<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
/XX/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1995
-------------
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)
31 West 34th Street, New York, New York 10001
----------------------------------------------------
(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 (1) 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 October 31, 1995 there were 5,000,850 common shares outstanding.
Page 1 of 13
<PAGE> 2
THIS FORM 10-Q/A AMENDS THE FOLLOWING ITEMS OF THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST
10, 1995
ALEXANDER'S, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
Page 2 of 13
<PAGE> 3
PART I. FINANCIAL INFORMATION
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
--------- -----------
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land $ 46,082 $ 26,460
Buildings leaseholds, and leasehold
improvements (including $7,645 of
construction in progress at June 30, 1995) 68,887 59,851
Capitalized expenses and predevelopment
costs 33,520 27,213
--------- ---------
Total 148,489 113,524
Less accumulated depreciation and
amortization (37,013) (36,365)
--------- ---------
111,476 77,159
Investment in unconsolidated joint
venture 9,324 7,499
--------- ---------
Real estate, net 120,800 84,658
Cash and cash equivalents 18,962 2,363
Restricted cash 20,835 --
Deferred lease and other expenses 12,391 11,561
Deferred finance and debt expense 5,577 2,642
Other assets 7,514 3,645
Note receivable -- 4,550
--------- ---------
TOTAL ASSETS $ 186,079 $ 109,419
========= =========
LIABILITIES AND DEFICIENCY IN NET ASSETS:
Continuing Operations:
Secured debt $ 161,893 $ 51,654
Amounts due to Vornado Realty Trust 12,202 12,342
Liability for postretirement
healthcare benefits 15,876 15,882
Taxes payable and accrued liabilities 10,732 9,067
Minority interest 600 1,574
Unsecured debt -- 1,188
--------- ---------
Total continuing operations 201,303 91,707
--------- ---------
Discontinued Retail Operations:
Taxes payable and accrued liabilities 2,325 2,613
Liabilities subject to settlement under
reorganization proceedings 8,728 36,672
--------- ---------
Total discontinued retail operations 11,053 39,285
--------- ---------
TOTAL LIABILITIES 212,356 130,992
--------- ---------
Commitments and contingencies
Deficiency in Net Assets:
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 (55,334) (50,630)
--------- ---------
(25,317) (20,613)
Less treasury shares, 172,600 shares at
cost (960) (960)
--------- ---------
Total deficiency in net assets (26,277) (21,573)
--------- ---------
TOTAL LIABILITIES AND DEFICIENCY
IN NET ASSETS $ 186,079 $ 109,419
========= =========
</TABLE>
See notes to consolidated financial statements.
Page 3 of 13
<PAGE> 4
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------ ------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Property rentals $ 2,189 $ 2,189 $ 4,378 $ 4,378
Expense reimbursements 310 286 595 571
Equity in income of unconsolidated
joint venture 88 60 861 522
Parking lot income 232 270 408 515
----------- ----------- ----------- -----------
Total Revenues 2,819 2,805 6,242 5,986
----------- ----------- ----------- -----------
Expenses:
Operating, general and administrative
(including management fee of $750 and
$1,000 to Vornado in 1995) 2,492 1,176 4,043 2,270
Depreciation and amortization 469 457 933 914
Reorganization costs 322 497 1,938 1,143
----------- ----------- ----------- -----------
Total expenses 3,283 2,130 6,914 4,327
----------- ----------- ----------- -----------
Operating (loss)/income (464) 675 (672) 1,659
Interest and debt expense (including interest
on loan from Vornado in 1995) (3,483) (624) (6,222) (1,220)
Interest and other income, net 687 35 784 136
Gain on sale of real estate -- -- -- 161
----------- ----------- ----------- -----------
(Loss)/income before reversal of deferred taxes (3,260) 86 (6,110) 736
----------- ----------- ----------- -----------
Reversal of deferred taxes -- -- 1,406 --
----------- ----------- ----------- -----------
NET (LOSS)/INCOME $(3,260) $ 86 $(4,704) $ 736
=========== =========== =========== ===========
Net (Loss)/Income Per Share $ (.65) $ .02 $ (.94) $ .15
=========== =========== =========== ===========
Weighted average number of common
shares outstanding during period 5,000,850 5,000,850 5,000,850 5,000,850
</TABLE>
See notes to consolidated financial statements.
Page 4 of 13
<PAGE> 5
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------------
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income $ (4,704) $ 736
Adjustments to reconcile net (loss)/income to net
cash (used in)/provided by operations:
Depreciation and amortization
(including debt issuance costs) 2,554 1,120
Gain on sale of real estate -- (161)
Equity in real estate operations (net of
contributions of $951 and $839
in 1995 and 1994) (1,812) (1,383)
Change in assets and liabilities:
Note receivable 4,550 --
Amounts due to Vornado Realty Trust (705) 170
Liability for postretirement healthcare benefits (6) --
Taxes payable and accrued liabilities (708) (295)
Other (3,887) 1,626
--------- ---------
Net cash (used in)/provided by operating activities of
continuing operations (4,718) 1,813
Payment of liabilities of discontinued operations (28,232) (2,200)
--------- ---------
Net cash used in operating activities (32,950) (387)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (11,607) (4,033)
Cash restricted for construction financing (6,000) --
Cash restricted for operating liabilities (14,835) 775
Proceeds from sale of real estate -- 200
--------- ---------
Net cash used in investing activities (32,442) (3,058)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of secured debt 126,611 --
Debt repayments (39,658) (775)
Deferred finance and debt expense (4,962) (1,270)
--------- ---------
Net cash provided by/(used in) financing activities 81,991 (2,045)
--------- ---------
Net increase(decrease) in cash and cash equivalents 16,599 (5,490)
Cash and cash equivalents at beginning of period 2,363 7,053
Cash and cash equivalents at end of period $ 18,962 $ 1,563
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest (including capitalized
interest of $3,100 and $851) $ 9,363 $ 1,220
========= =========
</TABLE>
Excludes an increase in real estate of $20,838 and secured debt of
$21,812 and a reduction in minority interest of $974 as a result of the
Company acquiring a partnership interest (see Note 4).
See notes to consolidated financial statements.
Page 5 of 13
<PAGE> 6
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of June 30, 1995, the consolidated
statements of operations for the three and six months ended June 30, 1995
and June 30, 1994, and the consolidated statements of cash flows for the
six months ended June 30, 1995 and June 30, 1994 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 at June 30, 1995 and June
30, 1994 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 Consolidated
Financial Statements should be read in conjunction with the financial
statements and notes thereto included in the Company's 1994 Annual Report
to Shareholders. The results of operations for the period ended June 30,
1995 are not necessarily indicative of the operating results for the full
year.
Effective in the first quarter of 1995, to be consistent with the
prevalent real estate industry practice, the Company changed the
presentation of its consolidated statements of operations to show tenant
reimbursements of expenses, previously offset against operating expenses,
as part of revenues. Prior period's amounts have been reclassified to
conform with the current year's presentation.
2. EMERGENCE FROM CHAPTER 11
In March 1995, the Company paid holders of allowed general unsecured
claims in full, together with accrued interest in respect of their claims.
Such payments aggregated $24,005,000. The Official Committee of Unsecured
Creditors has been dissolved and all secured and unsecured creditors
having allowed claims in the Bankruptcy Court cases have received the cash
payments or debt instruments contemplated to be delivered to them under
the Plan. A number of claims are being disputed by the Company and
therefore are not allowed claims. An escrow account has been established
for the resolution of these claims (see Note 4). The Bankruptcy Court has
retained jurisdiction to resolve these disputed claims and for other
limited purposes.
Because the Company is in the development stage, its current operating
properties (four of its eight properties) do not generate sufficient cash
flow to pay all of its expenses. The Company's four non-operating
properties (Rego Park, Lexington Avenue, Paramus and the Kings Plaza
Store) are in various stages of development. Rents under the Rego Park
project are scheduled to commence in March 1996. As rents commence from a
portion of the remaining development properties, the Company expects that
cash flow will become positive.
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. Therefore, Alexander's may raise capital
through (a) property specific or corporate borrowing, (b) the sale of
securities, and (c) asset sales. In addition, the Company may receive the
proceeds from certain tax certiorari or condemnation proceedings -- see
Note 6 "Paramus Property" and "Tax Certiorari Proceedings". 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.
Page 6 of 13
<PAGE> 7
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS
Steven Roth is Chief Executive Officer and a Director of the Company, the
Managing General Partner of Interstate Properties ("Interstate") and Chairman
of the Board and Chief Executive Officer of Vornado Realty Trust ("Vornado").
Interstate owns 27.1% of the outstanding common stock of the Company and owns
27.7% of the outstanding common shares of beneficial interest of Vornado. In
addition, Mr. Roth owns 3.6% of the outstanding common shares of beneficial
interest of Vornado. Mr. Roth, Interstate and the other two general partners
of Interstate own, in the aggregate, 32.6% of the outstanding common shares of
beneficial interest of Vornado. Vornado owns 29.3% of the outstanding common
stock of the Company, including 27.1% purchased in March 1995.
In March 1995, the Company and Vornado entered into a three-year management
and development agreement (the "Management Agreement"). The annual management
fee payable by the Company to Vornado is $3,000,000, plus 6% of development
costs with a minimum guaranteed fee for the development portion of $1,650,000
in the first year and $750,000 in each of the second and third years.
The fee pursuant to the Management Agreement is in addition to the leasing
fee the Company pays to Vornado under the leasing agreement (the "Leasing
Agreement") which has been in effect since 1992. Subject to the payment of
rents by tenants, Vornado is due $11,600,000, payable annually in an amount
not to exceed $2,500,000, until the present value of such installments
(calculated at a discount rate of 9% per annum) equals the amount that would
have been paid had it been paid on September 21, 1993, or at the time the
transactions which gave rise to the commissions occurred, if later. The term
of the Leasing Agreement has been extended to be coterminous with the term of
the Management Agreement.
In March 1995, the Company borrowed $45,000,000 from Vornado, the
subordinated tranche of a $75,000,000 secured financing (see Note 4(2)). The
Company recorded interest on the loan of $1,973,000 and $2,385,000 in the
three and six months ended June 30, 1995, of which $621,000 was capitalized.
Effective March 2, 1995, for a three-year period, Vornado and Interstate
agreed not to own in excess of two-thirds of the Company's common stock or to
enter into certain other transactions with the Company, other than the
transactions described above, without the consent of the Company's independent
directors.
4. DEBT AND RESTRICTED CASH
The Company borrowed $126,611,000 during the six months ended June 30, 1995,
of which $4,980,000 was borrowed in the second quarter. The proceeds of these
borrowings were used primarily to (i) pay construction costs associated with
the Company's Rego Park property of $7,600,000, (ii) pay $39,552,000 of
outstanding funded debt, and $24,005,000 of allowed general unsecured claims
and (iii) fund (a) interest-bearing escrow accounts for unpaid real estate
taxes ($7,000,000) and the remaining disputed claims in the Bankruptcy Court
cases as they become allowed ($8,000,000), and (b) collateral accounts for the
Rego Park construction ($6,000,000). Substantially all of the assets of the
Company and its subsidiaries have been pledged and/or mortgaged to secure such
indebtedness. The borrowings consist of:
Page 7 of 13
<PAGE> 8
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) A $25,000,000 five year loan maturing February 24, 2000, secured
principally by, a mortgage on the Company's Fordham Road property and
guaranteed by the parent. The loan bears annual interest at 30 day LIBOR
+4.25% (10.31% at June 30, 1995), capped at LIBOR 9.75% (all-in rate, 14%) and
requires amortization based on a 20 year term with an assumed interest rate of
9 1/2%. Beginning in year four, all cash flow of the property, after debt
service, will further amortize the loan. The loan is not prepayable for the
first six months of its term and is only prepayable with yield maintenance
during the next twelve months in the event of certain types of refinancings.
For the remainder of the term, it is prepayable without penalty. The loan
contains customary mortgage covenants, including, among others, a default by
the existing tenant. Further, in the event debt service coverage falls below
certain levels or the existing tenant's financial condition, as defined,
deteriorates, then during the first three years of the loan term, all cash
flow of the property, after debt service, will be escrowed with the lender.
(2) A $75,000,000 three-year loan secured by mortgages on all of the
Company's assets and/or pledges of the stock of subsidiaries owning the assets
and/or guarantees of such subsidiaries and the parent. The loan bears interest
at a blended rate of 13.8% per annum for the first two years and is comprised
of two separate notes of $45,000,000 to Vornado and $30,000,000 to a bank.
Each note is separately secured by the collateral described above. The Vornado
loan is subordinate to that of the bank and bears interest at 16.43% per annum
(effective rate 17.54%) for the first two years and at a fixed rate for the
third year of 992 basis points over the one-year Treasury bill rate. The
bank's loan bears interest at 9.86% for the first two years and at a fixed
rate for the third year of 325 basis points over the one-year Treasury bill
rate. The Company paid a loan origination fee to Vornado and the bank of
$1,500,000 and $375,000, respectively. The loans are prepayable at the end of
the second year of their term without penalty. The loans contain customary
covenants including, among others, lease approval rights, limitations on
additional debt, dividends, acquisitions, mergers, property sales and restrict
the Company from developing property without signed leases for more than 50%
of such property's leasable space. No dividends can be paid unless required to
maintain Real Estate Investment Trust ("REIT") status.
(3) A two year $60,000,000 construction loan and a two year $25,000,000
bridge loan from a bank, each secured by a mortgage on the Rego Park property.
As of June 30, 1995, approximately $26,600,000 was funded under such loans.
The loans mature on April 1, 1997 (but may be extended at the Company's
option, subject to certain conditions, for an additional year) and bear annual
interest at (i) LIBOR plus 1.625% or (ii) the greater of (a) Federal Funds
Rate plus 1.125% or (b) prime plus 0.625%, at the option of the Company (7.75%
at June 30, 1995). The ability of the Company to borrow the $25,000,000 under
the bridge loan is based on conditions that cannot be met today and may not be
met during the term of this loan. The Company has not relied on this amount in
its determination of its ability to fund its current cash needs but believes
that it will be able to refinance the Rego Park property at a level exceeding
$60,000,000 upon the completion of construction and commencement of tenants
paying rent.
Page 8 of 13
<PAGE> 9
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition to the above, in January 1995, the Seven Thirty One Limited
Partnership ("the Partnership"), redeemed the first portion of the outside 731
Limited Partners' interest by giving such limited partners a promissory note
due in August 1998 in the amount of $21,812,000 (the "Note"). The Note bears
annual interest at Prime plus 1% and is secured by a third mortgage on the
Lexington Avenue property. The outside 731 Limited Partners have the right to
put their remaining 7.64% interest to the Partnership until October 1998, in
exchange for a five year secured note in the principal amount of $15,000,000,
bearing annual interest at Prime plus 1%.
After giving effect to the additional borrowings and debt repayments noted
above, a summary of maturities of long-term debt is as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Year ended December 31:
<S> <C>
1995 $ 300
1996 500
1997 500
1998 137,593
1999 900
thereafter 22,100
--------
$161,893
========
</TABLE>
5. INCOME TAXES
The Company intends to file, with its Federal income tax return for 1995, an
election to be treated as a REIT for Federal income tax purposes. As a result
of the Company's intention to elect to be taxed as a REIT, the deferred tax
balance of $1,406,000 at December 31, 1994 was reversed, resulting in an
income tax benefit in the first quarter of 1995. At June 30, 1995, net
operating loss carryovers of approximately $124,000,000 are available to
offset both future taxable income and the amount of the Company's REIT taxable
income that otherwise would be required to be distributed to stockholders.
6. CONTINGENCIES
Paramus Property
The State of New Jersey has notified the Company of its intention to condemn
a portion of the Paramus property. The New Jersey Department of Transportation
("DOT") has recently made an offer to purchase the land which is the subject
of the condemnation proceeding for $15,400,000 based on an appraisal performed
on their behalf. The Company and the DOT expect to continue negotiations to
attempt to reach agreement on the value. In the event that the Company and the
DOT do not reach agreement on the value, a formal process will be initiated by
the DOT, pursuant to which, among other things, a group of independent
commissioners will be appointed by a court to determine fair market value. If
the condemnation occurs, the Company will be required to change its
development plans, Home Depot and B.J.'s Wholesale Clubs will not be obligated
under their current leases, and the time and cost to develop the Paramus
property may materially increase.
Page 9 of 13
<PAGE> 10
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Lexington Avenue Property
The Company believes that, along with a number of other locations, a portion
of the Lexington Avenue property is being considered by the Port Authority of
New York and New Jersey (the "Port Authority") for the site of the terminus
for a rail link from midtown Manhattan to LaGuardia and Kennedy Airports.
Approvals of numerous Federal, New York State and New York City agencies are
required before construction could begin. If the project proceeds and the Port
Authority selects a portion of the Lexington Avenue property for such use and
can establish that it is needed to serve a public use, benefit or purpose, the
Port Authority, after conducting the requisite public hearings, may acquire
such portion of the Lexington Avenue property pursuant to its powers of
eminent domain. The Company has expressed its opposition to the possible
condemnation of a portion of the property and has the right to appeal any such
action by the Port Authority. If the Port Authority prevails, the Company
would be entitled to compensation for its loss. Since the nature and scope of
any plans being considered by the Port Authority, and whether any such plans
would ultimately affect the Lexington Avenue property, cannot be fully
assessed by the Company at this time, it is impossible to determine the
ultimate effect that a taking, or any uncertainty with respect thereto, would
have on the Company's use or development of the Lexington Avenue property.
Tax Certiorari Proceedings
Alexander's Department Stores of Valley Stream, Inc. ("ADS of Valley
Stream") is a party to a tax certiorari proceeding against The Board of
Assessors and The Board of Assessment Review of the County of Nassau (the
"Board") for overpayment of taxes on its former Valley Stream store property
during the assessment rolls from 1986 to 1992. In January 1995, the Supreme
Court of Nassau County, New York ruled that ADS of Valley Stream is entitled
to an assessment reduction which would result in a refund of approximately
$6,600,000, plus interest (currently, $3,200,000). Both the Board and the
Company have appealed the Court's decision.
The Company is currently negotiating certiorari proceedings with the City of
New York on several of its properties. As to one of these properties, the
Company and its joint venture partner have agreed with the Law Department of
the City of New York to a reduction in the assessed values covering the tax
years 1988/1989 through 1995/1996, generating a refund of approximately
$28,300,000. The cash arising from the Company's allocable share of such
refund, net of expenses, is approximately $9,000,000. This settlement is
subject to approval by various agencies of the City of New York.
Environmental Matters
The results of a 1993 Phase I environmental assessment 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 assessment 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.
Page 10 of 13
<PAGE> 11
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 other income were $2,819,000 in the quarter ended June 30,
1995, compared to $2,805,000 in the prior year's quarter, an increase of
$14,000 or 0.5%. Revenues were $6,242,000 for the six months ended June 30,
1995, compared to $5,986,000 for the prior year's six months, an increase of
$256,000 or 4.3%. This increase resulted primarily from an increase in the
income derived from the operation of the Kings Plaza Shopping Center and Marina
during the quarter ended March 31, 1995.
Operating, general and administrative expenses were $2,492,000 in the
quarter ended June 30, 1995, compared to $1,176,000 in the prior year's
quarter, an increase of $1,316,000. Operating, general and administrative
expenses were $4,043,000 in the six months ended June 30, 1995 compared to
$2,270,000 for the prior year's six months, an increase of $1,773,000. These
increases resulted primarily from fees under the Management Agreement and the
commencement of salary to the Chairman of the Board of Directors.
Depreciation and amortization expense for the three and six months ended
June 30, 1995, did not change significantly from such expense for the prior
year's periods.
Reorganization costs were $322,000 in the quarter ended June 30, 1995,
compared to $497,000 in the prior year's quarter, a decrease of $175,000.
Reorganization costs were $1,938,000 in the six months ended June 30, 1995,
compared to $1,143,000 in the prior year's periods, an increase of $795,000.
These expenses were primarily due to professional fees incurred in connection
with investigating financing alternatives, becoming a REIT and bankruptcy
expenses. The Company expects no further significant costs in connection with
these activities.
Interest and debt expense was $3,483,000 in the quarter ended June 30,
1995, as compared to $624,000 in the prior year's quarter, an increase of
$2,859,000. Of this increase, approximately (i) $1,600,000 was attributable to
higher levels of debt, (ii) $100,000 was attributable to higher interest rates,
(iii) $400,000 was attributable to the amortization of debt issuance costs and
(iv) $800,000 resulted from interest and debt expense for 1994 being charged
against the accrual for losses from discontinued operations. Interest and debt
expense was $6,222,000 for the six months ended June 30, 1995 as compared to
$1,220,000 for the prior year's period, an increase of $5,002,000. Of this
increase, approximately (i) $2,400,000 was attributable to higher levels of
debt, (ii) $100,000 was attributable to higher interest rates, (iii) $1,500,000
was attributable to the amortization of debt issuance costs including a
$600,000 write-off, and (iv) $1,000,000 resulted from interest and debt expense
for 1994 being charged against the accrual for losses from discontinued
operations.
Interest and other income increased in 1995 as compared to 1994, as a
result of higher average cash invested due to increased borrowings.
As a result of the Company's intention to elect to be taxed as a REIT for
the year ended December 31, 1995, the deferred tax balance of $1,406,000 at
December 31, 1994 was reversed, resulting in an income tax benefit in the
quarter ended March 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities of $32,950,000 for the six months ended
June 30, 1995, was comprised of: (i) a net loss of $4,704,000, less
adjustments for non-cash items of $742,000, (ii) the payment of liabilities of
discontinued operations of $28,232,000, and (iii) the net change in operating
assets and liabilities of $756,000.
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ALEXANDER'S, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash used in operating activities of $387,000 for the six months ended June
30, 1994, was comprised of: (i) net income of $736,000, less adjustments for
non-cash items of $424,000, and (ii) the net change in operating assets and
liabilities of $1,501,000, offset by (iii) the payment of liabilities of
discontinued operations of $2,200,000
Net cash used in investing activities of $32,442,000 for the six months
ended June 30, 1995, was comprised of capital expenditures of $11,607,000, cash
restricted for construction financing of $6,000,000 and cash restricted for
operating liabilities of $14,835,000. Net cash used in investing activities of
$3,058,000 for the six months ended June 30, 1994 was comprised primarily of
capital expenditures.
Net cash provided by financing activities of $81,991,000 for the six months
ended June 30, 1995, was comprised of proceeds from the issuance of secured
debt of $121,649,000 (net of deferred debt expense), offset by repayments of
debt of $39,658,000. Net cash used in financing activities of $2,045,000 for
the six months ended June 30, 1994, was comprised primarily of debt repayments
and payments of debt issuance costs.
In connection with the redevelopment of its Rego Park property (new parking
structure and other improvements), the Company has expended approximately
$7,600,000 during the six months ended June 30, 1995, and expects to expend
through the first quarter of 1996, up to an additional $29,000,000 to complete
the project. At June 30, 1995, there was 33,400,000 available under a
$60,000,000 construction loan to fund these expenditures. The Company estimates
that its capital expenditure requirements for other projects will include (i)
the asbestos removal, building demolition and other improvements at the Paramus
property which are expected to cost between $15,000,000 and $17,000,000, and
(ii) the subdivision of the existing space and other improvements at the Kings
Plaza Store property estimated to cost $10,000,000. 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
financings 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.
Because the Company is in the development stage, its current operating
properties (four of its eight properties) do not generate sufficient cash flow
to pay all of its expenses. The Company's four non-operating properties (Rego
Park, Lexington Avenue, Paramus and the Kings Plaza Store) are in various
stages of development. Rents under the Rego Park project are scheduled to
commence in March 1996. As rents commence from a portion of the remaining
development properties, the Company expects that cash flow will become
positive.
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. Therefore, Alexander's may raise capital through (a)
property specific or corporate borrowing, (b) the sale of securities, and (c)
asset sales. In addition, the Company may receive the proceeds from certain
tax certiorari or condemnation proceedings -- see Note 6 "Paramus Property"
and "Tax Certiorari Proceedings". 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.
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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: December 20, 1995 /s/ Joseph Macnow
---------------------------------------
JOSEPH MACNOW
Vice President - Chief Financial
Officer and Chief Accounting Officer
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