##### Table of Contents



EXHIBIT INDEX ON PAGE 21

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|                                              |  |                                                                                         
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------
|[X]                                           |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|                                              |  |                                                                                         
|For the quarterly period ended March 31, 2003
|                                              |  |                                                                                         
|                                              |  | 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
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|888 Seventh Avenue, New York, New York                         |  | 10019                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(212) 894-7000

(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 April 30, 2003, there were 4,068,924 shares of the registrants common
stock, par value $.01 per share, outstanding.

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TABLE OF CONTENTS



|                                |                                                                                               |                                            |  |  |  |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION  
|                                | Item 1. Financial Statements                                                                 
|                                |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                |                                                                                               | INDEPENDENT ACCOUNTANTS REPORT           
|                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                | Item 4. Controls and Procedures                                                              
|PART II.OTHER INFORMATION      
|                                | Item 1. Legal Proceedings                                                                    
|                                | Item 5. Other Information                                                                    
|                                | Item 6. Exhibits and Reports on Form 8-K:                                                    
|SIGNATURES                     
|CERTIFICATION                  
|Exhibit Index                  
|SPECIMEN STOCK CERTIFICATE     
|PURCHASE AGREEMENT             
|LETTER OF DELOITTE & TOUCHE LLP



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##### Table of Contents



INDEX

|               |                        |  |  |         |    |                                                                                       |  |                                                                                                                |    |             |    | 
|-------------- | ---------------------- |  |  | ------- | -- | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- | -- | ----------- | -- | 
|               |                        |  |  |         |    |                                                                                       |  |                                                                                                                |    | Page Number
|               |                        |  |  |         |    |                                                                                       |  |                                                                                                                |    |            
|PART I.        | Financial Information: |  |  |         |   
|               |                        |  |  | Item 1. |    | Financial Statements:                                                                 |  |                                                                                                                |    |            
|               |                        |  |  |         |    |                                                                                       |  | Consolidated Balance Sheets as of
March 31, 2003 (unaudited) and December 31, 2002                             |    |             | 3  | 
|               |                        |  |  |         |    |                                                                                       |  | Consolidated Statements of Operations (unaudited) for the
Three Months Ended March 31, 2003 and March 31, 2002 |    |             | 4  | 
|               |                        |  |  |         |    |                                                                                       |  | Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 2003 and March 31, 2002 |    |             | 5  | 
|               |                        |  |  |         |    |                                                                                       |  | Notes to Consolidated Financial Statements (unaudited)                                                         |    |             | 6  | 
|               |                        |  |  |         |    |                                                                                       |  | Independent Accountants Report                                                                                |    |             | 10 | 
|               |                        |  |  | Item 2. |    | Managements Discussion and Analysis of
Financial Condition and Results of Operations |  |                                                                                                                | 11 |            
|               |                        |  |  | Item 3. |    | Quantitative and Qualitative Disclosures About Market Risk                            |  |                                                                                                                | 16 |            
|               |                        |  |  | Item 4. |    | Controls and Procedures                                                               |  |                                                                                                                | 16 |            
|PART II.       | Other Information:     |  |  |         |   
|               |                        |  |  | Item 1. |    | Legal Proceedings                                                                     |  |                                                                                                                | 17 |            
|               |                        |  |  | Item 5. |    | Other Information                                                                     |  |                                                                                                                | 17 |            
|               |                        |  |  | Item 6. |    | Exhibits and Reports on Form 8-K                                                      |  |                                                                                                                | 17 |            
|SIGNATURES     |                        |  |  |         | 18 |                                                                                      
|CERTIFICATIONS |                        |  |  |         | 19 |                                                                                      
|EXHIBIT INDEX  |                        |  |  |         | 21 |                                                                                      

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##### Table of Contents









PART I. FINANCIAL INFORMATION

Item 1.Financial Statements




VORNADO OPERATING COMPANY
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                    |  |             |             |              |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ----------- | ------------ |  | - | ----------- | -
|                                                                                                                                    |  | (UNAUDITED) |             |              |  |  
|                                                                                                                                    |  | March 31,   |             | December 31,
|                                                                                                                                    |  | 2003        |             | 2002        
|                                                                                                                                    |  |             |             |             
|ASSETS                                                                                                                              |  |             |             |              |  |   |             |  
|Cash and cash equivalents, including U.S. government obligations under
repurchase agreements of $400,000 and $200,000, respectively |  | $           | 549,549     |              |  | $ | 344,686     |  
|Investments in and advances to AmeriCold Logistics                                                                                  |  |             |            |              |  |   |            |  
|Interest receivable from AmeriCold Logistics                                                                                        |  |             | 36,573      |              |  |   | 50,885      |  
|Prepaid expenses and other assets                                                                                                   |  |             | 194,475     |              |  |   | 254,016     |  
|                                                                                                                                    |  |             |             |              |  |   |             |  
|Total assets                                                                                                                        |  | $           | 780,597     |              |  | $ | 649,587     |  
|                                                                                                                                    |  |             |             |              |  |   |             |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                               |  |             |             |              |  |   |             |  
|Note, interest, and commitment fees payable to Vornado Realty Trust                                                                 |  | $           | 24,222,649  |              |  | $ | 23,834,355  |  
|Due to Vornado Realty Trust                                                                                                         |  |             | 77,830      |              |  |   | 76,474      |  
|Accounts payable and accrued expenses                                                                                               |  |             | 118,045     |              |  |   | 171,758     |  
|                                                                                                                                    |  |             |             |              |  |   |             |  
|Total liabilities                                                                                                                   |  |             | 24,418,524  |              |  |   | 24,082,587  |  
|                                                                                                                                    |  |             |             |              |  |   |             |  
|Minority interest                                                                                                                   |  |             |            |              |  |   |            |  
|                                                                                                                                    |  |             |             |              |  |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                                                       |  |             |             |              |  |   |             |  
|STOCKHOLDERS DEFICIT                                                                                                               |  |             |             |              |  |   |             |  
|Common stock: par value $.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                                                                                                                 |  |             | (43,805,024 | )            |  |   | (43,600,097 | )
|                                                                                                                                    |  |             |             |              |  |   |             |  
|                                                                                                                                    |  |             | (21,301,780 | )            |  |   | (21,096,853 | )
|Accumulated other comprehensive loss                                                                                                |  |             | (2,336,147  | )            |  |   | (2,336,147  | )
|                                                                                                                                    |  |             |             |              |  |   |             |  
|Total stockholders deficit                                                                                                         |  |             | (23,637,927 | )            |  |   | (23,433,000 | )
|                                                                                                                                    |  |             |             |              |  |   |             |  
|Total liabilities and stockholders deficit                                                                                         |  | $           | 780,597     |              |  | $ | 649,587     |  
|                                                                                                                                    |  |             |             |              |  |   |             |  

See notes to consolidated financial statements.

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VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                                                                              |  |                                      |          |      |  |   |            |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------------ | -------- | ---- |  | - | ---------- | -
|                                                                                              |  | For the Three Months Ended March 31,
|                                                                                              |  |                                     
|                                                                                              |  | 2003                                 |          | 2002
|                                                                                              |  |                                      |          |     
|REVENUES:                                                                                     |  |                                      |          |      |  |   |            |  
|Interest income                                                                               |  | $                                    | 862      |      |  | $ |           |  
|EXPENSES:                                                                                     |  |                                      |          |      |  |   |            |  
|General and administrative (including fees to
Vornado Realty Trust of $82,500 in each period) |  |                                      | 277,515  |      |  |   | 273,021    |  
|                                                                                              |  |                                      |          |      |  |   |            |  
|                                                                                              |  |                                      | (276,653 | )    |  |   | (273,021   | )
|Interest and debt expense to Vornado Realty Trust                                             |  |                                      | (388,294 | )    |  |   | (490,512   | )
|Income (loss) from AmeriCold Logistics                                                        |  |                                      | 460,020  |      |  |   | (3,310,695 | )
|                                                                                              |  |                                      |          |      |  |   |            |  
|Loss before income tax benefit                                                                |  |                                      | (204,927 | )    |  |   | (4,074,228 | )
|Income tax benefit                                                                            |  |                                      |         |      |  |   |           |  
|                                                                                              |  |                                      |          |      |  |   |            |  
|NET LOSS                                                                                      |  | $                                    | (204,927 | )    |  | $ | (4,074,228 | )
|                                                                                              |  |                                      |          |      |  |   |            |  
|Net loss per share  basic and diluted                                                        |  | $                                    | (0.05    | )    |  | $ | (1.00      | )
|                                                                                              |  |                                      |          |      |  |   |            |  

See notes to consolidated financial statements.

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VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |            |         |           |  
|------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------------------------------------------------- | -------- | ------------------------------------ | -------- | ------- | ---------- | ------- | --------- | -
|                                                  |                                                                             |                                                |                                                                                                 |          | For the Three Months Ended March 31,
|                                                  |                                                                             |                                                |                                                                                                 |          |                                     
|                                                  |                                                                             |                                                |                                                                                                 |          | 2003                                 |          | 2002   
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |        
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|                                                  | Net loss                                                                    |                                                | $                                                                                               | (204,927 | )                                    |          | $       | (4,074,228 | )      
|                                                  | Adjustments to reconcile net loss to net cash used in
operating activities: |                                                |                                                                                                 |          |                                      |          |         |            |        
|                                                  |                                                                             |                                                | Equity in loss of AmeriCold Logistics                                                           |          |                                      |         |         |            |         | 3,684,000 |  
|                                                  |                                                                             |                                                | Recovery from repayments of loans to AmeriCold Logistics
previously reduced by equity in losses |          |                                      | (205,188 | )       |            |         |          |  
|                                                  | Changes in operating assets and liabilities:                                |                                                |                                                                                                 |          |                                      |          |         |            |        
|                                                  |                                                                             |                                                | Prepaid expenses and other assets                                                               |          |                                      | 59,541   |         |            |         | 60,928    |  
|                                                  |                                                                             |                                                | Interest and commitment fees payable on note to Vornado
Realty Trust                            |          |                                      | 388,294  |         |            |         | 326,635   |  
|                                                  |                                                                             |                                                | Interest receivable from AmeriCold Logistics                                                    |          |                                      | 14,312   |         |            |         | 2,528     |  
|                                                  |                                                                             |                                                | Accounts payable and accrued expenses                                                           |          |                                      | (53,713  | )       |            |         | (59,049   | )
|                                                  |                                                                             |                                                | Due to Vornado Realty Trust                                                                     |          |                                      | 1,356    |         |            |         | (15,356   | )
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|Net cash used in operating activities             |                                                                             |                                                | (325                                                                                            | )        |                                      |          | (74,542 | )         
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|                                                  |                                                                             | Repayments of loans to AmeriCold Logistics     |                                                                                                 |          | 205,188                              |          |         |            | 126,166 |          
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|                                                  | Proceeds
from note to Vornado Realty Trust                                  |                                                |                                                                                                 |         |                                      |          |         | 65,000     |        
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|Net increase in cash and cash equivalents         |                                                                             |                                                | 204,863                                                                                         |          |                                      |          | 116,624 |           
|Cash and cash equivalents at beginning of period  |                                                                             |                                                | 344,686                                                                                         |          |                                      |          | 14,653  |           
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|Cash and cash equivalents at end of period        |                                                                             | $                                              | 549,549                                                                                         |          |                                      | $        | 131,277 |           
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           
|                                                  |                                                                             | Cash payments for interest and commitment fees |                                                                                                 | $        |                                     |          |         | $          | 163,877 |          
|                                                  |                                                                             |                                                |                                                                                                 |          |                                      |          |         |           

See notes to consolidated financial statements.

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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. ORGANIZATION

Vornado Operating Company (the Company) 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 March
31, 2003, 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.

2. BASIS OF PRESENTATION

The consolidated balance sheet as of March 31, 2003, and the consolidated
statements of operations and cash flows for the three months ended March 31,
2003 and 2002 are unaudited. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes in cash flows have
been made. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with 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, 2002 as filed with the Securities and Exchange Commission. The
results of operations for the three months ended March 31, 2003 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. The Companys 60% interest in AmeriCold Logistics is accounted for
under the equity method of accounting as Crescent Operating, Inc., the
Companys partner in AmeriCold Logistics, has substantive participating rights.
The investments in and advances to AmeriCold Logistics are 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 is
recorded as a component of income or loss from AmeriCold Logistics. The
Company does not record comprehensive losses in excess of the cost of its
investments in and advances to AmeriCold Logistics, as the Company is 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 loss for the three months ended March 31,
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. The Company will resume recording income from
AmeriCold Logistics after such income equals its share of losses not
previously recorded.

Management has made estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.

Certain amounts in the prior periods consolidated financial statements
have been reclassified to conform to the current period presentation.

3. INVESTMENTS IN AND ADVANCES TO AMERICOLD LOGISTICS

At March 31, 2003, $8,165,000 was outstanding under the Companys secured
loans to AmeriCold Logistics, which mature on December 31, 2004. These loans
are carried at zero in the accompanying consolidated balance sheet as they have
been fully absorbed by the Companys share of comprehensive losses of AmeriCold
Logistics. AmeriCold Logistics is required to make loan payments approximating
$159,000 per month. The portion of the loan payments made during the three
months ended March 31, 2003 that represented the repayment of principal is
$205,000 and is reflected as income from AmeriCold Logistics as this principal
was previously reduced to zero by equity in losses of AmeriCold Logistics.

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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

The following condensed balance sheet data represents 100% of AmeriCold
Logistics, of which the Company holds a 60% interest:

|                        |  |                |         |                   |  |   |         |  
|----------------------- |  | -------------- | ------- | ----------------- |  | - | ------- | -
|(amounts in thousands)  |  | March 31, 2003 |         | December 31, 2002
|                        |  |                |         |                  
|Current assets          |  | $              | 113,914 |                   |  | $ | 116,420 |  
|Non-current assets      |  |                | 46,050  |                   |  |   | 47,670  |  
|                        |  |                |         |                   |  |   |         |  
|                        |  | $              | 159,964 |                   |  | $ | 164,090 |  
|                        |  |                |         |                   |  |   |         |  
|Current liabilities     |  | $              | 111,372 |                   |  | $ | 115,057 |  
|Non-current liabilities |  |                | 97,075  |                   |  |   | 90,666  |  
|                        |  |                |         |                   |  |   |         |  
|                        |  | $              | 208,447 |                   |  | $ | 205,723 |  
|                        |  |                |         |                   |  |   |         |  
|Partners deficit       |  | $              | (48,483 | )                 |  | $ | (41,633 | )
|                        |  |                |         |                   |  |   |         |  

The following represents the components of the Companys income (loss)
from AmeriCold Logistics:

|                                                                         |  |                                      |     |      |  |   |        |  
|------------------------------------------------------------------------ |  | ------------------------------------ | --- | ---- |  | - | ------ | -
|(amounts in thousands)                                                   |  | For The Three Months Ended March 31,
|                                                                         |  |                                     
|                                                                         |  | 2003                                 |     | 2002
|                                                                         |  |                                      |     |     
|Equity in loss(1)                                                        |  | $                                    |    |      |  | $ | (3,684 | )
|Interest on loans                                                        |  |                                      | 255 |      |  |   | 373    |  
|Recovery from repayments of
loans previously reduced by
equity in losses |  |                                      | 205 |      |  |   |       |  
|                                                                         |  |                                      |     |      |  |   |        |  
|                                                                         |  | $                                    | 460 |      |  | $ | (3,311 | )
|                                                                         |  |                                      |     |      |  |   |        |  



---

|(1) |  | The Company did not record $4,110, its 60% share of AmeriCold
Logistics net loss of $6,850 for the three months ended
March 31, 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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following condensed operating and cash flow data represents 100% of AmeriCold
Logistics, of which the Company holds a 60% interest:

|                                                      |  |                                      |          |      |  |   |          |  
|----------------------------------------------------- |  | ------------------------------------ | -------- | ---- |  | - | -------- | -
|(amounts in thousands)                                |  | For The Three Months Ended March 31,
|                                                      |  |                                     
|                                                      |  | 2003                                 |          | 2002
|                                                      |  |                                      |          |     
|Revenues                                              |  | $                                    | 159,722  |      |  | $ | 154,628  |  
|Costs applicable to revenues                          |  |                                      | (115,837 | )    |  |   | (111,053 | )
|                                                      |  |                                      |          |      |  |   |          |  
|Gross margin                                          |  |                                      | 43,885   |      |  |   | 43,575   |  
|Depreciation                                          |  |                                      | (2,402   | )    |  |   | (2,873   | )
|Rent                                                  |  |                                      | (39,505  | )    |  |   | (37,541  | )
|Other expenses, net                                   |  |                                      | (8,828   | )    |  |   | (9,301   | )
|                                                      |  |                                      |          |      |  |   |          |  
|Net loss                                              |  | $                                    | (6,850   | )    |  | $ | (6,140   | )
|                                                      |  |                                      |          |      |  |   |          |  
|                                                      |  |                                      |          |      |  |  
|Cash flows provided by (used in)
operating activities |  | $                                    | 2,539    |      |  | $ | (16,106  | )
|                                                      |  |                                      |          |      |  |   |          |  

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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

AmeriCold Logistics has reported losses since its inception and, at March
31, 2003, the Companys 60% share of AmeriCold Logistics partners deficit was
$29,090,000, which includes $27,726,000 of deferred rent (rent recognized as
expense but not paid in cash) to the Vornado REIT/Crescent REIT Partnership
(the Landlord). On March 7, 2003, AmeriCold Logistics and the Landlord
extended the deferred rent period in AmeriCold Logistics leases with the
Landlord to December 31, 2004 from December 31, 2003. Based on its right to
defer rent, the management of AmeriCold Logistics anticipates it will have
sufficient cash flows to operate at least through March 31, 2004. AmeriCold
Logistics anticipates that in 2003 the Landlord will restructure the leases to
provide additional cash flow to AmeriCold Logistics. Further, the management
of AmeriCold Logistics is also considering the financing of certain trade
receivables and equipment and the sale of certain warehouse operations. In the
absence of such financings and sales and the anticipated lease restructuring,
AmeriCold Logistics will not have the ability to distribute funds to the
Company and in turn, the Company will not have resources sufficient to repay
its $24,223,000 loan from Vornado Realty Trust due December 31, 2004.

During the three months ended March 31, 2003, 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
March 31, 2003 is as follows:

|                                                      |  |           |        | 
|----------------------------------------------------- |  | --------- | ------ | 
|(amounts in thousands)                                |  | Total (1)
|                                                      |  |          
|Deferred during the three months ended
March 31, 2003 |  | $         | 5,627  | 
|Aggregate deferral at December 31, 2002               |  |           | 40,583 | 
|                                                      |  |           |        | 
|                                                      |  | $         | 46,210 | 
|                                                      |  |           |        | 



---

|(1) |  | The Company does not guarantee AmeriCold Logistics deferred rent liability.
|--- |  | ----------------------------------------------------------------------------

On March 7, 2003, AmeriCold Logistics and the Landlord extended the
deferred rent period to December 31, 2004 from December 31, 2003.

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to a joint venture owned 44% by Vornado Realty Trust
and 56% by Crescent Real Estate Equities Company, the owners of the Landlord,
for $6,500,000 in cash. AmeriCold Logistics recognized a loss of $140,000 on
the sale. AmeriCold Logistics also agreed to act as agent to collect the
accounts receivable. The Company does not believe that any
significant servicing asset or liability exists. As of May 2, 2003, $6,600,000 of the $6,640,000 was
collected. The joint venture had previously purchased $5,720,000 of accounts
receivable from AmeriCold Logistics for $5,600,000 in cash on December 31,
2002. The accounts receivable sold in December 2002 were collected in full.

4. 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.

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##### Table of Contents



VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)

5. LOSS PER SHARE

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

|                                       |                                     |                              |       |           |      |   |       |           |  
|-------------------------------------- | ----------------------------------- | ---------------------------- | ----- | --------- | ---- | - | ----- | --------- | -
|(amounts in thousands, except          |                                     | For the                     
|share and per share amounts)           |                                     | Three Months Ended March 31,
|                                       |                                     |                             
|                                       |                                     |                              | 2003  |           | 2002
|                                       |                                     |                              |       |           |     
|Numerator:                             |                                     |                              |       |           |      |   |       |          
|                                       | Net loss                            |                              | $     | (205      | )    |   | $     | (4,074    | )
|                                       |                                     |                              |       |           |      |   |       |          
|Denominator:                           |                                     |                              |       |           |      |   |       |          
|                                       | Weighted average shares outstanding |                              |       | 4,068,924 |      |   |       | 4,068,924 |  
|                                       |                                     |                              |       |           |      |   |       |          
|Net loss per share  basic and diluted |                                     | $                            | (0.05 | )         |      | $ | (1.00 | )        
|                                       |                                     |                              |       |           |      |   |       |          

The
Companys stock options (358,569 outstanding and exercisable at
March 31, 2003) are not dilutive in the reporting periods as the average market
prices of the Companys common stock did not exceed the option exercise prices
and as the Company reported net losses. The rights issued pursuant to the
Companys Stockholder Protection Rights Plan are not dilutive in the reporting
periods as the rights were not exercisable or outstanding. The limited
partnership units of Company L.P. not owned by the Company (447,017 at March
31, 2003) are not dilutive in the reporting periods as the Company reported net
losses.

6. RECENTLY ISSUED ACCOUNTING STANDARDS

In
December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of FASB Statement No.
123.SFAS No. 148 provides alternative methods of transition for entities that
voluntarily change to the fair value method of accounting for stock-based
employee compensation. The Company voluntarily adopted the fair value
provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
prospectively for all employee awards granted, modified, or settled in 2003 and
thereafter. The Company will utilize an option-pricing model and appropriate
market assumptions to determine the value of such grants. Compensation expense
will be recognized on a straight-line basis over the vesting periods of the
grants. None of the Companys stock options accounted for under the
intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25 would have increased net losses for the three
months ended March 31, 2003 and 2002 had they been accounted for
under the fair value method.

In
January 2003, FASB issued FASB Interpretation ("FIN") No. 46, Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51. FIN No. 46 requires the
consolidation of an entity by an enterprise if (i) that enterprise, known as a
primary beneficiary, has a variable 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. FIN No. 46
applies immediately to all variable interest entities created after January 31,
2003. For variable interest entities created by public companies before
February 1, 2003, FIN No. 46 must be applied no later than the beginning of the
first interim or annual reporting period beginning after June 15, 2003. The
initial determination of whether an entity is a variable interest entity shall
be made as of the date at which a primary beneficiary becomes involved with the
entity and reconsidered as of the date one of three triggering events described
in FIN No. 46 occurs. The Company is currently evaluating the impact of this
interpretation regarding the appropriateness of the continued use of the equity
method of accounting for its investment in AmeriCold Logistics.

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INDEPENDENT ACCOUNTANTS REPORT

Stockholders and Board of Directors
Vornado Operating Company
New York, New York

We have reviewed the accompanying condensed consolidated balance sheet of
Vornado Operating Company as of March 31, 2003, and the related condensed
consolidated statements of operations and cash flows for the three month
periods ended March 31, 2003 and 2002. These financial statements are the
responsibility of the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, 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 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 auditing standards
generally accepted in the United States of America, the consolidated balance
sheet of Vornado Operating Company as of December 31, 2002, 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
7, 2003, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2002 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
May 7, 2003

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##### Table of Contents






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. Our 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 operating history; (b) restrictions on the Companys business
and future opportunities; (c) dependence upon Vornado Realty Trust;
(d) the substantial influence of the Companys controlling stockholders and
conflicts of interest; (e) the bankruptcy of the Companys joint venture
partner, Crescent Operating, Inc. (COPI); (f) risks associated with potential
investments and the ability to manage those investments; (g) competition; (h)
the Companys obligations under the Revolving Credit Agreement
with Vornado Realty Trust;
(i) AmeriCold Logistics obligations under the lease agreements with the
Vornado REIT/Crescent REIT Partnership (the Landlord); (j) the Companys
limited financial resources; (k) dependence on key personnel; (l) potential
anti-takeover effects of the Companys charter documents and Stockholder
Protection Rights Plan and applicable law; (m) dependence on distributions from
subsidiaries; (n) potential costs of compliance with environmental laws; (o)
changes in the general economic climate; and (p) government regulations.

For these forward-looking statements, we claim 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 our forward-looking statements to reflect
events or circumstances after the date of this Quarterly Report on Form 10-Q.
See Item 1. Business  Risk Factors in the Companys Annual Report on Form
10-K for the year ended December 31, 2002.

Overview

Managements Discussion and Analysis of Financial Condition and Results of
Operations considers the Companys consolidated financial statements for the
three months ended March 31, 2003 and 2002.

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 consolidated 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 2 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, 2002.

Investments in and Advances to AmeriCold Logistics

The Companys 60% interest in AmeriCold Logistics is accounted for under
the equity method of accounting as COPI, the Companys partner in AmeriCold
Logistics, has substantive participating rights. The investments in and
advances to AmeriCold Logistics are 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 is recorded as a component of
income or loss from AmeriCold Logistics. The Company does not record
comprehensive losses in excess of the cost of its investments in and advances

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##### Table of Contents



to AmeriCold Logistics, as the Company is 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 loss for the three months ended March 31, 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. The Company will resume recording income from
AmeriCold Logistics after such income equals its share of losses not
previously recorded.

Recently Issued Accounting Standards

In December 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, an amendment of FASB
Statement No. 123.SFAS No. 148 provides alternative methods of transition for
entities that voluntarily change to the fair value method of accounting for
stock-based employee compensation. The Company voluntarily adopted the fair
value provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
prospectively for all employee awards granted, modified, or settled in 2003 and
thereafter. The Company will utilize an option-pricing model and appropriate
market assumptions to determine the value of such grants. Compensation expense
will be recognized on a straight-line basis over the vesting periods of the
grants. None of the Companys stock options accounted for under the
intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25 would have increased net losses for the three
months ended March 31, 2003 and 2002 had they been accounted for
under the fair value method.

In January 2003, FASB issued FASB Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.
FIN No. 46 requires the consolidation of an entity by an enterprise if (i) that
enterprise, known as a primary beneficiary, has a variable 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. FIN No. 46 applies immediately to all variable interest entities
created after January 31, 2003. For variable interest entities created by
public companies before February 1, 2003, FIN No. 46 must be applied no later
than the beginning of the first interim or annual reporting period beginning
after June 15, 2003. The initial determination of whether an entity is a
variable interest entity shall be made as of the date at which a primary
beneficiary becomes involved with the entity and reconsidered as of the date
one of three triggering events described in FIN No. 46 occurs. The Company is
currently evaluating the impact of this interpretation regarding the
appropriateness of the continued use of the equity method of accounting for its
investment in AmeriCold Logistics.

Results of Operations

The Company had a net loss of $205,000 for the three months ended March
31, 2003, compared to a net loss of $4,074,000 for the prior period, a decrease
of $3,869,000.

General and administrative expenses were $278,000 for the three months
ended March 31, 2003, compared to $273,000 for the three months ended March 31,
2002, an increase of $5,000. This increase resulted primarily from higher
corporate insurance costs, substantially offset by lower franchise taxes due to
the decline in the book value of the Companys investments in and advances to
AmeriCold Logistics.

Interest and debt expense to Vornado Realty Trust was $388,000 for the
three months ended March 31, 2003, compared to $491,000 for the three months
ended March 31, 2002, a decrease of $103,000. This decrease is the result of a
lower average balance outstanding and lower LIBOR rates under the Revolving
Credit Agreement with Vornado Realty Trust during the current three-month
period.

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The following represents the components of the Companys income (loss) from
AmeriCold Logistics:

|                                                                         |  |                      |     |      |  |   |        |  
|------------------------------------------------------------------------ |  | -------------------- | --- | ---- |  | - | ------ | -
|                                                                         |  | For The Three Months
|(amounts in thousands)                                                   |  | Ended March 31,     
|                                                                         |  |                     
|                                                                         |  | 2003                 |     | 2002
|                                                                         |  |                      |     |     
|Equity in loss                                                           |  | $                    |    |      |  | $ | (3,684 | )
|Interest on loans                                                        |  |                      | 255 |      |  |   | 373    |  
|Recovery from repayments of loans previously
reduced by equity in losses |  |                      | 205 |      |  |   |       |  
|                                                                         |  |                      |     |      |  |   |        |  
|                                                                         |  | $                    | 460 |      |  | $ | (3,311 | )
|                                                                         |  |                      |     |      |  |   |        |  

The Company did not record $4,110,000, its 60% share of AmeriCold
Logistics net loss of $6,850,000 for the three months ended March 31, 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 is not liable for the
obligations of, or otherwise committed to provide additional financial support
to, AmeriCold Logistics. In the three months ended March 31, 2002, the Company
recorded its 60% share of AmeriCold Logistics net loss of $6,140,000 for that
period, or $3,684,000. The decrease in interest earned on the Companys loans
to AmeriCold Logistics of $118,000 is attributable to lower average loans
outstanding in the current period. The $205,000 recognized as income in the
current period represents repayments from AmeriCold Logistics of its loans
from the Company that were previously reduced to zero by equity in losses of
AmeriCold Logistics.

To keep the Companys stockholders knowledgeable about the Companys sole
investment, a discussion of AmeriCold Logistics results of operations is
included below. The amounts discussed below in AmeriCold Logistics Results
of Operations for the Three Months Ended March 31, 2003 and 2002 exclude the
interest income and the $205,000 gain recorded by the Company.

AmeriCold Logistics Results of Operations for the Three Months Ended March 31,
2003 and 2002

The following is a discussion of the results of operations of AmeriCold
Logistics, the Companys investee in the temperature controlled logistics
business (see the Companys Annual Report on Form 10-K for the year ended
December 31, 2002 for a discussion of this business and see Note 3 to the
unaudited consolidated financial statements included in this Quarterly Report
on Form 10-Q for condensed balance sheet data and condensed
operating data of AmeriCold Logistics). The data below
represents 100% of this business of which the Company holds a 60% interest.
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), (ii) Transportation Management Services,
which includes freight routing, dispatching, freight rate negotiation, backhaul
coordination, and distribution channel assessments, and (iii) Quarry
Operations. In December 2002, AmeriCold Logistics sold its quarries to a joint
venture owned 44% by Vornado Realty Trust and 56% by Crescent Real Estate
Equities Company, the owners of the Landlord. Additionally, AmeriCold
Logistics agreed to manage and operate the quarries for an annual management
fee of approximately $200,000 plus all direct expenses incurred as the
operator.



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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenues were $159,722,000 for the three months ended March 31, 2003,
compared to $154,628,000 for the three months ended March 31, 2002, an
increase of $5,094,000. Revenues from Leased Operations were $105,080,000
for the three months ended March 31, 2003, compared to $105,761,000 for the
three months ended March 31, 2002, a decrease of $681,000. Revenues from
Other Operations were $54,642,000 for the three months ended March 31, 2003,
compared to $48,867,000 for the three months ended March 31, 2002, an
increase of $5,775,000.



| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The increase in revenues from Other Operations is largely due to new
Managed Warehouse contracts that commenced after the first quarter of 2002
and increased volume from two significant customers, partially offset by the
discontinuation of Transportation Management Services business with lower
margin customers.

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##### Table of Contents





| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The gross margin for Leased Operations was $39,723,000, or 37.8% for
the three months ended March 31, 2003, compared to $40,215,000, or 38.0% for
the three months ended March 31, 2002, a decrease of $492,000.



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Operating income from Other Operations was $4,162,000 for the three
months ended March 31, 2003, compared to $3,360,000 for the three months
ended March 31, 2002, an increase of $802,000. This increase resulted
largely from the new Managed Warehouse contracts noted above, partially
offset by the effect of the December 2002 quarry sale noted above.



| |                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Rent expense was $39,505,000 for the three months ended March 31, 2003,
compared to $37,541,000 for the three months ended March 31, 2002, an
increase of $1,964,000. The increase resulted from higher percentage rent
in the current year as the lease amendment with the Landlord that
reduced percentage rent for the 2002 lease year expired.



| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | General and administrative expenses were $8,060,000 for the three
months ended March 31, 2003, compared to $8,337,000 for the three months
ended March 31, 2002, a decrease of $277,000. This decrease is largely due
to reduced administrative expenses such as travel costs and corporate office
rent for the Portland, Oregon office that was closed in 2002.



| |                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Depreciation and amortization expense was $2,402,000 for the three
months ended March 31, 2003, compared to $2,873,000 for the three months
ended March 31, 2002. The decrease of $471,000 is primarily attributable to
the December 2002 quarry sale.



| |                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Interest expense was $831,000 for the three months ended March 31,
2003, compared to $1,092,000 for the three months ended March 31, 2002.
This $261,000 decrease resulted from lower average borrowings outstanding in
the current period, partially offset by the interest on higher average
deferred rent balances in the current period.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other income was $63,000 for the three months ended March 31, 2003,
compared to $128,000 for the three months ended March 31, 2002, a decrease
of $65,000. This decrease resulted primarily from a $140,000 loss on the
March 2003 accounts receivable sale, discussed on page 15, and lower
interest rates on lower cash balances in the current year, partially offset
by a foreign currency translation gain from AmeriCold Logistics warehouse
in Ontario, Canada.

Liquidity and Capital Resources

The Company has a $75,000,000 unsecured Revolving Credit Agreement with
Vornado Realty Trust which expires on December 31, 2004. Borrowings under this
facility bear interest at LIBOR plus 3% (4.30% at March 31, 2003). The Company
pays Vornado Realty Trust a commitment fee equal to 1% per annum on the average
daily unused portion of the facility pursuant thereto; such commitment fees
were $128,000 and $111,000 for the three months ended March 31, 2003 and 2002,
respectively. Amounts may be borrowed under the Revolving Credit Agreement,
repaid and reborrowed from time to time on a revolving basis (so long as the
principal amount outstanding at any time does not exceed $75,000,000).
Principal payments are not required under the Revolving Credit Agreement during
its term. The Revolving Credit Agreement prohibits the Company from incurring
indebtedness to third parties (other than certain purchase money debt and
certain other exceptions) and prohibits the Company from paying any dividends.
The Company currently has no external sources of financing except this
facility. At March 31, 2003, $419,000 of interest and commitment fees were
unpaid, which reduces the availability under the Revolving Credit Agreement to
$50,777,000.

At March 31, 2003, $8,165,000 was outstanding under the Companys secured
loans to AmeriCold Logistics, which mature on December 31, 2004. These loans
are carried at zero in the Companys consolidated balance sheet as they have
been fully absorbed by the Companys share of comprehensive losses of AmeriCold
Logistics. AmeriCold Logistics is required to make loan payments approximating
$159,000 per month. The portion of the loan payments made during the three
months ended March 31, 2003 that represented the repayment of principal is
$205,000 and is reflected as income from AmeriCold Logistics as this principal
was previously reduced to zero by equity in losses of AmeriCold Logistics.

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AmeriCold Logistics has reported losses since its inception and, at March
31, 2003, the Companys 60% share of AmeriCold Logistics partners deficit was
$29,090,000, which includes $27,726,000 of deferred rent (rent recognized as
expense but not paid in cash) to the Landlord. On March 7, 2003, AmeriCold
Logistics and the Landlord extended the deferred rent period in AmeriCold
Logistics leases with the Landlord to December 31, 2004 from December 31,
2003. Based on its right to defer rent, the management of AmeriCold Logistics
anticipates it will have sufficient cash flows to operate at least through
March 31, 2004. AmeriCold Logistics anticipates that in 2003 the Landlord will
restructure the leases to provide additional cash flow to AmeriCold Logistics.
Further, the management of AmeriCold Logistics is also considering the
financing of certain trade receivables and equipment and the sale of certain
warehouse operations. In the absence of such financings and sales and the
anticipated lease restructuring, AmeriCold Logistics will not have the ability
to distribute funds to the Company and in turn, the Company will not have
resources sufficient to repay its $24,223,000 loan from Vornado Realty Trust
due December 31, 2004, as described above.

During the three months ended March 31, 2003, 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
March 31, 2003 is as follows:

|                                                      |  |           |        | 
|----------------------------------------------------- |  | --------- | ------ | 
|(amounts in thousands)                                |  | Total (1)
|                                                      |  |          
|Deferred during the three months ended
March 31, 2003 |  | $         | 5,627  | 
|Aggregate deferral at December 31, 2002               |  |           | 40,583 | 
|                                                      |  |           |        | 
|                                                      |  | $         | 46,210 | 
|                                                      |  |           |        | 



---

|(1) |  | The Company does not guarantee AmeriCold Logistics deferred rent liability.
|--- |  | ----------------------------------------------------------------------------

On March 7, 2003, AmeriCold Logistics and the Landlord extended the
deferred rent period to December 31, 2004 from December 31, 2003.

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to a joint venture owned 44% by Vornado Realty Trust
and 56% by Crescent Real Estate Equities Company, the owners of the Landlord,
for $6,500,000 in cash. AmeriCold Logistics recognized a loss of $140,000 on
the sale. AmeriCold Logistics also agreed to act as agent to collect the
accounts receivable. The Company does not believe that any
significant servicing asset or liability exists. As of May 2, 2003, $6,600,000 of the $6,640,000 was
collected. The joint venture had previously purchased $5,720,000 of accounts
receivable from AmeriCold Logistics for $5,600,000 in cash on December 31,
2002. The accounts receivable sold in December 2002 were collected in full.

On April 30, 2002, the American Stock Exchange (AMEX) notified the
Company that it had fallen below the AMEXs continued listing standards because
it had losses from continuing operations and/or net losses in two of its three
most recent fiscal years and it had not maintained at least $2,000,000 in
stockholders equity. The April 30, 2002 letter offered the Company an
opportunity to submit a plan that would ultimately bring the Company into
compliance with the AMEXs continued listing standards. On June 6, 2002, the
Company submitted a plan to the AMEX which includes the anticipated
restructuring of AmeriCold Logistics leases with the Landlord to provide
additional cash flow; the sale of non-core assets by AmeriCold Logistics; and
operating improvements. After reviewing the Companys plan, the AMEX notified
the Company by letter dated July 8, 2002 that it accepted the Companys plan of
compliance and granted the Company an extension of time to regain compliance
with the continued listing standards. The Company is subject to periodic
reviews by the AMEXs staff during the extension period. Failure to make
progress consistent with the plan or to regain compliance with the continued
listing standards could result in the Company being delisted from the AMEX.
There can be no assurance that the Company will be able to achieve its plan.

Cash Flows for the Three Months Ended March 31, 2003

There were no net cash flows from operating activities as (i) the net loss
of $205,000 and (ii) the non-cash and non-operating income from AmeriCold
Logistics of $205,000 were fully offset by (iii) the net change in operating
assets and liabilities of $410,000.

Cash provided by investing activities of $205,000 resulted from repayments
of loans to AmeriCold Logistics.

There were no cash flows from financing activities.

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Cash Flows for the Three Months Ended March 31, 2002

Net cash used in operating activities of $75,000 is comprised of (i) a net
loss of $4,074,000 partially offset by (ii) the net change in operating assets
and liabilities of $315,000 and (iii) a non-cash and non-operating loss from
AmeriCold Logistics of $3,684,000.

Cash provided by investing activities of $126,000 resulted from repayments
of loans to AmeriCold Logistics.

Cash provided by financing activities of $65,000 resulted from borrowings
under the Companys Revolving Credit Agreement with Vornado Realty Trust.




Item 3.Quantitative and Qualitative Disclosures About Market Risk

See Item 7A. Quantitative and Qualitative Disclosures about Market Risk
in the Companys Annual Report on Form 10-K for the year ended December 31,
2002. There has been no material change to this information.

The fair
value of the Companys note payable to Vornado Realty Trust,
estimated by discounting the future cash flows using current
market rates
available to the Company, is approximately $3,800,000 less than the carrying
amount of such debt at March 31, 2003. Such fair value estimate is not
necessarily indicative of the amount that would be paid upon liquidation of the
Companys note payable.




Item 4. Controls and Procedures

Within the 90-day period prior to the filing of this Quarterly Report on
Form 10-Q, an evaluation was carried out under the supervision and with the
participation of Vornado Operating Companys management, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rule 13a-14(c) under the Securities Exchange Act of 1934). Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

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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

Subject to confirmation of a plan of reorganization under Chapter 11 of
the United States Bankruptcy Code, Crescent Operating, Inc. (COPI), the
Companys joint venture partner in AmeriCold Logistics, is expected to transfer
its interest in AmeriCold Logistics to an entity to be owned by the
shareholders of Crescent Real Estate Equities Company. The shareholders of
COPI approved the plan of reorganization on March 6, 2003. It is uncertain
whether this plan will be confirmed and what effect, if any, this plan and the
proposed change in ownership will have on the operation and management of
AmeriCold Logistics.




Item 6.Exhibits and Reports on Form 8-K:



|(a) |  | Exhibits required by Item 601 of Regulation S-K are filed herewith and are listed in the
attached Exhibit Index.
|--- |  | ----------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Reports on Form 8-K:                                                                                            
|   
|    |  | During the quarter ended March 31, 2003, the Company did not file any reports on Form 8-K.                      

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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: May 12, 2003 |  | By: |  | /s/ JOSEPH MACNOW                                                                                                                            
|                   |  |     |  |                                                                                                                                              
|                   |  |     |  | Joseph Macnow, Executive Vice
President  Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)

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##### Table of Contents






CERTIFICATION

I, Steven Roth, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Vornado Operating
Company;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                               
|------------------ |  | ------------------------------
|Date: May 12, 2003 |  |                               
|                   |  |                               
|                   |  | /s/ STEVEN ROTH               
|                   |  |                               
|                   |  | Name: Steven Roth             
|                   |  | Title: Chief Executive Officer

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##### Table of Contents



CERTIFICATION

I, Joseph Macnow, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Vornado Operating
Company;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  |  | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                                                                                         
|------------------ |  | ----------------------------------------------------------------------------------------
|Date: May 12, 2003 |  |                                                                                         
|                   |  |                                                                                         
|                   |  | /s/ JOSEPH MACNOW                                                                       
|                   |  |                                                                                         
|                   |  | Name: Joseph Macnow                                                                     
|                   |  | Title: Executive Vice President 
Finance and Administration and
Chief Financial Officer

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Exhibit Index

|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|----------- | ---- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|Exhibit No. |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |      |  |  | The following is a list of all exhibits filed as part of this report.                                                                                                                                                                                                                                                                                                                                                                 |  |  
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 3.1  |  |  | Restated Certificate of Incorporation of Vornado Operating Company
(incorporated by reference to Exhibit 3.1 of the Companys
Registration Statement on Form S-11 (File No. 333-40701), as filed
with the Commission on September 28, 1998)                                                                                                                                                                                           |  | *
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 3.2  |  |  | Amended and Restated Bylaws of Vornado Operating Company
(incorporated by reference to Exhibit 3.2 of the Companys Quarterly
Report on Form 10-Q for the period ended March 31, 2000 (File No.
001-14525), as filed with the Commission on May 9, 2000)                                                                                                                                                                              |  | *
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 4.1  |  |  | Specimen stock certificate                                                                                                                                                                                                                                                                                                                                                                                                            |  |  
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 4.2  |  |  | Stockholder Protection Rights Agreement, dated as of May 29, 2002,
between Vornado Operating Company and Wachovia Bank, National
Association, as Rights Agent, including as Exhibit A the forms of
Rights Certificate and of Election to Exercise (incorporated by
reference to Exhibit 1 of the Companys Registration Statement on
Form 8-A, dated June 5, 2002 (File No. 001-14525), as filed with the
Commission on June 5, 2002) |  | *
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 10.1 |  |  | Deferred Rent Agreement between Crescent Real Estate Equities Company
and Vornado Realty Trust, as Landlord, and AmeriCold Logistics, LLC,
as Tenant, dated March 7, 2003 (incorporated by reference to Exhibit
10.43 of the Companys Annual Report on Form 10-K for the year ended
December 31, 2002 (File No. 001-14525), as filed with the Commission
on March 25, 2003)                                                          |  | *
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 10.2 |  |  | Purchase Agreement by and between Vornado Crescent Carthage and KC
Quarry L.L.C. and AmeriCold Logistics, LLC dated March 28, 2003                                                                                                                                                                                                                                                                                                    |  |  
|            |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|            | 15.1 |  |  | Letter of Deloitte & Touche LLP regarding unaudited interim financial
information                                                                                                                                                                                                                                                                                                                                                     |  |  



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|* |  | Incorporated by reference
|- |  | -------------------------

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