##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended SEPTEMBER 30, 2005
 OR
 o
    
    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 001-6064
 ALEXANDERS, INC.
 
  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
 
  N/A
 
   þ o
  þ o
 o o




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
 INDEX
 Page NumberPART I. Financial InformationItem 1. Financial Statements:Consolidated Balance Sheets as of
September 30, 2005 (unaudited) and December 31, 2004
    
    
    3Consolidated Statements of Operations (unaudited) for the Three and
Nine Months Ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows (unaudited) for the
Nine Months Ended September 30, 2005 and 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
    
    
    18Item 4. Control and Procedures
    
    
    18PART II. Other InformationItem 1. Legal Proceedings
    
    
    19Item 6. Exhibits
    
    
    19Signatures
    
    
    20Exhibit Index
    
    
    21
 -2-




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##### 



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ALEXANDERS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  September 30,
    
    
    
    
    
    
    December 31,2005
    
    
    
    
    
    
    2004(Unaudited)ASSETSReal estate, at cost:Land
    
    
    
    
    
    $
    69,455
    
    
    
    
    
    
    $
    69,455Buildings, leaseholds and leasehold improvements
    
    
    
    
    
    
    583,682
    
    
    
    
    
    
    
    466,593Construction in progress
    
    
    
    
    
    
    24,559
    
    
    
    
    
    
    
    419,059Total
    
    
    
    
    
    
    677,696
    
    
    
    
    
    
    
    955,107Accumulated depreciation and amortization
    
    
    
    
    
    
    (85,004
    )
    
    
    
    
    
    
    (74,028
    )Real estate, net
    
    
    
    
    
    
    592,692
    
    
    
    
    
    
    
    881,079Cash and cash equivalents
    
    
    
    
    
    
    615,840
    
    
    
    
    
    
    
    128,874Deposits on the sale of condominium units and restricted cash
    
    
    
    
    
    
    12,498
    
    
    
    
    
    
    
    66,930Accounts receivable, net of allowance for doubtful accounts
of $354 and $379
    
    
    
    
    
    
    2,927
    
    
    
    
    
    
    
    4,872Notes receivable
    
    
    
    
    
    
    4,491
    
    
    
    
    
    
    
    Receivable arising from the straight-lining of rents
    
    
    
    
    
    
    92,658
    
    
    
    
    
    
    
    70,739Deferred lease and other property costs, net (including unamortized
leasing fees
to Vornado Realty Trust (Vornado) of $45,282 and $38,819
    
    
    
    
    
    
    73,483
    
    
    
    
    
    
    
    68,148Deferred debt expense, net
    
    
    
    
    
    
    21,442
    
    
    
    
    
    
    
    15,027Other assets
    
    
    
    
    
    
    9,372
    
    
    
    
    
    
    
    9,132TOTAL ASSETS
    
    
    
    
    
    $
    1,425,403
    
    
    
    
    
    
    $
    1,244,801LIABILITIES AND STOCKHOLDERS EQUITYDebt (2004 includes $124,000 due to Vornado)
    
    
    
    
    
    $
    1,080,481
    
    
    
    
    
    
    $
    952,528Amounts due to Vornado
    
    
    
    
    
    
    34,212
    
    
    
    
    
    
    
    49,225Accounts payable and accrued expenses
    
    
    
    
    
    
    36,876
    
    
    
    
    
    
    
    37,706Liability for stock appreciation rights
    
    
    
    
    
    
    168,456
    
    
    
    
    
    
    
    121,706Other liabilities (including taxes payable of $36,191 in 2005)
    
    
    
    
    
    
    44,367
    
    
    
    
    
    
    
    65,268TOTAL LIABILITIES
    
    
    
    
    
    
    1,364,392
    
    
    
    
    
    
    
    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, and outstanding, 5,173,450 shares
    
    
    
    
    
    
    5,173
    
    
    
    
    
    
    
    5,173Additional capital
    
    
    
    
    
    
    26,343
    
    
    
    
    
    
    
    25,685Retained earnings (deficit)
    
    
    
    
    
    
    30,326
    
    
    
    
    
    
    
    (11,602
    )61,842
    
    
    
    
    
    
    
    19,256Treasury shares: 149,450 and 159,600 shares, at cost
    
    
    
    
    
    
    (831
    )
    
    
    
    
    
    
    (888
    )TOTAL STOCKHOLDERS EQUITY
    
    
    
    
    
    
    61,011
    
    
    
    
    
    
    
    18,368TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    
    
    
    
    $
    1,425,403
    
    
    
    
    
    
    $
    1,244,801
  -3-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUESProperty rentals
    
    $
    33,337
    
    
    $
    29,009
    
    
    $
    98,580
    
    
    $
    80,712Expense reimbursements
    
    
    14,051
    
    
    
    9,826
    
    
    
    38,219
    
    
    
    26,687Total revenues
    
    
    47,388
    
    
    
    38,835
    
    
    
    136,799
    
    
    
    107,399EXPENSESOperating (including fees to Vornado of $517, $474, $1,530
and $1,446, respectively)
    
    
    17,567
    
    
    
    12,732
    
    
    
    45,982
    
    
    
    33,969General and administrative (including stock appreciation
rights compensation expense of $18,062, $26,656, $46,750
and $63,274, respectively, and management fees to Vornado
of $540 and $1,620 in each three and nine month period)
    
    
    19,225
    
    
    
    27,627
    
    
    
    50,306
    
    
    
    66,488Depreciation and amortization
    
    
    4,996
    
    
    
    3,785
    
    
    
    14,619
    
    
    
    11,193Total expenses
    
    
    41,788
    
    
    
    44,144
    
    
    
    110,907
    
    
    
    111,650OPERATING INCOME (LOSS)
    
    
    5,600
    
    
    
    (5,309
    )
    
    
    25,892
    
    
    
    (4,251
    )Interest and other income, net
    
    
    4,530
    
    
    
    353
    
    
    
    7,487
    
    
    
    1,090Interest and debt expense (including interest to
Vornado of $198, $2,906, $6,009 and $9,745, respectively)
    
    
    (17,520
    )
    
    
    (10,599
    )
    
    
    (45,232
    )
    
    
    (29,813
    )Write off of unamortized deferred debt expense
    
    
    (736
    )
    
    
    
    
    
    
    (736
    )
    
    
    (3,050
    )Loss from continuing operations
    
    
    (8,126
    )
    
    
    (15,555
    )
    
    
    (12,589
    )
    
    
    (36,024
    )Gain on sale of condominiums in 2005 and other real estate
in 2004
    
    
    2,539
    
    
    
    3,862
    
    
    
    100,878
    
    
    
    3,862Income tax expense of taxable REIT subsidiary
    
    
    (1,167
    )
    
    
    
    
    
    
    (46,361
    )
    
    
    1,372
    
    
    
    3,862
    
    
    
    54,517
    
    
    
    3,862NET (LOSS) INCOME
    
    $
    (6,754
    )
    
    $
    (11,693
    )
    
    $
    41,928
    
    
    $
    (32,162
    )Income (loss) per common share  Basic:Loss from continuing operations
    
    $
    (1.61
    )
    
    $
    (3.10
    )
    
    $
    (2.51
    )
    
    $
    (7.19
    )Gain on sale of condominiums in 2005 and other real estate in
2004, net of taxes
    
    
    .27
    
    
    
    0.77
    
    
    
    10.86
    
    
    
    0.77Net (loss) income per common share
    
    $
    (1.34
    )
    
    $
    (2.33
    )
    
    
    8.35
    
    
    $
    (6.42
    )Income (loss) per common share  Diluted:Loss from continuing operations
    
    $
    (1.61
    )
    
    $
    (3.10
    )
    
    $
    (2.48
    )
    
    $
    (7.19
    )Gain on sale of condominiums in 2005 and other real estate in
2004, net of taxes
    
    
    .27
    
    
    
    0.77
    
    
    
    10.73
    
    
    
    0.77Net (loss) income per common share
    
    $
    (1.34
    )
    
    $
    (2.33
    )
    
    $
    8.25
    
    
    $
    (6.42
    )
  -4-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Nine Months Ended September 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    41,928
    
    
    $
    (32,162
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Gain on sale of condominiums in 2005 and other real estate in 2004
    
    
    (100,878
    )
    
    
    (3,862
    )Income tax expense of taxable REIT subsidiary
    
    
    36,191
    
    
    
    Write-off of unamortized deferred debt expense
    
    
    736
    
    
    
    3,050Depreciation and amortization (including amortization of deferred
debt expense)
    
    
    16,831
    
    
    
    13,689Straight-lining of rental income
    
    
    (21,919
    )
    
    
    (38,691
    )Change in operating assets and liabilities:Accounts receivable, net
    
    
    1,945
    
    
    
    (1,023
    )Notes receivable
    
    
    (4,491
    )
    
    
    Amounts due to Vornado
    
    
    8,516
    
    
    
    8,840Accounts payable and accrued expenses
    
    
    9,724
    
    
    
    8,460Liability for stock appreciation rights
    
    
    46,750
    
    
    
    63,274Other liabilities
    
    
    (78
    )
    
    
    (168
    )Other assets
    
    
    (8,419
    )
    
    
    (3,501
    )Net cash provided by operating activities
    
    
    26,836
    
    
    
    17,906CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of condominiums in 2005 and other real estate in 2004
    
    
    437,436
    
    
    
    4,294Investment in joint venture
    
    
    (715
    )
    
    
    Additions to real estate
    
    
    (93,230
    )
    
    
    (115,577
    )Cash restricted for operating liabilities
    
    
    (2,582
    )
    
    
    (1,086
    )Net cash provided by (used in) investing activities
    
    
    340,909
    
    
    
    (112,369
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings
    
    
    344,832
    
    
    
    458,306Repayments of borrowings
    
    
    (216,879
    )
    
    
    (255,812
    )Deferred debt issuance costs
    
    
    (9,446
    )
    
    
    (3,461
    )Exercise of share options
    
    
    714
    
    
    
    844Net cash provided by financing activities
    
    
    119,221
    
    
    
    199,877Net increase in cash and cash equivalents
    
    
    486,966
    
    
    
    105,414Cash and cash equivalents at beginning of period
    
    
    128,874
    
    
    
    21,336Cash and cash equivalents at end of period
    
    $
    615,840
    
    
    $
    126,750SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash payments for interest (of which $6,935 and $18,628 have been
capitalized)
    
    $
    49,720
    
    
    $
    45,086Cash
payments for income taxes
    
    $
    10,170
    
    
    $
    
  -5-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. ORGANIZATION
  2. BASIS OF PRESENTATION
    3. RELATIONSHIP WITH VORNADO
   Management Agreements
  -6-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Leasing Agreements
  731 Lexington Avenue Fees
     Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Company management fees
    
    $
    750
    
    
    $
    750
    
    
    $
    2,250
    
    
    $
    2,250Development fee,
guarantee fee and rent
for development office
    
    
    2,146
    
    
    
    1,384
    
    
    
    4,134
    
    
    
    4,696Leasing fees
    
    
    748
    
    
    
    790
    
    
    
    10,683
    
    
    
    10,993Property management
fees and payments for
cleaning, engineering
and security services
    
    
    1,335
    
    
    
    633
    
    
    
    3,581
    
    
    
    1,756$
    4,979
    
    
    $
    3,557
    
    
    $
    20,648
    
    
    $
    19,695
  -7-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 4. 731 LEXINGTON AVENUE
      5. LEASES
  (Amounts in thousands)Year Ending December 31,2005
    
    $
    23,7572006
    
    
    107,6902007
    
    
    105,8002008
    
    
    108,5742009
    
    
    104,152Thereafter
    
    
    1,548,527
  -8-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 6. DEBT
  Interest Rate at
    
    
    Balance atSeptember 30,
    
    
    September 30,
    
    
    December 31,(Amounts in thousands)
    
    Maturity
    
    
    2005
    
    
    2005
    
    
    2004First mortgage, secured by the office space at the
Lexington Avenue property
    
    Feb. 2014
    
    
    5.33
    %
    
    $
    400,000
    
    
    $
    400,000First mortgage, secured by the retail space at the Lexington Avenue property
    
    July 2015
    
    
    4.93
    %
    
    
    320,000
    (1)(2)

    
    
    First mortgage, secured by the Kings Plaza Regional
Shopping Center
    
    June 2011
    
    
    7.46
    %
    
    
    211,362
    
    
    
    213,699Vornado term loan and line of credit
    
    
    N/A
    
    
    N/A
    
    
    
    
    (1)
    
    
    124,000First mortgage, secured by the Rego Park I
Shopping Center
    
    June 2009
    
    
    7.25
    %
    
    
    81,119
    
    
    
    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
    
    
    N/A
    
    
    N/A
    
    
    
    
    (1)
    
    
    65,168$
    1,080,481
    
    
    $
    952,528
 
 (1)
    
    On July 6, 2005, the Company completed a $320,000,000 mortgage financing on the retail
space. The loan is interest only and matures in July 2015. Of the net proceeds of
$312,000,000, approximately $90,000,000 was used to repay the construction loan and
$124,000,000 was used to repay the loans from Vornado.(2)
    
    In the event of a substantial casualty, up to $75,000,000 of this loan may become
recourse. 7. COMMITMENTS AND CONTINGENCIES
  Insurance
    -9-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Environmental Remediation
   Flushing Property
  Kings Plaza
  Rego Park II
 th nd
    -10-




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##### 



ALEXANDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Paramus
  Letters of Credit
  8. EARNINGS PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands, except share and per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Loss from continuing operations
    
    $
    (8,126
    )
    
    $
    (15,555
    )
    
    $
    (12,589
    )
    
    $
    (36,024
    )Gain on sale of condominiums in 2005 and other
real estate in 2004, net of taxes
    
    
    1,372
    
    
    
    3,862
    
    
    
    54,517
    
    
    
    3,862Net (loss) income available to common
shareholders  Basic and Diluted
    
    $
    (6,754
    )
    
    $
    (11,693
    )
    
    $
    41,928
    
    
    $
    (32,162
    )Weighted average shares
outstanding  Basic
    
    
    5,023,477
    
    
    
    5,010,627
    
    
    
    5,020,457
    
    
    
    5,006,660Effect of stock options
    
    
    
    
    
    
    
    
    
    
    58,805
    
    
    
    Weighted average shares
outstanding  Diluted
    
    
    5,023,477
    
    
    
    5,010,627
    
    
    
    5,079,262
    
    
    
    5,006,660Income (loss) per common share  Basic:Loss from continuing operations
    
    $
    (1.61
    )
    
    $
    (3.10
    )
    
    $
    (2.51
    )
    
    $
    (7.19
    )Gain on sale of condominiums in 2005 and other
real estate in 2004, net of taxes
    
    
    .27
    
    
    
    0.77
    
    
    
    10.86
    
    
    
    0.77Net (loss) income per common share
    
    $
    (1.34
    )
    
    $
    (2.33
    )
    
    $
    8.35
    
    
    $
    (6.42
    )Income (loss) per common share  Diluted:Loss from continuing operations
    
    $
    (1.61
    )
    
    $
    (3.10
    )
    
    $
    (2.48
    )
    
    $
    (7.19
    )Gain on sale of condominiums in 2005 and other
real estate in 2004, net of taxes
    
    
    .27
    
    
    
    0.77
    
    
    
    10.73
    
    
    
    0.77Net (loss) income per common share
    
    $
    (1.34
    )
    
    $
    (2.33
    )
    
    $
    8.25
    
    
    $
    (6.42
    )
  -11-




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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 -12-




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    Overview
   Condominium Sales
  13




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##### 



Stock Appreciation Rights
  Application of Critical Accounting Policies
 Real Estate
  Critical Accounting Policies
  Results of Operations
     14




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##### 



Liquidity and Capital Resources
  Development Projects
 731 Lexington Avenue
  Kings Plaza
  15




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##### 



Rego Park
 th nd
    Stock Appreciation Rights
  Insurance
    Cash Flows
 Nine Months Ended September 30, 2005
    16




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##### 



Nine Months Ended September 30, 2004
    Funds from Operations (FFO)
 FFO for the three and nine months ended September 30, 2005 and 2004
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands, except share and per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net (loss) income
    
    $
    (6,754
    )
    
    $
    (11,693
    )
    
    $
    41,928
    
    
    $
    (32,162
    )Depreciation and amortization of real property
    
    
    4,975
    
    
    
    3,785
    
    
    
    14,558
    
    
    
    11,193(Negative FFO) FFO
    
    $
    (1,779
    )
    
    $
    (7,908
    )
    
    $
    56,486
    
    
    $
    (20,969
    )(Negative FFO) FFO per common share  diluted
    
    $
    (0.35
    )
    
    $
    (1.58
    )
    
    $
    11.12
    
    
    $
    (4.19
    )Weighted average shares used in computing
FFO per common share  diluted
    
    
    5,023,477
    
    
    
    5,010,627
    
    
    
    5,079,262
    
    
    
    5,006,660
  17




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##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
 Internal Control Over Financial Reporting 
 18




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##### 



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
 (a)
    
    Exhibits required by Item 601 of Regulation S-K are filed herewith and are listed in the
attached
Exhibit Index.
 19




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##### 



SIGNATURES
  ALEXANDERS, INC.(Registrant)Date: October 27, 2005
    
    /s/ Joseph MacnowJoseph Macnow
Executive Vice President and Chief Financial Officer
(duly authorized officer and principal financial and
accounting officer) 20




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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 September 30, 2000
    
    *10.61
    
    Form of Stock Option Agreement between the Company and certain employees10.62
    
    Form of Restricted Stock Option Agreement between the Company and certain employees15.1
    
    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. 21