center property ("Center") - a 50% owned joint venture - showed that certain adjacent properties owned by third parties have experienced contamination by petroleum hydrocarbons. The Center commissioned a Phase II Environmental Study and Contamination Assessment/Site Investigation in June 1997 to evaluate and delineate environmental conditions. These additional reports indicate that the Center is required to engage in remediation activities at the property due to the presence of petroleum and other hydrocarbons. Management believes that the remediation will not have a material adverse effect on the Company's financial condition and results of operations. 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 29% and 36% of the Company's consolidated revenues for the six months ended June 30, 1997 and the year ended December 31, 1996. Caldor rejected its Fordham Road lease effective June 6, 1997 and accordingly, no longer pays rent; Alexander's has filed a claim for damages based on such rejection. The annual base rental under this lease was $3,537,000 (approximately 15% of the Company's consolidated revenues). The rejection of the Fordham Road lease and the loss of property rental payments, if any, under the Caldor lease for the Flushing property, could have a material adverse affect on the Company's financial condition and results of operations. Page 7 of 18 8 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements made in this report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of prospective tenants, lease rents and the terms and availability of financing; adverse changes in the real estate markets including, among other things, competition with other companies and technology; risks of real estate development and acquisition; governmental actions and initiatives; and environmental/safety requirements. RESULTS OF OPERATIONS The Company's revenues, which consist of property rentals, tenant expense reimbursements and equity in income of unconsolidated joint venture were $6,761,000 in the quarter ended June 30, 1997, compared to $5,686,000 in the prior year's quarter, an increase of $1,075,000. Revenues were $12,759,000 for the six months ended June 30, 1997, compared to $10,370,000 for the prior year's six months, an increase of $2,389,000. Property rentals were $4,630,000 in the quarter ended June 30, 1997 compared to $4,504,000 in the prior year's quarter, an increase of $126,000. This increase resulted primarily from leases commencing during the quarter with Circuit City, Bed Bath & Beyond and Old Navy for the remaining 112,000 square feet at the Company's Rego Park I property, partially offset by the loss of rent resulting from Caldor's rejection of its Fordham Road lease. Property rentals for the six months ended June 30, 1997 were $8,850,000 compared to $7,453,000 for the prior year's six months, an increase of $1,397,000. In addition to the items during the quarter noted above, the increase in the six months reflected six months of paid parking and rents for 234,000 square feet of the Company's Rego Park I property, compared to four months 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 $803,000 in the quarter ended June 30, 1997, compared to $499,000 the prior year's quarter, an increase of $304,000. Tenant expense reimbursements for the six months ended June 30, 1997 were $1,294,000 compared to $967,000 for the prior year's six months, an increase of $327,000. These increases reflect a corresponding increase in operating expenses passed through to tenants as a result of six months of operations at the Company's Rego Park I property this year, compared to four months in 1996. Equity in income of unconsolidated joint venture ("the Kings Plaza Shopping Center") was $1,328,000 in the quarter ended June 30, 1997, compared to $683,000 in the prior year's quarter, an increase of $645,000. Equity in income of the Kings Plaza Shopping Center was $2,615,000 for the six months ended June 30, 1997, compared to $1,950,000 in the prior year's six months, an increase of $665,000. These increases resulted primarily from higher rents. Operating expenses were $2,265,000 in the quarter ended June 30, 1997, compared to $1,429,000 in the prior year's quarter, an increase of $836,000. Operating expenses were $3,877,000 in the six months ended June 30, 1997, compared to $2,453,000 in the prior year's six months, an increase of $1,424,000. Of these increases, $667,000 was a second quarter charge to bad debt expense, in connection with Caldor's rejection of its Fordham Road lease, for the receivable from the straight-lining of rents. The remaining increase of $757,000 for the six months resulted primarily from six months of operations at the Rego Park I property this year, compared to four months in 1996. Page 8 of 18 9 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General and administrative expenses were $1,032,000 in the quarter ended June 30, 1997, compared to $1,262,000 in the prior year's quarter, a decrease of $230,000. General and administrative expenses were $2,013,000 in the six months ended June 30, 1997 compared to $2,422,000 in the prior year's six months, a decrease of $409,000. These decreases resulted primarily from lower professional fees. Interest and debt expense was $3,311,000 for the quarter ended June 30, 1997 compared to $3,419,000 for the prior year's quarter, a decrease of $108,000. Interest and debt expense was $6,605,000 in the six months ended June 30, 1997 compared to $6,736,000 for the prior year's six months, a decrease of $131,000. These decreases resulted primarily from more interest expense being capitalized on redevelopment projects in 1997, offset by interest on the Rego Park I debt being charged to income this year for six months versus four months last year. Interest and other income, net was $612,000 in the quarter ended June 30, 1997, compared to $1,033,000 in the prior year's quarter, a decrease of $421,000. Interest and other income, net was $864,000 in the six months ended June 30, 1997, compared to $1,655,000 in the prior year's six months, a decrease of $791,000. These decreases resulted primarily from the amortization of deferred gains in connection with the Company's postretirement healthcare benefits and refunds in the prior year. Discontinued Operations The Company recorded income from discontinued operations of $11,602,000 in the quarter ended June 30, 1996 comprised of (i) $9,602,000 from the settlement of a tax certiorari proceeding against the County of Nassau for overpayment of taxes on its former Valley Stream Store property and (ii) $2,000,000 from the reduction of "Other liabilities of discontinued 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 $2,500,000 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 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. Page 9 of 18 10 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Property rentals from Caldor, which filed for relief under Chapter 11 of the United States Bankruptcy Code in September 1995, represented approximately 29% and 36% of the Company's consolidated revenues for the six months ended June 30, 1997 and the year ended December 31, 1996. Caldor rejected its Fordham Road lease effective June 6, 1997 and accordingly, no longer pays rent; Alexander's has filed a claim for damages based on such rejection. The annual base rental revenue under this lease was $3,537,000 (approximately 15% of the Company's consolidated revenues). The rejection of the Fordham Road lease and the loss of property rental payments, if any, under the Caldor lease for the Flushing Property, could have a material adverse effect on the Company's financial condition and results of operations. In addition, Caldor failed to meet certain financial tests required under the Company's Fordham Road mortgage. As a result, the Company was 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 six months ended June 30, 1997 was $407,000. 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 commenced during the second quarter of 1997. In addition, the Company's lease with Sears for 289,000 square feet at its Kings Plaza Store property for use as a full-line department store is expected to commence in the last quarter of 1997. In March 1997, the Company extended its Rego Park construction loan for one year maturing on March 30, 1998. As of June 30, 1997, $75,000,000 was funded under such construction loan (approximately $16,667,000 was borrowed in the six months ended June 30, 1997). The loan bears interest at LIBOR plus 1.00% (6.88% at June 30, 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. 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 Six Months Ended June 30, 1997 Cash provided by operating activities of $314,000 was comprised of $3,291,000 from results of operations (net loss of $25,000 offset by non-cash items of $3,316,000), partially offset by the net change in operating assets and liabilities of $2,977,000. The adjustments for non-cash items are comprised of (i) depreciation and amortization of $2,069,000 and (ii) equity in income of unconsolidated joint venture of $1,660,000, offset by the effect of straight-lining of rental income of $413,000. Net cash used in investing activities of $7,397,000 was comprised of capital expenditures of $8,930,000, offset by the release of $1,533,000 of restricted cash. Page 10 of 18 11 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net cash provided by financing activities of $15,807,000 was comprised of proceeds from the issuance of debt (net of deferred debt expense) of $16,468,000 on the Rego Park I property, offset by repayments of debt of $661,000. Six Months Ended June 30, 1996 Cash provided by operating activities of $920,000 was comprised of $2,646,000 from results of operations (net loss of $409,000 offset by non-cash items of $3,055,000), offset by a net change in operating assets and liabilities of $1,726,000. Net cash used in investing activities of $16,327,000 was comprised primarily of capital expenditures of $24,051,000, offset by the release of cash restricted for operating liabilities of $7,846,000. Net cash provided by financing activities of $10,005,000 was comprised of proceeds from the issuance of debt of $10,527,000, offset by repayments of debt of $522,000. 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 11 of 18 12 ALEXANDER'S, INC. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 28, 1997, the Company held its annual meeting of stockholders. The matters on which the stockholders voted, in person or by proxy, were: (1) the election of the three nominees listed in the Proxy Statement to serve on the Board of Directors for a term of three years, or until their respective successors are duly elected and qualify and (2) the approval of the amendment to the Company's Omnibus Stock Plan. The three nominees were elected and the amendment to the Omnibus Stock Plan was approved. The results of the voting are shown below: Election of Directors
Votes Cast Against or Directors Votes Cast For Withheld --------------------- -------------- ---------- Steven Roth 4,630,660 71,112 Russell B. Wight, Jr. 4,630,909 70,863 Neil Underberg 4,630,906 70,866
Approval of Amendment to the Omnibus Stock Plan
Abstention Votes Cast or Broker Votes Cast For Against Non-Vote -------------- ---------- ---------- 2,325,696 649,021 3,504
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: The following exhibits are filed with this Quarterly Report on Form 10-Q. 10 Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997. 27 Financial Data Schedule (b) Reports on Form 8-K None Page 12 of 18 13 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: August 7, 1997 /s/ Joseph Macnow ----------------------------- JOSEPH MACNOW Vice President - Chief Financial Officer and Chief Accounting Officer Page 13 of 18 14 ALEXANDER'S, INC. EXHIBIT INDEX PAGE NUMBER IN SEQUENTIAL EXHIBIT NO. NUMBERING ----------- -------------- 10 Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997. 15 27 Financial Data Schedule 18 Page 14 of 18 EX-10 2 AMENDED OMNIBUS STOCK PLAN 1 EXHIBIT 10 ALEXANDER'S, INC. OMNIBUS STOCK PLAN 1. PURPOSE. The purpose of the Alexander's, Inc. Omnibus Stock Plan (the "Plan") is to promote the financial interests of Alexander's, Inc. (the "Company"), including its growth and performance, by encouraging employees and officers of the Company and its subsidiaries, employees of Vornado Realty Trust ("Vornado") and its subsidiaries or any other person or entity designated by the Committee (as defined below) (collectively "Eligible Persons") to acquire an ownership interest in the Company, enhancing the ability of Company and its subsidiaries to attract and retain people or entities of outstanding ability, and providing such persons with a way to acquire or increase their proprietary interest in the Company's success. 2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Section 14, the number of shares of Common Stock, par value $1.00 per share, of the Company (the "Shares") which shall be available for the grant of awards under the Plan shall not exceed 1,050,000. No Participant (as defined in Section 3) shall be granted stock options or stock appreciation rights with respect to more than 350,000 Shares in any Plan year, subject to adjustment as provided in Article 14. The Shares issued under the Plan may be authorized and unissued Shares or treasury Shares, as the Company may from time to time determine. Shares subject to an award that expires unexercised, that is forfeited, terminated or canceled, in whole or in part, or is paid in cash in lieu of Shares, shall thereafter again be available for grant under the Plan. 3. ADMINISTRATION. The Plan shall be administered by a committee to be selected by the Board of Directors of the Company, from time to time (the "Committee"), which shall be comprised of no fewer than two members of the Board. Each member shall be a member of the Board who is "disinterested" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act"). A majority of the Committee shall constitute a quorum, and the acts of a majority shall be the acts of the Committee. Subject to the provisions of the Plan, the Committee (i) shall select the Eligible Persons who will be participants in the Plan (the "Participants"), determine the type of awards to be made to Participants, determine the Shares or share units subject to awards, and (ii) shall have the authority to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements entered into hereunder and to make all determinations necessary or advisable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any award in the manner and to the extent it shall deem desirable to carry it into effect. The determinations of the Committee in the administration of the Plan, as described herein, shall be final and conclusive. 4. ELIGIBILITY. All Eligible Persons who have demonstrated significant management potential or who have the capacity for contributing in a substantial measure to the successful performance of the Company, as determined by the Committee, are eligible to be Participants in the Plan. 5. AWARDS. Awards granted under the Plan may consist of either incentive stock options within the meaning of Section 422 of the Internal Revenue Code or non-qualified stock options, provided that only Eligible Persons who are employees of the Company or its subsidiaries may receive incentive stock options; stock appreciation rights, performance shares or grants of restricted stock. Awards of performance shares and restricted stock may provide the Participant with dividends and voting rights prior to vesting (whether based on a period of time or based on attainment of specified performance conditions). Page 15 of 18 2 6. STOCK OPTIONS. The Committee shall establish the option price at the time each stock option is granted, which price shall not be less than 100% of the fair market value of the Shares on the date of grant; provided, that for incentive stock options granted to persons owning more than 10% of the outstanding shares of Common Stock, the option price shall not be less than 110% of the fair market value per share at the date of grant. Stock options shall be exercisable for such period as specified by the Committee, but in no event may options be exercisable more than ten years after their date of grant (five years in the case of an incentive stock option granted to a ten percent stockholder). The option price of each Share as to which a stock option is exercised shall be paid in full at the time of such exercise. Such payment shall be made in cash, by tender of unrestricted Shares owned by the Participant valued at fair market value as of the date of exercise, in such other consideration as the Committee deems appropriate, or by a combination of cash, unrestricted Shares and such other consideration. If determined by the Committee at or subsequent to the date of grant of a stock option, in the event a Participant pays the exercise price of such stock option (in whole or in part) by tendering Shares owned by the Participant, such Participant shall automatically be granted a reload stock option for the number of Shares used to pay the exercise price. The reload stock option shall have terms and conditions determined by the Committee consistent with this Section. If a reload stock option is granted as set forth above, one or more successive reload stock options shall automatically be granted, unless otherwise determined by the Committee, to a Participant who pays all or part of the exercise price of any such reload stock option by tendering Shares owned by the Participant. Such reload stock option grants shall not be treated as Shares granted under the Plan in determining the aggregate number of Shares available for the grant of awards pursuant to the first sentence of Section 2. 7. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted in tandem with a stock option, in addition to a stock option, or may be freestanding and unrelated to a stock option. Stock appreciation rights granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time. No stock appreciation right shall be exercisable earlier than six months after grant, except in the event of the Participant's death or disability. A stock appreciation right shall entitle the Participant to receive from the Company an amount equal to the increase of the fair market value of the Share on the exercise of the stock appreciation right over the grant price. The Committee, in its sole discretion, shall determine whether the stock appreciation right shall be settled in cash, Shares or a combination of cash and Shares. 8. PERFORMANCE SHARES. Performance shares may be granted in the form of actual Shares or share units having a value equal to an identical number of Shares. In the event that a certificate is issued in respect of Shares subject to a grant of performance shares, such certificate shall be registered in the name of the Participant but shall be held by the Company until the time the Shares subject to the grant of performance shares are earned. The performance conditions and the length of the performance period shall be determined by the Committee. The Committee, in its sole discretion, shall determine whether performance shares granted in the form of share units shall be paid in cash, Shares, or a combination of cash and Shares. 9. RESTRICTED STOCK. Restricted stock may be granted in the form of actual Shares or share units having a value equal to an identical number of Shares. In the event that a certificate is issued in respect of Shares subject to a grant of restricted stock, such certificate shall be registered in the name of the Participant but shall be held by the Company until the end of the restricted period. The employment conditions and the length of the period for vesting of restricted stock shall be established by the Committee at time of grant. The Committee, in its sole discretion, shall determine whether restricted stock granted in the form of share units shall be paid in cash, Shares, or a combination of cash and Shares. 10. AWARD AGREEMENTS. Each award under the Plan shall be evidenced by an agreement setting forth the terms and conditions, as determined by the Committee, which shall apply to such award, in addition to the terms and conditions specified in the Plan. Page 16 of 18 3 11. WITHHOLDING. The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to require prior to the issuance or delivery of any Shares or the payment of cash under the Plan, any taxes required by law to be withheld therefrom. The Committee, in its sole discretion, may permit a Participant to elect to satisfy such withholding obligation by having the Company retain the number of Shares whose fair market value equals the amount required to be withheld. Any fraction of a Share required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash to the Participant. 12. NONTRANSFERABILITY. Except as may otherwise be determined by the Committee with respect to the transferability of stock options by a Participant to such Participant's immediate family members (or trusts, partnerships, or limited liability companies established for such immediate family members), no award under the Plan shall be assignable or transferable except by will or the laws of descent and distribution, and no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. For this purpose, immediate family member means, except as otherwise defined by the Committee, the Participant's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings (including half brothers and sisters), in-laws and persons related by reason of legal adoption. Such transferees may transfer a stock option only by will or the laws of descent or distribution. A stock option transferred pursuant to this Section 12 shall remain subject to the provisions of the Plan, and shall be subject to such other rules as the Committee shall determine. Upon transfer of a stock option, any related stock appreciation right shall be canceled. Except in the case of a holder's incapacity, an award shall be exercisable only by the holder thereof. 13. NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be granted an award, and the grant of such award shall not be construed as giving a Participant the right to be retained in the employ of the Company, Vornado or their respective subsidiaries. Further, the Company, Vornado and their respective subsidiaries expressly reserve the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any agreement entered into hereunder. 14. ADJUSTMENT OF AND CHANGES IN SHARES. In the event of any change in the outstanding Shares by reason of any share dividend or split, recapitalization, merger, consolidation, spinoff, combination or exchange of Shares or other corporate change, or any distributions to Common Stockholders other than regular cash dividends, the Committee may make such substitution or adjustment, if any, as it deems to be equitable, as to the number or kind of Shares or other securities issued or reserved for issuance pursuant to the Plan and to outstanding awards. 15. AMENDMENT. The Board of Directors may amend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary in order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act. 16. RIGHTS AS STOCKHOLDER. Except as provided in Section 5 hereof, a Participant shall have no rights as a stockholder with respect to any Shares issuable upon exercise of any award hereunder until a certificate or certificates evidencing the Shares shall have been issued to the Participant and, subject to Section 14, no adjustment shall be made for dividends or distributions or other rights in respect of any Share for which the record date is prior to the date on which the Participant shall become the holder of record thereof. 17. EFFECTIVE DATE. The Plan shall become effective on the date of its adoption by the Board of Directors of the Company, and awards may be granted immediately thereafter, but any award granted under the Plan is subject to defeasance unless and until the Plan shall have been approved by the stockholders. If such stockholder approval is not obtained, the Plan and any options granted thereunder shall be null and void. Subject to earlier termination pursuant to Section 15, the Plan shall have a term of ten years from its effective date. Page 17 of 18 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Company's unaudited financial statements for the six months ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1997 JUN-30-1997 14,204 0 675 147 0 0 227,650 40,243 228,325 0 208,353 0 0 5,174 364 228,325 0 12,759 0 7,043 0 6,605 (25) 0 0 (25) 0 0 0 (25) 0 0
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