1
EXHIBIT INDEX ON PAGE 16
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, 2001
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 (I.R.S. Employer
or organization) Identification Number)
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
As of May 1, 2001, there were 4,068,924 shares of the registrant's common stock,
par value $.01 per share, outstanding.
Page 1
2
INDEX
PART I. FINANCIAL INFORMATION:
----------------------
Item 1. Financial Statements: Page Number
-----------
Consolidated Balance Sheets as of
March 31, 2001 and December 31, 2000...................................... 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and March 31, 2000...................... 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and March 31, 2000...................... 5
Notes to Consolidated Financial Statements................................ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk................ 13
PART II. OTHER INFORMATION:
------------------
Item 1. Legal Proceedings......................................................... 14
Item 6. Exhibits and Reports on Form 8-K.......................................... 14
Signatures .......................................................................... 15
Exhibit Index ......................................................................... 16
Page 2
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VORNADO OPERATING COMPANY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 DECEMBER 31, 2000
-------------- -----------------
ASSETS
Cash and cash equivalents............................................................. $ 358,642 $ 589,564
Marketable securities................................................................. -- 57,504
Investment in and advances to AmeriCold Logistics..................................... 13,252,691 15,765,891
Prepaid expenses and other assets..................................................... 285,281 316,399
--------------- -------------
$ 13,896,614 $ 16,729,358
=============== =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Note payable to Vornado Realty Trust.................................................. $ 21,181,538 $ 19,781,538
Due to Transportal Network............................................................ -- 582,194
Due to Vornado Realty Trust........................................................... 99,046 73,359
Accounts payable and accrued expenses................................................. 243,452 337,416
--------------- -------------
Total liabilities................................................................ 21,524,036 20,774,507
--------------- -------------
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 in each period..................................... 40,689 40,689
Additional paid-in capital............................................................ 22,462,555 22,462,555
Deficit............................................................................... (29,632,666) (25,828,267)
--------------- -------------
(7,129,422) (3,325,023)
Accumulated other comprehensive loss.................................................. (498,000) (720,126)
--------------- -------------
Total stockholders' deficit...................................................... (7,627,422) (4,045,149)
--------------- -------------
$ 13,896,614 $ 16,729,358
=============== =============
See notes to consolidated financial statements.
Page 3
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VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
-----------------------------
MARCH 31,
2001 2000
----------- -----------
Revenues:
Interest income ............................ $ 3,329 $ 41,778
Expenses:
General and administrative ................. 507,408 937,349
----------- -----------
(504,079) (895,571)
Loss from AmeriCold Logistics ................... (1,921,200) (3,738,000)
Loss from Transportal Network ................... -- (1,185,421)
Unrealized loss from marketable securities ...... (777,630) --
Interest and debt expense to Vornado Realty Trust (601,490) (316,000)
----------- -----------
Loss before income tax benefit and
minority interest .......................... (3,804,399) (6,134,992)
Income tax benefit .............................. -- --
----------- -----------
Loss before minority interest ................... (3,804,399) (6,134,992)
Minority interest ............................... -- 607,364
----------- -----------
Net loss ........................................ $(3,804,399) $(5,527,628)
=========== ===========
Net loss per share -- basic and diluted ......... $ (0.93) $ (1.36)
=========== ===========
See notes to consolidated financial statements.
Page 4
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VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31,
-----------------------------
2001 2000
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................ $(3,804,399) $(5,527,628)
Adjustments to reconcile net loss to net cash used in operations:
Minority interest ........................................... -- (607,364)
Equity in loss from AmeriCold Logistics
(Includes $94,000 of cash received for interest income).. 2,015,200 3,738,000
Loss from Transportal Network ............................... -- 1,185,421
Unrealized loss from marketable securities .................. 777,630 --
Stock appreciation rights compensation expense .............. -- 652,734
Changes in operating assets and liabilities:
Prepaid expenses and other assets ........................... 31,118 (228,961)
Accounts payable and accrued expenses ....................... (93,964) (21,369)
Due to Transportal Network .................................. (582,194) --
Due to Vornado Realty Trust ................................. 25,687 (8,996)
----------- -----------
Net cash used in operating activities ................................ (1,630,922) (818,163)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in and advances to AmeriCold Logistics ............... -- (6,000,000)
----------- -----------
Net cash used in investing activities ................................ -- (6,000,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings ........................................ 1,400,000 6,000,000
Other ........................................................... -- 1,496
----------- -----------
Net cash provided by financing activities ............................ 1,400,000 6,001,496
----------- -----------
Net decrease in cash and cash equivalents ............................ (230,922) (816,667)
Cash and cash equivalents at beginning of period ..................... 589,564 3,257,870
----------- -----------
Cash and cash equivalents at end of period ........................... $ 358,642 $ 2,441,203
=========== ===========
SUPPLEMENTAL INFORMATION:
Cash payments for interest ...................................... $ 601,490 $ 316,000
=========== ===========
See notes to consolidated financial statements.
Page 5
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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2001 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, 2001, the consolidated
statements of operations for the three months ended March 31, 2001 and 2000 and
the consolidated statements of cash flows for the three months ended March 31,
2001 and 2000 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 Unites States of America have been condensed or omitted. These
condensed 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, 2000 as
filed with the Securities and Exchange Commission. The results of operations for
the three months ended March 31, 2001 are not necessarily indicative of the
operating results for the full year.
The accompanying consolidated financial statements include the accounts of
Vornado Operating Company and Company L.P. All significant intercompany amounts
have been eliminated.
The preparation of financial statements in conformity with accounting
principles general accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
3. MARKETABLE SECURITIES
The Company recognized an unrealized loss from marketable securities of
$777,630 for the three months ended March 31, 2001, due to an "other than
temporary decline" in fair value of securities available for sale.
4. INVESTMENTS IN PARTNERSHIPS
The Company's investments in and advances to partnerships and loss
recognized from such investments are as follows:
Investments in and Advances to Partnership
------------------------------------------
March 31, 2001 December 31, 2000
-------------- -----------------
AmeriCold Logistics (60% interest) ....... $13,252,691 $15,765,891
=========== ===========
Page 6
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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Loss from Investments in Partnerships
-------------------------------------
For The Three Months Ended
March 31,
-----------------------------
2001 2000
----------- -----------
AmeriCold Logistics (60% interest) ... $(1,921,200) $(3,738,000)
Transportal Network (60% interest) ... -- (1,185,421)
----------- -----------
$(1,921,200) $(4,923,421)
=========== ===========
The following condensed operating data represents 100% of AmeriCold
Logistics of which the Company's share is 60%:
For The Three Months Ended March 31,
------------------------------------
2001 2000
------------- -------------
Revenues .................................. $ 158,988,000 $ 170,091,000
============= =============
Costs other than depreciation applicable to
revenues .............................. $ 151,328,000 $ 165,608,000
============= =============
Net loss .................................. $ (3,352,000) $ (6,230,000)
============= =============
AmeriCold Logistics is experiencing cash flow deficits which management of
AmeriCold Logistics is currently addressing through sales of non-core assets and
capital infusion by new investors.
Lease Restructuring
On February 22, 2001, AmeriCold Logistics' leases with the Vornado
REIT/Crescent REIT Partnership (the "Landlord") were restructured to, among
other things, (i) reduce 2001's contractual rent to $146,000,000 ($14,500,000
less than 2000's contractual rent), (ii) reduce 2002's contractual rent to
$150,000,000 (plus additional contingent rent in certain circumstances), (iii)
increase the Landlord's share of annual maintenance capital expenditures by
$4,500,000 to $9,500,000 effective January 1, 2000 and (iv) extend the deferred
rent period to December 31, 2003 from March 11, 2002.
Total rent expense was $35,480,000 and $42,854,000 for the three months
ended March 31, 2001 and 2000. The rent reduction in the first quarter of 2001,
compared to the first quarter of 2000, is not indicative of the rent reduction
for the full year. The rent reduction for the full year is expected to be
approximately $14,500,000 as discussed above.
5. VORNADO AGREEMENT
The Company and Vornado Realty Trust ("Vornado") have entered into an
agreement ("Vornado Agreement") pursuant to which, among other things, (a)
Vornado will under certain circumstances offer the Company an opportunity to
become the lessee of certain real property owned now or in the future by Vornado
(under mutually satisfactory lease terms) and (b) the Company will not make any
real estate investment or other REIT-Qualified Investment unless it first offers
Vornado the opportunity to make such investment and Vornado has rejected that
opportunity.
Page 7
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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Vornado and the Company each have the right to terminate the Vornado
Agreement if the other party is in material default of the Vornado Agreement or
upon 90 days written notice to the other party at any time after December 31,
2003. In addition, Vornado has the right to terminate the Vornado Agreement upon
a change in control of the Company.
6. LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss
per share:
Three Months Ended
March 31,
-----------------------------
2001 2000
----------- -----------
Numerator:
Net loss ............................................ $(3,804,399) $(5,527,628)
=========== ===========
Denominator:
Denominator for basic loss per share-weighted average
shares .......................................... 4,068,924 4,068,393
Effect of dilutive securities:
Employee stock options .......................... -- --
----------- -----------
Denominator for diluted loss per share-adjusted
weighted average shares ......................... 4,068,924 4,068,393
=========== ===========
Net loss per share-basic and diluted ..................... $ (0.93) $ (1.36)
=========== ===========
7. COMPREHENSIVE LOSS
The following table sets forth the Company's comprehensive loss:
Three Months Ended
March 31,
-----------------------------
2001 2000
----------- -----------
Net loss ................................................ $(3,804,399) $(5,527,628)
Recognition of unrealized loss from marketable securities
previously included in comprehensive loss ........... 720,126 --
Proportionate share of other comprehensive loss of
partially-owned entity .............................. (498,000) --
----------- -----------
Comprehensive loss ...................................... $(3,582,273) $(5,527,628)
=========== ===========
Page 8
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VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. MINORITY INTEREST
During the year ended December 31, 2000, the investment in Company L.P.
(Vornado Operating Company's operating partnership) by minority holders was
fully absorbed by losses. The minority interest's 9.9% share of present and
future losses will be recognized by the Company.
9. COMMITMENTS AND CONTINGENCIES
The Company is from time to time involved in legal actions arising in the
ordinary course of its business. In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
Page 9
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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
(the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Certain factors could cause actual results to
differ materially from those in the forward-looking statements. 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) risks associated with potential investments and ability to manage
those investments; (f) competition; (g) the Company's obligations under the
revolving credit facility; (h) AmeriCold Logistics' obligations under the lease
agreements with the Vornado REIT/Crescent REIT Partnership; (i) the Company's
limited financial resources; (j) dependence on key personnel; (k) potential
anti-takeover effects of the Company's charter documents and applicable law; (l)
dependence on dividends and distributions of subsidiaries; (m) potential costs
of compliance with environmental laws; (n) changes in the general economic
climate; and (o) government regulations. See "Risk Factors" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.
RESULTS OF OPERATIONS
The Company's operations and business are subject to a variety of risks.
In considering the Company's results of operations, please read "Risk Factors"
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.
Three Months Ended March 31, 2001 and 2000
The Company had a net loss of $3,804,399 for the three months ended March
31, 2001, compared to $5,527,628 for the three months ended March 31, 2000, a
decrease of $1,723,229.
Interest income was $3,329 for the three months ended March 31, 2001,
compared to $41,778 for the three months ended March 31, 2000, a decrease of
$38,449. The decrease resulted primarily from a lower average invested balance.
General and administrative expenses were $507,408 for the three months
ended March 31, 2001, compared to $937,349 for the three months ended March 31,
2000. The decrease of $429,941 resulted primarily from $652,734 less in
compensation expense relating to stock appreciation rights, offset by payroll
costs.
The Company's loss from AmeriCold Logistics was $1,921,200 for the three
months ended March 31, 2001, compared to $3,738,000 for the three months ended
March 31, 2000, a decrease of $1,816,800. Included in the loss for the three
months ended March 31, 2001 is interest income of $90,000 earned on the
$3,000,000 promissory note advanced to AmeriCold Logistics by the Company in the
third quarter of 2000. Excluding interest income, the loss from AmeriCold
Logistics was $2,011,200 for the three months ended March 31, 2001.
On February 22, 2001, AmeriCold Logistics' leases with the Vornado
REIT/Crescent REIT Partnership (the "Landlord") were restructured to, among
other things, (i) reduce 2001's contractual rent to $146,000,000 ($14,500,000
less than 2000's contractual rent), (ii) reduce 2002's contractual rent to
$150,000,000 (plus additional contingent rent in certain circumstances), (iii)
increase the Landlord's share of annual maintenance capital expenditures by
$4,500,000 to $9,500,000 effective January 1, 2000 and (iv) extend the deferred
rent period to December 31, 2003 from March 11, 2002.
The AmeriCold Logistics' results are discussed below:
AMERICOLD LOGISTICS RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 2001 AND 2000
The following are discussions of the results of operations of
AmeriCold Logistics, the Company's Temperature Controlled Logistics
business - see the Company's Annual Report on Form 10-K for a discussion
of this business. The data below represents 100% of this business of which
the Company owns 60%. For the purpose of the discussions 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, (ii) Transportation
Management Services, which includes freight routing, dispatching, freight
rate negotiation, backhaul coordination, and distribution channel
assessments and (iii) Quarry Operations.
Page 10
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Revenues were $158,988,000 for the three months ended March 31,
2001, compared to $170,091,000 for the three months ended March 31, 2000,
a decrease of $11,103,000. Revenues from Leased Operations were
$107,641,000 for the three months ended March 31, 2001, compared to
$113,836,000 for the three months ended March 31, 2000, a decrease of
$6,195,000. Revenues from Other Operations were $51,347,000 for the three
months ended March 31, 2001, compared to $56,255,000 for the three months
ended March 31, 2000, a decrease of $4,908,000.
The revenue decrease in Leased Operations for the three months ended
March 31,2001, resulted from lower warehouse revenue as a result of a
reduction in both total customer inventory stored at the warehouses and
customer inventory turns due to their reaction to a slowing U.S. economy
which may continue. The decrease in revenue from Other Operations is
primarily a decline in Transportation Management Services revenue due to
the expiration of a contract with a customer.
The gross margin for Leased Operations was $39,848,000, or 37.0% for
the three months ended March 31, 2001, compared to $44,060,000, or 38.7%
for the three months ended March 31, 2000, a decrease of $4,212,000. The
decrease in both gross margin and gross margin percentage is attributable
to lower customer inventory levels and customer inventory turns.
Operating income from Other Operations was $3,292,000 for the three
months ended March 31, 2001, compared to $3,277,000 for the three months
ended March 31, 2000, an increase of $15,000.
Rent expense was $35,480,000 for the three months ended March 31,
2001, compared to $42,854,000 for the three months ended March 31, 2000, a
decrease of $7,374,000 (not indicative of the decrease for the full year).
The decrease was due to the lease restructuring announced February 22,
2001, discussed above.
General and administrative expenses were $8,326,000 for the three
months ended March 31, 2001, compared to $8,844,000 for the three months
ended March 31, 2000, a decrease of $518,000. The decrease resulted
primarily from lower outside services purchased.
Depreciation and amortization expense was $2,187,000 for the three
months ended March 31, 2001, compared to $1,981,000 for the three months
ended March 31, 2000. The increase of $206,000 is the result of additional
machinery and equipment.
Interest expense was $689,000 for the three months ended March 31,
2001, compared to $160,000 for the three months ended March 31, 2000. This
$529,000 increase resulted from higher borrowings and deferred rent in
2001.
Other income was $190,000 for the three months ended March 31, 2001,
compared to $272,000 for the three months ended March 31, 2000, a decrease
of $82,000. This decrease resulted primarily from lower average invested
balances and the write-off of the remaining book value for assets taken
out of service.
As a result of the aforementioned factors, AmeriCold Logistics' net
loss for the three months ended March 31, 2001 decreased by $2,878,000 to
$3,352,000. The Company's share of this loss is $2,011,200. AmeriCold
Logistics believes that the loss for the quarter ended March 31, 2001, is
not necessarily indicative of the operating results for the full year, due
to seasonality of the business.
----------
Transportal Network ceased operations in September 2000. Accordingly,
there was no loss in this year's first quarter.
The Company recognized an unrealized loss from marketable securities of
$777,630 for the three months ended March 31, 2001, due to an "other than
temporary decline" in fair value of securities available for sale.
Page 11
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Interest and debt expense to Vornado Realty Trust was $601,490 for the
three months ended March 31, 2001, compared to $316,000 for the three months
ended March 31, 2000. The $285,490 increase resulted primarily from a higher
average outstanding balance on the Company's revolving credit facility with
Vornado Realty Trust.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $75,000,000 unsecured revolving credit facility with
Vornado which expires on December 31, 2004. Borrowings under this facility bear
interest at LIBOR plus 3% (7.88% at March 31, 2001). The Company pays Vornado a
commitment fee equal to 1% per annum on the average daily unused portion of the
facility pursuant thereto. 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 dividends. The Company has no external sources of financing
except this facility.
During the three months ended March 31, 2001, the Company increased its
note payable to Vornado by $1,400,000. At March 31, 2001, $53,818,462 remains
available under this facility.
AmeriCold Logistics is experiencing cash flow deficits which management of
AmeriCold Logistics is currently addressing through sales of non-core assets and
capital infusion by new investors.
On February 22, 2001, AmeriCold Logistics' leases with the Vornado
REIT/Crescent REIT Partnership (the "Landlord") were restructured to, among
other things, (i) reduce 2001's contractual rent to $146,000,000 ($14,500,000
less than 2000's contractual rent), (ii) reduce 2002's contractual rent to
$150,000,000 (plus additional contingent rent in certain circumstances), (iii)
increase the Landlord's share of annual maintenance capital expenditures by
$4,500,000 to $9,500,000 effective January 1, 2000 and (iv) extend the deferred
rent period to December 31, 2003 from March 11, 2002.
In the aggregate, the Company's investments do not generate sufficient
cash flow to pay all of its expenses. The Company estimates that it has adequate
borrowing capacity under its credit facility to meet its cash requirements.
Cash Flows Three Months Ended March 31, 2001
Cash flows used in operating activities of $1,630,922 were comprised of
(i) net loss of $3,804,399 and (ii) the net change in operating assets and
liabilities of $619,353, offset by (iii) adjustments for non-cash and
non-operating items of $2,792,830. The adjustments for non-cash and
non-operating items are comprised of (i) loss from AmeriCold Logistics of
$2,015,200 and (ii) unrealized loss from Marketable Securities of $777,630.
Net cash provided by financing activities of $1,400,000 resulted from
borrowings under the Company's revolving credit facility with Vornado.
Cash Flows Three Months Ended March 31, 2000
Cash flows used in operating activities of $818,163 were comprised of (i)
net loss of $5,527,628 and (ii) the net change in operating assets and
liabilities of $259,326, offset by (iii) adjustments for non-cash and
non-operating items of $4,968,791. The adjustment for non-cash and non-operating
items are comprised of (i) loss from investment in AmeriCold Logistics of
$3,738,000, (ii) loss from investment in Transportal Network of $1,185,421 and
(iii) stock appreciation rights compensation expense of $652,734, offset by (iv)
minority interest of $607,364.
Net cash used in investing activities of $6,000,000 resulted from an
additional investment in AmeriCold Logistics.
Net cash provided by financing activities of $6,001,496 primarily resulted
from borrowings under the Company's revolving credit facility with Vornado.
Page 12
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At March 31, 2001, the Company had $21,181,538 of variable rate debt
bearing interest at an interest rate of 7.88% (LIBOR plus 3.00%). A one percent
increase for one year in the base used to determine the interest rate of the
variable rate debt would result in a $211,815 increase in the Company's annual
net loss ($0.05 per basic and diluted share).
Page 13
14
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 its business. In the opinion of management, after
consultation with legal counsel, the outcome of such matters will not have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
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, 2001, Vornado Operating Company
filed the following report on Form 8-K:
Period Covered (Date of
Event Reported) Items Reported Date Filed
Press release regarding
February 22, 2001 Lease Restructuring February 22, 2001
Page 14
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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 10, 2001 By: /s/ Patrick T. Hogan
------------------------------------
PATRICK T. HOGAN
Vice President, Chief Financial Officer
Page 15
16
EXHIBIT INDEX
EXHIBIT NO. PAGE
----------- ----
The following is a list of all exhibits filed as part of this
report
2.1 Assignment Agreement, dated as of December 31, 1998, between *
Vornado Realty Trust, as assignor, and Vornado Operating Company,
assignee (incorporated by reference to Exhibit 2.1 of the
Company's Current Report on Form 8-K, dated December 31, 1998
(File No. 001-14525), as filed with the Commission on January 15,
1999)
2.2 Put Agreement, dated as of December 31, 1998, between Vornado *
Realty Trust, as grantor, and Vornado Operating Company, as
grantee (incorporated by reference to Exhibit 2.2 of the Company's
Current Report on Form 8-K, dated December 31, 1998 (File No. 001
-14525), as filed with the Commission on January 15, 1999)
2.3 Asset Purchase Agreement dated as of February 26, 1999, between *
AmeriCold Logistics, LLC, as Purchaser, and AmeriCold Corporation,
as Seller (incorporated by reference to Exhibit 2.1 of the,
Company's Current Report on Form 8-K, dated March 12, 1999 (File
No. 001-14525), as filed with the Commission on March 31, 1999)
2.4 Asset Purchase Agreement, dated as of March 9, 1999, between *
Vornado Crescent Logistics Operating Partnership, as Purchaser,
and URS Logistics, Inc., as Seller (incorporated by reference to
Exhibit 2.2 of the Company's Current Report on form 8-K, dated
March 12, 1999 (File No. 001-14525), as filed with the Commission
on March 31, 1999)
2.5 Asset Purchase Agreement, dated as of March 9, 1999, between *
AmeriCold Logistics, LLC, as Purchaser, and VC Omaha Holdings,
L.L.C., as Seller (incorporated by reference to Exhibit 2.3 of the
Company's Current Report on Form 8-K, dated March 12, 1999 (File
No. 001-14525), as filed with the Commission on March 31, 1999)
2.6 Asset Purchase Agreement, dated as of March 9, 1999, between *
AmeriCold Logistics II, LLC, as Purchaser, and VC Missouri
Holdings, L.L.C., as Seller (incorporated by reference to Exhibit
2.4 of the Company's Current Report on Form 8-K, dated March 12,
1999 (File No. 001-14525), as filed with the Commission on March
31, 1999)
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 quarter ended March 31, 2000
(File No. 001-14525) as filed with the Commission on May 9, 2000)
----------
* Incorporated by reference.
Page 16
17
EXHIBIT NO. PAGE
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4.1 Specimen stock certificate (incorporated by reference to Exhibit *
4.1 of the Company's Registration Statement on Form S-11 (File No.
333-40701), as filed with the Commission on January 23, 1998)
10.1 Intercompany Agreement, dated as of October 16, 1998, between *
Vornado Operating Company and Vornado Realty Trust (incorporated
by reference to Exhibit 10.1 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 (File No.
001-14525))
10.2 Credit Agreement dated as of January 1, 1999, between Vornado *
Operating Company and Vornado Realty L.P., together with related
form of Line of Credit Note (incorporated by reference to Exhibit
10.2 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 001-14525))
10.3 1998 Omnibus Stock Plan of Vornado Operating Company (incorporated *
by reference to Exhibit 10.3 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 (File No. 001
-14525))
10.4 Agreement of Limited Partnership of Vornado Operating L.P. *
(incorporated by reference to Exhibit 10.4 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (File No.
001-14525))
10.5 Agreement, dated March 11, 1999, between Vornado Operating L.P. *
and COPI Temperature Controlled Logistics L.L.C. (incorporated by
reference to Exhibit 10.1 of the Company's Current Report on Form
8-K, dated March 12, 1999 (File No. 001-14525), as filed with the
Commission on March 31, 1999)
10.6 Master Lease Agreement, dated as of April 22, 1998, between URS *
Real Estate, L.P., as Landlord, and URS Logistics, Inc., as Tenant
(incorporated by reference to Exhibit 10.2 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.7 First Amendment to Master Lease Agreement, dated as of March 10, *
1999, between URS Real Estate, L.P. and URS Logistics, Inc.
(incorporated by reference to Exhibit 10.3 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.7(A) Second Amendment to Master Lease Agreement, effective as of
February 22, 2001, between URS Real Estate, L.P. and AmeriCold
Logistics, LLC.
10.8 Assignment and Assumption of Master Lease, dated as of March 11, *
1999, between URS Logistics, Inc. and AmeriCold Logistics II, LLC
(incorporated by reference to Exhibit 10.4 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.9 Master Lease Agreement, dated as of April 22, 1998, between *
AmeriCold Real Estate, L.P., as Landlord and AmeriCold
Corporation, as Tenant (incorporated by reference to Exhibit 10.5
of the Company's Current Report on Form 8-K/A, dated March 12,
1999 (File No. 001-14525), as filed with the Commission on May 26,
1999)
----------
* Incorporated by reference.
Page 17
18
EXHIBIT NO. PAGE
----------- ----
10.10 First Amendment to Master Lease Agreement, dated as of March 10, *
1999, between AmeriCold Real Estate, L.P. and AmeriCold Logistics,
LLC (incorporated by reference to Exhibit 10.6 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.10(A) Second Amendment to Master Lease Agreement, effective as of
February 22, 2001, between AmeriCold Real Estate, L.P. and
AmeriCold Logistics, LLC.
10.11 Assignment and Assumption of Master Lease, dated as of February *
28, 1999, between AmeriCold Corporation and AmeriCold Logistics,
LLC (incorporated by referenced to Exhibit 10.7 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.12 Master Lease Agreement, dated as of March 11, 1999, between URS *
Logistics, Inc., as landlord, and AmeriCold Logistics II, LLC, as
Tenant (incorporated by reference to Exhibit 10.8 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.12(A) Amendment to Master Lease Agreement, effective as of February 22,
2001, between AmeriCold Corporation, as successor to URS
Logistics, Inc., and AmeriCold Logistics LLC.
10.13 Master Lease Agreement, dated as of February 28, 1999, between *
AmeriCold Corporation, as Landlord, and AmeriCold Logistics, LLC,
as Tenant (incorporated by reference to Exhibit 10.9 of the
Company's Current Report on Form 8-K/A, dated March 12, 1999 (File
No. 001-14525), as filed with the Commission on May 26, 1999)
10.13(A) Amendment to Master Lease Agreement, effective February 22, 2001,
between AmeriCold Corporation and AmeriCold Logistics, LLC.
10.14 Master Lease Agreement, dated as of March 11, 1999, between each *
of the entities listed on Exhibit A thereto, collectively as
Landlord, and AmeriCold Logistics, LLC, as Tenant (incorporated by
reference to Exhibit 10.10 of the Company's Current Report on Form
8-K/A, dated March 12, 1999 (File No. 001-14525), as filed with
the Commission on May 26, 1999)
10.14(A) Amendment to Master Lease Agreement, dated as of March 22, 2000, *
among each of the entities identified on Exhibit A thereto,
collectively as Landlord, and AmeriCold Logistic, LLC, as Tenant
(incorporated by reference to Exhibit 10.14 (A) of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
(File No. 001-14525) as filed with the Commission on May 9, 2000)
10.14(B) Amendment to Master Lease Agreement, effective as of February 22,
2001, by and among each of the entities listed on Exhibit A to
the lease, or their successors thereto, and AmeriCold Logistics,
LLC.
10.15 Master Lease Agreement, dated as of March 11, 1999, between VC *
Omaha Holdings, L.L.C. and Carmar Freezers Thomasville L.L.C.,
together as Landlord, and AmeriCold Logistics, LLC, as Tenant
(incorporated by reference to Exhibit 10.11 of the Company's
Current Report on Form 8-K/A, dated March 12, 1999 (File No.
001-14525), as filed with the Commission on May 26, 1999)
10.15(A) Amendment to Master Lease Agreement, effective as of February 22,
2001, between VC Omaha Holdings, L.L.C., and Carmar Freezers
Thomasville L.L.C., together as Landlord, and AmeriCold
Logistics, LLC.
10.16 Employment Agreement between Vornado Operating Company and Emanuel *
Pearlman, dated May 19, 2000 (incorporated by reference to Exhibit
10.16 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000 (File no. 001-14525) as filed with the
Commission on August 7, 2000)
----------
* Incorporated by reference.
Page 18
19
EXHIBIT NO. PAGE
----------- ----
10.17 Amended and Restated Limited Liability Company Agreement of *
Transportal Network, LLC, a Delaware Limited Liability Company
(incorporated by reference to Exhibit 10.17 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
(File no. 001-14525) as filed with the Commission on August 7,
2000)
----------
* Incorporated by reference.
Page 19