-----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, LTyQvAbMwfRMeWFtSjaHw1bHHgygiZqeJJcOsv2vKswFkF/bFhjzhY5eGzijEc2R 5PJmtn+hn/vZX1aS15ZOLA== 0000950123-98-004851.txt : 19980513 0000950123-98-004851.hdr.sgml : 19980513 ACCESSION NUMBER: 0000950123-98-004851 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 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: SEC FILE NUMBER: 001-06064 FILM NUMBER: 98616668 BUSINESS ADDRESS: STREET 1: PARK 80 WEST STREET 2: PLAZA II CITY: SADDLEBROOK STATE: NJ ZIP: 07663 BUSINESS PHONE: 2125602121 MAIL ADDRESS: STREET 1: PARK 80 WEST, PLAZA II CITY: SADDLE BROOK STATE: NJ ZIP: 07663 10-Q 1 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, 1998 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 1, 1998 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, 1998 and December 31, 1997........................................................... 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and March 31, 1997.................................. 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and March 31, 1997.................................. 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, 1998 1997 --------- --------- ASSETS: Real estate, at cost: Land $ 45,571 $ 45,571 Buildings, leaseholds and improvements 123,612 123,612 Capitalized expenses and predevelopment costs 50,767 47,163 --------- --------- Total 219,950 216,346 Less accumulated depreciation and amortization (35,862) (35,224) --------- --------- 184,088 181,122 Investment in unconsolidated joint venture 10,708 10,611 --------- --------- Real estate, net 194,796 191,733 Cash and cash equivalents 2,700 2,691 Restricted cash 8,209 1,872 Receivable arising from condemnation proceedings -- 14,700 Accounts receivable, net of allowance for doubtful accounts of $147 in each period 475 1,064 Receivable arising from the straight-lining of rents, net 8,703 7,805 Deferred lease and other expenses 12,672 12,443 Deferred debt expense 632 783 Other assets 3,912 1,983 --------- --------- TOTAL ASSETS $ 232,099 $ 235,074 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Debt $ 204,359 $ 208,087 Amounts due to Vornado Realty Trust and its affiliate 6,686 6,888 Accounts payable and accrued liabilities 4,265 4,174 Other liabilities from discontinued operations 2,238 2,296 Minority interest 600 600 --------- --------- TOTAL LIABILITIES 218,148 222,045 --------- --------- 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 (15,106) (16,028) --------- --------- 14,911 13,989 Less treasury shares, 172,600 shares at cost (960) (960) --------- --------- Total stockholders' equity 13,951 13,029 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 232,099 $ 235,074 ========= =========
See notes to consolidated financial statements. 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, 1998 1997 ------- ------- Revenues: Property rentals $ 5,631 $ 4,220 Expense reimbursements 998 491 Equity in income of unconsolidated joint venture 1,378 1,287 ------- ------- Total revenues 8,007 5,998 ------- ------- Expenses: Operating (including management fee to Vornado of $210 in 1998 and 1997) 2,020 1,612 General and administrative (including management fee to Vornado of $540 in 1998 and 1997) 866 981 Depreciation and amortization 798 571 ------- ------- Total expenses 3,684 3,164 ------- ------- Operating income 4,323 2,834 Interest and debt expense (including interest on loan from Vornado) (3,665) (3,294) Interest and other income, net 264 252 ------- ------- Net income (loss) $ 922 $ (208) ======= ======= Net income (loss) per share (basic and diluted) $ .18 $ (.04) ======= =======
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, 1998 1997 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 922 $ (208) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization (including debt issuance costs) 1,169 1,057 Straight-lining of rental income (898) (512) Change in assets and liabilities: Accounts receivable 589 (64) Note receivable 14,700 -- (Investment) distributions in excess of equity in income of unconsolidated joint venture (98) 1,063 Amounts due to Vornado Realty Trust and its affiliate (527) (542) Accounts payable and accrued liabilities 92 527 Other liabilities from discontinued operations (58) (249) Other (1,994) (1,552) -------- -------- Net cash provided by (used in) operating activities 13,897 (480) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to real estate (3,603) (4,398) Cash restricted for construction and development (6,326) 2 Cash restricted for operating liabilities (11) 579 -------- -------- Net cash (used in) investing activities (9,940) (3,817) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt -- 16,667 Debt repayments (3,729) (329) Deferred debt expense (219) (167) -------- -------- Net cash (used in) provided by financing activities (3,948) 16,171 -------- -------- Net increase in cash and cash equivalents 9 11,874 Cash and cash equivalents at beginning of period 2,691 5,480 -------- -------- Cash and cash equivalents at end of period $ 2,700 $ 17,354 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash payments for interest (including capitalized interest of $1,765 and $2,254) $ 5,060 $ 5,063 ======== ========
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, 1998, the consolidated statements of operations for the three months ended March 31, 1998, and the consolidated statements of cash flows for the three months ended March 31, 1998 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 1997 Annual Report to Shareholders. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the operating results for the full year. 2. RELATIONSHIP WITH VORNADO REALTY TRUST ("Vornado") Vornado owns 29.3% of the Company's Common Stock. The Company is managed by and its properties are redeveloped and leased by Vornado, pursuant to agreements with a one-year term expiring in March of each year which are automatically renewable. Under these agreements, the Company incurred fees of $1,563,000 in each of the three month periods ended March 31, 1998 and 1997. In addition, Vornado is due $6,078,000 at March 31, 1998 under the leasing agreement, subject to the payment of rents by tenants. Vornado lent the Company $45,000,000, the subordinated tranche of a $75,000,000 loan, in 1995. The loan, which had a three-year term expiring on March 15, 1998, has been extended for an additional year and the interest rate has been reset from 15.60% per annum to 13.87% per annum. The Company incurred interest on its loan from Vornado of $ 1,718,000 and $1,830,000 in the three months ended March 31, 1998 and 1997, of which $907,000 and $1,216,000 was capitalized. 3. COMMITMENTS AND CONTINGENCIES Lexington Avenue The Company is evaluating redevelopment plans for this 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. No development decisions have been finalized. Page 6 of 14 7 ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Environmental Matters In June 1997, the Kings Plaza Shopping Center (the "Center"), in which the Company owns a 50% interest, commissioned an Environmental Study and Contamination Assessment Site Investigation (the Phase II "Study") to evaluate and delineate environmental conditions disclosed in a Phase I study. The results of the Study indicate the presence of petroleum and other hydrocarbons in the soil and groundwater. The Study recommends a remedial approach, but agreement has not yet been reached with the New York State Department of Environmental Conservation ("NYDEC") on the finalization of the approach. The Center accrued $1,500,000 at December 31, 1997, for its estimated obligation with respect to the clean up of the site, which includes costs of (i) remedial investigation, (ii) feasibility study, (iii) remedial design, (iv) remedial action and (v) professional fees. If the NYDEC insists on a more extensive remediation approach, the Center could incur additional obligations. Such contamination may have resulted from activities of third parties; however, the sources of the contamination have not been fully identified. Although the Center intends to pursue all available remedies against any potentially responsible third parties, there can be no assurance that such parties will be identified, or if identified, whether these potentially responsible third parties will be solvent. In addition, the costs associated with pursuing any potentially responsible parties may be cost prohibitive. The Center has not recorded an asset as of March 31, 1998 for potential recoveries of environmental remediation costs from other parties. Compliance with applicable provisions of federal, state and local laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment have not had, and, although there can be no assurance, are not expected to have, a material effect on the Company's operations, earnings, competitive position or capital expenditures. 4. EARNINGS PER SHARE The following table set for the computation of basic and diluted earnings per share: FOR THE THREE MONTHS ENDED
---------------------------- MARCH 31, MARCH 31, 1998 1997 ---------- ----------- Numerator: Net income (loss) $ 922,000 $ (208,000) ========== =========== Denominator: Denominator for basic earnings per share -- weighted average shares 5,000,850 5,000,850 Effect of dilutive securities: Employee stock options 67,335 -- ---------- ----------- Denominator for diluted earnings per share -- adjusted weighted average shares and assumed conversions 5,068,185 5,000,850 ========== =========== Basic and diluted earnings (loss) per share $ .18 $ (.04) ========== ===========
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 $8,007,000 in the quarter ended March 31, 1998, compared to $5,998,000 in the quarter ended March 31, 1997, an increase of $2,009,000 or 33.5%. Property rentals were $5,631,000 in the quarter ended March 31, 1998, compared to $4,220,000 in the quarter ended March 31, 1997, an increase of $1,411,000 or 33.4%. This increase resulted primarily from rents from leases commencing subsequent to March 31, 1997 at the Rego Park I and Kings Plaza Store properties of $2,117,000, partially offset by the loss of $965,000 of rent resulting from Caldor's rejection of its Fordham Road lease in June 1997. Tenant expense reimbursements were $998,000 in the quarter ended March 31, 1998, compared to $491,000 in the quarter ended March 31, 1997, an increase of $507,000. This increase reflects a corresponding increase in operating expenses passed through to tenants as a result of leases commencing subsequent to March 31, 1997 at the Rego Park I property and the commencement of operations at the Kings Plaza Store property. Equity in income of unconsolidated joint venture (the Kings Plaza Mall) was $1,378,000 in the quarter ended March 31, 1998, compared to $1,287,000 in the quarter ended March 31, 1997, an increase of $91,000 or 7.1%. This increase resulted primarily from an increase in rent from mall tenants. Operating expenses were $2,020,000 in the quarter ended March 31, 1998, compared to $1,612,000 in the quarter ended March 31, 1997, an increase of $408,000. This increase resulted primarily from real estate taxes which previously had been capitalized, being charged to income due to the commencement of operations at the Kings Plaza Store property. General and administrative expenses were $866,000 in the quarter ended March 31, 1998, compared to $981,000 in the quarter ended March 31, 1997, a decrease of $115,000. This decrease resulted primarily from lower professional fees. Depreciation and amortization expense was $798,000 in the quarter ended March 31, 1998, compared to $571,000 in the quarter ended March 31, 1997, an increase of $227,000. This increase resulted primarily from the commencement of operations at the Kings Plaza Store property in October 1997. Interest and debt expense was $3,665,000 in the quarter ended March 31, 1998, compared to $3,294,000 in the quarter ended March 31, 1997, an increase of $371,000. This increase resulted primarily from interest allocated to the Kings Plaza Store property which previously had been capitalized, being charged to income in 1998. LIQUIDITY AND CAPITAL RESOURCES In the aggregate, Alexander's current operating properties (six of its nine properties) do not generate sufficient cash flow to pay all of its expenses. The Company's three non-operating properties (Lexington Avenue, Paramus, 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. Page 8 of 14 9 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company estimates that its capital expenditure requirements for redevelopment projects will include: (i) the redevelopment of the Paramus property, at a cost of approximately $90,000,000 to $100,000,000 and (ii) improvements to the Kings Plaza Shopping Center at a cost of approximately $20,000,000. 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 11 of the United States Bankruptcy Code in September 1995, represented approximately 12% and 22% of the Company's consolidated revenues for the three months ended March 31, 1998 and for the year ended December 31, 1997. 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. 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. The non-affiliated limited partners of the Seven Thirty One Limited partnership (the "Partnership"), a limited partnership which owns the Company's Lexington Avenue property, have the right to put their remaining 7.64% interest to the Partnership until October 3, 1998, in exchange for a five year secured note in the principal amount of $15,000,000, bearing annual interest at Prime plus 1%. The Company estimates that the fair market values of its assets are substantially in excess of their historical cost and that it has 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, in March 1998 the Company received the proceeds from the condemnation of a portion of its Paramus property of $14,700,000 and repaid $3,591,000 of the loan collateralized by the 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, 1998 Cash provided by operating activities of $13,897,000 was comprised of (i) net income of $922,000, (ii) proceeds from the condemnation of a portion of the Paramus property of $14,700,000 and (iii) non-cash items of $271,000, offset by (iv) the net change in operating assets and liabilities of $1,996,000. The adjustments for non-cash items are comprised of depreciation and amortization of $1,169,000, offset by the effect of straight-lining of rental income of $898,000. Net cash used in investing activities of $9,940,000 was primarily comprised of (i) cash from the condemnation of a portion of the Paramus property restricted for construction and development of $6,326,000 and (ii) capital expenditures of $3,603,000. Net cash used in financing activities of $3,948,000 was comprised primarily of repayments of debt. Page 9 of 14 10 ALEXANDER'S, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 $568,000, offset by adjustments for non-cash items of $545,000. The adjustments for non-cash items are comprised of depreciation and amortization of $1,057,000, 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. 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 7, 1998 /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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 MAR-31-1998 2,700 0 622 (147) 0 0 219,950 (35,862) 232,099 0 204,359 0 0 5,174 8,777 232,099 0 8,007 0 2,020 1,664 0 3,665 922 0 0 0 0 0 922 .18 .18
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