SEC Filing | Alexander's, Inc.

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1 As filed with the Securities and Exchange Commission on July 31, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) JUNE 18, 1998 Commission File Number: 1-6064 ALEXANDER'S, INC. (Exact name of registrant as specified in its charter) DELAWARE 51-0100517 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number) PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663 (Address of principal executive offices) (Zip Code) (201)587-8541 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if Changed Since Last Report) Page 1

2 This Form 8-K/A amends Alexander's, Inc. Form 8-K previously filed to include certain required financial statements and pro forma financial information ITEM 1. NOT APPLICABLE. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On June 18, 1998, Alexander's, Inc. ("Alexander's") increased its interest in the Kings Plaza Mall (the "Mall") to 100% by acquiring Federated Department Store's 50% interest. The purchase price was approximately $28,000,000, which was paid in cash. Alexander's has owned a 50% interest in the Mall since it was built in 1970. The two-level Mall contains approximately 430,000 square feet and is part of the Kings Plaza Shopping Center (the "Center"). The Center, which contains approximately 1.1 million square feet of retail space and a five-level parking structure, is located at the intersection of Flatbush Avenue and Avenue U in Brooklyn, NY. In addition to owning the Mall, Alexander's owns one of the Center's anchor stores, which is principally leased to Sears. The other anchor store is owned by Federated and operated as a Macy's department store. In connection with the acquisition and to fund the purchase price, Alexander's has completed a $90 million three-year mortgage loan with Union Bank of Switzerland. The loan is secured by the Kings Plaza Mall and the Alexander's anchor store and bears interest at LIBOR plus 1.25%. In addition, Alexander's expects to complete a $30 million construction loan with Union Bank of Switzerland, of which approximately $15 million will be advanced in the future to partially fund a renovation of the Mall, as will approximately $15 million for the refurbishment of the Macy's store. These transactions were arrived at through arms- length negotiations. ITEMS 3-6. NOT APPLICABLE. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. There are filed herewith: (a) The historical Statements of Operations for Kings Plaza Shopping Center and Marina For The Three Months Ended March 31, 1998 and 1997. The financial statements of Kings Plaza Shopping Center and Marina for the year ended December 31, 1997 which are included in the Consolidated Financial Statements of Alexander's Inc., for the year ended December 31, 1997, are incorporated herein by reference. Page 2

3 (b) The Consolidated Pro Forma Balance Sheet of Alexander's as of March 31, 1998 and the Consolidated Pro Forma Income Statement of Alexander's for the Three Months Ended March 31, 1998 and the Year Ended December 31, 1997, commencing on page 5, to give pro forma effect to the acquisition of the remaining 50% interest in Kings Plaza Shopping Center and Marina and the financings attributable thereto. Page Reference --------- Kings Plaza Shopping Center and Marina Statements of Operations for the Three Months Ended March 31, 1998 and 1997 (unaudited).............................................................. 4 Pro Forma financial information: Consolidated Pro Forma Balance Sheet at March 31, 1998........................... 7 Consolidated Pro Forma Income Statement for the Three Months Ended March 31, 1998.....................................................................8 Consolidated Pro Forma Income Statement for the Year Ended December 31, 1997...........................................................................9 Notes to Consolidated Pro Forma Financial Statements...............................10 ITEMS 8-9. Not Applicable. Page 3

4 KINGS PLAZA SHOPPING CENTER AND MARINA STATEMENTS OF OPERATIONS (unaudited) (amounts in thousands) For the Three Months Ended --------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- REVENUES: Rents $ 3,787 $ 3,618 Expense reimbursements: Central heating, cooling, air handling and electricity 636 631 Real estate taxes 467 396 Common area 1,497 1,351 Parking lot 501 438 Other income 511 527 -------------- -------------- TOTAL REVENUES 7,399 6,961 -------------- -------------- EXPENSES: Central heating, cooling, air handling and electricity 1,073 1,093 Real estate taxes 547 427 Common area 932 909 Parking lot 704 644 Insurance 246 262 Rent 18 18 Management fee 194 156 Administrative 423 383 Depreciation and amortization 369 330 -------------- -------------- TOTAL EXPENSES 4,506 4,222 -------------- -------------- OPERATING INCOME 2,893 2,739 Interest and debt expense (156) (190) -------------- -------------- NET INCOME $ 2,737 $ 2,549 ============== ============== See notes to statements of operations Page 4

5 KINGS PLAZA SHOPPING CENTER AND MARINA NOTES TO STATEMENTS OF OPERATIONS (unaudited) 1. ORGANIZATION AND BUSINESS Kings Plaza Shopping Center of Avenue U, Inc. (a wholly-owned subsidiary of Federated Department Stores, Inc. (formerly R.H. Macy & Co. Inc. ("Macy's")) and Alexander's Department Stores of Brooklyn, Inc. (wholly-owned by Alexander's, Inc. ("Alexander's")), formed a joint venture for the purpose of owning and operating the Kings Plaza Shopping Center and Marina ("Center"), including the energy plant servicing the entire shopping center, but exclusive of the Macy's and Alexander's stores and land thereunder located in the Center. The co-venturers each have an undivided 50% interest as tenants in common in the property and equipment. 2. BASIS OF PRESENTATION The Statements of Operations for the three months ended March 31, 1998 and 1997 are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These Statements of Operations should be read in conjunction with the financial statements and notes thereto of the Center, which are included in the Alexander's 1997 Annual Report to Shareholders and incorporated herein by reference. The results of operations for the three months ended March 31, 1998 and 1997 are not necessarily indicative of the operating results for the full year. Page 5

6 PRO FORMA FINANCIAL INFORMATION: The unaudited consolidated pro forma financial information attached presents: (A) the Consolidated Pro Forma Income Statements of Alexander's, Inc. ("Alexander's") for the year ended December 31, 1997 and for the three months ended March 31, 1998, as if the acquisition of the remaining 50% interest in Kings Plaza Shopping Center and Marina (the "Center") and the financings attributable thereto had occurred on January 1, 1997 and (B) the Consolidated Pro Forma Balance Sheet of Alexander's as of March 31, 1998, as if the above acquisition and related financing had occurred on March 31, 1998. The unaudited consolidated pro forma financial information is not necessarily indicative of what Alexander's actual results of operations or financial position would have been had these transactions been consummated on the dates indicated, nor does it purport to represent Alexander's results of operations or financial position for any future period. The unaudited consolidated pro forma financial information should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Alexander's Annual Report on Form 10-K for the year ended December 31, 1997 which contains the audited financial statements of Kings Plaza Shopping Center and Marina, the Consolidated Financial Statements and notes thereto included in Alexander's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and the Statement of Operations of Kings Plaza Shopping Center and Marina included herein. In management's opinion, all adjustments necessary to reflect these transactions have been made. Page 6

7 ALEXANDER'S INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA BALANCE SHEET MARCH 31, 1998 (unaudited) (amounts in thousands) Reclassification of Alexander's Historical 50% Equity Interest Pro Forma Total Alexander's in the Mall Adjustments Pro Forma ---------- -------- --------- ---------- ASSETS: Real estate, net: Land, building and improvements, net $ 184,088 13,392 $ 13,392 (A) $ 230,286 19,414 (A) Investment in unconsolidated joint venture 10,708 (10,708) - ---------- -------- --------- ---------- 194,796 2,684 32,806 230,286 Cash & cash equivalents 2,700 538 538 (A) 25,376 49,600 (B) (28,000) (A) Restricted cash 8,209 - - 8,209 Accounts receivable 475 260 260 (A) 995 Receivable arising from the straight-lining of rents 8,703 858 9,561 Deferred lease and other expenses 12,672 1,264 15,000 (C) 28,936 Deferred debt expense 632 - 2,400 (B) 3,032 Other assets 3,912 460 460 (A) 4,832 ========== ======== ========= ========== $ 232,099 $ 6,064 $ 73,064 $ 311,227 ========== ======== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Debt $ 204,359 $ 3,084 $ 3,084 (A) $ 262,527 90,000 (B) (38,000) (B) Amount due to Vornado Realty Trust and its affiliates 6,686 6,686 Accounts payable and accrued liabilities 4,265 1,260 1,260 (A) 6,785 Minority interest 600 - 600 Amount due tenants - tax certiorari proceedings 1,720 1,720 (A) 3,440 Other liabilities 2,238 2,238 Due to seller 15,000 (C) 15,000 Equity 13,951 13,951 ========== ======== ========= ========== $ 232,099 $ 6,064 $ 73,064 $ 311,227 ========== ======== ========= ========== Page 7

8 ALEXANDER'S INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 1998 (unaudited) (amounts in thousands except per share amounts) Historical ---------------------------------- Kings Plaza Shopping Center And Pro Forma Total Alexander's Marina(100%) Adjustments Pro Forma ------------- ----------------- ------------- ------------- REVENUES: Property rentals $ 5,631 $ 3,787 $ 40 (D) $ 9,458 Expense reimbursements 998 2,600 3,598 Equity in income of unconsolidated joint venture 1,378 (1,378)(E) - Parking lot 501 501 Miscellaneous income 511 511 ------------- ----------------- ------------- ------------- TOTAL REVENUES 8,007 7,399 (1,338) 14,068 ------------- ----------------- ------------- ------------- EXPENSES Operating 2,020 3,520 5,540 General and administrative 866 617 1,483 Depreciation and amortization 798 369 (108)(F) 1,309 250 (G) ------------- ----------------- ------------- ------------- TOTAL EXPENSES 3,684 4,506 142 8,332 ------------- ----------------- ------------- ------------- OPERATING INCOME 4,323 2,893 (1,480) 5,736 Interest and debt expenses (3,665) (156) (434)(H) (4,255) Interest and other income 264 264 ============= ================= ============= ============= NET INCOME $ 922 $ 2,737 $ (1,914) $ 1,745 ============= ================= ============= ============= Net income per share - basic and diluted (based on 5,001 shares) $ 0.18 $ 0.35 ============= ============= Page 8

9 ALEXANDER'S INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1997 (unaudited) (amounts in thousands except per share amounts) Historical --------------------------------- Kings Plaza Shopping Center And Pro Forma Total Alexander's Marina(100%) Adjustments Pro Forma -------------- --------------- --------------- --------------- REVENUES: Property rentals $ 18,455 $ 14,940 $ 150 (I) $ 33,545 Expense reimbursements 2,668 10,775 13,443 Equity in income of unconsolidated joint venture 4,246 (4,246)(J) - Parking lot 2,079 2,079 Miscellaneous income 2,409 2,409 -------------- --------------- --------------- --------------- TOTAL REVENUES 25,369 30,203 (4,096) 51,476 -------------- --------------- --------------- --------------- EXPENSES: Operating 7,459 16,708 24,167 General and administrative 3,933 2,332 6,265 Depreciation and amortization 2,714 1,418 (402)(K) 4,730 1,000 (L) -------------- --------------- --------------- --------------- TOTAL EXPENSES 14,106 20,458 598 35,162 -------------- --------------- --------------- --------------- OPERATING INCOME 11,263 9,745 (4,694) 16,314 Interest and debt expenses (13,430) (710) (1,650)(M) (15,790) Interest and other income 719 719 Net gain from condemnation proceedings 8,914 8,914 ============== =============== =============== =============== NET INCOME $ 7,466 $ 9,035 $ (6,344) $ 10,157 ============== =============== =============== =============== Net income per share - basic and diluted (based on 5,001 shares) $ 1.49 $ 2.03 ============== =============== Page 9

10 NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Basis of Pro Forma: The unaudited Consolidated Pro Forma Financial Statements were prepared to give pro forma effect to Alexander's acquisition of the remaining 50% interest in the Center. The column headed "Reclassification of Alexander's 50% Equity Interest in the Mall" on the Consolidated Pro Forma Balance Sheet reflects the reclassification of the equity investment into its balance sheet components. The columns in the Consolidated Pro Forma Income Statements headed "Kings Plaza Shopping Center and Marina" include the historical operating information for the three months ended March 31, 1998 and the year ended December 31, 1997. The acquisition was consummated through a subsidiary of Alexander's and was recorded under the purchase method of accounting. The purchase costs were allocated to the acquired assets and assumed liabilities using their relative fair values as of the closing date, based upon valuations and other studies which are not yet complete. Accordingly, the initial valuations are subject to change as such information is finalized. Alexander's believes that any such changes will not be significant since the allocations were principally to real estate. The purchase price and preliminary allocation of the excess of cost over net assets acquired is as follows: (in thousands) Purchase price of the Center $ 28,000 Future fundings by Alexander's for the refurbishment of the Macy's store 15,000 -------- 43,000 -------- Historical value of 50% interest in real estate being acquired 13,392 Assets and liabilities being acquired: Cash 538 Accounts receivable 260 Other assets 460 Debt (3,084) Accounts payable and accrued liabilities (1,260) Other liabilities (1,720) -------- Historical net book value of assets acquired 8,586 -------- Excess purchase price to be allocated in accordance with the acquisition and operating agreement $ 34,414 ======== Preliminary allocation of excess: Allocation to real estate $ 19,414 Allocation to deferred lease and other expense 15,000 -------- $ 34,414 ======== Page 10

11 NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The following adjustments were required to give pro forma effect to the transactions being reported: Consolidated Pro Forma Balance Sheet at March 31, 1998: (A) To allocate the purchase cost of the acquisition of the remaining 50% interest in the Center to those assets and liabilities acquired. (B) To record a $90 million mortgage and the use of a portion of the proceeds to repay existing property debt of approximately $38 million and pay financing costs of approximately $2.4 million. (C) To accrue amounts due to the seller in connection with the acquisition and the related operating agreement. Consolidated Pro Forma Income Statement for the Three Months Ended March 31, 1998: (D) To adjust rentals arising from straight-lining of tenant leases that contain escalations over the lease term. (E) To eliminate equity in income from unconsolidated joint venture as a result of acquiring the remaining 50% interest in the Center and consolidating the operations into Alexander's. (F) To adjust depreciation expense over the Center's expected useful life based on the allocation of the purchase price between land and building. (G) To record three months of expense on deferred costs being amortized over 15 years. (H) To adjust interest expense for the portion of the new mortgage financing used for the acquisition and interest savings on the debt repaid. Consolidated Pro Forma Income Statement for the Year Ended December 31, 1997: (I) To adjust rentals arising from straight-lining of tenant leases that contain escalations over the lease term. (J) To eliminate equity in income from unconsolidated joint venture as a result of acquiring the remaining 50% interest in the Center and consolidating the operations into Alexander's. (K) To adjust depreciation expense for the year ended December 31, 1997 over the Center's expected useful life based on the allocation of the purchase price between land and building. (L) To record expense for the year ended December 31, 1997 on deferred costs being amortized over 15 years. (M) To adjust interest expense for the portion of the new mortgage financing used for the acquisition and interest savings on the debt repaid. Page 11

12 ALEXANDER'S, INC. 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 hereunto duly authorized. ALEXANDER'S, INC. (Registrant) Date: July 31, 1998 /s/ Joseph Macnow ------------------------------------ JOSEPH MACNOW Vice President-Chief Financial Officer and Chief Accounting Officer Page 12