<PAGE> 1
EXHIBIT INDEX ON PAGE 15
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: SEPTEMBER 30, 2000
--------------------------------------------------
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)
210 ROUTE 4 EAST, PARAMUS, NEW JERSEY 07652
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201)587-8541
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
--------------------------------------------------------------------------------
(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
As of October 13, 2000 there were 5,000,850 common shares
outstanding.
<PAGE> 2
ALEXANDER'S, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999........................................................... 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2000 and September 30, 1999.......................... 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and September 30, 1999................................. 5
Notes to Consolidated Financial Statements...................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................. 9
Item 3. Quantitative and Qualitative
Disclosures about Market Risk................................................... 12
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings............................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders............................. 13
Item 6. Exhibits and Reports on Form 8-K................................................ 13
Signatures ................................................................................ 14
Exhibit Index ................................................................................ 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land ................................................. $ 83,957 $ 83,957
Buildings, leaseholds and improvements ............... 175,657 155,899
Capitalized expenses and development
costs ............................................ 130,678 87,148
--------- ---------
Total ...................................... 390,292 327,004
Less accumulated depreciation and
amortization ..................................... (57,936) (55,199)
--------- ---------
Real estate, net ..................................... 332,356 271,805
Cash and cash equivalents ................................. 1,006 26,053
Restricted cash ........................................... 9,460 20,685
Accounts receivable, net of allowance for
doubtful accounts of $625 in 2000 and $314 in 1999 ... 2,287 3,353
Receivable arising from the straight-lining of
rents, net ........................................... 14,171 11,575
Deferred lease and other property costs ................... 24,516 24,788
Deferred debt expense ..................................... 3,516 4,206
Other assets .............................................. 5,251 4,031
--------- ---------
TOTAL ASSETS .............................................. $ 392,563 $ 366,496
========= =========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Debt (including $110,000 and $95,000 due to Vornado) ... $ 361,693 $ 329,161
Amounts due to Vornado Realty Trust and
its affiliate ..................................... 1,203 3,821
Accounts payable and accrued liabilities ............... 11,271 10,804
Other liabilities ...................................... 9,661 10,212
--------- ---------
383,828 353,998
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY: .................................. 5,174 5,174
Preferred stock; no par value;
authorized 3,000,000 shares
issued, none
Common stock; $1.00 par value per share;
authorized, 10,000,000 shares;
issued 5,173,450
Additional capital ..................................... 24,843 24,843
Deficiency ............................................. (20,322) (16,559)
--------- ---------
9,695 13,458
Less treasury shares, 172,600 shares
at cost .......................................... (960) (960)
--------- ---------
Total stockholders' equity ............................. 8,735 12,498
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY .............................. $ 392,563 $ 366,496
========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Property rentals ............................................................ $ 10,676 $ 10,724 $ 31,843 $ 32,870
Expense reimbursements ...................................................... 5,706 5,223 15,713 15,737
-------- -------- -------- --------
Total revenues ................................................................... 16,382 15,947 47,556 48,607
-------- -------- -------- --------
Expenses:
Operating (including management fee to Vornado of $329 and $326 each for
the three months ended in 2000 and 1999; $997 and $1,000 each for the
nine months ended in 2000 and 1999) ..................................... 7,909 7,768 21,918 24,568
General and administrative (including management fee to Vornado
of $540 and $1,620 each for the three and nine months ended
in 2000 and 1999)........................................................ 6,921 872 9,676 2,793
Depreciation and amortization ............................................... 1,404 1,444 4,121 4,074
-------- -------- -------- --------
Total expenses ................................................................... 16,234 10,084 35,715 31,435
-------- -------- -------- --------
Operating income ................................................................. 148 5,863 11,841 17,172
Interest and debt expense (including interest on loans from Vornado) ............. (5,777) (4,223) (16,458) (12,323)
Interest and other income, net ................................................... 206 (5) 854 597
-------- -------- -------- --------
Net (loss)/income ................................................................ $ (5,423) $ 1,635 $ (3,763) $ 5,446
======== ======== ======== ========
Net (loss)/income per share - basic .............................................. $ (1.08) $ .33 $ (.75) $ 1.09
======== ======== ======== ========
Net (loss)/income per share - diluted ............................................ $ (1.08) $ .32 $ (.75) $ 1.08
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
ALEXANDER'S, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income ......................................................... $ (3,763) $ 5,446
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization (including debt issuance costs) ........ 5,427 5,604
Straight-lining of rental income, net ................................ (2,596) (2,706)
Stock appreciation rights compensation expense........................ 6,864 --
Write-off of the asset arising from the straight-lining of rents ..... -- 3,000
Change in assets and liabilities:
Accounts receivable ................................................... 1,066 2,925
Amounts due to Vornado Realty Trust and its affiliate ................. (2,618) (2,718)
Accounts payable and accrued liabilities .............................. 467 642
Other liabilities ..................................................... (479) 925
Other ................................................................. (2,333) (1,212)
-------- --------
Net cash provided by operating activities ................................ 2,035 11,906
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate .............................................. (63,288) (12,225)
Cash (made available) restricted for construction and development ..... 11,350 (178)
Cash (restricted) made available for operating liabilities ............ (125) 1,946
-------- --------
Net cash used in investing activities ..................................... (52,063) (10,457)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt ...................................................... 32,754 82,000
Debt repayments ....................................................... (222) (85,465)
Deferred debt expense ................................................. (616) (3,476)
Payment of acquisition obligation ..................................... (6,936) (4,648)
-------- --------
Net cash provided by (used in) financing activities ....................... 24,980 (11,589)
-------- --------
Net decrease in cash and cash equivalents ................................. (25,048) (10,140)
Cash and cash equivalents at beginning of period .......................... 26,053 15,363
-------- --------
Cash and cash equivalents at end of period ................................ $ 1,005 $ 5,223
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest (including capitalized interest of
$10,840 and $6,630) ................................................... $ 24,827 $ 16,558
======== ========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
ALEXANDER'S, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Balance Sheet as of September 30, 2000, the Consolidated
Statements of Operations for the three and nine months ended September 30, 2000
and 1999, and the Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and 1999 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
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1999 as filed with
the Securities and Exchange Commission. The results of operations for the three
and nine months ended September 30, 2000 are not necessarily indicative of the
operating results for the full year.
Management has made estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
2. RELATIONSHIP WITH VORNADO REALTY TRUST ("VORNADO")
Vornado owns 33.1% of the Company's Common Stock at September 30, 2000, of
which 41,500 shares were acquired on March 31, 2000 and 10,400 shares were
acquired on April 11, 2000.
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 $1,919,000 and $1,834,000 in the three months ended September
30, 2000 and 1999 and $5,291,000 and $5,278,000 in the nine months ended
September 30, 2000 and 1999.
At September 30, 2000, the Company is indebted to Vornado in the amount of
$110,000,000 comprised of (i) $95,000,000 relating to the subordinated tranche
of a $115,000,000 secured financing, and (ii) $15,000,000 under the line of
credit discussed below. The Company incurred interest on its loans from Vornado
of $4,175,000 and $1,631,000 in the three months ended September 30, 2000 and
1999 and $11,424,000 and $4,806,000 in the nine months ended September 30, 2000
and 1999.
On August 1, 2000, the Company obtained a $50,000,000 secured line of
credit from Vornado under the same terms and conditions as the existing
$95,000,000 loan from Vornado, including the interest rate of 15.72%. The
maturity date of the existing $95,000,000 loan has been extended to March 15,
2002, which is also the maturity date of the new line of credit. The interest
rate on the loan and line of credit will reset on March 15, 2001, using the same
spread to treasuries as presently exists. The proceeds of the secured line of
credit are being used for general corporate purposes including continuing to
fund the real estate development costs at its Lexington Avenue property. It is
expected that a construction loan will be obtained to finance the Lexington
Avenue property.
6
<PAGE> 7
3. DEBT
A mortgage loan of $21,263,000, an obligation of a wholly-owned subsidiary
of the Company collateralized by the Fordham Road property, was scheduled to
mature on February 24, 2000. The mortgage loan has been extended for an
additional three-years to April 17, 2003. Under the terms of the extension,
interest accrues at LIBOR plus 1.50% in the first two years and LIBOR plus 1.75%
in year three which is a reduction of the original terms of LIBOR plus 4.25%.
Interest is payable at LIBOR for the entire term. The spread over LIBOR accrues
during the extended term and increases the principal balance.
4. COMMITMENTS AND CONTINGENCIES
The Company let contracts for $28,000,000 to undertake the excavation and
laying the foundation for its Lexington Avenue property as part of the proposed
development of a large multi-use building as of September 30, 2000. $22,635,000
has been paid as of September 30, 2000.
In June 1997, the Kings Plaza Regional Shopping Center (the "Center"),
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 bis (2-ethylhexyl) phthalate contamination in the soil
and groundwater. The Company has delineated the contamination and has developed
a remediation approach. The New York State Department of Environmental
Conservation ("NYDEC") has not yet approved the finalization of the approach. In
1997, the Center accrued $1,500,000 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. Based upon revised estimates the Company accrued an
additional $500,000 in the second quarter of 1999 ($1,107,000 has been paid as
of September 30, 2000). If the NYDEC insists on a more extensive remediation
approach, the Company could incur additional obligations.
The majority of the contamination may have resulted from activities of
third parties; however, the sources of the contamination have not been fully
identified. Although the Company 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 Company has not recorded an asset as of September 30, 2000 for
potential recoveries of environmental remediation costs from other parties.
Letters of Credit
Approximately $900,000 in standby letters of credit were issued at
September 30, 2000.
7
<PAGE> 8
5. (LOSS)/INCOME PER SHARE
The following table sets for the computation of basic and diluted
(loss)/income per share:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
2000 1999 2000 1999
------- ------ ------- ------
<S> <C> <C> <C> <C>
(amounts in thousands except per share amounts)
Numerator:
Net (loss)/income ............................... $(5,423) $1,635 $(3,763) $5,446
======= ====== ======= ======
Denominator:
Denominator for basic (loss)/income per share ... --
weighted average shares ........................ 5,001 5,001 5,001 5,001
Effect of dilutive securities:
Employee stock options ......................... -- 60 -- 19
------- ------ ------- ------
Denominator for diluted (loss)/income per share .... --
adjusted weighted average shares and assumed
conversions ..................................... 5,001 5,061 5,001 5,020
======= ====== ======= ======
Net (loss)/income per share - basic ................ $ (1.08) $ .33 $ (.75) $ 1.09
======= ====== ======= ======
Net (loss)/income per share - diluted .............. $ (1.08) $ .32 $ (.75) $ 1.08
======= ====== ======= ======
</TABLE>
6. STOCK APPRECIATION RIGHTS
On June 5, 2000, the Board of Directors approved the conversion of
850,000 stock options of two officers/directors into equivalent stock
appreciation rights (SARs). The SARs have the same vesting terms and strike
prices as the options. Accounting for SARs is reflected in the statement of
operations, whereas the accounting for stock options is not, accordingly a
charge of $5,881,000 for the quarter ended September 30, 2000 and $6,864,000 for
the nine months ended September 30, 2000 has been recorded. SARs, unlike
options, are not aggregated under the REIT rules.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements contained herein constitute forward-looking statements
as such term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21 E of the Securities Exchange Act of 1934, as amended.
Certain factors could cause actual results to differ materially from those in
the forward-looking statements. Factors that might cause such a material
difference include, but are not limited to, (a) changes in the general economic
climate, (b) local conditions such as an oversupply of space or a reduction in
demand for real estate in the area, (c) conditions of tenants, (d) competition
from other available space, (e) increased operating costs and interest expense,
(f) the timing of and costs associated with property improvements, (g) changes
in taxation or zoning laws, (h) government regulations, (i) failure of
Alexander's to continue to qualify as a REIT, (j) availability of financing on
acceptable terms, (k) potential liability under environmental or other laws or
regulations, (l) general competitive factors, (m) dependence upon Vornado Realty
Trust and (n) possible conflicts of interest with Vornado Realty Trust.
RESULTS OF OPERATIONS
The Company had a net loss of $5,423,000 in the quarter ended September
30, 2000, compared to net income of $1,635,000 in the quarter ended September
30, 1999, a decrease of $7,058,000, and a net loss of $3,763,000 for the nine
months ended September 30, 2000, compared to net income of $5,446,000 for the
nine months ended September 30, 1999, a decrease of $9,209,000.
Property rentals were $10,676,000 in quarter ended September 30,2000,
compared to $10,724,000 in the quarter ended September 30, 1999, a decrease of
$48,000, and $31,843,000 for the nine months ended September 30, 2000, compared
to $32,870,000 for the nine months ended September 30, 1999, a decrease of
$1,027,000. The decrease for the nine months is primarily from Caldor's
rejection of its Flushing lease effective March 29, 1999.
Tenant expense reimbursements were $5,706,000 in the quarter ended
September 30, 2000, compared to $5,223,000 in the prior year's quarter, an
increase of $483,000, and $15,713,000 for the nine months ended September 30,
2000, compared to $15,737,000 for the nine months ended September 30, 1999, a
decrease of $24,000. The increase for the three months ended September 30, 2000
resulted primarily from higher reimbursements for a portion of the increased
fuel costs of the utility plant at the Company's Kings Plaza Regional Shopping
Center. This increase was offset for the nine months primarily from a change
made in the first quarter of 2000, in the method of allocating an anchor
tenant's share of parking lot expenses at a shopping center and covered a number
of years.
Operating expenses were $7,909,000 in the quarter ended September 30,
2000, compared to $7,768,000 in the prior year's quarter, a increase of
$141,000. This increase is principally from higher expenses of the utility plant
at the Company's Kings Plaza Regional Shopping Center resulting primarily from
higher fuel costs, partially offset by lower repairs and maintenance. Operating
expenses were $21,918,000 for the nine months ended September 30, 2000, compared
to $24,568,000 for the nine months ended September 30, 1999, a decrease of
$2,650,000. Operating expenses for the nine months ended September 30, 1999,
included $3,000,000 resulting from the write-off of the asset arising from the
straight-lining of rents due to Caldor's rejection of its Flushing lease. This
amount was partially offset by an increase in expenses of the utility plant at
the Company's Kings Plaza Regional Shopping Center in the current year's nine
months resulting primarily from higher fuel costs.
General and administrative expenses were $6,921,000 in the quarter
ended September 30, 2000, compared to $872,000 in the prior year's quarter, an
increase of $6,049,000, and $9,676,000 for the nine months ended September 30,
2000, compared to $2,793,000 for the nine months ended September 30, 1999, an
increase of $6,883,000. These increases resulted primarily from an increase in
compensation expense relating to stock appreciation rights granted on June 5,
2000.
Interest and debt expense was $5,777,000 in the quarter ended September
30, 2000, compared to $4,223,000 in the prior year's quarter, an increase of
$1,554,000, and $16,458,000 for the nine months ended September 30, 2000,
compared to $12,323,000 for the nine months ended September 30, 1999, an
increase of $4,135,000. These increases resulted from (i) an increase in average
debt outstanding of approximately $81,000,000 and $65,000,000, and (ii) an
increase in average interest rates from 8.42% to 10.22%, and 8.19% to 9.95%,
partially offset by (iii) an increase in capitalized interest relating to the
Company's development properties.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
In the aggregate, Alexander's operating 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 development. As rents commence from portions of the
development property(s) and from the vacant property(s) the Company expects that
cash flow will become positive.
The Company let contracts for $28,000,000 to undertake the excavation
and laying the foundation for its Lexington Avenue property as part of the
proposed development of a large multi-use building. $22,635,000 has been paid as
of September 30, 2000. The additional capital required for the proposed building
will be in excess of $650,000,000.
At September 30, 2000, the Company is indebted to Vornado in the amount
of $110,000,000 comprised of (i) $95,000,000 relating to the subordinated
tranche of a $115,000,000 secured financing, and (ii) $15,000,000 under the line
of credit discussed below.
On August 1, 2000, the Company obtained a $50,000,000 secured line of
credit from Vornado under the same terms and conditions as the existing
$95,000,000 loan from Vornado, including the interest rate of 15.72%. The
maturity date of the existing $95,000,000 loan has been extended to March 15,
2002, which is also the maturity date of the new line of credit. The interest
rate on the loan and line of credit will reset on March 15, 2001, using the same
spread to treasuries as presently exists. The proceeds of the secured line of
credit are being used for general corporate purposes including continuing to
fund the real estate development costs at its Lexington Avenue property. It is
expected that a construction loan will be obtained to finance the Lexington
Avenue property.
The Company estimates that capital expenditure requirements for the
development of its Paramus property, will approximate $100,000,000.
A mortgage loan of $21,263,000, an obligation of a wholly-owned
subsidiary of the Company collateralized by the Fordham Road property, was
scheduled to mature on February 24, 2000. The mortgage loan has been extended
for an additional three-years to April 17, 2003. Under the terms of the
extension, interest accrues at LIBOR plus 1.50% in the first two years and LIBOR
plus 1.75% in year three which is a reduction of the original terms of LIBOR
plus 4.25%. Interest is payable at LIBOR for the entire term. The spread over
LIBOR accrues during the extended term and increases the principal balance.
The Company estimates that the fair market values of its assets are
substantially in excess of their historical costs 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. 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
Nine Months Ended September 30, 2000
Cash provided by operating activities of $2,035,000 was comprised of
(i) non-cash items of $9,695,000, offset by, (ii) net loss of $3,763,000, and
(iii) the net change in operating assets and liabilities of $3,897,000. The
adjustments for non-cash items are comprised of (i) depreciation and
amortization of $5,427,000, (ii) compensation expense of $6,864,000, partially
offset by (iii) the effect of straight-lining of rental income of $2,596,000.
Net cash used in investing activities of $52,063,000 was comprised of
capital expenditures of $63,288,000, partially offset by the release of
restricted cash of $11,350,000.
Net cash provided by financing activities of $24,981,000 resulted
primarily from an increase in debt of $32,754,000 partially offset by the
payment of acquisition obligation of $6,936,000.
10
<PAGE> 11
Nine Months Ended September 30, 1999
Cash provided by operating activities of $11,906,000 was comprised of
(i) net income of $5,446,000, (ii) non-cash items of $5,898,000, and (iii) the
net change in operating assets and liabilities of $562,000. The adjustments for
non-cash items are comprised of (i) the write-off of the asset arising from the
straight-lining of rents of $3,000,000 and (ii) depreciation and amortization of
$5,604,000, offset by (iii) the effect of straight-lining of rental income of
$2,706,000.
Net cash used in investing activities of $10,457,000 primarily
comprised of capital expenditures.
Net cash used in financing activities of $11,589,000 resulted primarily
from proceeds of $82,000,000 from the refinancing of its subsidiary's Rego Park
I property, offset by (i) the repayment of the then existing $75,000,000 debt on
the property, (ii) repayment of the $10,000,000 debt on the Paramus property,
(iii) an increase in debt issuance costs of $3,476,000, and (iv) payment of
acquisition obligation of $4,648,000.
Funds (used in) / from Operations for the Three and Nine Months Ended September
30, 2000 and 1999
Funds used in operations was $5,396,000 in the quarter ended September
30, 2000, compared to funds from operations of $1,406,000 in the prior year's
quarter, a decrease of $6,802,000, and funds used in operations of $3,994,000 in
the nine months ended September 30, 2000, compared to funds from operations of
$8,231,000 in the prior year's nine months, a decrease of $12,225,000. The
following table reconciles net income to funds from operations:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net (loss)/income ..................... $(5,423,000) $ 1,635,000 $(3,763,000) $ 5,446,000
Depreciation and amortization of
real property ................... 1,404,000 1,444,000 4,121,000 4,074,000
Straight-lining of property rentals
for rent escalations ............ (815,000) (978,000) (2,596,000) (2,932,000)
Leasing fees paid in excess
of expense recognized ........... (562,000) (695,000) (1,756,000) (1,357,000)
Write-off of asset arising from the
straight-lining of rent ......... -- -- -- 3,000,000
----------- ----------- ----------- -----------
$(5,396,000) $ 1,406,000 $(3,994,000) $ 8,231,000
=========== =========== =========== ===========
</TABLE>
Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs, which is
disclosed in the Consolidated Statements of Cash Flows for the applicable
periods. There are no material legal or functional restrictions on the use of
funds from operations. Funds from operations should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity. Management
considers funds from operations a relevant supplemental measure of operating
performance because it provides a basis for comparison among REITs; however,
funds from operations may not be comparable to similarly titled measures
reported by other REITs since the Company's method of calculating funds from
operations is different from that used by NAREIT. Funds from operations, as
defined by NAREIT, represents net income before depreciation and amortization,
extraordinary items and gains or losses on sales of real estate. Funds from
operations as disclosed above has been modified to adjust for the effect of
straight-lining of property rentals for rent escalations and leasing fee
expenses. Below are the cash flows provided by (used in) operating, investing
and financing activities:
11
<PAGE> 12
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ----------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating activities ... $ (3,295,000) $ 1,337,000 $ 2,035,000 $ 11,906,000
============ ============ ============ ============
Investing activities ... $(18,446,000) $ (5,087,000) $(52,063,000) $(10,457,000)
============ ============ ============ ============
Financing activities ... $ 19,984,000 $ (6,136,000) $ 24,980,000 $(11,589,000)
============ ============ ============ ============
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At September 30, 2000, the Company had $169,693,000 of variable rate of debt
at a weighted average interest rate of 8.29% and $192,000,000 of fixed rate of
debt bearing interest at a weighted average interest rate of 12.10%. A one
percent increase in the base used to determine the interest rate of the variable
rate debt would result in a $1,697,000 increase in its net loss ($.34 per basic
and diluted share).
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is a party to, nor is their
property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 1, 2000, the Company held its annual meeting of stockholders.
The stockholders voted, in person or by proxy, for: (i) 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 qualified, and (ii) an amendment to the Company's Omnibus Stock Plan (the
"Plan") to authorize the allocation of an additional 300,000 shares to be
reserved for issuance under the Plan. The three nominees and the amendment were
approved. The results of the voting are shown below:
Election of Directors:
<TABLE>
<CAPTION>
Votes
Directors Votes Cast For Withheld
--------- -------------- --------
<S> <C> <C>
Steven Roth 4,825,045 35,323
David Mandelbaum 4,825,202 35,166
Richard West 4,825,102 35,266
</TABLE>
Amendment to Omnibus Stock Plan:
<TABLE>
<CAPTION>
Votes
Against or
Votes Cast For Abstentions
-------------- --------
<S> <C> <C>
4,298,234 294,839
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits required by Item 601 of Regulation S-K are filed herewith and
are listed in the attached Exhibit Index.
(b) Reports on Form 8-K:
None
13
<PAGE> 14
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: November 2, 2000 /s/ Joseph Macnow
----------------------------------------
Joseph Macnow, Vice President,
Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
<S> <C> <C>
3(i) -- Certificate of Incorporation, as amended. Incorporated herein by reference from Exhibit
3.0 to the Registrant's Current Report on Form 8-K dated September 21, 1993................ *
3(ii) -- By-laws, as amended. Incorporated herein by reference from Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000..... *
10(i)(A)(1) -- Agreement, dated as of December 4, 1985, among Seven Thirty One Limited Partnership ("731
Limited Partnership"), Alexander's Department Stores of Lexington Avenue, Inc., the
Company, Emanuel Gruss, Riane Gruss and Elizabeth Goldberg (collectively, the
"Partners"). Incorporated herein by reference from Exhibit 10(i)(F)(1) to the
Registrant's Form 10-K for the fiscal year ended July 26, 1986............................. *
10(i)(A)(2) -- Amended and Restated Agreement of Limited Partnership in the 731 Limited Partnership, dated
as of August 21, 1986, among the Partners. Incorporated herein by reference from Exhibit 1
to the Registrant's Current Report on Form 8-K, dated August 21, 1986...................... *
10(i)(A)(3) -- Third Amendment to Amended and Restated Agreement of Limited Partnership dated December 30,
1994, among the Partners. Incorporated herein by reference from Exhibit 10(i)(A)(3) to
the Registrant's Form 10-K for the fiscal year ended December 31, 1994..................... *
10(i)(B)(1) -- Promissory Note Modification Agreement, dated October 4, 1993, between Alexander's
Department Stores of New Jersey, Inc. and New York Life Insurance Company ("New York
Life"). Incorporated herein by reference from Exhibit 10(i)(3)(a) to the Registrant's
Form 10-K for the Transition Period August 1, 1993 to December 31, 1993.................... *
10(i)(B)(2) -- Mortgage Modification Agreement, dated October 4, 1993, by Alexander's Department Stores of
New Jersey, Inc. and New York Life Incorporated herein by reference from Exhibit
10(i)(E)(3)(a) to the Registrant's Form 10-K for the Transition Period August 1, 1993 to
December 31, 1993.......................................................................... *
10(i)(C) -- Credit Agreement, dated March 15, 1995, among the Company and Vornado Lending Corp.
Incorporated herein by reference from Exhibit 10(i)(C) to the Registrant's Form 10-K for
the fiscal year ended December 31, 1994.................................................... *
10(i)(C)(1) -- Modification and Extension of Credit Agreement, dated as of March 13, 2000, between Vornado
Lending L.L.C., as Lender, and Alexander's Inc., as Borrower. Incorporated herein by
reference from Exhibit 10(i)(C)(1) to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2000..................................................... *
10(i)(D) -- Credit Agreement, dated March 15, 1995, among the Company and First Union Bank, National
Association. Incorporated herein by reference from Exhibit 10(i)(D) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1994...................................... *
</TABLE>
-----------------------------------
* Incorporated by reference
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
<S> <C> <C>
10(i)(D)(1) -- Modification and Extension of Credit Agreement, dated as of April 14, 2000, between First
Union National Bank, as lender, and Alexander's Inc., as borrower. Incorporated herein by
reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2000........................................................ *
10(i)(D)(2) -- Pledge and Security Agreement for Transferable Development Rights, dated as of April 14,
2000, between First Union National Bank, as secured party, 731 Limited Partnership, as
assignor, and Alexander's, Inc. as borrower, Incorporated herein by reference from Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000................................................................................... *
10(i)(E) -- Amended, Restated and Consolidated Mortgage and Security Agreement, dated May 12, 1999,
between The Chase Manhattan Bank, as mortgagee, and Alexander's Rego Shopping Center Inc.,
as mortgagor. Incorporated herein by reference from Exhibit 10(i)(E) to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000................... *
10(i)(G)(1) -- Real Estate Retention Agreement dated as of July 20, 1992, between Vornado Realty Trust and
Keen Realty Consultants, Inc., each as special real estate consultants, and the Company.
Incorporated herein by reference from Exhibit 10(i)(O) to the Registrant's Form 10-K for
the fiscal year ended July 25, 1992........................................................ *
10(i)(G)(2) -- Extension Agreement to the Real Estate Retention Agreement, dated as of February 6, 1995,
between the Company and Vornado Realty Trust. Incorporated herein by reference from
Exhibit 10(i)(G)(2) to the Registrant's Form 10-K for the fiscal year ended December 31,
1994....................................................................................... *
10(i)(H) -- Management and Development Agreement, dated as of February 6, 1995, between Vornado Realty
Trust and the Company, on behalf of itself and each subsidiary listed therein.
Incorporated herein by reference from Exhibit 10.1 to the Registrant's Current Report on
Form 8-K dated February 6, 1995............................................................ *
10(i)(I) -- Commitment letter, dated as of February 6, 1995, between Vornado Realty Trust and the
Company. Incorporated herein by reference from Exhibit 10.3 to the Registrant's Current
Report on Form 8-K dated February 6, 1995.................................................. *
10(i)(J)(1) -- First Amendment to Mortgage and Security Agreement, dated as of February 24, 2000, between
Banc of America Commercial Finance Corporation, as mortgagee, and Alexander's of Fordham
Road, Inc., as mortgagor. Incorporated herein by reference from Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000..... *
10(i)(J)(2) -- Amended and Restated Promissory Note (Secured), dated as of February 24, 2000, between Banc
of America Commercial Finance Corporation, as lender, and Alexander's of Fordham Road,
Inc., as borrower. Incorporated herein by reference from Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000.................. *
10(i)(J)(3) -- Trigger Agreement, dated as of February 24, 2000, between Banc of America Commercial
Finance Corporation, as lender, and Alexander's, Inc., as guarantor. Incorporated herein
by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2000......................................................... *
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
<S> <C> <C>
10(i)(K) -- Term Loan Agreement dated as of June 18, 1998 among Alexanders' Kings Plaza Center, Inc.,
Kings Plaza Corp., and Alexander's Department Stores of Brooklyn, Inc., as Borrower, Union
Bank of Switzerland, as Lender. Incorporated herein by reference from Exhibit 10 to the
Registrant's Form 10-Q for the fiscal quarter ended June 30, 1998........................... *
10(ii)(A)(3) -- Agreement of Lease for Rego Park, Queens, New York, between Alexander's, Inc. and Sears
Roebuck & Co. Incorporated herein by reference from Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994.................. *
10(ii)(A)(4)(a) -- Lease for Roosevelt Avenue, Flushing, New York, dated as of December 1, 1992, between the
Company, as landlord, and Caldor, as tenant. Incorporated herein by reference from
Exhibit (ii)(E)(7) to the Registrant's Form 10-K for the fiscal year ended July 25, 1992... *
10(ii)(A)(4)(b) -- First Amendment to Sublease for Roosevelt Avenue, Flushing, New York, dated as of February
22, 1995 between the Company, as sublandlord, and Caldor, as tenant. Incorporated herein
by reference from Exhibit 10(ii)(A)(8)(b) to the Registrant's Form 10-K for the fiscal
year ended December 31, 1994............................................................... *
10(ii)(A)(5) -- Lease Agreement, dated March 1, 1993 by and between the Company and Alex Third Avenue
Acquisition Associates. Incorporated by reference from Exhibit 10(ii)(F) to the
Registrant's Form 10-K for the fiscal year ended July 31, 1993............................. *
10(ii)(A)(6) -- Agreement of Lease for Rego Park, Queens, New York, between the Company and Marshalls of
Richfield, MN., Inc., dated as of March 1, 1995. Incorporated herein by reference from
Exhibit 10(ii)(A)(12)(a) to the Registrant's Form 10-K for the fiscal year ended December
31, 1994................................................................................... *
10(ii)(A)(7) -- Guaranty, dated March 1, 1995, of the Lease described in Exhibit 10(ii)(A)(6)(a) above by
the Company. Incorporated herein by reference from Exhibit 10(ii)(A)(12)(b) to the
Registrant's Form 10-K for the fiscal year ended December 31, 1994......................... *
10(iii)(B) -- Employment Agreement, dated February 9, 1995, between the Company and Stephen Mann.
Incorporated herein by reference from Exhibit 10(iii)(B) to the Registrant's Form 10-K for
the fiscal year ended December 31, 1994.................................................... *
10(iv)(A) -- Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997. Incorporated herein by
reference from Exhibit 10 to the Registrant's Form 10-Q for the fiscal quarter ended June
30, 1997.................................................................................. *
27 -- Financial Data Schedule
</TABLE>
-----------------------------------
* Incorporated by reference
17
