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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 FORM 10-Q (Mark one)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended
    
    March 31, 2005
 ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
    
    
    
    toCommission File Number
    
    001-6064ALEXANDERS, INC.(Exact name of registrant as specified in its charter)
 Delaware
    
    51-0100517(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)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. þ o
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). þ o
 As of April 15, 2005, there were 5,021,850 shares of common stock, par value $1 per share,
outstanding.




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ALEXANDERS, INC. AND SUBSIDIARIES
INDEX Page NumberPART I. Financial InformationItem 1. Financial Statements:Consolidated Balance Sheets as of
March 31, 2005 (unaudited) and December 31, 2004
    
    3Consolidated Statements of Operations (unaudited) for the
Three Months Ended March 31, 2005 and March 31, 2004
    
    4Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 2005 and March 31, 2004
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    6Report of Independent Registered Public Accounting Firm
    
    12Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    17Item 4. Control and Procedures
    
    17PART II. Other InformationItem 1. Legal Proceedings
    
    18Item 6. Exhibits
    
    18Signatures
    
    19Exhibit Index
    
    20EX-15.1: LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATIONEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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PART I. FINANCIAL INFORMATION 
 Item 1. Financial Statements
 ALEXANDERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
  March 31,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSReal estate, at cost:Land
    
    $
    69,455
    
    
    $
    69,455Buildings, leaseholds and leasehold improvements
    
    
    583,187
    
    
    
    466,593Construction in progress
    
    
    45,634
    
    
    
    419,059Total
    
    
    698,276
    
    
    
    955,107Accumulated depreciation and amortization
    
    
    (77,551
    )
    
    
    (74,028
    )Real estate, net
    
    
    620,725
    
    
    
    881,079Cash and cash equivalents
    
    
    201,065
    
    
    
    128,874Deposits on
the sale of condominium units and restricted cash
    
    
    79,614
    
    
    
    66,930Accounts receivable, net of allowance for doubtful accounts of $413 and
$379
    
    
    6,112
    
    
    
    4,872Receivable arising from the straight-lining of rents
    
    
    76,896
    
    
    
    70,739Receivable arising from the sale of condominiums
    
    
    291,575
    
    
    
    Deferred lease and other property costs (including unamortized leasing fees
to Vornado Realty Trust (Vornado) of $46,650 and $38,819), net
    
    
    75,679
    
    
    
    68,148Deferred debt expense, net
    
    
    14,222
    
    
    
    15,027Other assets
    
    
    8,730
    
    
    
    9,132TOTAL ASSETS
    
    $
    1,374,618
    
    
    $
    1,244,801LIABILITIES AND STOCKHOLDERS EQUITYDebt (including $124,000 due to Vornado in 2005 and 2004)
    
    $
    971,287
    
    
    $
    952,528Amounts due to Vornado
    
    
    58,317
    
    
    
    49,225Accounts payable and accrued expenses
    
    
    41,162
    
    
    
    37,706Liability for stock appreciation rights
    
    
    144,231
    
    
    
    121,706Other liabilities (includes taxes payable of $34,692 in 2005)
    
    
    109,605
    
    
    
    65,268TOTAL LIABILITIES
    
    
    1,324,602
    
    
    
    1,226,433COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock: $1.00 par value per share; authorized, 3,000,000 shares;
issued, none
    
    
    
    
    
    
    Common stock: $1.00 par value per share; authorized, 10,000,000 shares;
issued, 5,173,450 shares
    
    
    5,174
    
    
    
    5,174Additional capital
    
    
    26,081
    
    
    
    25,685Retained earnings (deficit)
    
    
    19,615
    
    
    
    (11,603
    )50,870
    
    
    
    19,256Treasury shares: 153,500 and 159,600 shares at cost
    
    
    (854
    )
    
    
    (888
    )TOTAL STOCKHOLDERS EQUITY
    
    
    50,016
    
    
    
    18,368TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,374,618
    
    
    $
    1,244,801
 See notes to consolidated financial statements. 3




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ALEXANDERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 Three Months EndedMarch 31,2005
    
    
    2004REVENUESProperty rentals
    
    $
    31,673
    
    
    $
    24,567Expense reimbursements
    
    
    12,003
    
    
    
    9,198Total revenues
    
    
    43,676
    
    
    
    33,765EXPENSESOperating (including fees to Vornado of $551 and $379)
    
    
    13,834
    
    
    
    10,496General and administrative (including stock appreciation rights
compensation expense of $22,525 and $30,039 and management
fees of $540 to Vornado in each period)
    
    
    23,628
    
    
    
    31,205Depreciation and amortization
    
    
    4,649
    
    
    
    3,530Total expenses
    
    
    42,111
    
    
    
    45,231OPERATING INCOME (LOSS)
    
    
    1,565
    
    
    
    (11,466
    )Interest and other income, net
    
    
    981
    
    
    
    458Interest and debt expense (including interest on loans from Vornado)
    
    
    (11,303
    )
    
    
    (8,934
    )Write off of unamortized deferred debt expense
    
    
    
    
    
    
    (3,050
    )Loss from continuing operations
    
    
    (8,757
    )
    
    
    (22,992
    )Gain on sale of condominiums
    
    
    74,667
    
    
    
    Income tax expense of taxable REIT subsidiary
    
    
    (34,692
    )
    
    
    39,975
    
    
    
    NET INCOME (LOSS)
    
    $
    31,218
    
    
    $
    (22,992
    )Income (loss) per common share  Basic
    
    $
    6.22
    
    
    $
    (4.60
    )Income (loss) per common share  Diluted
    
    $
    6.15
    
    
    $
    (4.60
    )
 See notes to consolidated financial statements. 4




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ALEXANDERS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Three Months Ended March 31,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    31,218
    
    
    $
    (22,992
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Gain on sale of condominiums
    
    
    (74,667
    )
    
    
    Income tax expense on taxable REIT subsidiary
    
    
    34,692
    
    
    
    Write-off of unamortized deferred debt expense
    
    
    
    
    
    
    3,050Depreciation and amortization (including deferred debt expense)
    
    
    5,453
    
    
    
    4,389Straight-lining of rental income
    
    
    (6,157
    )
    
    
    (11,683
    )Change in operating assets and liabilities:Accounts receivable, net
    
    
    (1,240
    )
    
    
    (3,130
    )Amounts due to Vornado
    
    
    8,219
    
    
    
    3,629Accounts payable and accrued expenses
    
    
    274
    
    
    
    1,878Liability for stock appreciation rights
    
    
    22,525
    
    
    
    30,039Other liabilities
    
    
    (8
    )
    
    
    (58
    )Other assets
    
    
    (7,504
    )
    
    
    (1,716
    )Net cash provided by operating activities
    
    
    12,805
    
    
    
    3,406CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of condominiums
    
    
    63,045
    
    
    
    Investment in joint venture
    
    
    (750
    )
    
    
    Additions to real estate
    
    
    (19,067
    )
    
    
    (50,612
    )Cash restricted for operating liabilities
    
    
    (3,031
    )
    
    
    (11,460
    )Net cash provided by (used in) investing activities
    
    
    40,197
    
    
    
    (62,072
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings
    
    
    19,780
    
    
    
    412,630Repayments of borrowings
    
    
    (1,021
    )
    
    
    (254,252
    )Deferred debt expense
    
    
    
    
    
    
    (1,914
    )Exercise of share options
    
    
    430
    
    
    
    351Net cash provided by financing activities
    
    
    19,189
    
    
    
    156,815Net increase in cash and cash equivalents
    
    
    72,191
    
    
    
    98,149Cash and cash equivalents at beginning of period
    
    
    128,874
    
    
    
    21,336Cash and cash equivalents at end of period
    
    $
    201,065
    
    
    $
    119,485SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash payments for interest (of which $5,700 and $6,729 have been
capitalized)
    
    $
    16,074
    
    
    $
    13,670
 See notes to consolidated financial statements. 5




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ALEXANDERS, INC. AND SUBSIDIARIES 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 1. ORGANIZATION Alexanders, Inc. is a real estate investment trust (REIT), incorporated in Delaware,
engaged in leasing, managing, developing and redeveloping its properties. The activities of
Alexanders, Inc. are conducted through its manager, Vornado Realty Trust (Vornado). 2. BASIS OF PRESENTATION The consolidated balance sheet as of March 31, 2005, the consolidated statements of operations
for the three months ended March 31, 2005 and 2004, and the consolidated statements of cash flows
for the three months ended March 31, 2005 and 2004 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 cash flows have been made. Certain information and
footnote disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been condensed or
omitted in accordance with Article 10 of Regulation S-X and the instructions to Form 10-Q. These
consolidated financial statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Annual Report on Form 10-K of Alexanders, Inc. for
the year ended December 31, 2004 as filed with the Securities and Exchange Commission. The results
of operations for the three months ended March 31, 2005 are not necessarily indicative of the
operating results for the full year. The accompanying consolidated financial statements include the accounts of Alexanders, Inc.
and all of its wholly owned subsidiaries (collectively, the Company). All significant
intercompany amounts have been eliminated. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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 periods consolidated financial
statements have been reclassified to conform to the current period presentation. These
reclassifications have no impact on net income previously reported. The Company currently operates in one business segment. 3. RELATIONSHIP WITH VORNADO REALTY TRUST Vornado owned 33.0% of the common stock of Alexanders, Inc. as of March 31, 2005. Steven
Roth is the Chief Executive Officer and a director of the Company, the Managing General Partner of
Interstate Properties (Interstate), a New Jersey general partnership, and the Chairman of the
Board and Chief Executive Officer of Vornado. At March 31, 2005, Mr. Roth, Interstate and its
other two general partners, David Mandelbaum and Russell B. Wight, Jr. (who are also directors of
the Company and trustees of Vornado) owned, in the aggregate, 27.4% of the outstanding common stock
of Alexanders, Inc., in addition to the common stock owned directly by Vornado, and 11.0% of the
outstanding common shares of beneficial interest of Vornado. The Company is managed, and its properties are leased and developed, by Vornado pursuant to
agreements with one-year terms, expiring in March of each year, which are automatically renewable
except for the 731 Lexington Avenue property which provides for a term lasting until substantial
completion of the development of the property. Management Agreements The annual fee payable to Vornado for management of the Company is equal to the sum of (i)
$3,000,000 and, (ii) 3% of gross income from the Kings Plaza Regional Shopping Center, and (iii) 6%
of development costs with minimum guaranteed fees of $750,000 per annum. Leasing Agreements Vornado also provides all leasing services for the Company for a fee of 3% of rent for the
first ten years of a lease term, 2% of rent for the eleventh through the twentieth year of a lease
term, and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the
payment of rents by tenants. In the event of the sale of an asset, the fee is 3% of the gross
proceeds, as defined. Such amounts are payable annually in an amount not to exceed 6




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ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) $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 they been paid at the time the
transactions which gave rise to the commissions occurred. Pursuant to the leasing agreement, in
the event third party real estate brokers are used, the fees to Vornado increase by 1% and Vornado
is responsible for the fees to the third party real estate brokers, except in connection with the
Bloomberg L.P. lease, where the tenant paid the third party broker directly. 731 Lexington Avenue Fees Pursuant to management agreements discussed above, Vornado is entitled to a development fee
for the construction of the Companys 731 Lexington Avenue project, estimated to be $26,300,000
payable on the earlier of January 3, 2006 or the date of payment in full of the construction loan
encumbering the property. Further, Vornado has agreed to guarantee to the construction lender, the
lien free, timely completion of the construction of the 731 Lexington Avenue project and funding of
project costs in excess of a stated budget, if not funded by the Company (the Completion
Guarantee). The fee payable by the Company to Vornado for the Completion Guarantee is 1% of
construction costs, as defined. This fee is estimated to be $6,300,000 and is due at the same time
that the development fee is due. In addition, if Vornado should advance any funds under the
Completion Guarantee in excess of $21,000,000, which was the amount available at December 31, 2004
under the line of credit with Vornado (see Debt and Contractual Obligations), interest on those
advances would be at 15% per annum. On May 27, 2004, Alexanders entered into an agreement with Vornado under which it provides
property management services at 731 Lexington Avenue for an annual fee of $0.50 per square foot of
the tenant-occupied office and retail space. Further, the Company entered into an agreement with
Building Maintenance Services (BMS), a wholly-owned subsidiary of Vornado, to supervise the
cleaning, engineering and security at the 731 Lexington Avenue property for an annual fee of 6% of
costs for such services. In addition, in October 2004, the Company entered into an agreement with
BMS to provide the same services at the Kings Plaza Regional Shopping Center. These agreements
were negotiated and approved on behalf of the Company by a committee of directors of the Company
unaffiliated with Vornado. At March 31, 2005, the Company owed Vornado (i) $19,192,000 for development fees, (ii)
$32,220,000 for leasing fees, (iii) $5,210,000 for the guarantee fee, (iv) $537,000 for interest,
and (v) $1,158,000 for management fees and property management and cleaning fees. The following table shows the amounts incurred under the management, leasing and development
agreements. Three Months EndedMarch 31,(amounts in thousands)
    
    2005
    
    
    2004Company management fees
    
    $
    750
    
    
    $
    750Development fee, guarantee fee and rent
for development office
    
    
    1,136
    
    
    
    1,704Leasing fees
    
    
    9,096
    
    
    
    4,390Property management fees and payments
for cleaning, engineering and security
services
    
    
    571
    
    
    
    662$
    11,553
    
    
    $
    7,506
    At March 31, 2005, in addition to the fees and costs described above, the Company was indebted
to Vornado in the amount of $124,000,000 comprised of (i) a $95,000,000 note and (ii) $29,000,000
under a $50,000,000 line of credit (which carries a 1% unused commitment fee). As of March 31,
2005, the interest rate on the loan and line of credit was 9.0% and resets quarterly using a 6.0%
spread to one-year treasuries with a 3% floor for treasuries. On April 1, 2005 the rate was reset
at 9.30%. On July 3, 2002, in conjunction with the original closing of the Construction Loan, the
maturity of the Vornado debt was extended to the earlier of January 3, 2006 or the date the
Construction Loan is finally repaid. The Company incurred interest (including the 1% unused
commitment fee) on this debt of $2,896,000 and $4,018,000 in the three months ended March 31, 2005
and 2004, respectively. 7




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ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 4. 731 LEXINGTON AVENUE 731 Lexington Avenue is a 1.3 million square foot multi-use building. The building contains
approximately 885,000 net rentable square feet of office space, approximately 174,000 net rentable
square feet of retail space and approximately 248,000 net saleable square feet of residential space
consisting of 105 condominium units (through a taxable REIT subsidiary (TRS)). Of the
construction budget of $630,000,000 (which excludes $29,000,000 for development and guarantee fees
to Vornado), $505,300,000 has been expended through March 31, 2005 and an additional $17,100,000
has been committed to at March 31, 2005. The remaining construction is expected to be completed by
the end of 2005. At March 31, 2005, the Company has leased all of the office space, of which 697,000 square
feet of office space was leased to Bloomberg L.P., and 176,000 square feet of office space was
leased to Citibank N.A. In addition, the Company has leased 145,000 square feet of retail space to,
among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank, and the Bank of
America. The
residential space is comprised of 105 condominium units. The total
value of condominiums (i) sold, (ii) under contract for
sale, and (iii) remaining to be sold is approximately
$500,000,000, which would produce pre-tax profit of approximately
$116,000,000. On January 24, 2005, the condominium offering plan was
declared effective by the State of New York. At March 31, 2005,
72 of the condominium units were under sales contract and
18 condominium unit sales closed. Accordingly, the Company will recognize approximately $45,437,000 of income
after taxes in fiscal 2005 from these sales for the units under contract. In the first quarter of
2005, $39,975,000 of this income was recognized using the percentage of completion method. On March 4, 2005, the Construction Loan was modified to allow the Company to retain the
proceeds received from the sales of its condominium units without having to pay down the
Construction Loan. When the condominiums are fully sold out, the Construction Loan will be secured
by a lien on only the retail unit. While the project is nearing completion, there can be no assurance that the remainder of the
project will be completed on time or completed for the budgeted amount. Any failure to complete
the 731 Lexington Avenue project on time or within budget may adversely affect future cash flows,
funds from operations and financial condition. 5. LEASES The Company leases space to tenants in retail centers and an office building. Future base
rental revenue under these non-cancelable operating leases is as follows: (amounts in thousands) Year Ending December 31,2005
    
    $
    69,9422006
    
    
    107,2632007
    
    
    105,4822008
    
    
    108,2852009
    
    
    104,212Thereafter
    
    
    1,552,721
 Bloomberg L.P. and Sears accounted for 36% and 10% of the companys consolidated revenues for
the first quarter of 2005, and 36% and 11% for the first quarter of 2004. No other tenant
accounted for more than 10% of revenues. 8




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ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 6. DEBT The following is a summary of the Companys outstanding debt. Interest
    
    
    Balance atRate at
    
    
    March 31,
    
    
    December 31,Maturity
    
    
    March 31, 2005
    
    
    2005
    
    
    2004(amounts in thousands except for percentages)First mortgage, secured by the office space at
the Lexington Avenue property
    
    Feb. 2014
    
    
    5.33
    %
    
    $
    400,000
    
    
    $
    400,000First mortgage, secured by the Kings Plaza
Regional
Shopping Center
    
    June 2011
    
    
    7.46
    %
    
    
    212,877
    
    
    
    213,699Term loan and line of credit to Vornado
    
    Jan. 2006
    
    
    9.00
    %
    
    
    124,000
    
    
    
    124,000First mortgage, secured by the Rego Park I
Shopping Center
    
    June 2009
    
    
    7.25
    %
    
    
    81,462
    
    
    
    81,661First mortgage, secured by the Paramus property
    
    Oct. 2011
    
    
    5.92
    %
    
    
    68,000
    
    
    
    68,000Construction loan, secured by the retail and
residential space at the Lexington Avenue
property
    
    Jan. 2006
    
    
    5.35
    %
    
    
    84,948
    
    
    
    65,168$
    971,287
    
    
    $
    952,528
 7. COMMITMENTS AND CONTINGENCIES Neither Alexanders, Inc. 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 routine legal actions will not be material to the
Companys financial condition or results of operations. Insurance The Company carries comprehensive liability and all-risk property insurance (fire, flood,
extended coverage and rental loss insurance) with respect to its assets but is at risk for
financial loss in excess of the policies limits. Such a loss could be material. Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers must offer coverage
through 2005 in their commercial property policies for losses resulting from defined acts of
terrorism. As a result of the legislation, since June 2003, the Company has maintained
$500,000,000 of coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company is at risk for
financial loss in excess of these limits, which loss could be material. The Companys debt instruments, consisting of mortgage loans secured by its properties (which
are generally non-recourse to the Company), contain customary covenants requiring the Company to
maintain insurance. There can be no assurance that the lenders under these instruments will not
take the position that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to declare an event of
default and accelerate repayment of debt. In addition, if lenders insist on coverage for these
risks and the Company is unable to obtain coverage if the Terrorism Risk Insurance Act of 2002 is
not extended, it may adversely affect the Companys ability to finance and/or refinance its
properties and businesses. Environmental Remediation In June 1997, the Kings Plaza Regional Shopping 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 Phase II Study indicated
the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and
groundwater. The Company has delineated the contamination and 9




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ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) has developed a remediation approach, which is ongoing. The New York State Department of
Environmental Conservation (NYDEC) has approved a portion of the remediation approach. The
Company accrued $2,675,000 in previous years, of which $2,559,000 has been paid as of March 31,
2005, for its estimated obligation with respect to the cleanup of the site, and which includes
costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial
action and (v) professional fees. Costs of future expenditures for these environmental remediation
obligations were not discounted to their present value. If NYDEC insists on a more extensive
remediation approach, the Company could incur additional obligations. The Company has concluded that the large majority of the contamination at the site is historic
and the result of past activities of third parties. Although the Company is pursuing claims
against potentially responsible third parties, and negotiations are ongoing with a former owner of
the property, there can be no assurance as to the extent that the Company will be successful in
obtaining recovery from such parties of the remediation costs incurred. In addition, the costs
associated with further pursuit of responsible parties may be prohibitive. The Company has not
recorded an asset as of March 31, 2005 for possible recoveries of environmental remediation costs
from potentially responsible third parties. On January 31, 2005, the Company received a settlement
of $337,500 from one of the responsible parties. Flushing Property In the fourth quarter of 2003, the Company recognized $1,289,000 of income representing a
non-refundable deposit of $1,875,000 from a party that had agreed to purchase the Companys
Flushing property, net of $586,000 of costs associated with the transaction, as the party had not
met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7,
2002, and July 8, 2004, the Company received letters from the party demanding return of the
deposit. The Company, after consulting with its legal counsel, does not believe the party is
entitled to a return of the deposit. There can be no assurance that the party will not institute
legal action and, if it does, that it will not be successful in requiring the Company to return all
or a portion of the deposit. Kings Plaza The
Company plans to construct a freestanding building adjacent to the
mall containing approximately 120,000 square feet leased to
Lowes Home Improvement Warehouse (Lowes).
This lease is expected to commence in 2006. The cost of this project,
net of tenant reimbursement, is approximately $5 million. In
addition, the Company may construct a second level on this project. There
can be no assurance that these projects will be completed, completed
on time or completed for the budgeted amount. Rego Park II The Company owns two land parcels containing approximately 10 acres adjacent to its Rego Park
I property in Queens, New York. One parcel comprises the entire square block bounded by the Horace
Harding Service Road, 97th Street, 62nd Drive and Junction Boulevard. The
other is a parcel of approximately one-quarter square block at the intersection of Junction Boulevard
and the Horace Harding Service Road. Both parcels are zoned for residential use, while commercial
uses are permitted as-of-right only on the smaller parcel. Each parcel is currently being used for
paid public parking. The
Companys plan for the entire square block parcel is a
mixed-use, development containing approximately 600,000 square
feet of retail space on four levels, 450 apartment units in two
towers, and a 1,400 space parking deck. This project is going
through the governmental approval process, which is expected to take
approximately nine months. While
the current plans for the other parcel are very preliminary, we
anticipate it may include up to 80,000 square feet of retail. It
is anticipated that neither of these projects will commence prior to
2006. There can be no assurance that these projects will be
completed, completed on time or completed for the budgeted amount. 10




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Letters of Credit Approximately $4,130,000 in standby letters of credit were issued at March 31, 2005. ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 8. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share. Basic
earnings per share is determined using the weighted average shares of common stock outstanding
during the period. Diluted earnings per share is determined using the weighted average shares of
common stock outstanding assuming all dilutive potential common shares were converted into shares
at the earliest date possible. Three Months Ended March 31,2005
    
    
    2004Net income (loss) available to common
shareholders  Basic and diluted
    
    $
    31,218,000
    
    
    $
    (22,992,000
    )Weighted average shares outstanding  Basic
    
    
    5,015,827
    
    
    
    5,002,169Effect of stock options
    
    
    59,638
    
    
    
    Weighted average shares outstanding  Diluted
    
    
    5,075,465
    
    
    
    5,002,169Income (Loss) Per Common Share  Basic
    
    $
    6.22
    
    
    $
    (4.60
    )Income (Loss) Per Common Share  Diluted
    
    $
    6.15
    
    
    $
    (4.60
    )
 Options to purchase 100,000 shares of the common stock of Alexanders Inc. were not included
in the calculation of net loss per share for the three months ended March 31, 2004, as they are
anti-dilutive. 11




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders of Alexanders, Inc.
Paramus, New Jersey We have reviewed the accompanying condensed consolidated balance sheet of Alexanders Inc. and
subsidiaries as of March 31, 2005, and the related condensed consolidated statements of operations
and cash flows for the three-month periods ended March 31, 2005 and 2004. These interim financial
statements are the responsibility of the Companys management. We conducted our reviews in accordance with standards established by the Public Company
Accounting Oversight Board (United States). A review of interim financial information consists
principally of applying analytical procedures and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an audit conducted in
accordance with standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to
such condensed consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of Alexanders Inc. and
subsidiaries as of December 31, 2004, and the related consolidated statements of operations,
stockholders equity, and cash flows for the year then ended (not presented herein); and in our
report dated February 24, 2005, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Parsippany, New Jersey
April 27, 2005   12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements contained herein and throughout this Quarterly Report on Form 10-Q
constitute forward-looking statements as such term is defined in Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are not guarantees of performance. The Companys future results,
financial condition, results of operations and business may differ materially from those expressed
in these forward-looking statements. You can find many of these statements by looking for words
such as approximates, believes, expects, anticipates, estimates, intends, plans, would, may,
will or other similar expressions in this Quarterly Report on Form 10-Q. These forward-looking
statements represent our intentions, plans, expectations and beliefs and are subject to numerous
assumptions, risks and uncertainties. Many of the factors that will determine these items are
beyond our ability to control or predict. Factors that might cause such a material difference
include, but are not limited to: (a) national, regional and local economic conditions; (b) the
consequences of any armed conflict involving, or terrorist attack against, the United States; (c)
our ability to secure adequate insurance; (d) local conditions, such as an oversupply of space or a
reduction in demand for real estate in the area; (e) competition from other available space; (f)
whether tenants consider a property attractive; (g) the financial condition of our tenants,
including the extent of tenant bankruptcies or defaults; (h) whether we are able to pass some or
all of any increased operating costs we incur through to our tenants; (i) how well we manage our
properties; (j) any increase in interest rates; (k) any decreases in market rental rates; (l) the
timing and costs associated with property development, improvements and rentals; (m) changes in
taxation or zoning laws; (n) government regulations; (o) our failure to continue to qualify as a
real estate investment trust; (p) the availability of financing on acceptable terms or at all; (q)
potential liabilities under environmental or other laws or regulations; (r) general competitive
factors; (s) dependence upon Vornado Realty Trust (Vornado); and (t) possible conflicts of
interest with Vornado. For these forward-looking statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You
are cautioned not to place undue reliance on the forward-looking statements, which speak only as of
the date of this Quarterly Report on Form 10-Q or the date of the applicable document incorporated
by reference. All subsequent written and oral forward-looking statements attributable to the
Company or any person acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Overview Managements Discussion and Analysis of Financial Condition and Results of Operations includes
a discussion of the Companys consolidated financial statements for the three months ended March
31, 2005 and 2004. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent 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. A summary of the Companys critical accounting policies is included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2004 in Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations and Note 2  Summary of Significant
Accounting Policies to the consolidated financial statements included therein. There have been no
significant changes to those policies during the first quarter of 2005. Condominium Sales The residential space of 731 Lexington Avenue contains approximately 248,000 net saleable
square feet, consisting of 105 condominium units. The sales of these condominiums are accounted
for using the percentage-of-completion method. The total value of
condominiums (i) sold, (ii) under contract for sale, and
(iii) remaining to be sold is approximately $500,000,000, which
would produce a net pre-tax profit of approximately $116,000,000. On
January 24, 2005, the condominium offering plan was declared
effective by the State of New York. At March 31, 2005, 72 of the
condominium units were under sales contract and 18 condominium
unit sales closed. Accordingly, the Company will recognize
approximately $45,437,000 of income after taxes in fiscal 2005 from the units under contract. In
the first quarter of 2005, $39,975,000 of this income has been recognized. 13




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##### Table of Contents



Stock Appreciation Rights Compensation expense for each stock appreciation right (SARs) is measured by the excess of
the stock price at the current balance sheet date over the stock price at the previous balance
sheet date. If the stock price is lower at the current balance sheet date, previously recognized
expense is reversed but not below zero. In the three months ended March 31, 2005, the Company
recorded $22,525,000 of SARs compensation expense as Alexanders, Inc. stock price increased from
$215.00 to $241.50 from December 31, 2004 to March 31, 2005. $30,039,000 was recorded in the three
months ended March 31, 2004 as the stock price increased from $124.66 to $160.00 from December 31,
2003 to March 31, 2004. Application of Critical Accounting Policies Real Estate As construction of the Lexington Avenue development project progresses and as components of
the building are placed into service, the Company will cease capitalizing property operating
expenses and interest expense and begin to expense these items, as well as depreciation, for those
components. In the three months ended March 31, 2005, the Company transferred approximately
$116,184,000 from Construction in Progress to Land and Buildings, leaseholds and leasehold
improvements, representing the space delivered. In addition, during the first quarter of 2005,
the Company transferred approximately $277,938,000 from Construction in Progress as its cost
portion regarding the sales of its condominium units. Results of Operations The Company had net income of $31,218,000 for the first quarter of 2005, compared to a net
loss of $22,922,000 in the prior years quarter. The net income for the current years quarter
includes a gain after tax of $39,975,000 for the sale of 90 condominium units at the 731 Lexington
Avenue property. Property rentals increased 28.9% to $31,673,000 for first quarter of 2005 from $24,567,000 in
the prior years quarter. The increase is primarily attributable to tenants located in the 731
Lexington Avenue property whose space was placed in service subsequent to the first quarter of
2004. These tenants include the Home Depot, Hennes & Mauritz, Metrovest, Wachovia Bank, Bank of
America, and Citibank. Tenant expense reimbursements increased 30.5% to $12,003,000 from $9,198,000 in the prior
years quarter. The increase is largely due to reimbursements received from the tenants whose
space was placed in service subsequent to the first quarter of 2004 at the 731 Lexington Avenue
property. Operating expenses increased 31.8% to $13,834,000 for the first quarter of 2005 from
$10,496,000 in the prior years quarter. The increase resulted primarily from lower capitalized
operating costs in 2005 at the 731 Lexington Avenue property resulting from the tenants whose space
was placed in service subsequent to the first quarter of 2004. General and administrative expenses decreased 24.3% to $23,628,000 for the first quarter of
2005 from $31,205,000 in the prior years quarter. The decrease is attributable to a lower accrual
of SARs compensation expense. Depreciation and amortization increased 31.7% to $4,649,000 for the first quarter of 2005 from
$3,530,000 in the prior years quarter. The increase was largely due to depreciation on the space
delivered to the new tenants at 731 Lexington Avenue. Interest and other income, net increased 114.2% to $981,000 for the first quarter of 2005 from
$458,000 in the prior years quarter. This increase resulted primarily from (i) an increase in
average cash balances from approximately $89,000,000 to $133,000,000, (ii) higher average yields on
investments from 0.8% to 2.0% and (iii) $338,000 reimbursement for environmental remediation costs
at its Kings Plaza site during the first quarter of 2005. The prior year quarter includes $150,000
for lease cancellation fee. Interest and debt expense increased 26.5% to $11,303,000 for the first quarter of 2005 from
$8,934,000 in the prior years quarter. This increase resulted primarily from (i) an increase in
average debt from approximately $818,000,000 to $960,000,000, (ii) $1,029,000 less capitalized
interest in the current years quarter as the Company 14




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##### Table of Contents



continued to place space in the 731 Lexington Avenue building in service and partially offset
by a decline in the average interest rate on the Vornado Realty Trust loan from 12.48% to 9.00%. In connection with reducing the principal amount of the Construction Loan on February 13,
2004, the Company wrote off $3,050,000, the proportionate share of unamortized deferred debt
expense, in the first quarter of 2004. Liquidity and Capital Resources The Company anticipates that cash from operations over the next twelve months, together with
existing cash balances, will be adequate to fund its business operations, recurring capital
expenditures, and debt amortization. Capital requirements for the completion of the 731 Lexington
Avenue project (currently estimated to be $125,441,000) may be funded from either existing cash,
proceeds from the sale of condominium units, and additional borrowings under the construction loan. Development Projects 731 Lexington Avenue On January 24, 2005, the condominium offering plan was declared effective by the State of New
York. At March 31, 2005, 90 units were under sales contract. The after-tax gain on the sale of
these units recorded during the period was $39,975,000. The Company has closed on 18 units during
the first quarter of 2005 and expects to close on the balance during 2005. Kings Plaza The Company plans to construct a two-story freestanding building adjacent to the Mall of
approximately 200,000 square feet. The first story of approximately 120,000 square feet will be
operated as a Lowes Home Improvement Warehouse (Lowes). The Lowes lease is expected to
commence in 2006. The cost of the project will be approximately $21 million, net of the Lowes
reimbursement and before reimbursement, if any, from the second story tenant(s). There can be no
assurance that this project will be completed, completed on time or completed for the budgeted
amount. Insurance The Company carries comprehensive liability and all-risk property insurance (fire, flood,
extended coverage and rental loss insurance) with respect to its assets but is at risk for
financial loss in excess of the policies limits. Such a loss could be material. Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers must offer coverage
through 2005 in their commercial property policies for losses resulting from defined acts of
terrorism. As a result of the legislation, since June 2003, the Company has maintained
$500,000,000 of coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company is at risk for
financial loss in excess of these limits, which loss could be material. The Companys debt instruments, consisting of mortgage loans secured by its properties (which
are generally non-recourse to the Company), contain customary covenants requiring the Company to
maintain insurance. There can be no assurance that the lenders under these instruments will not
take the position that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to declare an event of
default and accelerate repayment of debt. In addition, if lenders insist on coverage for these
risks and the Company is unable to obtain coverage if the Terrorism Risk Insurance Act of 2002 is
not extended, it may adversely affect the Companys ability to finance and/or refinance its
properties and businesses. Stock Appreciation Rights As of March 31, 2005, 850,000 SARs were outstanding and exercisable at a weighted-average
exercise price of $71.82. The agreements for these SARs require that they be settled in cash. Had
the holders of these SARs chosen to exercise their rights as of March 31, 2005, the Company would
have had to pay $144,231,000 in cash. Any further appreciation in the Alexanders, Inc. stock
price from the closing stock price of $241.50 at March 31, 2005 will increase the cash the Company
would have to pay upon exercise.   15




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##### Table of Contents



Cash Flows Three Months Ended March 31, 2005 Net cash provided by operating activities of $12,805,000 was comprised of (i) net income of
$31,218,000, (ii) the net change in operating assets and liabilities of $22,266,000, partially
offset by (iii) non-cash items of $40,679,000. The adjustments for non-cash items are comprised of
(a) $39,975,000 resulting from the after-tax gain on the sales of condominiums (b) the effect of
straight-lining of rental income of $6,157,000, and partially offset by (c) $5,453,000 of
depreciation and amortization. Net cash provided by investing activities of $40,197,000 resulted primarily from the proceeds
from the sales of condominiums of $63,045,000, partially offset by capital expenditures of
$19,067,000 and net cash restricted for operating liabilities of $3,031,000. The capital
expenditures primarily related to the 731 Lexington Avenue development project. Net cash provided by financing activities of $19,189,000 resulted primarily from borrowings
collateriallized by the Lexington Avenue development project of $19,780,000, partially offset by
debt repayments of $1,021,000. Three Months Ended March 31, 2004 Net cash provided by operating activities of $3,406,000 was comprised of (i) the net change in
operating assets and liabilities of $30,642,000, partially offset by (ii) a net loss of $22,992,000
and (iii) non-cash items of $4,244,000. The adjustments for non-cash items are comprised of (a)
the effect of straight-lining of rental income of $11,683,000, partially offset by (b) $4,389,000
of depreciation and amortization and (c) $3,050,000 resulting from the write off of unamortized
deferred debt expense. Net cash used in investing activities of $62,072,000 was comprised of capital expenditures of
$50,612,000 and net cash restricted for operating liabilities of $11,460,000. The capital
expenditures primarily related to the Lexington Avenue development project. Net cash provided by financing activities of $156,815,000 resulted primarily from borrowings
collateralized by the Lexington Avenue development project of $412,630,000, partially offset by
debt repayments of $254,252,000 and debt issuance costs of $1,914,000. Funds from Operations for the Three Months Ended March 31, 2005 and 2004 Funds From Operations (FFO) was $35,867,000 in the first quarter of 2005, compared to a
negative $19,462,000 in the prior years quarter, an increase of $55,329,000. FFO for the first
quarter of 2005 includes (i) an aftertax gain of $39,975,000 for the sales of condominium units at
the 731 Lexington Avenue project, and (ii) accrued compensation expense for SARs of $22,525,000.
The following table reconciles net income (loss) to FFO. Three Months EndedMarch 31,(amounts in thousands)
    
    2005
    
    
    2004Net income (loss)
    
    $
    31,218
    
    
    $
    (22,992
    )Depreciation and amortization of
real property
    
    
    4,631
    
    
    
    3,530FFO
    
    $
    35,849
    
    
    $
    (19,462
    )
 FFO is computed in accordance with the definition adopted by the Board of Governors of the
National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income
or loss determined in accordance with generally accepted accounting principles in the United States
of America (GAAP), excluding extraordinary items as defined under GAAP and gains or losses from
sales of previously depreciated operating real estate assets, plus specified non-cash items, such
as real estate asset depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Management, investors and industry analysts use FFO as a supplemental measure of operating
performance of equity REITs. FFO should be evaluated along with GAAP net earnings and net earnings
per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating
activities, investing activities and financing activities, in evaluating the operating performance
of equity REITs. Management believes that FFO is helpful to 16




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##### Table of Contents



investors as a supplemental performance measure because this measure excludes the effect of
depreciation, amortization and gains or losses from sales of real estate, all of which are based on
historical costs, which implicitly assumes that the value of real estate diminishes predictably
over time. Since real estate values have instead historically risen or fallen with market
conditions, these non-GAAP measures can facilitate comparisons of operating performance between
periods and among other equity REITs. FFO does not represent cash generated from operating activities in accordance with GAAP and is
not necessarily indicative of cash available to fund cash needs as disclosed in the Companys
Statements of Cash Flows. FFO should not be considered as an alternative to net loss as an
indicator of the Companys operating performance or as an alternative to cash flows as a measure of
liquidity. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk The following table summarizes the Companys exposure to a change in interest rates. Annual Effect of(amounts in thousands except
    
    March 31, 2005
    
    
    Weighted Average
    
    
    Change In Baseper share amount)
    
    Balance
    
    
    Interest Rate
    
    
    Rates of 1%Variable rate
    
    $
    208,948
    
    
    
    7.52
    %
    
    $
    2,089Fixed rate
    
    
    762,339
    
    
    
    6.18
    %
    
    
    $
    971,287
    
    
    
    
    
    
    $
    2,089Total effect on the Companys
annual net earnings per
share  diluted
    
    
    
    
    
    
    
    
    
    $
    0.41
 The fair value of the Companys debt, estimated by discounting future cash flows using the
current rates available to borrowers with similar credit ratings for the remaining terms of such
debt, is less than the aggregate carrying amount by approximately $24,590,000 at March 31, 2005.
Such fair value estimates are not necessarily indicative of the amounts that would be paid upon
liquidation of the Companys debt. 
 Item 4. Controls and Procedures (a) Disclosure Controls and Procedures The Companys management, with the participation of
the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Companys Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of such period,
the Companys disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting There have not been any changes in the
Companys internal control over financial reporting during the fiscal quarter to which this
Quarterly Report on Form 10-Q relates that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting. 17




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##### Table of Contents



PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings Neither Alexanders, Inc. 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 routine legal actions will not be material to the
Companys financial condition or results of operations. 
 Item 6. Exhibits  (a)
    Exhibits required by Item 601 of Regulation S-K are filed herewith and are listed in the
attached Exhibit Index. 18




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##### Table of Contents



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: April 28, 2005
    
    /s/ Joseph MacnowJoseph Macnow
Executive Vice President and Chief Financial Officer(duly authorized officer and principal financial andaccounting officer)
 19




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##### Table of Contents



EXHIBIT INDEX ExhibitNo.3.1
    
    Amended and Restated Certificate of Incorporation.
Incorporated herein by reference from Exhibit 3.1 to the
registrants Registration Statement on Form S-3 filed on
September 20, 1995.
    
    *3.2
    
    By-laws, as amended. Incorporated herein by reference
from Exhibit 10.1 to the registrants Quarterly Report
on Form 10-Q for the quarter ended March 31, 2000.
    
    *15.1
    
    Letter regarding unaudited interim financial information31.1
    
    Rule 13a-14(a) certification of the Chief Executive
Officer31.2
    
    Rule 13a-14(a) certification of the Chief Financial
Officer32.1
    
    Section 1350 certification of the Chief Executive Officer32.2
    
    Section 1350 certification of the Chief Financial Officer
   *
    
    Incorporated by reference. 20