<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
(Mark One)

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2004
                               -------------------------------------------------

                                       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  001-14525
                        --------------------------------------------------------

                            VORNADO OPERATING COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                DELAWARE                                22-3569068
----------------------------------------    ------------------------------------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)


210 ROUTE 4 EAST, PARAMUS, NEW JERSEY                     07652
----------------------------------------    ------------------------------------
(Address of principal executive offices)                (Zip Code)


                                 (201) 587-7721
--------------------------------------------------------------------------------
              (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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
                                 [ ] Yes [X] No

As of November 1, 2004, there were 4,068,924 shares of the registrant's common
stock, par value $0.01 per share, outstanding.


                                     Page 1
<PAGE>
                                      INDEX


<TABLE>
<CAPTION>
                                                                                                    Page Number
                                                                                                    -----------
<S>              <C>                                                                                <C>
PART I.          FINANCIAL INFORMATION

        ITEM 1.     Financial Statements:

                    Consolidated Balance Sheets as of
                       September 30, 2004 (unaudited) and December 31, 2003.......................       3

                    Consolidated Statements of Operations (unaudited) for the
                       Three and Nine Months Ended September 30, 2004 and September 30, 2003......       4

                    Consolidated Statements of Cash Flows (unaudited) for the
                       Nine Months Ended September 30, 2004 and September 30, 2003................       5

                    Notes to Consolidated Financial Statements (unaudited)........................       6

                    Report of Independent Registered Public Accounting Firm.......................      11

        ITEM 2.     Management's Discussion and Analysis of
                       Financial Condition and Results of Operations..............................      12

        ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk....................      17

        ITEM 4.     Controls and Procedures.......................................................      17


PART II.         OTHER INFORMATION

        ITEM 1.     Legal Proceedings.............................................................      18

        ITEM 5.     Other Information.............................................................      18

        ITEM 6.     Exhibits......................................................................      20

SIGNATURES          ..............................................................................      21

EXHIBIT INDEX       ..............................................................................      22
</TABLE>


                                     Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
      ITEM 1. FINANCIAL STATEMENTS


                            VORNADO OPERATING COMPANY
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                         (UNAUDITED)
                                                                                        SEPTEMBER 30,        DECEMBER 31,
                                                                                            2004                 2003
                                                                                       ---------------      --------------
<S>                                                                                    <C>                  <C>
ASSETS

Cash and cash equivalents, including U.S. government obligations under
      repurchase agreements of $1,210,000 and $650,000, respectively............       $     1,708,761       $   1,118,189
Investments in and advances to AmeriCold Logistics..............................                    --                  --
Interest receivable from AmeriCold Logistics....................................                29,199              33,655
Prepaid expenses and other assets...............................................                 9,781             204,784
                                                                                       ---------------       -------------
Total assets....................................................................       $     1,747,741       $   1,356,628
                                                                                       ===============       =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Note, interest, and fees payable to Vornado Realty Trust........................       $    26,606,948       $  25,394,254
Due to Vornado Realty Trust.....................................................                82,500              77,440
Accounts payable and accrued expenses...........................................               272,775             102,484
                                                                                       ---------------       -------------
Total liabilities...............................................................            26,962,223          25,574,178
                                                                                       ---------------       -------------
Minority interest...............................................................                    --                  --
                                                                                       ---------------       -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT

Common stock: par value $0.01 per share; authorized, 40,000,000 shares;
      issued and outstanding, 4,068,924 shares at each period end...............                40,689              40,689
Additional paid-in capital......................................................            22,462,555          22,462,555
Accumulated deficit.............................................................           (45,381,579)        (44,384,647)
                                                                                       ---------------       -------------
                                                                                           (22,878,335)        (21,881,403)
Accumulated other comprehensive loss............................................            (2,336,147)         (2,336,147)
                                                                                       ---------------       -------------
Total stockholders' deficit.....................................................           (25,214,482)        (24,217,550)
                                                                                       ---------------       -------------
Total liabilities and stockholders' deficit.....................................       $     1,747,741       $   1,356,628
                                                                                       ===============       =============
</TABLE>

                See notes to consolidated financial statements.


                                     Page 3
<PAGE>
                            VORNADO OPERATING COMPANY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                       SEPTEMBER 30,
                                                           -----------------------------------------------------------------
                                                               2004             2003              2004              2003
                                                           ------------      ------------     ------------      ------------
<S>                                                        <C>               <C>              <C>               <C>
REVENUES
Interest income......................................      $      3,096      $        783     $      5,853      $      2,649

EXPENSES
General and administrative (including fees to
   Vornado Realty Trust of $82,500 in each three
   month period and $247,500 in each nine month period)         317,851           357,914        1,218,493           892,393
                                                           ------------      ------------     ------------      ------------
                                                               (314,755)         (357,131)      (1,212,640)         (889,744)

Interest and debt expense to Vornado Realty Trust....          (428,399)         (387,148)      (1,212,694)       (1,167,576)

Income from notes receivable from AmeriCold Logistics           476,187           477,114        1,428,402         1,412,314
                                                           ------------      ------------     ------------      ------------
Loss before minority interest........................          (266,967)         (267,165)        (996,932)         (645,006)

Minority interest....................................                --                --               --                --
                                                           ------------      ------------     ------------      ------------


NET LOSS.............................................      $   (266,967)     $   (267,165)    $   (996,932)     $   (645,006)
                                                           ============      ============     ============      ============

Net loss per share -- basic and diluted..............      $      (0.07)     $      (0.07)    $      (0.25)     $      (0.16)
                                                           ============      ============     ============      ============
</TABLE>

                See notes to consolidated financial statements.


                                     Page 4
<PAGE>
                            VORNADO OPERATING COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                                                       ---------------------------------------
                                                                                            2004                     2003
                                                                                       ---------------         ---------------
<S>                                                                                    <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss......................................................................... $     (996,932)         $     (645,006)
     Adjustments to reconcile net loss to net cash (used in) provided by
       operating activities:
         Recovery from repayments of loans to AmeriCold Logistics
           previously reduced by equity in losses.....................................       (768,882)               (658,049)
     Changes in operating assets and liabilities:
         Prepaid expenses and other assets............................................        195,003                 180,309
         Interest and fees payable on note from Vornado Realty Trust..................      1,212,694               1,167,576
         Interest receivable from AmeriCold Logistics.................................          4,456                  18,572
         Accounts payable and accrued expenses........................................        170,291                  (9,698)
         Due to Vornado Realty Trust..................................................          5,060                   1,356
                                                                                       --------------          --------------
Net cash (used in) provided by operating activities...................................       (178,310)                 55,060
                                                                                       --------------          --------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Repayments of loans to AmeriCold Logistics.......................................        768,882                 658,049
                                                                                       --------------          --------------

Net increase in cash and cash equivalents.............................................        590,572                 713,109
Cash and cash equivalents at beginning of period......................................      1,118,189                 344,686
                                                                                       --------------          --------------
Cash and cash equivalents at end of period............................................ $    1,708,761          $    1,057,795
                                                                                       ==============          ==============
</TABLE>

            See notes to consolidated financial statements.


                                     Page 5
<PAGE>
                            VORNADO OPERATING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.    ORGANIZATION

      Vornado Operating Company, a Delaware corporation, holds its assets and
conducts its business through Vornado Operating L.P., a Delaware limited
partnership ("Company L.P."). The Company is the sole general partner of, and as
of September 30, 2004, owned a 90.1% partnership interest in, Company L.P. All
references to the "Company" refer to Vornado Operating Company and its
subsidiaries, including Company L.P. Company L.P. owns 60% of Vornado Crescent
Logistics Operating Partnership ("VCLOP") which, at September 30, 2004, owned
AmeriCold Logistics, LLC ("AmeriCold Logistics"). AmeriCold Logistics is the
operator of a temperature-controlled logistics business.

2.    BASIS OF PRESENTATION

      The consolidated balance sheet as of September 30, 2004, the consolidated
statements of operations for the three and nine months ended September 30, 2004
and 2003 and the consolidated statements of cash flows for the nine months ended
September 30, 2004 and 2003 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 Company's
Annual Report on Form 10-K for the year ended December 31, 2003 as filed with
the Securities and Exchange Commission. The results of operations for the three
and nine months ended September 30, 2004 are not necessarily indicative of the
operating results for the full year.

      The accompanying consolidated financial statements include the accounts of
the Company and Company L.P. All significant intercompany amounts have been
eliminated. On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord,
Americold Realty Trust ("ART") for $47,700,000 in cash (see Note 3). Prior to
this transaction and as of September 30, 2004, the Company accounted for its 60%
indirect interest in AmeriCold Logistics under the equity method of accounting
as Crescent Operating, Inc. ("COPI"), the 40% indirect owner of AmeriCold
Logistics, had substantive participating rights. The investments in and advances
to AmeriCold Logistics were recorded initially at cost and subsequently adjusted
for the Company's share of comprehensive income or loss and cash distributions
or principal repayments from AmeriCold Logistics. The interest earned on the
advances to AmeriCold Logistics was recorded as a component of income or loss
from AmeriCold Logistics. The Company did not record comprehensive losses in
excess of the cost of its investments in and advances to AmeriCold Logistics, as
the Company was not liable for the obligations of, or otherwise committed to
provide additional financial support to, AmeriCold Logistics. The Company did
not record its 60% share of AmeriCold Logistics' net losses for the year ended
December 31, 2003 and the nine months ended September 30, 2004, as the Company's
investments in and advances to AmeriCold Logistics were fully absorbed by the
Company's share of the comprehensive losses of AmeriCold Logistics at December
31, 2002. In addition, the Company's cumulative share of other comprehensive
losses of AmeriCold Logistics not recorded at September 30, 2004 was $6,882,000.

      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.

3.    SALE OF AMERICOLD LOGISTICS

      On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord, ART,
for $47,700,000 in cash. VCLOP distributed substantially all of the sale
proceeds to the Company ($28,575,000) and COPI ($19,050,000). The Company used
$26,760,000 of its distribution from VCLOP to repay the amount outstanding under
its revolving credit agreement with Vornado Realty Trust ("Vornado"). In
addition, after acquiring AmeriCold Logistics, ART repaid the secured loans
payable to the Company in the amount of $6,645,000.

      The sale of AmeriCold Logistics was negotiated and approved by a Special
Committee of the Company's independent directors formed to consider and
negotiate the sale. The Special Committee was advised by an independent
investment banker and independent legal counsel. The Board of Directors is
considering alternatives


                                     Page 6
<PAGE>
                            VORNADO OPERATING COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


for the Company, including liquidation and dissolution, which would have to be
approved by a majority of the holders of the Company's common shares.

      The Company will record a gain of approximately $32,898,000 which is
comprised of (i) the $26,284,000 gain on the sale of AmeriCold Logistics after
offsetting the share of comprehensive losses of AmeriCold Logistics not
previously recorded by the Company and (ii) the $6,614,000 gain resulting from
the repayment of secured loans to AmeriCold Logistics, which had been carried at
zero on the Company's accompanying consolidated balance sheet. In addition, the
Company will reverse $2,336,000 of accumulated other comprehensive losses (the
recorded share of AmeriCold Logistics' other comprehensive losses).

      The pro forma information set forth below presents the Company's (i)
condensed consolidated balance sheet as of September 30, 2004 as if the
transactions described above occurred on September 30, 2004 and (ii) condensed
consolidated statements of operations for the nine months ended September 30,
2004 and the year ended December 31, 2003 as if the transactions described above
occurred on January 1, 2003.


<TABLE>
<CAPTION>
(amounts in thousands, except per share amounts)            September 30, 2004
                                                       -----------------------------
                                                       Historical          Pro Forma
                                                       ----------          ---------
<S>                                                    <C>                 <C>
Cash and cash equivalents.......................         $  1,709           $ 10,411
Interest receivable from AmeriCold Logistics....               29                 --
Prepaid expenses and other assets...............               10                 55
                                                         --------           --------
                                                         $  1,748           $ 10,466
                                                         ========           ========

Note, interest and fees payable to Vornado......         $ 26,607           $     --
Due to Vornado..................................               82                 82
Accounts payable and accrued expenses...........              273                273
                                                         --------           --------
                                                           26,962                355
                                                         --------           --------

Minority interest...............................               --              1,004
                                                         --------           --------
Stockholders' (deficit) equity..................          (25,214)             9,107
                                                         --------           --------
                                                         $  1,748             10,466
                                                         ========           ========
</TABLE>

<TABLE>
<CAPTION>
                                                            Nine Months Ended                   Year Ended
                                                            September 30, 2004                December 31, 2003
                                                       -----------------------------     -----------------------------
                                                       Historical          Pro Forma     Historical          Pro Forma
                                                       ----------          ---------     ----------          ---------
<S>                                                    <C>                 <C>           <C>                 <C>
Interest income.................................          $     6            $     6        $     3            $     3
General and administrative expense..............            1,219              1,219          1,118              1,118
                                                         --------           --------       --------           --------
                                                           (1,213)            (1,213)        (1,115)            (1,115)
Interest and debt expense to Vornado............           (1,213)                --         (1,560)                --
Income from AmeriCold Logistics.................            1,429                 --          1,890             34,640
Minority interest...............................               --                120             --             (1,234)
                                                         --------           --------       --------           --------
Net (loss) income...............................          $  (997)           $(1,093)       $  (785)           $32,291
                                                         ========           ========       ========           ========

Net (loss) income per share:
     Basic......................................          $ (0.25)           $ (0.27)       $ (0.19)           $  7.94
     Diluted....................................            (0.25)             (0.27)         (0.19)              7.15
</TABLE>

4.    INVESTMENTS IN AND ADVANCES TO AMERICOLD LOGISTICS

      At September 30, 2004, $6,705,000 was outstanding under the Company's
secured loans to AmeriCold Logistics (these loans were repaid on November 4,
2004, as described in Note 3). The loans were carried at zero in the
accompanying consolidated balance sheets of the Company as they had been fully
absorbed by the Company's share of comprehensive losses of AmeriCold Logistics.
The portions of the loan payments that represented the repayment of principal
during the reporting periods covered herein are reflected as income from
AmeriCold Logistics as this principal was previously reduced to zero by equity
in losses of AmeriCold Logistics.


                                     Page 7
<PAGE>
                            VORNADO OPERATING COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


      The following condensed balance sheet data represents 100% of AmeriCold
Logistics, in which the Company held a 60% interest until November 4, 2004 (see
Note 3).

<TABLE>
<CAPTION>
      (amounts in thousands)         September 30, 2004     December 31, 2003
                                     ------------------     -----------------
<S>                                  <C>                    <C>
Current assets......................  $        110,835      $        118,560
Non-current assets..................            44,563                47,478
                                      ----------------      ----------------
                                      $        155,398      $        166,038
                                      ================      ================

Current liabilities.................  $        118,126      $        115,556
Non-current liabilities.............           164,941               126,554
                                      ----------------      ----------------
                                      $        283,067      $        242,110
                                      ================      ================

Partners' deficit...................  $       (127,669)     $        (76,072)
                                      ================      ================
</TABLE>


      The following condensed operating data represents 100% of AmeriCold
Logistics, in which the Company held a 60% interest until November 4, 2004 (see
Note 3).

<TABLE>
<CAPTION>
                                                            Three Months                       Nine Months
                                                         Ended September 30,               Ended September 30,
                                                     --------------------------       --------------------------
              (amounts in thousands)                    2004            2003             2004            2003
                                                     ----------      ----------       ----------     -----------
<S>                                                  <C>             <C>              <C>            <C>
Revenues.......................................      $ 173,333       $ 163,676        $ 509,244      $  477,556
Costs applicable to revenues...................       (138,601)       (120,916)        (395,863)       (350,894)
                                                     ---------       ---------        ---------        --------
Gross margin...................................         34,732          42,760          113,381         126,662
Depreciation and amortization..................         (2,598)         (2,469)          (8,176)         (7,327)
Rent...........................................        (42,937)        (41,190)        (125,205)       (122,494)
Other expenses, net............................        (11,594)         (9,332)         (31,597)        (25,824)
                                                     ---------       ---------        ---------        --------
Net loss (1)...................................      $ (22,397)      $ (10,231)       $ (51,597)     $  (28,983)
                                                     =========       =========        =========      ==========
</TABLE>

----------
(1)   The Company did not record its 60% share of AmeriCold Logistics' net
      losses in any of the reporting periods covered herein as the Company's
      investments in and advances to AmeriCold Logistics were fully absorbed by
      the Company's share of the comprehensive losses of AmeriCold Logistics at
      December 31, 2002.


      The following represents the components of the Company's income from notes
receivable from AmeriCold Logistics.

<TABLE>
<CAPTION>
                                                          Three Months                       Nine Months
                                                       Ended September 30,               Ended September 30,
                                                     -------------------------        --------------------------
            (amounts in thousands)                     2004            2003             2004              2003
                                                     ---------       ---------        ---------        ---------
<S>                                                  <C>             <C>              <C>              <C>
Interest on loans..............................      $     212       $     247        $     660        $     754
Recovery from repayments of loans previously
  reduced by equity in losses..................            264             230              768              658
                                                     ---------       ---------        ---------        ---------
                                                     $     476       $     477        $   1,428        $   1,412
                                                     =========       =========        =========        =========
</TABLE>


                                     Page 8
<PAGE>
                            VORNADO OPERATING COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


      During the nine months ended September 30, 2004, AmeriCold Logistics
exercised its right, pursuant to the terms of its leases with the Landlord, to
defer the payment of rent. AmeriCold Logistics' deferred rent liability at
September 30, 2004 is as follows:

<TABLE>
<CAPTION>
      (amounts in thousands)
                                                             Total
                                                         --------------
<S>                                                      <C>
      Deferred during the three months ended:
           September 30, 2004........................    $       13,188
           June 30, 2004.............................            16,085
           March 31, 2004............................            10,775
      Deferred prior to December 31, 2003............            82,394
                                                         --------------
                                                         $      122,442 (1)
                                                         ==============
</TABLE>


      (1)   This amount was included in the non-current liabilities of AmeriCold
            Logistics. As a result of the sale of AmeriCold Logistics discussed
            in Note 3, $114,105 of this liability was forgiven and $8,337 was
            assumed by ART.

      On January 20, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,120,000 to a joint venture (the "Quarry Company") owned by
Vornado and Crescent Real Estate Equities Company, the owners of ART, for
$6,000,000 in cash. AmeriCold Logistics recognized a loss of $120,000 on the
sale. The accounts receivable have been collected in full.

      On March 29, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $4,080,000 to the Quarry Company for $4,000,000 in cash. AmeriCold
Logistics recognized a loss of $80,000 on the sale. The accounts receivable have
been collected in full.

      On July 2, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash. AmeriCold
Logistics recognized a loss of $120,000 on the sale. The accounts receivable
have been collected in full.

      On September 29, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,610,000 to the Quarry Company for $5,500,000 in cash.
AmeriCold Logistics recognized a loss of $110,000 on the sale and also agreed to
act as agent to collect the accounts receivable. The Company did not believe
that any significant servicing asset or liability existed.

5.    COMMITMENTS AND CONTINGENCIES

      The Company is from time to time involved in legal actions arising in the
ordinary course of business. In the opinion of management, after consultation
with legal counsel, the outcome of such matters will not have a material effect
on the Company's financial condition, results of operations or cash flows.

6.    LOSS PER SHARE

      The following table sets forth the computation of basic and diluted loss
per share.

<TABLE>
<CAPTION>
         (amounts in thousands, except                   Three Months                        Nine Months
         share and per share amounts)                Ended September 30,                 Ended September 30,
                                                 -----------------------------      ----------------------------
                                                     2004            2003               2004           2003
                                                 -------------   -------------      -------------  -------------
<S>                                              <C>             <C>                <C>            <C>
Numerator:
     Net loss................................... $       (267)   $       (267)      $       (997)  $       (645)
                                                 ============    ============       ============   ============

Denominator:
     Weighted average shares outstanding........
                                                    4,068,924       4,068,924          4,068,924      4,068,924
                                                 ============    ============       ============   ============

Net loss per share -- basic and diluted......... $      (0.07)   $      (0.07)      $      (0.25)  $      (0.16)
                                                 ============    ============       ============   ============
</TABLE>

      The Company's stock options (355,554 outstanding and exercisable at
September 30, 2004) were not dilutive in the reporting periods as the average
market prices of the Company's common stock did not exceed the exercise


                                     Page 9
<PAGE>
                            VORNADO OPERATING COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


prices. The rights issued pursuant to the Company's Stockholder Protection
Rights Plan were not dilutive in the reporting periods as the rights were not
exercisable. The limited partnership units of Company L.P. not owned by the
Company (447,017 at September 30, 2004) were not dilutive in the reporting
periods as the Company reported net losses.

7.    REVOLVING CREDIT AGREEMENT

      The Company had a $75,000,000 unsecured revolving credit agreement with
Vornado which was scheduled to expire on December 31, 2004. As described in Note
3, the Company repaid the amount outstanding under this facility on November 4,
2004 and the facility was terminated.

8.    RECENTLY ISSUED ACCOUNTING STANDARDS

      In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation ("FIN") No. 46, Consolidation of Variable Interest Entities,
an interpretation of ARB No. 51. FIN No. 46 required the consolidation of an
entity by an enterprise if (i) that enterprise, known as a "primary
beneficiary," has an interest that will absorb a majority of the entity's
expected losses if they occur, receive a majority of the entity's expected
residual returns if they occur, or both and (ii) the entity is a variable
interest entity. An entity is a variable interest entity if (a) the total equity
investment at risk in the entity is not sufficient to permit the entity to
finance its activities without additional subordinated financial support from
other parties or (b) the equity investors do not have the characteristics of a
controlling financial interest in the entity. In December 2003, FASB issued a
revision to FIN No. 46 to, among other things, clarify some of the provisions of
FIN No. 46. The revision allows a public entity which is a small business
issuer, as defined in Regulation S-B, that has not previously applied FIN No. 46
to implement the revision no later than the end of the first interim or annual
period ending after December 15, 2004. The Company meets the criteria of the
small business issuer definition and has elected to implement the revision on
December 31, 2004. The implementation of the revision to FIN No. 46 will not
have an impact on the Company's consolidated financial statements.


                                    Page 10
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Stockholders and Board of Directors
Vornado Operating Company
Paramus, New Jersey

      We have reviewed the accompanying condensed consolidated balance sheet of
Vornado Operating Company and subsidiaries (the "Company") as of September 30,
2004, and the related condensed consolidated statements of operations for the
three and nine month periods ended September 30, 2004 and 2003, and of cash
flows for the nine month periods ended September 30, 2004 and 2003. These
interim financial statements are the responsibility of the Company's management.

      We conducted our reviews in accordance with standards of 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 standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheet of Vornado Operating Company and subsidiaries as of December 31, 2003, and
the related consolidated statements of operations, stockholders' deficit, and
cash flows for the year then ended (not presented herein); and in our report
dated March 2, 2004, we expressed an unqualified opinion on those consolidated
financial statements and included an explanatory paragraph concerning matters
that raise substantial doubt about the Company's ability to continue as a going
concern. In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2003 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
November 4, 2004


                                    Page 11
<PAGE>
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 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 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 "believes," "expects," "anticipates,"
"intends," "plans" or similar expressions in this Quarterly Report on Form 10-Q.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties. Many of the factors that will determine these items are beyond
the Company's ability to control or predict. Factors that might cause such a
material difference include, but are not limited to: (a) the Company's limited
financial resources; (b) restrictions on the Company's business and future
opportunities; (c) dependence upon Vornado Realty Trust ("Vornado"); (d) the
substantial influence of the Company's controlling stockholders and conflicts of
interest; (e) risks associated with potential investments and the ability to
manage those investments; (f) competition; (g) dependence on key personnel; (h)
potential anti-takeover effects of the Company's charter documents and
Stockholder Protection Rights Plan and applicable law; (i) dependence on
distributions from subsidiaries; (j) potential costs of compliance with
environmental laws; (k) changes in the general economic climate; (l) government
regulations; and (m) the potential liquidation and dissolution of the Company.
See "Item 1. Business - Risk Factors" in the Company's Annual Report on Form
10-K for the year ended December 31, 2003, as updated by the disclosures herein.

      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 any document incorporated by
reference. All subsequent written and oral forward-looking statements
attributable to the Company or any person acting on the Company's behalf are
expressly qualified in their entirety by the cautionary statements contained or
referred to in this paragraph. The Company does not undertake any obligation to
release publicly any revisions to the forward-looking statements to reflect
events or circumstances after the date of this Quarterly Report on Form 10-Q.

OVERVIEW

      Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our Annual Report on Form 10-K (as
amended by Amendment No. 1 to Form 10-K) for the year ended December 31, 2003.

      The Company, a Delaware corporation, holds its assets and conducts its
business through Vornado Operating L.P., a Delaware limited partnership
("Company L.P."). The Company is the sole general partner of, and as of
September 30, 2004, owned a 90.1% partnership interest in, Company L.P. Company
L.P. owns 60% of Vornado Crescent Logistics Operating Partnership ("VCLOP")
which, at September 30, 2004, owned AmeriCold Logistics, LLC ("AmeriCold
Logistics"). AmeriCold Logistics is the operator of a temperature-controlled
logistics business.

SALE OF AMERICOLD LOGISTICS

      On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord,
Americold Realty Trust ("ART"), for $47,700,000 in cash. VCLOP distributed
substantially all of the sale proceeds to the Company ($28,575,000) and COPI
($19,050,000). The Company used $26,760,000 of its distribution from VCLOP to
repay the amount outstanding under its revolving credit agreement with Vornado.
In addition, after acquiring AmeriCold Logistics, ART repaid the secured loans
payable to the Company in the amount of $6,645,000.

      The sale of AmeriCold Logistics was negotiated and approved by a Special
Committee of the Company's independent directors formed to consider and
negotiate the sale. The Special Committee was advised by an independent
investment banker and independent legal counsel. The Board of Directors is
considering alternatives for the Company, including liquidation and dissolution,
which would have to be approved by a majority of the holders of the Company's
common shares.

      The Company will record a gain of approximately $32,898,000 which is
comprised of (i) the $26,284,000 gain on the sale of AmeriCold Logistics after
offsetting the share of comprehensive losses of AmeriCold Logistics not
previously recorded by the Company and (ii) the $6,614,000 gain resulting from
the repayment of secured loans to AmeriCold Logistics, which had been carried at
zero on the Company's accompanying consolidated balance sheet. In addition, the
Company will reverse $2,336,000 of accumulated other comprehensive losses (the
recorded share of AmeriCold Logistics' other comprehensive losses).


                                    Page 12
<PAGE>
CRITICAL ACCOUNTING POLICIES

      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. Set forth below is a summary of the accounting policies that
management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Company's significant accounting policies included in
Note 3 to the consolidated financial statements included in "Item 8. Financial
Statements and Supplementary Data" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2003. The Company's critical accounting policies
have not changed during the nine months ended September 30, 2004.

Investments in and Advances to AmeriCold Logistics

      The Company's 60% interest in AmeriCold Logistics, which was sold on
November 4, 2004, was accounted for under the equity method of accounting as
COPI, the Company's partner in AmeriCold Logistics, had substantive
participating rights. The investments in and advances to AmeriCold Logistics
were recorded initially at cost and subsequently adjusted for the Company's
share of comprehensive income or loss and cash distributions or principal
repayments from AmeriCold Logistics. The interest earned on the advances to
AmeriCold Logistics was recorded as a component of income or loss from AmeriCold
Logistics. The Company did not record comprehensive losses in excess of the cost
of its investments in and advances to AmeriCold Logistics, as the Company was
not liable for the obligations of, or otherwise committed to provide additional
financial support to, AmeriCold Logistics. The Company did not record its 60%
share of AmeriCold Logistics' net losses for the year ended December 31, 2003
and the nine months ended September 30, 2004 as the Company's investments in and
advances to AmeriCold Logistics were fully absorbed by the Company's share of
the comprehensive losses of AmeriCold Logistics at December 31, 2002.

Recently Issued Accounting Standards

      In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation ("FIN") No. 46, Consolidation of Variable Interest Entities,
an interpretation of ARB No. 51. FIN No. 46 required the consolidation of an
entity by an enterprise if (i) that enterprise, known as a "primary
beneficiary," has an interest that will absorb a majority of the entity's
expected losses if they occur, receive a majority of the entity's expected
residual returns if they occur, or both and (ii) the entity is a variable
interest entity. An entity is a variable interest entity if (a) the total equity
investment at risk in the entity is not sufficient to permit the entity to
finance its activities without additional subordinated financial support from
other parties or (b) the equity investors do not have the characteristics of a
controlling financial interest in the entity. In December 2003, FASB issued a
revision to FIN No. 46 to, among other things, clarify some of the provisions of
FIN No. 46. The revision allows a public entity which is a small business
issuer, as defined in Regulation S-B, that has not previously applied FIN No. 46
to implement the revision no later than the end of the first interim or annual
period ending after December 15, 2004. The Company meets the criteria of the
small business issuer definition and has elected to implement the revision on
December 31, 2004. The implementation of the revision to FIN No. 46 will not
have an impact on the Company's consolidated financial statements.

RESULTS OF OPERATIONS

      The Company had a net loss of $267,000 for both the three months ended
September 30, 2004 and 2003, and a net loss of $997,000 for the nine months
ended September 30, 2004, compared to $645,000 for the nine months ended
September 30, 2003, an increase of $352,000.

      General and administrative expenses were $318,000 for the three months
ended September 30, 2004, compared to $358,000 for the three months ended
September 30, 2003, a decrease of $40,000. General and administrative expenses
were $1,218,000 for the nine months ended September 30, 2004, compared to
$892,000 for the nine months ended September 30, 2003, an increase of $326,000.
The increase for the nine months ended September 30, 2004 primarily resulted
from (i) higher professional fees as the Company reviews its business
alternatives and (ii) higher franchise taxes. The decrease for the three months
ended September 30, 2004 resulted from higher professional fees in the prior
year quarter relating to the Company's evaluation of FIN No. 46 and delisting
from the American Stock Exchange.

      Interest and debt expense to Vornado Realty Trust was $428,000 for the
three months ended September 30, 2004, compared to $387,000 for the three months
ended September 30, 2003, an increase of $41,000, and $1,213,000 for the nine
months ended September 30, 2004, compared to $1,168,000 for the nine months
ended September 30, 2003, an increase of $45,000. These increases resulted from
higher average balances outstanding under the Revolving Credit Agreement with
Vornado in the current year periods and higher average LIBOR rates in the three
months ended September 30, 2004.


                                    Page 13
<PAGE>
      The following represents the components of the Company's income from notes
receivable from AmeriCold Logistics.

<TABLE>
<CAPTION>
                                                           Three Months                   Nine Months
                                                        Ended September 30,           Ended September 30,
                                                        -------------------           -------------------
                 (amounts in thousands)                2004            2003           2004           2003
                                                       ----            ----           ----           ----

<S>                                                    <C>          <C>             <C>            <C>
       Interest on loans...........................    $    212     $      247      $      660     $      754
       Recovery from repayments of loans
         previously reduced by equity in losses....         264            230             768            658
                                                       --------     ----------      ----------     ----------
                                                       $    476     $      477      $    1,428     $    1,412
                                                       ========     ==========      ==========     ==========
</TABLE>

      The Company did not record $13,438,000 and $30,958,000, its 60% share of
AmeriCold Logistics' net losses of $22,397,000 and $51,597,000, respectively,
for the three and nine months ended September 30, 2004, or $6,139,000 and
$17,390,000, its 60% share of AmeriCold Logistics' net losses of $10,231,000 and
$28,983,000, respectively, for the three and nine months ended September 30,
2003, as the Company's investments in and advances to AmeriCold Logistics were
fully absorbed by the Company's share of the comprehensive losses of AmeriCold
Logistics at December 31, 2002 and as the Company was not liable for the
obligations of, or otherwise committed to provide additional financial support
to, AmeriCold Logistics. The decreases in interest earned on the Company's loans
to AmeriCold Logistics were attributable to lower average loans outstanding in
the current year periods. The Company recognized loan repayments from AmeriCold
Logistics that were made during the reporting periods as income as these loans
were previously reduced by equity in losses of AmeriCold Logistics.

      On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord, ART,
for $47,700,000 in cash (see " -- Sale of AmeriCold Logistics" above). A
discussion of AmeriCold Logistics' results of operations is included below. The
amounts discussed below in "AmeriCold Logistics' Results of Operations for the
Three and Nine Months Ended September 30, 2004 and 2003" exclude income related
to the Company's loans with AmeriCold Logistics.

     AmeriCold Logistics' Results of Operations for the Three and Nine Months
Ended September 30, 2004 and 2003

      The following is a discussion of the results of operations of AmeriCold
Logistics, the Company's former investee in the temperature-controlled logistics
business (see the Company's Annual Report on Form 10-K for the year ended
December 31, 2003 for a discussion of this business and see Note 4 to the
unaudited consolidated financial statements included in this Quarterly Report on
Form 10-Q for condensed balance sheet and operating data of AmeriCold
Logistics). The data below represents 100% of this business, in which the
Company had owned a 60% interest prior to November 4, 2004. For the purpose of
the discussion below, "Leased Operations" refer to operations at warehouses
leased by AmeriCold Logistics and "Other Operations" refer to (i) warehouses
managed by AmeriCold Logistics for the accounts of customers ("Managed
Warehouses") and (ii) Transportation Management Services, which includes freight
routing, dispatching, freight rate negotiation, backhaul coordination, and
distribution channel assessments.

                  Certain prior period amounts in this discussion were
         reclassified to conform to the current period presentation.

                  Revenues were $173,333,000 for the three months ended
         September 30, 2004, compared to $163,676,000 for the three months ended
         September 30, 2003, an increase of $9,657,000, and $509,244,000 for the
         nine months ended September 30, 2004, compared to $477,556,000 for the
         nine months ended September 30, 2003, an increase of $31,688,000.
         Revenues from Leased Operations were $112,463,000 for the three months
         ended September 30, 2004, compared to $109,921,000 for the three months
         ended September 30, 2003, an increase of $2,542,000, and $319,756,000
         for the nine months ended September 30, 2004, compared to $317,508,000
         for the nine months ended September 30, 2003, an increase of
         $2,248,000. Revenues from Other Operations were $60,870,000 for the
         three months ended September 30, 2004, compared to $53,755,000 for the
         three months ended September 30, 2003, an increase of $7,115,000, and
         $189,488,000 for the nine months ended September 30, 2004, compared to
         $160,048,000 for the nine months ended September 30, 2003, an increase
         of $29,440,000.

                  The increase in revenue from Other Operations was due to new
         Managed Warehouse contracts that commenced after the first quarter of
         2003 and additional Transportation Management Services business in 2004
         from both new and existing customers.


                                    Page 14
<PAGE>
                  The gross margin for Leased Operations was $36,989,000, or
         32.9%, for the three months ended September 30, 2004, compared to
         $38,603,000, or 35.1%, for the three months ended September 30, 2003, a
         decrease of $1,614,000, and $108,820,000, or 34.0%, for the nine months
         ended September 30, 2004, compared to $114,819,000, or 36.2%, for the
         nine months ended September 30, 2003, a decrease of $5,999,000. These
         decreases were attributable to (i) start up costs for existing
         customers at new locations during the first half of this year and (ii)
         a change in revenue mix as higher margin storage revenues declined and
         lower margin handling revenues increased.

                  Operating loss from Other Operations was $2,257,000 for the
         three months ended September 30, 2004, compared to operating income of
         $4,157,000 for the three months ended September 30, 2003, a decrease of
         $6,414,000, and operating income of $4,561,000 for the nine months
         ended September 30, 2004, compared to $11,843,000 for the nine months
         ended September 30, 2003, a decrease of $7,282,000. These decreases
         were the result of (i) a $5,062,000 change in estimate for unbilled
         Transportation revenue (not expected to re-occur) and (ii) lower
         margins for the Transportation Management Services business due to
         unused truck capacity and increased costs as a result of new
         legislation reducing the maximum hours that truck drivers are permitted
         to drive in a day, partially offset by (iii) increased margin from new
         and existing Managed Warehouse customers.

                  Rent expense was $42,937,000 for the three months ended
         September 30, 2004, compared to $41,190,000 for the three months ended
         September 30, 2003, an increase of $1,747,000, and $125,205,000 for the
         nine months ended September 30, 2004, compared to $122,494,000 for the
         nine months ended September 30, 2003, an increase of $2,711,000.

                  General and administrative expenses were $8,468,000 for the
         three months ended September 30, 2004, compared to $8,681,000 for the
         three months ended September 30, 2003, a decrease of $213,000, and
         $25,785,000 for the nine months ended September 30, 2004, compared to
         $24,500,000 for the nine months ended September 30, 2003, an increase
         of $1,285,000. The increase in the nine months was primarily due to
         higher payroll and other employment related expenses, offset by lower
         professional fees and travel and supplies expenses in the three months
         ended September 30, 2004.

                  Depreciation and amortization expense was $2,598,000 for the
         three months ended September 30, 2004, compared to $2,469,000 for the
         three months ended September 30, 2003, an increase of $129,000, and
         $8,176,000 for the nine months ended September 30, 2004, compared to
         $7,327,000 for the nine months ended September 30, 2003, an increase of
         $849,000. These increases were primarily attributable to depreciation
         on additional machinery and equipment.

                  Interest expense was $1,403,000 for the three months ended
         September 30, 2004, compared to $885,000 for the three months ended
         September 30, 2003, an increase of $518,000, and $3,634,000 for the
         nine months ended September 30, 2004, compared to $2,539,000 for the
         nine months ended September 30, 2003, an increase of $1,095,000. These
         increases resulted from higher average deferred rent balances,
         partially offset by lower average borrowings outstanding.

                  Other expense, net, was $1,723,000 for the three months ended
         September 30, 2004, compared to other income, net, of $234,000 for the
         three months ended September 30, 2003, a decrease of $1,957,000. Other
         expense, net, was $2,178,000 for the nine months ended September 30,
         2004, compared to other income, net, of $1,215,000 for the nine months
         ended September 30, 2003, a decrease of $3,393,000. These decreases
         resulted primarily from asset write-offs associated with the
         cancellation of a Managed Warehouse contract in the third quarter of
         2004 and taxes on earnings from AmeriCold Logistics' warehouse in
         Alberta, Canada during the nine months ended September 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

      The Company had a $75,000,000 unsecured revolving credit agreement with
Vornado which was scheduled to expire on December 31, 2004. As noted above under
" -- Sale of AmeriCold Logistics," the Company repaid the amount outstanding
under this facility on November 4, 2004 and the facility was terminated.

      On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord, ART,
for $47,700,000 in cash. VCLOP distributed substantially all of the sale
proceeds to the Company ($28,575,000) and COPI ($19,050,000). The Company used
$26,760,000 of its distribution from VCLOP to repay the amount outstanding under
its revolving credit agreement with Vornado. In addition, after acquiring
AmeriCold Logistics, ART repaid the secured loans payable to the Company in the
amount of $6,645,000.

      The sale of AmeriCold Logistics was negotiated and approved by a Special
Committee of the Company's independent directors formed to consider and
negotiate the sale. The Special Committee was advised by an independent
investment banker and independent legal counsel. The Board of Directors is
considering alternatives


                                    Page 15
<PAGE>
for the Company, including liquidation and dissolution, which would have to be
approved by a majority of the holders of the Company's common shares.

      During the nine months ended September 30, 2004, AmeriCold Logistics
exercised its right, pursuant to the terms of its leases with the Landlord, to
defer the payment of rent. AmeriCold Logistics' deferred rent liability at
September 30, 2004 is as follows:

<TABLE>
<CAPTION>
(amounts in thousands)
                                                               Total
                                                               -----
<S>                                                        <C>
Deferred during the three months ended:
     September 30, 2004.................................   $       13,188
     June 30, 2004......................................           16,085
     March 31, 2004.....................................           10,775
Deferred prior to December 31, 2003.....................           82,394
                                                           --------------
                                                           $      122,442(1)
                                                           ==============
</TABLE>

(1)  This amount was included in the non-current liabilities of AmeriCold
     Logistics. As a result of the sale of AmeriCold Logistics discussed in
     " - Sale of AmeriCold Logistics," $114,105 of this liability was forgiven
     and $8,337 was assumed by ART.

      On January 20, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,120,000 to a joint venture (the "Quarry Company") owned by
Vornado and Crescent Real Estate Equities Company, the owners of ART, for
$6,000,000 in cash. AmeriCold Logistics recognized a loss of $120,000 on the
sale. The accounts receivable have been collected in full.

      On March 29, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $4,080,000 to the Quarry Company for $4,000,000 in cash. AmeriCold
Logistics recognized a loss of $80,000 on the sale. The accounts receivable have
been collected in full.

      On July 2, 2004, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash. AmeriCold
Logistics recognized a loss of $120,000 on the sale. The accounts receivable
have been collected in full.

      On September 29, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,610,000 to the Quarry Company for $5,500,000 in cash.
AmeriCold Logistics recognized a loss of $110,000 on the sale and also agreed to
act as agent to collect the accounts receivable. The Company did not believe
that any significant servicing asset or liability existed.

Cash Flows for the Nine Months Ended September 30, 2004

      Net cash used in operating activities of $178,000 was comprised of (i) a
net loss of $997,000 and (ii) the recovery from repayments on loans to AmeriCold
Logistics previously reduced by equity in losses of $769,000, partially offset
by (iii) the net change in operating assets and liabilities of $1,588,000.

      Cash provided by investing activities of $769,000 resulted from repayments
of loans to AmeriCold Logistics.

      There were no cash flows from financing activities.

Cash Flows for the Nine Months Ended September 30, 2003

      Net cash provided by operating activities of $55,000 was comprised of (i)
the net change in operating assets and liabilities of $1,358,000, partially
offset by (ii) a net loss of $645,000 and (iii) the recovery from repayments on
loans to AmeriCold Logistics previously reduced by equity in losses of $658,000.

      Cash provided by investing activities of $658,000 resulted from repayments
of loans to AmeriCold Logistics.

      There were no cash flows from financing activities.


                                    Page 16
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The fair value of the amount outstanding under the revolving credit
facility with Vornado at September 30, 2004 was approximately $22,243,000. The
fair value was estimated by discounting the future cash flows using current
market rates available to the Company. The Company repaid the amount outstanding
on November 4, 2004 and the facility was terminated on such date. The Company
has no other significant exposure to market risk.

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 report. 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 report relates that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over
financial reporting.


                                    Page 17
<PAGE>
PART II.   OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      The Company is from time to time involved in legal actions arising in the
ordinary course of business. In the opinion of management, after consultation
with legal counsel, the outcome of such matters will not have a material effect
on the Company's financial condition, results of operations or cash flows.

ITEM 5.  OTHER INFORMATION

      The Company, a Delaware corporation, holds its assets and conducts its
business through Vornado Operating L.P., a Delaware limited partnership
("Company L.P."). The Company is the sole general partner of, and as of
September 30, 2004, owned a 90.1% partnership interest in, Company L.P. Company
L.P. owns 60% of Vornado Crescent Logistics Operating Partnership ("VCLOP")
which, owned AmeriCold Logistics, LLC ("AmeriCold Logistics"). AmeriCold
Logistics is the operator of a temperature-controlled logistics business.

      On November 4, 2004, VCLOP sold AmeriCold Logistics to its landlord,
Americold Realty Trust ("ART"), for $47,700,000 in cash. The sale of AmeriCold
Logistics was negotiated and approved by a Special Committee of the Company's
independent directors formed to consider and negotiate the transaction. The
Special Committee was advised by an independent investment banker and
independent legal counsel. VCLOP distributed substantially all of the sale
proceeds to the Company ($28,575,000) and Crescent Operating, Inc.
($19,050,000).

      In addition, the Company received $6,645,000 in cash owed to the Company
by AmeriCold Logistics and the Company paid $26,760,000 in cash it owed to
Vornado Realty Trust.

      The Company has been advised that the owners of ART have entered into a
definitive agreement to sell 20.7% of ART's common shares. The Company's Special
Committee and its advisors were aware of the details of the transaction when
they approved the sale of AmeriCold Logistics to ART.

      The Board of Directors is considering alternatives for the Company,
including liquidation and dissolution, which would have to be approved by a
majority of the holders of the Company's common shares. The Company estimates
that a liquidating distribution would be approximately $2.00 per share or unit
as compared to the last trading price of $0.35 per share although the actual
amount may be higher or lower depending on whether its remaining liabilities
turn out to be higher or lower than the estimated amounts.

      A copy of the press release issued by the Company on November 4, 2004
regarding the above-referenced transaction is being filed as Exhibit 99.1 to
this Quarterly Report on Form 10-Q and is incorporated herein by reference.


                                    Page 18
<PAGE>
      The pro forma information set forth below presents the Company's (i)
condensed consolidated balance sheet as of September 30, 2004 as if the
transactions described above occurred on September 30, 2004 and (ii) condensed
consolidated statements of operations for the nine months ended September 30,
2004 and the year ended December 31, 2003 as if the transactions described above
occurred on January 1, 2003.


<TABLE>
<CAPTION>
(amounts in thousands)                                                      SEPTEMBER 30, 2004
                                                          -----------------------------------------------------
                                                                                PRO FORMA
                                                          HISTORICAL           ADJUSTMENTS            PRO FORMA
                                                          ----------           -----------            ---------

<S>                                                       <C>                  <C>                   <C>
Cash and cash equivalents...........................      $   1,709            $   6,734  A          $  10,411
                                                                                  28,575  B
                                                                                 (26,607) C
Interest receivable from AmeriCold Logistics........             29                  (29) A                 --
Prepaid expenses and other assets...................             10                   45  B                 55
                                                          ---------            ---------             ---------
Total assets........................................      $   1,748            $   8,718             $  10,466
                                                          =========            =========             =========

Note, interest and fees payable to Vornado..........      $  26,607            $ (26,607) C          $      --
Due to Vornado......................................             82                   --                    82
Accounts payable and accrued expenses...............            273                   --                   273
                                                          ---------            ---------             ---------
Total liabilities...................................         26,962              (26,607)                  355
                                                          ---------            ---------             ---------
Minority interest...................................             --                1,004  D              1,004
                                                          ---------            ---------             ---------
Stockholders' (deficit) equity......................        (25,214)               6,705  A              9,107
                                                                                   2,336  B
                                                                                  26,284  B
                                                                                  (1,004) D
                                                          ---------            ---------             ---------
Total liabilities and stockholders' (deficit) equity      $   1,748            $   8,718             $  10,466
                                                          =========            =========             =========
</TABLE>

A    - Repayment of loans owed to the Company by AmeriCold Logistics, resulting
       in a gain of $6,705

B    - Distribution of proceeds of AmeriCold Logistics, resulting in a gain of
       $26,284 and a reversal of accumulated other comprehensive loss of $2,336

C    - Repayment of loan owed to Vornado

D    - Allocation of minority interest's share of gains


<TABLE>
<Caption>
                                         NINE MONTHS ENDED SEPTEMBER 30, 2004                 YEAR ENDED DECEMBER 31, 2003
                                        --------------------------------------         -------------------------------------------
                                                        PRO FORMA                                       PRO FORMA
                                         HISTORICAL    ADJUSTMENTS    PRO FORMA        HISTORICAL       ADJUSTMENTS    PRO FORMA
                                         ----------    -----------    ---------        ----------       -----------    ---------

<S>                                    <C>           <C>            <C>                <C>             <C>            <C>
Interest income......................   $     6         $    --      $     6            $     3           $    --         $     3
General and administrative expense...     1,219              --        1,219              1,118                --           1,118
                                        -------         -------      -------            -------           -------         -------
                                         (1,213)             --       (1,213)            (1,115)               --          (1,115)
Interest and debt expense to Vornado.    (1,213)          1,213  E        --             (1,560)            1,560  E           --
Income from AmeriCold Logistics......     1,429          (1,429) F        --              1,890            (1,890) F       34,640
                                                                                                           34,640  G
Minority interest....................        --             120  H       120                 --            (1,234) H       (1,234)
                                        -------         -------      -------            -------           -------         -------
Net (loss) income....................   $  (997)        $   (96)     $(1,093)           $  (785)          $33,076         $32,291
                                         ======         =======      =======             ======           =======         =======

Net (loss) income per share:
   Basic.............................   $ (0.25)                     $ (0.27)           $ (0.19)                          $  7.94
   Diluted...........................     (0.25)                       (0.27)             (0.19)                             7.15
</TABLE>

E    - Elimination of interest and debt expense resulting from repayment of loan
     to Vornado

F    - Reversal of income from AmeriCold Logistics due to sale of AmeriCold
     Logistics

G    - Gain from VCLOP's sale of AmeriCold Logistics and repayment of loans owed
     to the Company by AmeriCold Logistics

H    - Allocation of minority interest's share of net loss (income)


                                    Page 19
<PAGE>
ITEM 6.  EXHIBITS

      Exhibits required by Item 601 of Regulation S-K are filed herewith and are
listed in the attached Exhibit Index.


                                    Page 20
<PAGE>
                                   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.




                                          VORNADO OPERATING COMPANY
                                    ---------------------------------
                                                (Registrant)




Date: November 4, 2004          By:            /s/ JOSEPH MACNOW
                                     -----------------------------------------
                                     Joseph Macnow, Executive Vice President
                                     and Chief Financial Officer (duly
                                     authorized officer and principal
                                     financial and accounting officer)


                                    Page 21
<PAGE>
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT NO.
-----------

<S>            <C>
               The following is a list of all exhibits filed as part of this report.

       10.1    Securities Purchase Agreement by and between Vornado Crescent Logistics Operating
               Partnership, Vornado Operating L.P., Vornado Operating Company, COPI Cold Storage
               L.L.C., ART AL Holding LLC, Americold Realty Trust and Vornado Realty L.P., dated
               November 4, 2004

       15.1    Letter of Deloitte & Touche LLP regarding unaudited interim financial information

       31.1    Rule 15d-14(a) certification of the Chief Executive Officer

       31.2    Rule 15d-14(a) certification of the Chief Financial Officer

       32.1    Section 1350 certification of the Chief Executive Officer

       32.2    Section 1350 certification of the Chief Financial Officer

       99.1    Press release announcing sale of AmeriCold Logistics, LLC
</TABLE>


                                    Page 22