VORNADO OPERATING CO - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

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

For the fiscal year ended DECEMBER 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 (IRS Employer
incorporation or organization) Identification No.)

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

Registrant's telephone number, including area code: (201) 587-7721

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

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. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

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

The aggregate market value of the voting and non-voting common shares held by
non-affiliates of the registrant (i.e., by persons other than officers and
directors of Vornado Operating Company) as of June 30, 2003 was $2,387,665.

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

DOCUMENTS INCORPORATED BY REFERENCE

PART III: Portions of the Proxy Statement for Annual Meeting of Stockholders to
be held on May 27, 2004.

TABLE OF CONTENTS

PAGE
----

PART I.................................................................................................... 3
ITEM 1. Business..................................................................................... 3
ITEM 2. Properties................................................................................... 11
ITEM 3. Legal Proceedings............................................................................ 11
ITEM 4. Submission of Matters to a Vote of Security Holders.......................................... 11
Executive Officers of the Registrant......................................................... 12
PART II................................................................................................... 13
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters........................ 13
ITEM 6. Selected Financial Data...................................................................... 14
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........ 15
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk................................... 23
ITEM 8. Financial Statements and Supplementary Data.................................................. 24
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 24
ITEM 9A. Controls and Procedures...................................................................... 24
PART III.................................................................................................. 41
ITEM 10. Directors and Executive Officers of the Registrant (1)....................................... 41
ITEM 11. Executive Compensation (1)................................................................... 41
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters (1).................................................................................. 41
ITEM 13. Certain Relationships and Related Transactions (1)........................................... 41
ITEM 14. Principal Accountant Fees and Services (1)................................................... 41
PART IV................................................................................................... 42
ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................. 42
SIGNATURES................................................................................................ 43

(1)These items are omitted in part or in whole because the registrant will file
a definitive Proxy Statement pursuant to Regulation 14A under the Securities
Exchange Act of 1934 involving the election of directors with the Securities and
Exchange Commission not later than 120 days after December 31, 2003, which is
incorporated by reference herein. See "Executive Officers of the Registrant" for
information relating to executive officers of the registrant.

Certain statements contained herein constitute forward-looking
statements as such term is defined in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are not guarantees of performance. The Company's
future results, financial condition and business may differ materially from
those expressed in these forward-looking statements. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"intends," "plans" or similar expressions in this Annual Report on Form 10-K.
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 substantial doubt
about the Company's ability to continue as a going concern and its limited
financial resources; (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 in AmeriCold
Logistics, Crescent Operating, Inc.; (f) risks associated with potential
investments and the ability to manage those investments; (g) competition; (h)
dependence on key personnel; (i) potential anti-takeover effects of the
Company's charter documents and Stockholder Protection Rights Plan and
applicable law; (j) dependence on distributions from subsidiaries; (k) potential
costs of compliance with environmental laws; (l) changes in the general economic
climate; and (m) government regulations.

For these forward-looking statements, the Company claims the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. You are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date of
this Annual Report on Form 10-K or the date of any document incorporated by
reference. All subsequent written and oral forward-looking statements
attributable to the Company or any person acting on the Company's behalf are
expressly qualified in their entirety by the cautionary statements contained or
referred to in this paragraph. The Company does not undertake any obligation to
release publicly any revisions to the forward-looking statements to reflect
events or circumstances after the date of this Annual Report on Form 10-K.

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PART I.

ITEM 1. BUSINESS

GENERAL

On October 16, 1998, Vornado Realty L.P. (the "Operating Partnership"),
a subsidiary of Vornado Realty Trust ("Vornado"), made a distribution of one
share of common stock of Vornado Operating Company, a Delaware corporation (the
"Company"), for each 20 units of limited partnership interest of the Operating
Partnership (including the units owned by Vornado) held of record as of the
close of business on October 9, 1998, and Vornado, in turn, made a distribution
of the common stock it received to the holders of its common shares of
beneficial interest.

The Company was incorporated on October 30, 1997 as a wholly owned
subsidiary of Vornado. In order to maintain its status as a real estate
investment trust ("REIT") for federal income tax purposes, Vornado is required
to focus principally on investments in real estate assets. Accordingly, Vornado
is prevented from owning certain assets and conducting certain activities that
would be inconsistent with its status as a REIT. The Company was formed to own
assets that Vornado could not itself own and conduct activities that Vornado
could not itself conduct. The Company is intended to function principally as an
operating company, in contrast to Vornado's principal focus on investments in
real estate assets. The Company is able to do so because it is taxable as a
regular "C" corporation rather than as a REIT.

The Company operates businesses conducted at properties it leases from
Vornado or entities partially owned by Vornado, as contemplated by the
agreement, dated as of October 16, 1998, between the Company and Vornado (the
"Vornado Agreement"), referred to below. The Company expects to rely on Vornado
to identify business opportunities for the Company and currently expects that
those opportunities will relate in some manner to Vornado and its real estate
investments rather than to unrelated businesses.

The principal executive offices of the Company are located at 210 Route
4 East, Paramus, New Jersey 07652, and its telephone number at that location is
(201) 587-7721.

ABILITY TO CONTINUE AS A GOING CONCERN

Substantial doubt exists as to the Company's ability to continue as a
going concern and its ability to discharge its liabilities in the normal course
of business. The Company has incurred losses since its inception and, in the
aggregate, its investments have not generated sufficient cash flow to pay all of
the Company's expenses. The Company estimates that it has adequate borrowing
capacity under its credit facility with Vornado to meet its cash needs until
December 31, 2004. However, the principal, interest and fees outstanding under
the line of credit come due on such date. The Company currently has no external
sources of financing except this facility.

The Company's other potential source of cash is its investment in
AmeriCold Logistics. However, AmeriCold Logistics has also reported losses since
inception and, at December 31, 2003, the Company's 60% share of AmeriCold
Logistics' partners' deficit was $45,643,000, which includes $49,436,000 of
deferred rent (rent recognized as expense but not paid in cash) to its landlord,
the Vornado REIT/Crescent REIT Partnership (the "Landlord"). AmeriCold Logistics
anticipates that in 2004, the Landlord will restructure the leases to provide
additional cash flow to AmeriCold Logistics. Notwithstanding the foregoing, the
Landlord is under no obligation to restructure the leases and there can be no
assurance that it will do so. In the absence of the anticipated lease
restructuring or other options, 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 $25,394,000 loan from Vornado or the ability to continue
as a going concern.

VORNADO AGREEMENT AND CHARTER PURPOSE CLAUSES

Pursuant to the Vornado Agreement, among other things, (i) 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 (ii) 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.

More specifically, the Vornado Agreement requires, subject to certain
terms, that Vornado provide the Company with an opportunity (a "Tenant
Opportunity") to become the lessee of any real property owned now or in the
future by Vornado if Vornado determines, in its sole discretion, that,
consistent with Vornado's status as a REIT, it is required to enter into a
master lease arrangement with respect to such property and that the Company is
qualified

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to act as lessee thereof. In general, a master lease arrangement is an
arrangement pursuant to which an entire property or project (or a group of
related properties or projects) is leased to a single lessee. Under the Vornado
Agreement, the Company and Vornado will negotiate with each other on an
exclusive basis for 30 days regarding the terms and conditions of the lease in
respect of each Tenant Opportunity. If a mutually satisfactory agreement cannot
be reached within the 30-day period, Vornado may for a period of one year
thereafter enter into a binding agreement with respect to such Tenant
Opportunity with any third party on terms no more favorable to the third party
than the terms last offered to the Company. If Vornado does not enter into a
binding agreement with respect to such Tenant Opportunity within such one-year
period, Vornado must again offer the Tenant Opportunity to the Company in
accordance with the procedures specified above prior to offering such Tenant
Opportunity to any other party.

In addition, the Vornado Agreement prohibits the Company from making
(i) any investment in real estate (including the provision of services related
to real estate, real estate mortgages, real estate derivatives or entities that
invest in the foregoing) or (ii) any other REIT-Qualified Investment, unless it
has provided written notice to Vornado of the material terms and conditions of
the investment opportunity and Vornado has determined not to pursue such
investment either by providing written notice to the Company rejecting the
opportunity within ten days from the date of receipt of notice of the
opportunity or by allowing such ten-day period to lapse. As used herein,
"REIT-Qualified Investment" means an investment from which at least 95% of the
gross income would qualify under the 95% gross income test set forth in Section
856(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code") (or
could be structured to so qualify), and the ownership of which would not cause
Vornado to violate the asset limitations set forth in Section 856(c)(4) of the
Code (or could be structured not to cause Vornado to violate the Section
856(c)(4) limitations); provided, however, that "REIT-Qualified Investment" does
not include an investment in government securities, cash or cash items (as
defined for purposes of Section 856(c)(4) of the Code), money market funds,
certificates of deposit, commercial paper having a maturity of not more than 90
days, bankers' acceptances or the property transferred to the Company by the
Operating Partnership. The Vornado Agreement also requires the Company to assist
Vornado in structuring and consummating any such investment which Vornado elects
to pursue, on terms determined by Vornado. In addition, the Company has agreed
to notify Vornado of, and make available to Vornado, investment opportunities
developed by the Company or of which the Company becomes aware but is unable or
unwilling to pursue.

Under the Vornado Agreement, Vornado provides the Company with certain
administrative, corporate, accounting, financial, insurance, legal, tax, data
processing, human resources and operational services. Also, Vornado makes
available to the Company, at Vornado's offices, space for the Company's
principal corporate office. For these services, the Company compensates Vornado
in an amount determined in good faith by Vornado as the amount an unaffiliated
third party would charge the Company for comparable services and reimburses
Vornado for certain costs incurred and paid to third parties on behalf of the
Company. For such services, the Company incurred $330,000, $330,000 and $371,000
in the years ended December 31, 2003, 2002 and 2001, respectively.

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.

The Company's restated certificate of incorporation (the "Charter")
specifies that one of its corporate purposes is to perform under the Vornado
Agreement and, for so long as the Vornado Agreement remains in effect, prohibits
the Company from making any real estate investment or other REIT-Qualified
Investment without first offering the opportunity to Vornado in the manner
specified in the Vornado Agreement.

VORNADO OPERATING L.P. AND INTERSTATE PROPERTIES

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 December 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.

Interstate Properties, a New Jersey general partnership ("Interstate"),
and its three partners -- Steven Roth (Chairman of the Board and Chief Executive
Officer of Vornado and the Company), David Mandelbaum (a trustee of Vornado) and
Russell B. Wight, Jr. (a trustee of Vornado and a director of the Company) --
beneficially owned, in the aggregate, a 9.9% limited partnership interest in
Company L.P. and 7.9% of the common stock of the Company as of December 31,
2003. Interstate has the right to have its limited partnership interest in
Company L.P. redeemed by Company L.P. either for (i) cash in an amount equal to
the fair market value, at the time of redemption,

-4-

of 447,017 shares of common stock or (ii) 447,017 shares of common stock, in
each case as selected by the Company and subject to customary anti-dilution
adjustments.

TEMPERATURE CONTROLLED LOGISTICS BUSINESS ("AMERICOLD LOGISTICS")

(Data in this section with respect to AmeriCold Logistics represents 100% of
AmeriCold Logistics, in which the Company holds a 60% interest, unless otherwise
specified)

In October 1997, a partnership (the "Vornado REIT/Crescent REIT
Partnership" or the "Landlord") in which Vornado has a 60% interest and Crescent
Real Estate Equities Company ("Crescent") has a 40% interest acquired each of
AmeriCold Corporation and URS Logistics, Inc. In June and July 1998, the Vornado
REIT/Crescent REIT Partnership acquired the assets of Freezer Services, Inc. and
the Carmar Group.

On March 11, 1999, the Company and Crescent Operating, Inc. ("COPI")
formed the "Vornado Crescent Logistics Operating Partnership" (which does
business under the name "AmeriCold Logistics") to purchase all of the non-real
estate assets of the Vornado REIT/Crescent REIT Partnership for $48,723,000, of
which the Company's 60% share was $29,234,000. The purchase price was proposed
by the Landlord. The Boards of Directors of both the Company and COPI approved
the transaction after concluding that the price was the fair market value at the
time of the transaction. To fund its share of the purchase price, the Company
utilized $4,647,000 of cash and borrowed $18,587,000 under its Revolving Credit
Agreement with Vornado. The Company paid the balance of $6,000,000 on March 7,
2000.

Subject to confirmation of a plan of reorganization under Chapter 11 of
the United States Bankruptcy Code, COPI is expected to transfer its interest in
AmeriCold Logistics to an entity to be owned by the shareholders of Crescent.
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.

AmeriCold Logistics, headquartered in Atlanta, Georgia, has
approximately 5,800 employees and operates 102 temperature controlled warehouse
facilities nationwide with an aggregate of approximately 546 million cubic feet
of refrigerated, frozen and dry storage space. Of the 102 warehouses, AmeriCold
Logistics leases 87 temperature controlled warehouses with an aggregate of
approximately 441 million cubic feet of space from the Landlord, and manages 15
additional warehouses containing approximately 105 million cubic feet of space.
AmeriCold Logistics provides the food industry with refrigerated warehousing and
transportation management services. Refrigerated warehouses are comprised of
production, distribution and public facilities. Production facilities typically
serve one or a small number of customers, generally food processors, which are
located nearby. These customers store large quantities of processed or partially
processed products in the facilities until they are shipped to the next stage of
production or distribution. Distribution facilities primarily warehouse a wide
variety of customers' finished products until future shipment to end-users. Each
distribution facility generally services the surrounding regional market. Public
facilities generally serve the needs of local and regional customers under
short-term agreements. Food manufacturers and processors use these facilities to
store capacity overflow from their production facilities or warehouses.
AmeriCold Logistics' transportation management services include freight routing,
dispatching, freight rate negotiation, backhaul coordination, freight bill
auditing, network flow management, order consolidation and distribution channel
assessment. AmeriCold Logistics' temperature controlled logistics expertise and
access to both frozen food warehouses and distribution channels enable its
customers to respond quickly and efficiently to time-sensitive orders from
distributors and retailers.

AmeriCold Logistics' customers consist primarily of national, regional
and local food manufacturers, distributors, retailers and service organizations.
A breakdown of AmeriCold Logistics' largest customers follows:

Percentage of 2003
Revenue
------------------

H.J. Heinz & Co. 15%
ConAgra Foods, Inc. 13
Philip Morris Companies, Inc. 8
Sara Lee Corp. 5
General Mills, Inc. 4
Tyson Foods, Inc. 4
Schwan Corporation 4
McCain Foods, Inc. 4
J.R. Simplot Co. 2
Nippon Suisan 2
Other 39
---
Total 100%
===

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AmeriCold Logistics faces national, regional and local competition.
Breadth of service, warehouse locations, customer mix, warehouse size, service
performance and price are major competitive factors.

Management of AmeriCold Logistics

On February 23, 2004, AmeriCold Logistics announced that Alec Covington
resigned as President and Chief Executive Officer, effective March 31, 2004, to
take an opportunity in an unrelated industry. A search to identify a successor
is under way. In the interim, Mike O'Connell, who has been with AmeriCold
Logistics for over ten years, has been promoted to be in charge of all
operations and, until a successor is in place, will report to Anthony
Cossentino, Chief Financial Officer.

Anthony Cossentino became the Chief Financial Officer of AmeriCold
Logistics in September 2003. Mr. Cossentino was formerly the President and Chief
Executive Officer of Jazz Photo Corp., a privately-held designer, importer and
distributor of photographic equipment. Prior thereto, from January 1995 to May
2001, he was the Chief Financial Officer of CS Integrated LLC, a provider of
logistics services with over 100 temperature controlled warehouses throughout
the United States and Europe and a wholly-owned subsidiary of ProLogis. Mr.
Cossentino, a certified public accountant, replaced Jonathan C. Daiker, who
resigned from the position of Chief Financial Officer effective June 2003.

AmeriCold Logistics' Leases with the Landlord

AmeriCold Logistics entered into leases with the Landlord covering 87
of the warehouses used in this business. The leases, which commenced in March
1999, as amended, generally have 15-year terms with two five-year renewal
options and provide for the payment of fixed base rent and percentage rent based
on revenue from customers. The leases provide for fixed base rents of
approximately $136,000,000 in 2000, $137,000,000 per annum from 2001 through
2003, $140,000,000 per annum from 2004 through 2008, $145,000,000 per annum for
2009, $142,000,000 per annum for 2010, and $139,000,000 per annum from 2011
through February 2014. Percentage rent for each lease is based on a specified
percentage of revenues in excess of a specified base amount. The aggregate base
revenue amount under five of the six leases is approximately $350,000,000, and
the weighted average percentage rate is approximately 36% through 2003,
approximately 38% from 2004 through 2008 and approximately 40% from 2009 through
February 2014. The aggregate base revenue amount under the sixth lease is
approximately $32,000,000 through 2001, and approximately $26,000,000 from 2002
through February 2014, and the percentage rate is 24% through 2001, 37.5% from
2002 through 2006, 40% from 2007 through 2011 and 41% from 2012 through February
2014. The fixed base rent for each of the two five-year renewal options is
equal, generally, to the greater of the fair market rent at that time and the
fixed base rent for the immediately preceding lease year plus 5%.

On February 22, 2001, AmeriCold Logistics' leases with the Landlord
were restructured to, among other things, (i) reduce 2001 contractual rent to
$146,000,000, (ii) reduce 2002 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.

AmeriCold Logistics is required to pay for all costs arising from the
operation, maintenance and repair of the properties, including all real estate
taxes and assessments, utility charges, permit fees and insurance premiums, as
well as property capital expenditures in excess of $9,500,000 annually.

AmeriCold Logistics has the right to defer the payment of 15% of annual
fixed base rent and all percentage rent until December 31, 2004 to the extent
that available cash, as defined in the leases, is insufficient to pay such rent.
Pursuant thereto, AmeriCold Logistics' deferred rent liability at December 31,
2003, net of the waived rent discussed below, is as follows:

(amounts in thousands) Total (1)
------------------

Deferred during 2003 $ 41,811
Deferred during 2002 32,248
Aggregate deferral at December 31, 2001 8,335
------------------
$ 82,394
==================

(1) The Company does not guarantee AmeriCold Logistics' deferred rent liability.

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In the three months ended December 31, 2001, AmeriCold Logistics
reversed $25,469,000 of the rent expense recorded in 2001. This resulted from
the Landlord waiving its rights to collect this portion of the rent. Further,
the Landlord waived $14,343,000 of the rent expense recorded by AmeriCold
Logistics in 2000; AmeriCold Logistics recorded this amount as income in the
three months ended December 31, 2001. The aggregate amount waived by the
Landlord of $39,812,000 (of which the Company's share is $23,887,000) represents
a portion of the rent due under the leases, which AmeriCold Logistics deferred
in such years.

On January 23, 2002, four of the leases with the Landlord were combined
into one lease. This did not affect total contractual rent due under the
combined leases.

On March 2, 2004, AmeriCold Logistics and the Landlord extended the
deferred rent period in AmeriCold Logistics' leases with the Landlord to
December 31, 2005 from December 31, 2004. The parties previously extended the
deferred rent period to December 31, 2004 from December 31, 2003 on March 7,
2003.

Severance and Relocation Costs

In the year ended December 31, 2001, AmeriCold Logistics recorded a
charge of $8,895,000 (of which the Company's share is $5,337,000) comprised of
(i) severance and relocation costs associated with a management restructuring
and (ii) expenses arising from the consolidation of a portion of the corporate
office in Portland, Oregon into AmeriCold Logistics' Atlanta, Georgia
headquarters. Severance related charges were for the termination of 199
employees, located primarily in the Atlanta and Portland offices. In 2002,
AmeriCold Logistics reduced the charge by $949,000 (of which the Company's share
is $569,000). AmeriCold Logistics' liability for severance at December 31, 2003
was $497,000; the remaining 50 of the 199 original employees are expected to be
terminated in 2004.

Dispositions

On December 31, 2002, Vornado and Crescent formed a new joint venture
(the "Quarry Company") in which Vornado holds a 44% interest and Crescent holds
a 56% interest. This new joint venture acquired AmeriCold Logistics' Carthage,
Missouri and Kansas City, Kansas limestone quarries for $20,000,000, the
appraised value. The purchase price consisted of $8,929,000 in cash and the
cancellation of $11,071,000 of notes owed by AmeriCold Logistics to Crescent.
AmeriCold Logistics recognized a gain of $2,225,000 (of which the Company's
share is $1,335,000). AmeriCold Logistics used $8,800,000 of the cash proceeds
to repay a portion of its loans from the Company. The Company recognized a gain
on the repayment from AmeriCold Logistics of $8,608,000 as the loans were
previously reduced by equity in losses of AmeriCold Logistics. Additionally,
AmeriCold Logistics entered into a management agreement with the Quarry Company
to manage and operate the quarries for an annual management fee of approximately
$200,000 plus all direct expenses incurred as operator of the quarries. The
agreement is for a term of one year and automatically renews for additional
one-year periods unless terminated by either party. The Company used the
$8,800,000 repayment from AmeriCold Logistics and $700,000 of its cash to repay
$7,685,000 of principal and $1,815,000 of interest and commitment fees under the
Revolving Credit Agreement with Vornado.

On December 31, 2002, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,720,000 to the Quarry Company for $5,600,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale (of which the
Company's share is $72,000).

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to the Quarry Company for $6,500,000 in cash. AmeriCold
Logistics recognized a loss of $140,000 on the sale.

On January 20, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale. 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.

Cash Resources

At December 31, 2002, the Company's investments in and advances to
AmeriCold Logistics were fully absorbed by the Company's share of comprehensive
losses of AmeriCold Logistics. AmeriCold Logistics has reported losses since its
inception and, at December 31, 2003, the Company's share of AmeriCold Logistics'
partners' deficit was $45,643,000, which includes $49,436,000 of deferred rent
(rent recognized as expense but not paid in cash) to the Landlord. On March 2,
2004, AmeriCold Logistics and the Landlord extended the deferred rent period to
December 31, 2005 from December 31, 2004. Based on its right to defer rent, the
management of AmeriCold Logistics anticipates it will have sufficient cash flows
to operate at least through December 31, 2004. AmeriCold Logistics anticipates
that in 2004, the Landlord will restructure the leases to provide additional
cash flow to

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AmeriCold Logistics. Notwithstanding the foregoing, the Landlord is under no
obligation to restructure the leases and there can be no assurance that it will
do so. In the absence of the anticipated lease restructuring or other options,
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
$25,394,000 loan from Vornado due December 31, 2004.

Terms of the Vornado Crescent Logistics Operating Partnership

Vornado is the day-to-day liaison to the management of AmeriCold
Logistics. AmeriCold Logistics pays Vornado an annual fee of $487,000, which is
based on the temperature controlled logistics operating assets acquired by
AmeriCold Logistics on March 11, 1999. This fee increases by an amount equal to
1% of the cost of new acquisitions, including transaction costs. AmeriCold
Logistics provides financial statement preparation, tax and similar services to
the Vornado REIT/Crescent REIT Partnership. For such services, AmeriCold
Logistics has received fees of $276,000, $273,000 and $268,000 in 2003, 2002 and
2001, respectively.

The Company must obtain COPI's approval for specified matters involving
AmeriCold Logistics, including approval of the annual budget, requiring
specified capital contributions, entering into specified new leases or amending
existing leases, selling or acquiring specified assets and any sale, liquidation
or merger of AmeriCold Logistics. If the partners fail to reach an agreement on
certain matters during the period through October 30, 2007, the Company may set
a price at which it commits to either buy COPI's investment, or sell its own,
and COPI will decide whether to buy or sell at that price. If the partners fail
to reach agreement on such matters after October 30, 2007, either party may set
a price at which it commits to either buy the other party's investment, or sell
its own, and the other party will decide whether to buy or sell at that price.

Neither partner may transfer its rights or interest in the partnership
without the consent of the other partner. The partnership will continue for a
term through October 30, 2027, except as the partners may otherwise agree.

EMPLOYEES

At December 31, 2003, the Company had no employees. The Company expects
that, when it acquires specific assets or business operations, the subsidiaries
of the Company making such acquisitions will have their own employees. AmeriCold
Logistics, in which the Company has a 60% interest, has approximately 5,800
employees.

AVAILABLE INFORMATION

Copies of the Company's Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as
well as filings on Forms 3, 4 and 5 regarding officers, directors or 10%
beneficial owners of the Company, filed or furnished pursuant to Section 13(a),
15(d) or 16(a) of the Securities Exchange Act of 1934, are available free of
charge through the Company's website (www.vornadoopco.com) as soon as reasonably
practicable after they are electronically filed with, or furnished to, the
Securities and Exchange Commission. The Company also has made available, on the
website, copies of the Company's Audit Committee charter and "Code of Ethics for
Senior Financial Officers." In the event of any changes to these items, changed
copies will be made available on the website.

RISK FACTORS

Set forth below are the risks and certain factors that may adversely
affect the Company's business and operations. This section contains
forward-looking statements. Refer to the qualifications and limitations on
forward-looking statements on page 2.

ABILITY TO CONTINUE AS A GOING CONCERN AND LIMITED FINANCIAL RESOURCES

Substantial doubt exists as to the Company's ability to continue as a
going concern and its ability to discharge its liabilities in the normal course
of business. The Company has incurred losses since its inception and, in the
aggregate, its investments have not generated sufficient cash flow to pay all of
the Company's expenses. The Company estimates that it has adequate borrowing
capacity under its credit facility with Vornado to meet its cash needs until
December 31, 2004. However, the principal, interest and fees outstanding under
the line of credit come due on such date. The Company currently has no external
sources of financing except this facility.

The Company's other potential source of cash is its investment in
AmeriCold Logistics. However, AmeriCold Logistics has also reported losses since
inception and, at December 31, 2003, the Company's 60% share of AmeriCold
Logistics' partners' deficit was $45,643,000, which includes $49,436,000 of
deferred rent (rent recognized as expense but not paid in cash) to the Landlord,
the Vornado REIT/Crescent REIT Partnership.

-8-

AmeriCold Logistics anticipates that in 2004, the Landlord will restructure the
leases to provide additional cash flow to AmeriCold Logistics. Notwithstanding
the foregoing, the Landlord is under no obligation to restructure the leases and
there can be no assurance that it will do so. In the absence of the anticipated
lease restructuring or other options, 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 $25,394,000 loan from Vornado or the
ability to continue as a going concern.

RESTRICTIONS ON THE COMPANY'S BUSINESS AND FUTURE OPPORTUNITIES

The Vornado Agreement and the Charter prohibit the Company from making
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. See "Item 1. Business -- Vornado Agreement and Charter Purpose
Clauses." Because of the provisions of the Vornado Agreement and the Charter,
the nature of the Company's business and the opportunities it may pursue are
significantly restricted.

DEPENDENCE UPON VORNADO

The Company expects to rely on Vornado to identify business
opportunities for the Company, and the Company currently expects that those
opportunities will relate in some manner to Vornado and its real estate
investments rather than to unrelated businesses. There can be no assurance that
Vornado will identify opportunities for the Company or that any opportunities
that Vornado identifies will be within the Company's financial, operational or
managerial parameters. Vornado is required under the Vornado Agreement to
provide the Company with an opportunity to become the lessee of real property
acquired by Vornado only if Vornado determines in its sole discretion that,
consistent with Vornado's status as a REIT, it is required to enter into a
master lease arrangement with respect to such property and that the Company is
qualified to act as lessee thereof. Moreover, the Company is entitled to enter
into such a master lease arrangement with Vornado only if the Company and
Vornado are able to agree on mutually satisfactory lease terms.

If in the future Vornado should cease to qualify as a REIT and
thereafter acquire a property, Vornado would have the right under the Vornado
Agreement to lease the property to any person or entity pursuant to any type of
lease (including a master lease arrangement) or to operate the property itself,
in either case without offering the Company an opportunity to become a lessee
thereof. The Company, however, would remain subject to all of the limitations on
its operations contained in the Charter and the Vornado Agreement. Accordingly,
if Vornado should cease to qualify as a REIT, it could have a material adverse
effect on the Company.

If in the future, Vornado should sell any property which is leased to
the Company, it is possible that the new owner might refuse to renew the lease
upon the expiration of its term.

SUBSTANTIAL INFLUENCE OF CONTROLLING STOCKHOLDERS AND CONFLICTS OF INTEREST

As of December 31, 2003, Interstate and its three partners -- Steven
Roth (Chairman of the Board and Chief Executive Officer of Vornado and the
Company), David Mandelbaum (a trustee of Vornado) and Russell B. Wight, Jr. (a
trustee of Vornado and a director of the Company) -- beneficially owned, in the
aggregate, 11.7% of the outstanding Vornado common shares of beneficial interest
(excluding shares issuable on conversion of units of the Operating Partnership
for this purpose) and beneficially owned, in the aggregate, a 9.9% limited
partnership interest in Company L.P. and 7.9% of the common stock of the
Company. Because of the foregoing, Messrs. Roth, Mandelbaum and Wight and
Interstate (collectively, the "Interstate Parties") have substantial influence
over the Company and Vornado and on the outcome of any matters submitted to the
Company's stockholders or Vornado's shareholders for approval.

Four of the members of the Company's Board of Directors (including
Mr. Roth and Michael D. Fascitelli) are members of Vornado's Board of
Trustees, and certain members of senior management of the Company hold
corresponding positions with Vornado. Members of the Company's Board and senior
management may have different percentage equity interests in the Company and in
Vornado. Moreover, the Interstate Parties engage in a wide variety of activities
in the real estate business. Thus, members of the Board and senior management of
the Company and Vornado and the Interstate Parties may be presented with
conflicts of interest with respect to certain matters affecting the Company,
such as determinations of which of such entities or persons, if any, may take
advantage of potential business opportunities, decisions concerning the business
focus of such entities (including decisions concerning the types of properties
and geographic locations in which such entities make investments), potential
competition between business activities conducted, or sought to be conducted, by
such entities or persons (including competition for properties and tenants),
possible corporate transactions (such as acquisitions) and other strategic
decisions affecting the future of such parties.

-9-

BANKRUPTCY OF THE COMPANY'S JOINT VENTURE PARTNER, CRESCENT OPERATING, INC.

Subject to confirmation of a plan of reorganization under Chapter 11 of
the United States Bankruptcy Code, COPI is expected to transfer its interest in
AmeriCold Logistics to an entity to be owned by the shareholders of Crescent.
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.

RISKS ASSOCIATED WITH POTENTIAL INVESTMENTS AND ABILITY TO MANAGE THOSE
INVESTMENTS AND COMPETITION

Although the Company currently expects that the opportunities it
pursues will relate in some manner to Vornado and its real estate investments
rather than to unrelated businesses, it is possible that they will not. In
addition, whether or not such opportunities relate in some manner to Vornado and
its real estate investments, the businesses in which it engages may require a
wide range of skills and qualifications, and there is no assurance that the
Company's management or employees will have, or that the Company will be able to
hire and retain employees with, such skills and qualifications. There also is no
assurance that the opportunities the Company pursues will be integrated, perform
as expected or contribute significant revenues or profits to the Company, and
there is a risk that the Company may realize substantial losses with respect
thereto. The industries in which the Company will compete may be subject to
government regulation and restrictions, some of which may be significant and
burdensome. The businesses with which it will compete may be better capitalized
or have other features that will make it difficult for the Company to compete
effectively.

ABSENCE OF DIVIDENDS ON COMMON STOCK

The Company intends to use its available funds to cover cash flow
deficits and, therefore, does not anticipate the payment of any cash dividends
on its common stock in the foreseeable future. Payment of dividends on the
common stock is prohibited under the Revolving Credit Agreement until all
amounts outstanding thereunder have been paid in full and the commitment
thereunder is terminated.

The Company may also be unable to pay dividends under Delaware law.
Under the Delaware General Corporation Law, a corporation may pay dividends only
out of its surplus or, when there is no surplus, out of its net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year.
The Company has a stockholders' deficit, has not had any net profits since its
commencement of operations and may never have profits.

DEPENDENCE ON KEY PERSONNEL

The Company is dependent on the efforts of Steven Roth, the Chairman of
the Board and Chief Executive Officer of the Company, and Michael D. Fascitelli,
the President of the Company. While the Company believes that it could find
replacements for these key personnel, the loss of their services could have an
adverse effect on the operations of the Company.

POTENTIAL ANTI-TAKEOVER EFFECTS OF CHARTER DOCUMENTS, STOCKHOLDER PROTECTION
RIGHTS PLAN AND APPLICABLE LAW

The Charter, the Company's bylaws and Stockholder Protection Rights
Plan, and applicable sections of the Delaware General Corporation Law contain
provisions that may make the acquisition of control of the Company more
difficult without the approval of the Company's Board.

DEPENDENCE ON DISTRIBUTIONS FROM SUBSIDIARIES

Substantially all of the Company's assets consist of its partnership
interests in Company L.P., of which the Company is the sole general partner.
Substantially all of Company L.P.'s properties and assets are held through
subsidiaries. Any right of the Company to participate in any distribution of the
assets of any indirect subsidiary of the Company upon the liquidation,
reorganization or insolvency of such subsidiary (and any consequent right of the
Company's security holders to participate in those assets) will be subject to
the claims of the creditors (including AmeriCold Logistics' deferred rent
obligation to the Landlord) and preferred holders of equity, if any, of Company
L.P. and such subsidiary, except to the extent the Company has a recognized
claim against such subsidiary as a creditor of such subsidiary. In addition, in
the event that claims of the Company as a creditor of a subsidiary are
recognized, such claims would be subordinate to any security interest in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by the Company.

-10-

POTENTIAL COSTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

Under various federal and state laws, a current or previous owner or
operator of real estate (including the Company as lessee of real estate) may be
required to investigate and cleanup certain hazardous or toxic substances
released at a property, and may be held liable to a governmental entity or to
third parties for property damage or personal injuries and for investigation and
cleanup costs incurred by those parties because of the contamination. Such laws
often impose liability without regard to whether the owner or operator knew of
the release of such hazardous substances or caused the release. The presence of
contamination or the failure to remediate contamination may adversely affect the
owner's ability to sell or lease real estate or to borrow using the real estate
as collateral or the operator's ability to sell or finance the operations. Other
laws and regulations govern indoor and outdoor air quality, including those that
can require abatement or removal of asbestos-containing materials in the event
of damage, demolition, renovations or remodeling. The laws also govern emissions
of and exposure to asbestos fibers in the air. Air emissions and wastewater
discharges and the operation and removal of certain underground storage tanks
are also regulated by federal and state laws. The maintenance and removal of
lead paint and certain electrical equipment containing polychlorinated biphenyls
are also regulated by federal and state laws. In connection with the ownership,
operation and management of its properties, including the properties it leases
from Vornado or manages for others, the Company could be held liable for the
costs of remedial action, or other compliance expenditures, with respect to such
regulated substances or tanks and related claims for personal injury, property
damage or fines. Further, properties that AmeriCold Logistics leases or manages
are subject to a variety of environmental laws and regulations in each of the
jurisdictions in which it operates governing, among other things, soil and
groundwater contamination, the use, handling and disposal of hazardous
substances, air emissions, wastewater discharges, and employee health and
safety.

ITEM 2. PROPERTIES

Under the Vornado Agreement, Vornado makes available to the Company, at
Vornado's offices, space for the Company's principal corporate offices, for
which the Company compensates Vornado in an amount determined in good faith by
Vornado as the amount an unaffiliated third party would charge the Company for
comparable space. The Company believes that such facilities will be adequate to
meet its expected requirements for the coming year.

ITEM 3. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 2003.

-11-

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is a list of the names, ages, principal occupations and
positions of the executive officers of the Company and the position held by such
officers during the past five years. Officers are appointed by and serve at the
discretion of the Board of Directors.

Steven Roth, age 62, has been Chairman of the Board and Chief Executive
Officer of the Company since incorporation. Mr. Roth has been Chairman of the
Board and Chief Executive Officer of Vornado Realty Trust ("Vornado") since May
1989 and Chairman of the Executive Committee of the Board of Vornado since April
1980. Since 1968, he has been a general partner and more recently, the Managing
General Partner of Interstate Properties. In March 1995, he became Chief
Executive Officer of Alexander's, Inc. ("Alexander's"). Mr. Roth is also a
director of Alexander's and Capital Trust, Inc.

Michael D. Fascitelli, age 47, has been President and a director of the
Company since incorporation. Mr. Fascitelli has been President and a trustee of
Vornado, and a director of Alexander's, since December 1996. He has been
President of Alexander's since August 2000. From December 1992 to December 1996,
Mr. Fascitelli was a partner at Goldman Sachs & Co. in charge of its real estate
practice.

Joseph Macnow, age 58, has been Executive Vice President and Chief
Financial Officer of the Company since June 2002. Prior thereto, he was
Executive Vice President - Finance and Administration of the Company since
incorporation. Mr. Macnow has been Executive Vice President - Finance and
Administration of Vornado since January 1998 and its Chief Financial Officer
since March 2001. From 1985 to January 1998, he was Vice President and Chief
Financial Officer of Vornado. Mr. Macnow has been Executive Vice President and
Chief Financial Officer of Alexander's since June 2002. Prior thereto, he was
Executive Vice President - Finance and Administration of Alexander's since March
2001. From August 1995 to March 2001, he was Vice President and Chief Financial
Officer of Alexander's.

Neither Mr. Roth, Mr. Fascitelli nor any other member of management is
committed to spending a particular amount of time on the Company's affairs, nor
do any of them devote their full time to the Company. Mr. Roth, Mr. Fascitelli
and the other members of management devote such time and efforts as they deem
reasonably necessary to conduct the operations of the Company while continuing
to devote a material amount of their time and efforts to the management and
properties of Vornado, Alexander's and other businesses.

-12-

PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The American Stock Exchange suspended trading in the Company's common
stock as of the close of business on July 11, 2003. Effective July 14, 2003, the
Company's common stock began trading over the counter under its newly assigned
ticker symbol, VOOC. On July 24, 2003, the Securities and Exchange Commission
issued an order to approve the removal of the Company's common stock from
listing on the American Stock Exchange. Effective July 25, 2003, the Company's
common stock was eligible for trading on the OTC Bulletin Board. Trading of the
Company's common stock through market makers may involve decreased liquidity and
risks not present when common stock is traded on a securities exchange. The
transfer agent and registrar for the common stock is Wachovia Bank, N.A.

Set forth below are the high and low sales prices (prior to July 12,
2003) and the high and low bid quotations (July 12, 2003 and thereafter) for the
common stock for each quarterly period in the years ended December 31, 2003 and
2002. The over-the-counter market quotations reflect inter-dealer prices,
without retail markup, markdown or commission, and may not necessarily represent
actual transactions. These over-the-counter quotations are publicly available on
the website, www.nasdaq.com.

Year Ended Year Ended
December 31, 2003 December 31, 2002
---------------------- ----------------------
Quarter High Low High Low
- ------- -------- -------- -------- --------

First................... $ 0.58 $ 0.20 $ 1.24 $ 0.35
Second.................. 0.90 0.13 2.15 0.70
Third................... 0.60(1) 0.05(1) 0.85 0.40
Fourth.................. 0.70 0.34 0.70 0.22

(1) The high and low prior to July 12, 2003 are $0.60 and $0.46, respectively;
thereafter, the high and low are $0.55 and $0.05, respectively.

The approximate number of record holders of the common stock of the
Company at February 29, 2004 was 900.

No cash dividends have been declared or paid in respect of the common
stock. Payment of any dividends on the common stock is prohibited under the
Revolving Credit Agreement with Vornado Realty Trust until all amounts
outstanding thereunder are paid in full and the commitment thereunder is
terminated. Additionally, the Company intends to use its available funds to
cover cash flow deficits and, therefore, does not anticipate the payment of any
cash dividends on the common stock for the foreseeable future. The declaration
of dividends is subject to the discretion of the Board, subject to applicable
law. Under the Delaware General Corporation Law, a corporation may pay dividends
only out of its surplus or, when there is no surplus, out of its net profits for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year. The Company has a stockholders' deficit, has not had any net profits since
its commencement of operations and may never have profits.

Information relating to compensation plans under which equity
securities of the Company are authorized for issuance is set forth under Part
III, Item 12 of this Form 10-K and such information is incorporated herein by
reference.

-13-

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial and operating data.
This data should be read in conjunction with the consolidated financial
statements and notes thereto and "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations" in this Annual Report on Form
10-K. This data may not be comparable to, or indicative of, future operating
results.

Year Ended December 31,
----------------------------------------------------------------------------
2003 2002 2001 2000 1999
------------ ------------ ------------ ------------ ------------

REVENUES
Interest income ....................... $ 3,523 $ 2,346 $ 7,293 $ 85,441 $ 421,690
------------ ------------ ------------ ------------ ------------
EXPENSES
General and administrative ............ 1,118,134 1,053,241 1,896,822 1,574,963 1,094,773
Organization costs .................... -- -- -- -- 359,643
------------ ------------ ------------ ------------ ------------
1,118,134 1,053,241 1,896,822 1,574,963 1,454,416
------------ ------------ ------------ ------------ ------------
(1,114,611) (1,050,895) (1,889,529) (1,489,522) (1,032,726)

Interest and debt expense to Vornado
Realty Trust .......................... (1,559,899) (1,998,550) (2,422,337) (1,904,580) (1,216,628)
Income (loss) from AmeriCold
Logistics (1)(2)(3)(4) ................ 1,889,960 (7,301,784) (2,331,105) (10,890,600) (5,546,400)
Loss from marketable securities ........... -- -- (777,630) -- --
Loss from Transportal Network ............. -- -- -- (4,982,576) (540,000)
Gain on sale of investment in Charles
E. Smith Commercial Realty L.P. ....... -- -- -- -- 280,000
------------ ------------ ------------ ------------ ------------
Loss before minority interest ............. (784,550) (10,351,229) (7,420,601) (19,267,278) (8,055,754)
Minority interest(5) ...................... -- -- -- 1,581,765 797,520
------------ ------------ ------------ ------------ ------------
NET LOSS .................................. $ (784,550) $(10,351,229) $ (7,420,601) $(17,685,513) $ (7,258,234)
============ ============ ============ ============ ============
Net loss per share - basic and diluted .... $ (0.19) $ (2.54) $ (1.82) $ (4.35) $ (1.78)
============ ============ ============ ============ ============
Balance sheet data:
Total assets .......................... $ 1,356,628 $ 649,587 $ 19,110,923 $ 16,729,358 $ 21,372,706
Note, interest, and fees payable
to Vornado Realty Trust .............. 25,394,254 23,834,355 31,434,682 19,781,538 4,586,896
Stockholders' (deficit) equity ........ (24,217,550) (23,433,000) (12,899,024) (4,045,149) 14,357,089

(1) The Company did not record $21,779,000 its 60% share of AmeriCold
Logistics' net loss of $36,298,000 for the year ended December 31, 2003, as
the Company's investments in and advances to AmeriCold Logistics were fully
absorbed by the Company's share of comprehensive losses of AmeriCold
Logistics at December 31, 2002. The income from AmeriCold Logistics for the
year ended December 31, 2003 represents interest and the recovery from
repayments of loans previously reduced by equity in losses.

(2) The year ended December 31, 2002 includes the Company's $1,335,000
share of AmeriCold Logistics' $2,225,000 gain on its sale of its Carthage,
Missouri and Kansas City, Kansas limestone quarries and a recovery of
$8,608,000 from the $8,800,000 repayment of loans to AmeriCold Logistics
previously reduced by equity in losses.

(3) The year ended December 31, 2001 includes the Company's $23,887,000
share of $39,812,000 of deferred rent waived by AmeriCold Logistics'
Landlord, as defined below, and the Company's $5,337,000 share of AmeriCold
Logistics' charge of $8,895,000 for severance and relocation costs.

(4) On March 11, 1999, the Company and Crescent Operating, Inc. formed the
"Vornado Crescent Logistics Operating Partnership" (which does business
under the name "AmeriCold Logistics") to purchase all of the non-real
estate assets of the Vornado REIT/Crescent REIT Partnership (the
"Landlord"). AmeriCold Logistics leases 87 temperature controlled
warehouses from the Landlord, which continues to own the real estate. The
Company's results of operations reflect 60% of the losses of AmeriCold
Logistics from March 11, 1999 until December 31, 2002 (see footnote (1)
above).

(5) During the year ended December 31, 2000, the minority interest was fully
absorbed by losses.

No cash dividends have been declared or paid in respect of the
Company's common stock, par value $0.01 per share.

-14-

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

Management's Discussion and Analysis of Financial Condition and Results
of Operations considers the Company's consolidated financial statements for the
years ended December 31, 2003, 2002 and 2001.

ABILITY TO CONTINUE AS A GOING CONCERN

Substantial doubt exists as to the Company's ability to continue as a
going concern and its ability to discharge its liabilities in the normal course
of business. The Company has incurred losses since its inception and, in the
aggregate, its investments have not generated sufficient cash flow to pay all of
the Company's expenses. The Company estimates that it has adequate borrowing
capacity under its credit facility with Vornado Realty Trust ("Vornado") to meet
its cash needs until December 31, 2004. However, the principal, interest and
fees outstanding under the line of credit come due on such date. The Company
currently has no external sources of financing except this facility.

The Company's other potential source of cash is its investment in
AmeriCold Logistics. However, AmeriCold Logistics has also reported losses since
inception and, at December 31, 2003, the Company's 60% share of AmeriCold
Logistics' partners' deficit was $45,643,000, which includes $49,436,000 of
deferred rent (rent recognized as expense but not paid in cash) to its landlord,
the Vornado REIT/Crescent REIT Partnership (the "Landlord"). AmeriCold Logistics
anticipates that in 2004, the Landlord will restructure the leases to provide
additional cash flow to AmeriCold Logistics. Notwithstanding the foregoing, the
Landlord is under no obligation to restructure the leases and there can be no
assurance that it will do so. In the absence of the anticipated lease
restructuring or other options, 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 $25,394,000 loan from Vornado or the ability to continue
as a going concern.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. Set forth below is a summary of the accounting policies that
management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Company's significant accounting policies included in
Note 3 to the consolidated financial statements in this Annual Report on Form
10-K.

Investments in and Advances to AmeriCold Logistics

The Company's 60% interest in AmeriCold Logistics is currently
accounted for under the equity method of accounting as Crescent Operating, Inc.
("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 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 year ended December 31, 2003 as the
Company's investments in and advances to AmeriCold Logistics were fully absorbed
by the Company's share of comprehensive losses of AmeriCold Logistics at
December 31, 2002. In addition, the Company's share of other comprehensive
losses of AmeriCold Logistics not recorded at December 31, 2003 was $6,882,000.
The Company will record its share of future comprehensive income from AmeriCold
Logistics only for the portion of such income that exceeds its share of
comprehensive losses not previously recorded. The Company's method of accounting
for AmeriCold Logistics will change in the fourth quarter of 2004 (see "Recently
Issued Accounting Standards" below). The Company's exposure to losses from
AmeriCold Logistics is limited to its investments in and advances to AmeriCold
Logistics.

-15-

Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation ("FIN") No. 46, Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51. FIN No. 46 required the consolidation
of an entity by an enterprise if (i) that enterprise, known as a "primary
beneficiary," has an interest that will absorb a majority of the entity's
expected losses if they occur, receive a majority of the entity's expected
residual returns if they occur, or both and (ii) the entity is a variable
interest entity. An entity is a variable interest entity if (a) the total equity
investment at risk in the entity is not sufficient to permit the entity to
finance its activities without additional subordinated financial support from
other parties or (b) the equity investors do not have the characteristics of a
controlling financial interest in the entity. The initial determination of
whether an entity is a variable interest entity shall be made as of the date at
which an enterprise became involved with the entity and reconsidered as of the
date that one of three triggering events described in FIN No. 46 occurs.

The Company previously disclosed that its investments in AmeriCold
Logistics met the criteria for consolidation under FIN No. 46 and it would
consolidate AmeriCold Logistics beginning July 1, 2003 by restating its prior
period consolidated financial statements. However, in October 2003, FASB issued
FASB Staff Position No. FIN 46-6, Effective Date of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities. This position allowed public
entities to defer the date for implementing FIN No. 46, except certain required
disclosures, until the end of the first interim or annual period ending after
December 15, 2003 if certain conditions apply. The Company concluded that
AmeriCold Logistics qualified for deferral and elected to implement FIN No. 46
on December 31, 2003. However, on December 24, 2003, FASB issued a revision to
FIN No. 46 to, among other things, clarify some of the provisions of FIN No. 46.
The revision allows a public entity which is a small business issuer, as defined
in Regulation S-B, that has not previously applied FIN No. 46 to implement the
revision no later than the end of the first interim or annual period ending
after December 15, 2004. The Company meets the criteria of the small business
issuer definition and has elected to implement the revision on December 31,
2004. The Company is evaluating its implementation alternatives (i.e.,
restatement of its previously issued consolidated financial statements or a
cumulative effect adjustment). Had AmeriCold Logistics been consolidated as of
December 31, 2003, the Company's accumulated deficit and accumulated other
comprehensive loss would have increased to $99,955,000 and $15,363,000,
respectively.

RESULTS OF OPERATIONS

Years Ended December 31, 2003 and 2002

The Company had a net loss of $785,000 for the year ended December 31,
2003, compared to a net loss of $10,351,000 for the prior year, a decrease of
$9,566,000. The Company did not record $21,779,000, its 60% share of AmeriCold
Logistics' net loss of $36,298,000 for the year ended December 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. In the year ended December 31, 2002, the Company recorded its
share of AmeriCold Logistics' net loss of $29,766,000, or $17,980,000.
Additionally, the Company recognized $896,000 and $8,608,000 as income in the
respective periods. These amounts represent repayments from AmeriCold Logistics
of its loans from the Company that were previously reduced by equity in losses
of AmeriCold Logistics.

General and administrative expenses were $1,118,000 for the year ended
December 31, 2003, compared to $1,053,000 for the prior year, an increase of
$65,000. The increase resulted primarily from higher insurance costs and
professional fees.

Interest and debt expense to Vornado was $1,560,000 for the year ended
December 31, 2003, compared to $1,999,000 for the prior year, a decrease of
$439,000. The decrease resulted from interest calculated at lower LIBOR rates on
a lower average outstanding balance due to the December 2002 $7,685,000
principal payment made following the quarry sale, as discussed below.

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

For The Year Ended December 31,
-------------------------------
(amounts in thousands) 2003 2002
---------- ----------

Equity in loss............................. $ -- $ (17,980)
Interest on loans.......................... 994 2,070
Recovery from repayments of loans
previously reduced by equity in losses... 896 8,608
---------- ----------
$ 1,890 $ (7,302)
========== ==========

-16-

The Company did not record $21,779,000, its 60% share of AmeriCold
Logistics' net loss of $36,298,000 for the year ended December 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 year ended December 31, 2002, the Company recorded its share
of AmeriCold Logistics' net loss of $29,766,000, or $17,980,000. The decreases
in interest earned on the Company's loans to AmeriCold Logistics were
attributable to lower average loans outstanding in the current year. The
$896,000 and $8,608,000 recognized as income in the respective periods represent
repayments from AmeriCold Logistics of its loans from the Company that were
previously reduced by equity in losses of AmeriCold Logistics.

On December 31, 2002, Vornado and Crescent Real Estate Equities Company
("Crescent") formed a new joint venture (the "Quarry Company") in which Vornado
holds a 44% interest and Crescent holds a 56% interest. This new joint venture
acquired AmeriCold Logistics' Carthage, Missouri and Kansas City, Kansas
limestone quarries for $20,000,000, the appraised value. The purchase price
consisted of $8,929,000 in cash and the cancellation of $11,071,000 of notes
owed by AmeriCold Logistics to Crescent. AmeriCold Logistics recognized a gain
of $2,225,000 (of which the Company's share is $1,335,000). AmeriCold Logistics
used $8,800,000 of the cash proceeds to repay a portion of its loans from the
Company. The Company recognized a gain on the repayment from AmeriCold Logistics
of $8,608,000 as the loans were previously reduced by equity in losses of
AmeriCold Logistics. Additionally, AmeriCold Logistics entered into a management
agreement with the joint venture to manage and operate the quarries for an
annual management fee of approximately $200,000 plus all direct expenses
incurred as operator of the quarries. The agreement is for a term of one year
and automatically renews for additional one-year periods unless terminated by
either party. The Company used the $8,800,000 repayment from AmeriCold Logistics
and $700,000 of its cash to repay $7,685,000 of principal and $1,815,000 of
interest and commitment fees under its Revolving Credit Agreement with Vornado.

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 Years Ended December 31, 2003 and 2002" exclude the interest
income of $994,000 and $2,070,000 and gains of $896,000 and $8,608,000 recorded
by the Company in the years ended December 31, 2003 and 2002, respectively.

AmeriCold Logistics' Results of Operations for the Years Ended December 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 "Item 1. Business - Temperature Controlled Logistics Business
(`AmeriCold Logistics')" for a discussion of the business. The data below
represents 100% of this business, in 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 and 56% by Crescent, 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 year amounts in this discussion were reclassified to
conform to the current year presentation.

Revenues were $653,746,000 for the year ended December 31,
2003, compared to $646,332,000 for the prior year, an increase of
$7,414,000. Revenues from Leased Operations were $433,704,000 for the
year ended December 31, 2003, compared to $439,532,000 for the prior
year, a decrease of $5,828,000. Revenues from Other Operations were
$220,042,000 for the year ended December 31, 2003, compared to
$206,800,000 for the prior year, an increase of $13,242,000.

The decrease in revenue from Leased Operations for the year
was largely the result of lower storage and accessorial revenues,
partially offset by increased handling revenues. The increase in
revenue from Other Operations was chiefly attributable to (i) new
Managed Warehouse contracts and (ii) increased volume from existing
Managed Warehouse and Transportation Management customers, partially
offset by (iii) the effect of the December 2002 quarry sale noted
above.

-17-

The gross margin for Leased Operations was $159,909,000, or
36.9%, for the year ended December 31, 2003, compared to $159,302,000,
or 36.2%, for the prior year, an increase of $607,000. The increase in
gross margin was primarily the result of cost containment measures.

Operating income from Other Operations was $15,499,000 for the
year ended December 31, 2003, compared to $11,437,000 for the prior
year, an increase of $4,062,000. This increase resulted primarily from
the new Managed Warehouse contracts noted above and more favorable
rates with transportation carriers, partially offset by the effect of
the December 2002 quarry sale.

Rent expense was $165,266,000 for the year ended December 31,
2003, compared to $153,759,000 for the prior year, an increase of
$11,507,000. This 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 $34,937,000 for the
year ended December 31, 2003, compared to $35,625,000 for the prior
year, a decrease of $688,000. This decrease resulted largely from cost
containment measures, partially offset by higher payroll expenses.

Depreciation and amortization expense was $9,751,000 for the
year ended December 31, 2003, compared to $10,701,000 for the prior
year, a decrease of $950,000. This decrease was mainly attributable to
the December 2002 quarry sale.

Interest expense was $3,507,000 for the year ended December
31, 2003, compared to $5,089,000 for the prior year, a decrease of
$1,582,000. This decrease resulted from lower average borrowings
outstanding in the current year, partially offset by the interest on
higher average deferred rent balances in the current year.

Other income, net, was $1,755,000 for the year ended December
31, 2003, compared to $1,495,000 for the prior year, an increase of
$260,000. This increase was mainly due to improved results from a joint
venture partially offset by lower interest rates on cash balances.

Years Ended December 31, 2002 and 2001

The Company had a net loss of $10,351,000 for the year ended December
31, 2002, compared to a net loss of $7,421,000 for the prior year, an increase
of $2,930,000.

General and administrative expenses were $1,053,000 for the year ended
December 31, 2002, compared to $1,897,000 for the prior year, a decrease of
$844,000. The decrease resulted from (i) lower payroll costs relating to the
resignation of the Company's former Chief Operating Officer effective June 15,
2001 and (ii) a decrease in 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 was $1,999,000 for the year ended
December 31, 2002, compared to $2,422,000 for the prior year, a decrease of
$423,000. The decrease resulted primarily from interest calculated at lower
LIBOR rates under the Revolving Credit Agreement with Vornado.

The Company's loss from AmeriCold Logistics was $7,302,000 for the year
ended December 31, 2002, compared to a loss of $2,331,000 for the prior year, an
increase of $4,971,000. Included in these losses is interest income for the
years ended December 31, 2002 and 2001 of $2,070,000 and $1,082,000,
respectively. This interest was earned on the Company's loans to AmeriCold
Logistics. This increase was attributable to higher average loans outstanding in
the current year.

On December 31, 2002, Vornado and Crescent formed the Quarry Company in
which Vornado holds a 44% interest and Crescent holds a 56% interest. This new
joint venture acquired AmeriCold Logistics' Carthage, Missouri and Kansas City,
Kansas limestone quarries for $20,000,000, the appraised value. The purchase
price consisted of $8,929,000 in cash and the cancellation of $11,071,000 of
notes owed by AmeriCold Logistics to Crescent. AmeriCold Logistics recognized a
gain of $2,225,000 (of which the Company's share is $1,335,000). AmeriCold
Logistics used $8,800,000 of the cash proceeds to repay a portion of its loans
from the Company. The Company recognized a gain on the repayment from AmeriCold
Logistics of $8,608,000 as the loans were previously reduced by equity in losses
of AmeriCold Logistics. Additionally, AmeriCold Logistics entered into a
management agreement with the joint venture to manage and operate the quarries
for an annual management fee of approximately $200,000 plus all direct expenses
incurred as operator of the quarries. The agreement is for a term of one year
and automatically renews for additional one-year periods unless terminated by
either party. The Company used the

-18-

$8,800,000 repayment from AmeriCold Logistics and $700,000 of its cash to repay
$7,685,000 of principal and $1,815,000 of interest and commitment fees under its
Revolving Credit Agreement with Vornado.

In the three months ended December 31, 2001, AmeriCold Logistics
reversed $25,469,000 of the rent expense recorded in 2001. This resulted from
the Landlord waiving its rights to collect this portion of the rent. Further,
the Landlord waived $14,343,000 of the rent expense recorded by AmeriCold
Logistics in 2000; AmeriCold Logistics recorded this amount as income in the
three months ended December 31, 2001. The aggregate amount waived by the
Landlord of $39,812,000 (of which the Company's share is $23,887,000) represents
a portion of the rent due under the leases, which AmeriCold Logistics deferred
in such years.

In the year ended December 31, 2001, AmeriCold Logistics recorded a
charge of $8,895,000 (of which the Company's share is $5,337,000) comprised of
(i) severance and relocation costs associated with a management restructuring
and (ii) expenses arising from the consolidation of a portion of the corporate
office in Portland, Oregon into AmeriCold Logistics' Atlanta, Georgia
headquarters. Severance related charges were for the termination of 199
employees, located primarily in the Atlanta and Portland offices. In 2002,
AmeriCold Logistics reduced the charge by $949,000 (of which the Company's share
is $569,000).

The amounts discussed below in "AmeriCold Logistics' Results of
Operations for the Years Ended December 31, 2002 and 2001" exclude the interest
income and the $8,608,000 gain recorded by the Company. AmeriCold Logistics' net
losses were $29,766,000 and $5,688,000 for the years ended December 31, 2002 and
2001 (of which the Company's share is $17,980,000 and $3,413,000, respectively).

AmeriCold Logistics' Results of Operations for the Years Ended December 31, 2002
and 2001

The following is a discussion of the results of operations of AmeriCold
Logistics, the Company's investee in the temperature controlled logistics
business. See "Item 1. Business - Temperature Controlled Logistics Business
(`AmeriCold Logistics')" for a discussion of the business. The data below
represents 100% of this business, in 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 and 56% by Crescent, 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 year amounts in this discussion were reclassified to
conform to the current year presentation.

Revenues were $646,332,000 for the year ended December 31,
2002, compared to $647,259,000 for the prior year, a decrease of
$927,000. Revenues from Leased Operations were $439,532,000 for the
year ended December 31, 2002, compared to $441,772,000 for the prior
year, a decrease of $2,240,000. Revenues from Other Operations were
$206,800,000 for the year ended December 31, 2002, compared to
$205,487,000 for the prior year, an increase of $1,313,000.

The decrease in revenue from Leased Operations for the year is
primarily the result of a rate restructuring with a significant
customer and temporary plant shutdowns, partially offset by higher
occupancy rates. The increase in revenue from Other Operations is
largely attributable to new warehouse management contracts, partially
offset by the discontinuation of Transportation Management Services
business with lower margin customers.

The gross margin for Leased Operations was $159,302,000, or
36.2%, for the year ended December 31, 2002, compared to $160,145,000,
or 36.3%, for the prior year, a decrease of $843,000. The decrease in
gross margin is primarily the result of increased insurance, workers'
compensation and labor costs, partially offset by a pension curtailment
gain in 2002.

Operating income from Other Operations was $11,437,000 for the
year ended December 31, 2002, compared to $11,897,000 for the prior
year, a decrease of $460,000. This decrease is largely attributable to
a reduction in output at the Quarry Operations partially offset by
improved margins on Transportation Management Services and new
warehouse management contracts.

Rent expense was $153,759,000 for the year ended December 31,
2002, compared to $130,807,000 for the prior year, an increase of
$22,952,000. The increase resulted primarily from the waiver of 2001
rent of

-19-

$25,469,000 by the Landlord in the three months ended December 31,
2001, as discussed above, partially offset by a decline in contingent
rent which varies based on revenue in the applicable periods. Further,
in the three months ended December 31, 2001, AmeriCold Logistics
recorded income resulting from the waiver by the Landlord of rent
deferred in 2000 of $14,343,000, also as discussed above.

General and administrative expenses were $35,625,000 for the
year ended December 31, 2002, compared to $37,137,000 for the prior
year, a decrease of $1,512,000. This decrease resulted primarily from
lower professional fees, partially offset by higher payroll expenses.

Reserves established for restructuring were $8,895,000 for the
year ended December 31, 2001. This reflects senior management changes
and the consolidation of a portion of the corporate office in Portland,
Oregon into AmeriCold Logistics' Atlanta, Georgia headquarters, as
discussed above. Severance related charges were for the termination of
199 employees, located primarily in the Atlanta and Portland offices.
In 2002, AmeriCold Logistics reduced the charge by $949,000.

Depreciation and amortization expense was $10,701,000 for the
year ended December 31, 2002, compared to $11,477,000 for the prior
year, a decrease of $776,000. This decrease was primarily due to a
change in estimate in 2001 for depletion at one of AmeriCold Logistics'
former quarries partially offset by depreciation on additional
equipment purchased in 2002 and an adjustment in the first quarter of
2002 of the useful lives of certain assets.

Gain on the sale of AmeriCold Logistics' Carthage, Missouri
and Kansas City, Kansas limestone quarries was $2,225,000 for the year
ended December 31, 2002, as discussed above.

Interest expense was $5,089,000 for the year ended December
31, 2002, compared to $4,702,000 for the prior year, an increase of
$387,000. This increase was largely the result of higher average
borrowings outstanding in the current year.

Other income, net, was $1,495,000 for the year ended December
31, 2002, compared to $945,000 for the prior year, an increase of
$550,000. This increase was primarily the result of a 2001 write off of
receivables from Transportal Network, which ceased operations in 2000.

The Company recognized a loss from marketable securities of $778,000 in
2001, due to an "other than temporary decline" in the fair value of marketable
securities classified as available for sale.

LIQUIDITY AND CAPITAL RESOURCES

Substantial doubt exists as to the Company's ability to continue as a
going concern and its ability to discharge its liabilities in the normal course
of business. The Company has incurred losses since its inception and, in the
aggregate, its investments have not generated sufficient cash flow to pay all of
the Company's expenses. The Company estimates that it has adequate borrowing
capacity under its credit facility with Vornado to meet its cash needs until
December 31, 2004. However, the principal, interest and fees outstanding under
the line of credit come due on such date. The Company currently has no external
sources of financing except this facility.

The Company's other potential source of cash is its investment in
AmeriCold Logistics. However, AmeriCold Logistics has also reported losses since
inception and, at December 31, 2003, the Company's 60% share of AmeriCold
Logistics' partners' deficit was $45,643,000, which includes $49,436,000 of
deferred rent (rent recognized as expense but not paid in cash) to its Landlord,
the Vornado REIT/Crescent REIT Partnership. AmeriCold Logistics anticipates that
in 2004, the Landlord will restructure the leases to provide additional cash
flow to AmeriCold Logistics. Notwithstanding the foregoing, the Landlord is
under no obligation to restructure the leases and there can be no assurance that
it will do so. In the absence of the anticipated lease restructuring or other
options, 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 $25,394,000 loan from Vornado or the ability to continue as a going concern.

The Company has a $75,000,000 unsecured Revolving Credit Agreement with
Vornado which expires on December 31, 2004. Borrowings under this facility bear
interest at LIBOR plus 3% (4.12% at December 31, 2003). The Company pays Vornado
a commitment fee equal to 1% per annum on the average daily unused portion of
the facility pursuant thereto; for the years ended December 31, 2003, 2002 and
2001, the Company recorded commitment fees under the facility of $505,000,
$432,000 and $485,000, 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

-20-

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 December 31, 2003, $1,591,000 of interest
and commitment fees were unpaid, which reduces the availability under the
Revolving Credit Agreement to $49,606,000. See the preceding two paragraphs
regarding the substantial doubt as to the Company's ability to continue as a
going concern and discharge this liability in the normal course of business.

During 2001 and 2000, the Company made three secured loans totaling
$11,940,000 to AmeriCold Logistics. The first two loans, totaling $6,840,000,
were secured by a mortgage on AmeriCold Logistics' quarries. These loans bore
interest at 12% and required monthly payments of interest until maturity on
March 31, 2002. The third loan was $5,100,000 and is secured by property, plant
and equipment. This loan bears interest at 14% and requires monthly payments of
principal and interest of $99,000 until maturity on December 31, 2002. On March
11, 2002, all three of these loans were amended to extend the maturity date to
December 31, 2004. On December 31, 2002, AmeriCold Logistics used $8,800,000 of
the cash proceeds from the sale of its quarries, as discussed under "Results of
Operations," to repay the two loans secured by the quarries and a portion of the
loan secured by property, plant and equipment. At December 31, 2003, $1,474,000
remains outstanding under the property, plant and equipment loan.

The Company's $6,000,000 contribution to AmeriCold Logistics on March
7, 2000 was unmatched by COPI. Accordingly, the $4,000,000 contribution
receivable shown in partners' capital of the Vornado Crescent Logistics
Operating Partnership's financial statements was cancelled at December 31, 2001.
On March 11, 2002, the Company's $6,000,000 became a special equity contribution
that has priority over the original equity amounts and accrues a return of 12%
compounded annually. On November 5, 2002, the Company's $6,000,000 special
equity contribution was converted into a loan collateralized by certain trade
receivables of AmeriCold Logistics. The conversion was effective March 11, 2002.
The loan bears interest of 12% and requires monthly interest payments until
maturity on December 31, 2004.

AmeriCold Logistics' deferred rent liability at December 31, 2003, net
of the waived rent discussed below, is as follows:

(amounts in thousands) Total (1)
---------

Deferred during 2003 $ 41,811
Deferred during 2002 32,248
Aggregate deferral at December 31, 2001 8,335
---------
$ 82,394
=========

(1) The Company does not guarantee AmeriCold Logistics' deferred rent liability.

In the three months ended December 31, 2001, AmeriCold Logistics
reversed $25,469,000 of the rent expense recorded in 2001. This resulted from
the Landlord waiving its rights to collect this portion of the rent. Further,
the Landlord waived $14,343,000 of the rent expense recorded by AmeriCold
Logistics in 2000; AmeriCold Logistics recorded this amount as income in the
three months ended December 31, 2001. The aggregate amount waived by the
Landlord of $39,812,000 (of which the Company's share is $23,887,000) represents
a portion of the rent due under the leases, which AmeriCold Logistics deferred
in such years.

On January 23, 2002, four of the leases with the Landlord were combined
into one lease. This did not affect total contractual rent due under the
combined leases.

On March 2, 2004, AmeriCold Logistics and the Landlord extended the
deferred rent period in AmeriCold Logistics' leases with the Landlord to
December 31, 2005 from December 31, 2004. The parties previously extended the
deferred rent period to December 31, 2004 from December 31, 2003 on March 7,
2003.

In the year ended December 31, 2001, AmeriCold Logistics recorded a
charge of $8,895,000 (of which the Company's share is $5,337,000) comprised of
(i) severance and relocation costs associated with a management restructuring
and (ii) expenses arising from the consolidation of a portion of the corporate
office in Portland, Oregon into AmeriCold Logistics' Atlanta, Georgia
headquarters. Severance related charges were for the termination of 199
employees, located primarily in the Atlanta and Portland offices. In 2002,
AmeriCold Logistics reduced the charge by $949,000 (of which the Company's share
is $569,000). AmeriCold Logistics' liability for severance at December 31, 2003
was $497,000; the remaining 50 of the 199 original employees are expected to be
terminated in 2004.

-21-

On December 31, 2002, Vornado and Crescent formed a new joint venture,
the Quarry Company, in which Vornado holds a 44% interest and Crescent holds a
56% interest. This new joint venture acquired AmeriCold Logistics' Carthage,
Missouri and Kansas City, Kansas limestone quarries for $20,000,000, the
appraised value. The purchase price consisted of $8,929,000 in cash and the
cancellation of $11,071,000 of notes owed by AmeriCold Logistics to Crescent.
AmeriCold Logistics recognized a gain of $2,225,000 (of which the Company's
share is $1,335,000). AmeriCold Logistics used $8,800,000 of the cash proceeds
to repay a portion of its loans from the Company. The Company recognized a gain
on the repayment from AmeriCold Logistics of $8,608,000 as the loans were
previously reduced by equity in losses of AmeriCold Logistics. Additionally,
AmeriCold Logistics entered into a management agreement with the Quarry Company
to manage and operate the quarries for an annual management fee of approximately
$200,000 plus all direct expenses incurred as operator of the quarries. The
agreement is for a term of one year and automatically renews for additional
one-year periods unless terminated by either party. The Company used the
$8,800,000 repayment from AmeriCold Logistics and $700,000 of its cash to repay
$7,685,000 of principal and $1,815,000 of interest and commitment fees under the
Revolving Credit Agreement with Vornado.

On December 31, 2002, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,720,000 to the Quarry Company for $5,600,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale (of which the
Company's share is $72,000).

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to the Quarry Company for $6,500,000 in cash. AmeriCold
Logistics recognized a loss of $140,000 on the sale.

On January 20, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale. 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.

The American Stock Exchange suspended trading in the Company's common
stock as of the close of business on July 11, 2003. Effective July 14, 2003, the
Company's common stock began trading over the counter under its newly assigned
ticker symbol, VOOC. On July 24, 2003, the Securities and Exchange Commission
issued an order to approve the removal of the Company's common stock from
listing on the American Stock Exchange. Effective July 25, 2003, the Company's
common stock was eligible for trading on the OTC Bulletin Board. Trading of the
Company's common stock through market makers may involve decreased liquidity and
risks not present when common stock is traded on a securities exchange.

At December 31, 2002, the Company's investments in and advances to
AmeriCold Logistics were fully absorbed by the Company's share of comprehensive
losses of AmeriCold Logistics. AmeriCold Logistics has reported losses since its
inception and, at December 31, 2003, the Company's share of AmeriCold Logistics'
partners' deficit was $45,643,000, which includes $49,436,000 of deferred rent
(rent recognized as expense but not paid in cash) to the Landlord. On March 2,
2004, AmeriCold Logistics and the Landlord extended the deferred rent period to
December 31, 2005 from December 31, 2004. Based on its right to defer rent,
management of AmeriCold Logistics anticipates it will have sufficient cash flows
to operate at least through December 31, 2004. AmeriCold Logistics anticipates
that in 2004, the Landlord will restructure the leases to provide additional
cash flow to AmeriCold Logistics. Notwithstanding the foregoing, the Landlord is
under no obligation to restructure the leases and there can be no assurance that
it will do so. In the absence of the anticipated lease restructuring or other
options, 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 $25,394,000 loan from Vornado due December 31, 2004.

Contractual Obligations

At December 31, 2003, the Company had the following contractual
obligations:

Less than One to Three to More than
(amounts in thousands) Total One Year Two Years Five Years Five Years
---------- ---------- ---------- ---------- ----------

Long-term debt obligations.............. $ 25,394 $ 25,394 $ -- $ -- $ --
Other liabilities....................... 180 180 -- -- --
---------- ---------- ---------- ---------- ----------
Total................................... $ 25,574 $ 25,574 $ -- $ -- $ --
========== ========== ========== ========== ==========

-22-

Cash Flows for the Year Ended December 31, 2003

Net cash used in operating activities of $123,000 was comprised of (i)
a net loss of $785,000 and (ii) the non-cash and non-operating income from
AmeriCold Logistics of $896,000, offset by (iii) the net change in operating
assets and liabilities of $1,558,000.

Cash provided by investing activities of $896,000 resulted from
repayments of loans to AmeriCold Logistics.

There were no cash flows from financing activities.

Cash Flows for the Year Ended December 31, 2002

Net cash used in operating activities of $1,380,000 was comprised of
(i) a net loss of $10,351,000 and (ii) the net change in operating assets and
liabilities of $401,000, offset by (iii) a non-cash loss from AmeriCold
Logistics of $9,372,000.

Cash provided by investing activities of $9,330,000 resulted from
repayments of loans to AmeriCold Logistics.

Net cash used in financing activities of $7,620,000 resulted primarily
from repayments under the Company's Revolving Credit Agreement with Vornado.

Cash Flows for the Year Ended December 31, 2001

Net cash used in operating activities of $2,934,000 is comprised of (i)
a net loss of $7,421,000, partially offset by (ii) the net change in operating
assets and liabilities of $296,000 and (iii) adjustments for non-cash and
non-operating items of $4,191,000. The adjustments for non-cash and
non-operating items are comprised of (a) a loss from AmeriCold Logistics of
$3,413,000 and (b) a loss from marketable securities of $778,000.

Net cash used in investing activities of $9,282,000 is comprised of (i)
advances to AmeriCold Logistics of $8,940,000 and (ii) payments of $582,000 to
cease the operations of Transportal Network, partially offset by (iii)
repayments of loans to AmeriCold Logistics of $240,000.

Cash provided by financing activities of $11,642,000 resulted from
borrowings under the Company's Revolving Credit Agreement with Vornado.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At December 31, 2003 and 2002, respectively, the Company had
$25,394,000 and $23,834,000 of variable rate debt outstanding, entered into for
non-trading purposes, bearing interest at LIBOR plus 3% (4.12% at December 31,
2003). A one percent increase for one year in the base used to determine the
interest rate of the variable rate debt outstanding at December 31, 2003 would
result in a $254,000 increase in the Company's interest and debt expense ($0.06
per basic share).

The fair values of the note payable to Vornado at December 31, 2003 and
2002 are approximately $19,700,000 and $19,600,000, respectively. These fair
values were estimated by discounting the future cash flows using current market
rates available to the Company. Such fair value estimates are not necessarily
indicative of the amount that would be paid upon liquidation of the Company's
note payable.

The variable interest rate on the Revolving Credit Agreement is reset
periodically. At reset, the Company can fix the interest rate, at its
discretion, for a period of one, two, three, or six months. The Company attempts
to select interest rate periods that it believes will minimize interest and debt
expense. There can be no assurance that the Company will select interest rate
periods that will minimize its expense.

-23-

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Independent Auditors' Report.............................................................................. 25
Consolidated Balance Sheets at December 31, 2003 and 2002................................................. 26
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001................ 27
Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 2003, 2002 and 2001..... 28
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001................ 29
Notes to Consolidated Financial Statements................................................................ 30

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

a) Disclosure Controls and Procedures. The Company's management, with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this report. Based on such evaluation, the Company's Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of such
period, the Company's disclosure controls and procedures are effective.

(b) Internal Control over Financial Reporting. There have not been any
changes in the Company's internal control over financial reporting during the
fourth quarter of the Company's fiscal year ended December 31, 2003 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

-24-

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of Vornado
Operating Company as of December 31, 2003 and 2002 and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
three years in the period ended December 31, 2003. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Vornado Operating Company at
December 31, 2003 and 2002, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2003 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company's inability to repay its $25,394,000
loan when it comes due on December 31, 2004 raises substantial doubt about its
ability to continue as a going concern. Management's plans concerning this
matter are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP

Parsippany, New Jersey
March 2, 2004

-25-

VORNADO OPERATING COMPANY
CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
-----------------------------------
2003 2002
------------- -------------

ASSETS

Cash and cash equivalents, including U.S. government obligations under repurchase
agreements of $650,000 and $200,000, respectively..................................... $ 1,118,189 $ 344,686
Investments in and advances to AmeriCold Logistics......................................... -- --
Interest receivable from AmeriCold Logistics............................................... 33,655 50,885
Prepaid expenses and other assets.......................................................... 204,784 254,016
------------- -------------
Total assets............................................................................... $ 1,356,628 $ 649,587
============= =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Note, interest, and fees payable to Vornado Realty Trust................................... $ 25,394,254 $ 23,834,355
Due to Vornado Realty Trust................................................................ 77,440 76,474
Accounts payable and accrued expenses...................................................... 102,484 171,758
------------- -------------
Total liabilities.......................................................................... 25,574,178 24,082,587
------------- -------------
Minority interest.......................................................................... -- --
------------- -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT

Common stock: par value $0.01 per share; authorized, 40,000,000 shares; issued and
outstanding, 4,068,924 shares......................................................... 40,689 40,689
Additional paid-in capital................................................................. 22,462,555 22,462,555
Accumulated deficit........................................................................ (44,384,647) (43,600,097)
------------- -------------
(21,881,403) (21,096,853)
Accumulated other comprehensive loss....................................................... (2,336,147) (2,336,147)
------------- -------------
Total stockholders' deficit................................................................ (24,217,550) (23,433,000)
------------- -------------
Total liabilities and stockholders' deficit................................................ $ 1,356,628 $ 649,587
============= =============

See notes to consolidated financial statements.

-26-

VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2003 2002 2001
-------------- -------------- --------------

REVENUES
Interest income.......................................... $ 3,523 $ 2,346 $ 7,293

EXPENSES
General and administrative (including fees to
Vornado Realty Trust of $330,000, $330,000 and
$371,000)........................................... 1,118,134 1,053,241 1,896,822
-------------- -------------- --------------
(1,114,611) (1,050,895) (1,889,529)

Interest and debt expense to Vornado Realty Trust........ (1,559,899) (1,998,550) (2,422,337)
Income (loss) from AmeriCold Logistics................... 1,889,960 (7,301,784) (2,331,105)
Loss from marketable securities.......................... -- -- (777,630)
-------------- -------------- --------------

Loss before minority interest............................ (784,550) (10,351,229) (7,420,601)

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

NET LOSS................................................. $ (784,550) $ (10,351,229) $ (7,420,601)
============== ============== ==============

Net loss per share -- basic and diluted.................. $ (0.19) $ (2.54) $ (1.82)
============== ============== ==============

See notes to consolidated financial statements.

-27-

VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
STOCK CAPITAL DEFICIT LOSS DEFICIT LOSS
------------ ------------ ------------ ------------- ------------ -------------

BALANCE, JANUARY 1, 2001 ...... $ 40,689 $ 22,462,555 $(25,828,267) $ (720,126) $ (4,045,149)

Recognition of loss from
marketable securities
previously included in
comprehensive loss ........... -- -- -- 720,126 720,126 $ 720,126
Proportionate share of other
comprehensive loss of
AmeriCold Logistics .......... -- -- -- (2,153,400) (2,153,400) (2,153,400)
Net loss ...................... -- -- (7,420,601) -- (7,420,601) (7,420,601)
------------ ------------ ------------ ------------ ------------ ------------

BALANCE, DECEMBER 31, 2001 .... 40,689 22,462,555 (33,248,868) (2,153,400) (12,899,024) $ (8,853,875)
============

Proportionate share of other
comprehensive loss of
AmeriCold Logistics .......... -- -- -- (182,747) (182,747) $ (182,747)
Net loss ...................... -- -- (10,351,229) -- (10,351,229) (10,351,229)
------------ ------------ ------------ ------------ ------------ ------------

BALANCE, DECEMBER 31, 2002 .... 40,689 22,462,555 (43,600,097) (2,336,147) (23,433,000) $(10,533,976)
============

Net loss ...................... -- -- (784,550) -- (784,550) $ (784,550)
------------ ------------ ------------ ------------ ------------ ------------

BALANCE, DECEMBER 31, 2003 .... $ 40,689 $ 22,462,555 $(44,384,647) $ (2,336,147) $(24,217,550) $ (784,550)
============ ============ ============ ============ ============ ============

See notes to consolidated financial statements.

-28-

VORNADO OPERATING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
------------------------------------------------
2003 2002 2001
----------------- ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ............................................ $ (784,550) $(10,351,229) $ (7,420,601)
Adjustments to reconcile net loss to net cash used in
operating activities:
Equity in loss of AmeriCold Logistics ........... -- 17,979,985 3,412,800
Recovery from repayment of loans to AmeriCold
Logistics previously reduced by equity in
losses .................................... (896,435) (8,607,869) --
Loss from marketable securities ................. -- -- 777,630
Changes in operating assets and liabilities:
Prepaid expenses and other assets ............... 49,232 (101,055) 163,438
Interest and fees payable on note from Vornado
Realty Trust ................................ 1,559,899 19,600 11,144
Interest receivable from AmeriCold Logistics .... 17,230 7,495 (43,380)
Accounts payable and accrued expenses ........... (69,274) (315,979) 150,321
Due to Vornado Realty Trust ..................... 966 (11,054) 14,169
----------------- ------------ ------------
Net cash used in operating activities .................... (122,932) (1,380,106) (2,934,479)
----------------- ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in and advances to AmeriCold Logistics .. -- -- (8,940,000)
Repayment of loans to AmeriCold Logistics ........... 896,435 9,330,066 239,762
Investment in Transportal Network ................... -- -- (582,194)
----------------- ------------ ------------
Net cash provided by (used in) investing activities ...... 896,435 9,330,066 (9,282,432)
----------------- ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note to Vornado Realty Trust .......... -- 65,000 11,642,000
Repayments on note to Vornado Realty Trust .......... -- (7,684,927) --
----------------- ------------ ------------
Net cash (used in) provided by financing activities ...... -- (7,619,927) 11,642,000
----------------- ------------ ------------

Net increase (decrease) in cash and cash equivalents ..... 773,503 330,033 (574,911)
Cash and cash equivalents at beginning of period ......... 344,686 14,653 589,564
----------------- ------------ ------------
Cash and cash equivalents at end of period ............... $ 1,118,189 $ 344,686 $ 14,653
================= ============ ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest and commitment fees ...... $ -- $ 1,978,950 $ 2,411,193
================= ============ ============

See notes to consolidated financial statements.

-29-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

Vornado Operating Company, a Delaware corporation (the "Company"), was
incorporated on October 30, 1997 as a wholly owned subsidiary of Vornado Realty
Trust ("Vornado") and commenced operations on October 16, 1998. In order to
maintain its status as a real estate investment trust ("REIT") for federal
income tax purposes, Vornado is required to focus principally on investments in
real estate assets. Accordingly, Vornado is prevented from owning certain assets
and conducting certain activities that would be inconsistent with its status as
a REIT. The Company was formed to own assets that Vornado could not itself own
and conduct activities that Vornado could not itself conduct. The Company is
intended to function principally as an operating company, in contrast to
Vornado's principal focus on investments in real estate assets. The Company is
able to do so because it is taxable as a regular "C" corporation rather than as
a REIT.

On October 16, 1998, Vornado Realty L.P. (the "Operating Partnership"),
a subsidiary of Vornado, made a distribution (the "Distribution") of one share
of common stock of the Company for each 20 units of limited partnership interest
of the Operating Partnership (including the units owned by Vornado) held of
record as of the close of business on October 9, 1998, and Vornado, in turn,
made a distribution of the common stock it received to the holders of its common
shares of beneficial interest.

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 December 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. ABILITY TO CONTINUE AS A GOING CONCERN

Substantial doubt exists as to the Company's ability to continue as a
going concern and its ability to discharge its liabilities in the normal course
of business. The Company has incurred losses since its inception and, in the
aggregate, its investments have not generated sufficient cash flow to pay all of
the Company's expenses. The Company estimates that it has adequate borrowing
capacity under its credit facility with Vornado to meet its cash needs until
December 31, 2004. However, the principal, interest and fees outstanding under
the line of credit come due on such date. The Company currently has no external
sources of financing except this facility.

The Company's other potential source of cash is its investment in
AmeriCold Logistics. However, AmeriCold Logistics has also reported losses since
inception and, at December 31, 2003, the Company's 60% share of AmeriCold
Logistics' partners' deficit was $45,643,000, which includes $49,436,000 of
deferred rent (rent recognized as expense but not paid in cash) to its landlord,
the Vornado REIT/Crescent REIT Partnership (the "Landlord"). AmeriCold Logistics
anticipates that in 2004, the Landlord will restructure the leases to provide
additional cash flow to AmeriCold Logistics. Notwithstanding the foregoing, the
Landlord is under no obligation to restructure the leases and there can be no
assurance that it will do so. In the absence of the anticipated lease
restructuring or other options, 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 $25,394,000 loan from Vornado or the ability to continue
as a going concern.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION: The accompanying consolidated financial
statements include the accounts of the Company and Company L.P. All significant
intercompany amounts have been eliminated. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates. Certain amounts in the prior
years' consolidated financial statements have been reclassified to conform to
the current year presentation.

-30-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of highly
liquid investments purchased with original maturities of three months or less.
The Company enters into agreements for the purchase and resale of United States
government obligations for periods of up to one week. The obligations purchased
under these agreements are held in safekeeping in the Company's name by a
regional money center bank. The Company has the right to demand additional
collateral or return of funds at any time the collateral value is less than 102%
of invested funds plus accrued earnings thereon.

MARKETABLE SECURITIES: During the year ended December 31, 2000, the
Company purchased marketable securities that it intended to hold for an
indefinite period of time and therefore had classified as securities available
for sale. Unrealized losses were included as a component of stockholders'
deficit as other comprehensive loss. In the three months ended March 31, 2001,
the Company recognized a loss from these securities for the entire purchase
price due to an "other than temporary decline" in their fair value.

INVESTMENTS IN AND ADVANCES TO AMERICOLD LOGISTICS: The Company's 60%
interest in AmeriCold Logistics is currently accounted for under the equity
method of accounting as Crescent Operating, Inc. ("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 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 year ended December 31, 2003 as the Company's
investments in and advances to AmeriCold Logistics were fully absorbed by the
Company's share of comprehensive losses of AmeriCold Logistics at December 31,
2002. In addition, the Company's share of other comprehensive losses of
AmeriCold Logistics not recorded at December 31, 2003 was $6,882,000. The
Company will record its share of future comprehensive income from AmeriCold
Logistics only for the portion of such income that exceeds its share of
comprehensive losses not previously recorded. The Company's method of accounting
for AmeriCold Logistics will change in the fourth quarter of 2004 (see "Recently
Issued Accounting Standards" in this Note). The Company's exposure to losses
from AmeriCold Logistics is limited to its investments in and advances to
AmeriCold Logistics.

FAIR VALUE OF FINANCIAL INSTRUMENTS: The fair values of the note
payable to Vornado at December 31, 2003 and 2002 are approximately $19,700,000
and $19,600,000, respectively. These fair values were estimated by discounting
the future cash flows using current market rates available to the Company. Such
fair value estimates are not necessarily indicative of the amount that would be
paid upon liquidation of the Company's note payable.

INCOME TAXES: Income taxes are provided for the tax effects of
transactions reported in the consolidated financial statements and consist of
taxes currently due plus deferred taxes related primarily to differences between
the treatment of certain items for financial reporting purposes and the
treatment of those items for corporate tax purposes. The deferred tax assets and
liabilities represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and liabilities are
recovered or settled.

AMOUNTS PER SHARE: Basic earnings per share are computed based on
weighted-average shares outstanding. Diluted earnings per share considers the
dilutive effect, if any, of outstanding stock options, rights, and the limited
partnership units of Company L.P. not owned by the Company.

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: 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. On
January 1, 2003, 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 utilizes an option-pricing model and appropriate market assumptions to
determine the value of such grants. Compensation expense is recognized on a
straight-line basis over the vesting periods of the grants. No options were
granted, modified or settled in the year ended December 31, 2003.

-31-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Prior to its voluntary adoption of the fair value method, the Company
accounted for employee stock options under the intrinsic value method of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, as amended and interpreted. Under the intrinsic value method,
compensation cost is measured as the excess, if any, of the quoted market price
of the common stock at the date of grant over the exercise price of the stock
options granted. Compensation cost for employee stock options, if any, is
recognized ratably over the vesting period. The Company's policy is to grant
stock options with exercise prices equal to the quoted market price of the
common stock on the grant date. Accordingly, no compensation cost has been
recognized for employee stock options granted, modified or settled prior to 2003
for the years ended December 31, 2003, 2002, and 2001.

The Company accounts for stock appreciation rights ("SARs") under the
provisions of FASB Interpretation ("FIN") No. 28, Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans. SARs are
granted at 100% of the market price of the common stock on the date of grant.
SARs vest ratably, becoming fully vested 36 months after grant. Compensation
expense is recognized ratably in the statement of operations if the market price
of the common stock exceeds the exercise price at the balance sheet date. At
subsequent balance sheet dates and the date the SARs become fully vested,
additional compensation expense is recognized ratably if the market price
exceeds the previous market price. If the market price falls, the previously
recognized expense is reversed but not adjusted below zero. No compensation cost
has been recognized for SARs for the years ended December 31, 2003, 2002 and
2001.

If all compensation cost for stock option awards had been determined
based on fair value at the grant dates, net loss and loss per share would have
been increased to the pro forma amounts below:

Year Ended December 31,
-----------------------------------
(amounts in thousands, 2003 2002 2001
except per share amounts) ---------- ---------- -------

Net loss:

As reported .......................... $ (785) $ (10,351) $(7,421)
Less: stock-based compensation expense
determined under fair value method .. -- -- (616)
---------- ---------- -------
Pro forma ............................ $ (785) $ (10,351) $(8,037)
========== ========== =======

Net loss per share - basic and diluted:

As reported .......................... $ (0.19) $ (2.54) $ (1.82)
Pro forma ............................ (0.19) (2.54) (1.98)

RECENTLY ISSUED ACCOUNTING STANDARDS: In January 2003, FASB issued FIN
No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51. FIN No. 46 required the consolidation of an entity by an enterprise if
(i) that enterprise, known as a "primary beneficiary," has an interest that will
absorb a majority of the entity's expected losses if they occur, receive a
majority of the entity's expected residual returns if they occur, or both and
(ii) the entity is a variable interest entity. An entity is a variable interest
entity if (a) the total equity investment at risk in the entity is not
sufficient to permit the entity to finance its activities without additional
subordinated financial support from other parties or (b) the equity investors do
not have the characteristics of a controlling financial interest in the entity.
The initial determination of whether an entity is a variable interest entity
shall be made as of the date at which an enterprise became involved with the
entity and reconsidered as of the date that one of three triggering events
described in FIN No. 46 occurs.

The Company previously disclosed that its investments in AmeriCold
Logistics met the criteria for consolidation under FIN No. 46 and it would
consolidate AmeriCold Logistics beginning July 1, 2003 by restating its prior
period consolidated financial statements. However, in October 2003, FASB issued
FASB Staff Position No. FIN 46-6, Effective Date of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities. This position allowed public
entities to defer the date for implementing FIN No. 46, except certain required
disclosures, until the end of the first interim or annual period ending after
December 15, 2003 if certain conditions apply. The Company concluded that
AmeriCold Logistics qualified for deferral and elected to implement FIN No. 46
on December 31, 2003. However, on December 24, 2003, FASB issued a revision to
FIN No. 46 to, among other things, clarify some of the provisions of FIN No. 46.
The revision allows a public entity which is a small business issuer, as defined
in Regulation S-B, that has not previously applied FIN No. 46 to implement the
revision no later than the end of the

-32-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

first interim or annual period ending after December 15, 2004. The Company meets
the criteria of the small business issuer definition and has elected to
implement the revision on December 31, 2004. The Company is evaluating its
implementation alternatives (i.e., restatement of its previously issued
consolidated financial statements or a cumulative effect adjustment). Had
AmeriCold Logistics been consolidated as of December 31, 2003, the Company's
accumulated deficit and accumulated other comprehensive loss would have
increased to $99,955,000 and $15,363,000, respectively.

In May 2003, FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity. SFAS No. 150
establishes standards for classifying and measuring certain financial
instruments that embody obligations of the issuer and have characteristics of
both liabilities and equity as liabilities. The adoption of SFAS No. 150 on July
1, 2003, as required, had no impact on the Company's consolidated financial
statements.

4. INVESTMENTS IN AND ADVANCES TO AMERICOLD LOGISTICS

(Data in this section represents 100% of AmeriCold Logistics, in which
the Company holds a 60% interest, unless otherwise specified)

On March 11, 1999, the Company and COPI formed the "Vornado Crescent
Logistics Operating Partnership" (which does business under the name "AmeriCold
Logistics") to purchase all of the non-real estate assets of the Landlord for
$48,723,000, of which the Company's 60% share was $29,234,000. To fund its share
of the purchase price, the Company utilized $4,647,000 of cash and borrowed
$18,587,000 under its Revolving Credit Agreement with Vornado. The Company paid
the balance of $6,000,000 on March 7, 2000. AmeriCold Logistics leases 87
temperature controlled warehouses from the Landlord which continues to own the
real estate. The leases, which commenced in March 1999, as amended, generally
have 15-year terms with two five-year renewal options and provide for the
payment of fixed base rent and percentage rent based on revenue from customers.
AmeriCold Logistics is required to pay for all costs arising from the operation,
maintenance and repair of the properties, as well as property capital
expenditures in excess of $9,500,000 annually. AmeriCold Logistics has the right
to defer the payment of 15% of annual fixed base rent and all percentage rent
until December 31, 2004, to the extent that available cash, as defined in the
leases, is insufficient to pay such rent. In addition to the leased warehouses,
AmeriCold Logistics manages 15 additional warehouses.

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

December 31,
----------------------
(amounts in thousands) 2003 2002
--------- ---------

Current assets ............... $ 118,560 $ 116,420
Non-current assets ........... 47,478 47,670
--------- ---------
$ 166,038 $ 164,090
========= =========

Current liabilities (1) ...... $ 115,556 $ 115,057
Non-current liabilities (1)... 126,554 90,666
--------- ---------
$ 242,110 $ 205,723
========= =========

Partners' deficit ............ $ (76,072) $ (41,633)
========= =========

(1) AmeriCold Logistics' creditors have no recourse to the general credit of the
Company. At December 31, 2003, AmeriCold Logistics' notes payable (representing
loans from the Company of $7,474) and capital leases of $20,230 were
collateralized by property, plant and equipment and accounts receivable with a
net book value of approximately $31,136.

-33-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

For The Year Ended December 31,
-----------------------------------
(amounts in thousands) 2003 2002 2001
--------- --------- ---------

Revenues ..................................... $ 653,746 $ 646,332 $ 647,259
Costs applicable to revenues ................. (478,338) (475,593) (475,217)
--------- --------- ---------
Gross margin ................................. 175,408 170,739 172,042
Depreciation and amortization ................ (9,751) (10,701) (11,477)
Rent (1) ..................................... (165,266) (153,759) (116,464)(2)
Other expenses, net .......................... (36,689) (36,045) (49,789)
--------- --------- ---------
Net loss (3) ................................. $ (36,298) $ (29,766) $ (5,688)
========= ========= =========

Cash flows provided by (used in)
operating activities ......................... $ 10,114 $ (698) $ 7,388
========= ========= =========

(1) Includes the effect of straight-lining.

(2) In the year ended December 31, 2001, $39,812 of rent was waived by the
Landlord, of which $25,469 was for 2001 rent and $14,343 was for 2000 rent.

(3) The Company did not record $21,779, its 60% share of AmeriCold Logistics'
net loss of $36,298 for the year ended December 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.

During 2001 and 2000, the Company made three secured loans totaling
$11,940,000 to AmeriCold Logistics. The first two loans, totaling $6,840,000,
were secured by a mortgage on AmeriCold Logistics' quarries. These loans bore
interest at 12% and required monthly payments of interest until maturity on
March 31, 2002. The third loan was $5,100,000 and is secured by property, plant
and equipment. This loan bears interest at 14% and requires monthly payments of
principal and interest of $99,000 until maturity on December 31, 2002. On March
11, 2002, all three of these loans were amended to extend the maturity date to
December 31, 2004. On December 31, 2002, AmeriCold Logistics used $8,800,000 of
the cash proceeds from the sale of its quarries, as discussed under
"Dispositions" in this Note, to repay the two loans secured by the quarries and
a portion of the loan secured by property, plant and equipment. At December 31,
2003, $1,474,000 remains outstanding under the property, plant and equipment
loan.

The Company's $6,000,000 contribution to AmeriCold Logistics on March
7, 2000 was unmatched by COPI. Accordingly, the $4,000,000 contribution
receivable shown in partners' capital of the Vornado Crescent Logistics
Operating Partnership's financial statements was cancelled at December 31, 2001.
On March 11, 2002, the Company's $6,000,000 became a special equity contribution
that has priority over the original equity amounts and accrues a return of 12%
compounded annually. On November 5, 2002, the Company's $6,000,000 special
equity contribution was converted into a loan collateralized by certain trade
receivables of AmeriCold Logistics. The conversion was effective March 11, 2002.
The loan bears interest of 12% and requires monthly interest payments until
maturity on December 31, 2004.

-34-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

For the Year Ended December 31,
--------------------------------
(amounts in thousands) 2003 2002 2001
-------- -------- --------

Equity in loss (1) ........................ $ -- $(17,980) $ (3,413)
Interest on loans ......................... 994 2,070 1,082
Recovery from repayment of loans
previously reduced by equity in losses .. 896 8,608 --
-------- -------- --------
$ 1,890 $ (7,302) $ (2,331)
======== ======== ========

(1) The Company did not record $21,779, its 60% share of AmeriCold Logistics'
net loss of $36,298 for the year ended December 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.

At December 31, 2002, the Company's investments in and advances to
AmeriCold Logistics were fully absorbed by the Company's share of comprehensive
losses of AmeriCold Logistics. AmeriCold Logistics has reported losses since its
inception and, at December 31, 2003, the Company's share of AmeriCold Logistics'
partners' deficit was $45,643,000, which includes $49,436,000 of deferred rent
(rent recognized as expense but not paid in cash) to the Landlord. On March 2,
2004, AmeriCold Logistics and the Landlord extended the deferred rent period to
December 31, 2005 from December 31, 2004. Based on its right to defer rent,
management of AmeriCold Logistics anticipates it will have sufficient cash flows
to operate at least through December 31, 2004. AmeriCold Logistics anticipates
that in 2004, the Landlord will restructure the leases to provide additional
cash flow to AmeriCold Logistics. Notwithstanding the foregoing, the Landlord is
under no obligation to restructure the leases and there can be no assurance that
it will do so. In the absence of the anticipated lease restructuring or other
options, 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 $25,394,000 loan from Vornado due December 31, 2004.

AmeriCold Logistics' Leases with the Landlord

On February 22, 2001, AmeriCold Logistics' leases with the Landlord
were restructured to, among other things, (i) reduce 2001 contractual rent to
$146,000,000, (ii) reduce 2002 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.

AmeriCold Logistics' deferred rent liability at December 31, 2003, net
of the waived rent discussed below, is as follows:

(amounts in thousands) Total (1)
----------

Deferred during 2003 $ 41,811
Deferred during 2002 32,248
Aggregate deferral at December 31, 2001 8,335
----------
$ 82,394
==========

(1) The Company does not guarantee AmeriCold Logistics' deferred rent liability.

In the three months ended December 31, 2001, AmeriCold Logistics
reversed $25,469,000 of the rent expense recorded in 2001. This resulted from
the Landlord waiving its rights to collect this portion of the rent. Further,
the Landlord waived $14,343,000 of the rent expense recorded by AmeriCold
Logistics in 2000; AmeriCold Logistics recorded this amount as income in the
three months ended December 31, 2001. The aggregate amount waived by the
Landlord of $39,812,000 (of which the Company's share is $23,887,000) represents
a portion of the rent due under the leases, which AmeriCold Logistics deferred
in such years.

-35-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On January 23, 2002, four of the leases with the Landlord were combined
into one lease. This did not affect total contractual rent due under the
combined leases.

On March 2, 2004, AmeriCold Logistics and the Landlord extended the
deferred rent period in AmeriCold Logistics' leases with the Landlord to
December 31, 2005 from December 31, 2004. The parties previously extended the
deferred rent period to December 31, 2004 from December 31, 2003 on March 7,
2003.

Severance and Relocation Costs

In the year ended December 31, 2001, AmeriCold Logistics recorded a
charge of $8,895,000 (of which the Company's share is $5,337,000) comprised of
(i) severance and relocation costs associated with a management restructuring
and (ii) expenses arising from the consolidation of a portion of the corporate
office in Portland, Oregon into AmeriCold Logistics' Atlanta, Georgia
headquarters. Severance related charges were for the termination of 199
employees, located primarily in the Atlanta and Portland offices. In 2002,
AmeriCold Logistics reduced the charge by $949,000 (of which the Company's share
is $569,000). AmeriCold Logistics' liability for severance at December 31, 2003
was $497,000; the remaining 50 of the 199 original employees are expected to be
terminated in 2004.

Dispositions

On December 31, 2002, Vornado and Crescent Real Estate Equities Company
("Crescent") formed a new joint venture (the "Quarry Company") in which Vornado
holds a 44% interest and Crescent holds a 56% interest. This new joint venture
acquired AmeriCold Logistics' Carthage, Missouri and Kansas City, Kansas
limestone quarries for $20,000,000, the appraised value. The purchase price
consisted of $8,929,000 in cash and the cancellation of $11,071,000 of notes
owed by AmeriCold Logistics to Crescent. AmeriCold Logistics recognized a gain
of $2,225,000 (of which the Company's share is $1,335,000). AmeriCold Logistics
used $8,800,000 of the cash proceeds to repay a portion of its loans from the
Company. The Company recognized a gain on the repayment from AmeriCold Logistics
of $8,608,000 as the loans were previously reduced by equity in losses of
AmeriCold Logistics. Additionally, AmeriCold Logistics entered into a management
agreement with the Quarry Company to manage and operate the quarries for an
annual management fee of approximately $200,000 plus all direct expenses
incurred as operator of the quarries. The agreement is for a term of one year
and automatically renews for additional one-year periods unless terminated by
either party. The Company used the $8,800,000 repayment from AmeriCold Logistics
and $700,000 of its cash to repay $7,685,000 of principal and $1,815,000 of
interest and commitment fees under the Revolving Credit Agreement with Vornado.

On December 31, 2002, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,720,000 to the Quarry Company for $5,600,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale (of which the
Company's share is $72,000).

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to the Quarry Company for $6,500,000 in cash. AmeriCold
Logistics recognized a loss of $140,000 on the sale.

On January 20, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale. 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.

Other

During the years ended December 31, 2003, 2002 and 2001, AmeriCold
Logistics received a management fee of $276,000, $273,000 and $268,000,
respectively, from the Landlord for administrative services performed.

During the year ended December 31, 2003, AmeriCold Logistics received a
management fee of $214,000 from the Quarry Company for management services
provided.

During each of the years ended December 31, 2003, 2002 and 2001,
AmeriCold Logistics recorded a management fee of $487,000 due to Vornado.

-36-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, specifically (i) the 2003
net operating loss carryforward as reflected on the Company's tax return, (ii)
the book to tax differences arising from the Company's investment in AmeriCold
Logistics and (iii) the write off of organization costs in 1999 and 1998 for
financial reporting purposes and the amortization of such costs over 60 months
for tax reporting purposes.

The tax effects of significant items comprising the Company's net
deferred tax asset as of December 31, 2003 and 2002 are as follows.

December 31,
--------------------
(amounts in thousands) 2003 2002
-------- --------

Deferred assets:
Organization costs .................................. $ 12 $ 106
Minority interest (taxed directly to limited partner) 940 940
Net operating loss carryforward ..................... 25,391 12,164
Book to tax differences ............................. (10,926) 1,720
-------- --------
15,417 14,930
Valuation allowance .................................... (15,417) (14,930)
-------- --------
Net deferred tax asset ................................. $ -- $ --
======== ========

Because the Company has a history of operating losses, a valuation
allowance has been established for its deferred tax assets. The need for this
allowance will be reassessed periodically based upon the operating results of
the Company. A reconciliation of income taxes to the expected income tax benefit
is as follows:

Year Ended December 31,
----------------------------------
(amounts in thousands) 2003 2002 2001
-------- -------- --------

Loss before income taxes and minority interest $ 785 $ 10,351 $ 7,421
Statutory federal income tax rate ............ 34% 34% 34%
-------- -------- --------
Expected federal income tax benefit .......... 267 3,519 2,523
Expected state income tax benefit ............ 47 621 445
-------- -------- --------
Provision for income taxes ................... 314 4,140 2,968
Valuation allowance .......................... (314) (4,140) (2,968)
-------- -------- --------
Income taxes ................................. $ -- $ -- $ --
======== ======== ========

6. REVOLVING CREDIT AGREEMENT

The Company has a $75,000,000 unsecured Revolving Credit Agreement with
Vornado which expires on December 31, 2004. Borrowings under this facility bear
interest at LIBOR plus 3% (4.12% at December 31, 2003). The Company pays Vornado
a commitment fee equal to 1% per annum on the average daily unused portion of
the facility pursuant thereto; for the years ended December 31, 2003, 2002 and
2001, the Company recorded commitment fees under the facility of $505,000,
$432,000 and $485,000, 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 December 31, 2003, $1,591,000 of interest and commitment fees
were unpaid, which reduces the availability under the Revolving Credit Agreement
to $49,606,000. See Note 2 regarding the substantial doubt as to the Company's
ability to continue as a going concern and discharge this liability in the
normal course of business.

7. EMPLOYEES' STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

Under the 1998 Omnibus Stock Plan (the "Plan"), various directors,
officers and key employees of Vornado and the Company were granted incentive and
non-qualified stock options to purchase common stock of the Company. Awards to
officers and employees of Vornado were granted prior to the Distribution (see
Note 1). The options were granted at prices equal to the book value per share as
of the date of grant for options granted prior to the Distribution, and 100% of
the market price of the common stock at the date of grant for options granted
after the

-37-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Distribution. Shares vest ratably, becoming fully vested 36 months after grant.
All options expire ten years after grant.

A summary of the Plan's status and changes are presented below:

Year Ended December 31,
----------------------------------------------------------------------------------
2003 2002 2001
------------------------ ------------------------ ------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------- --------- -------- ----------- -------- -----------

Outstanding at January 1.................... 379,109 $ 5.54 438,706 $ 5.70 651,475 $ 5.86

Cancelled or converted to SARs.............. (23,555) 5.54 (59,597) 6.72 (212,769) 6.18
------- -------- --------

Outstanding at December 31.................. 355,554 5.54 379,109 5.54 438,706 5.70
======= ======== ========

Options exercisable at December 31.......... 355,554 379,109 438,706
======= ======== ========

The 355,554 options which were outstanding and exercisable as of
December 31, 2003 have a remaining contractual life of 4.6 years. Shares
available for future grant under the Plan at December 31, 2003 were 893,832.

Effective December 17, 2001, two plan participants converted 90,000
outstanding stock options with an exercise price of $5.54 into SARs. 220,000
SARs were outstanding and exercisable at December 31, 2003 at a price of $5.54.

8. VORNADO AGREEMENT

The Company and Vornado have entered into an agreement (the "Vornado
Agreement") pursuant to which, among other things, (i) 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 (ii) 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.

Under the Vornado Agreement, Vornado provides the Company with certain
administrative, corporate, accounting, financial, insurance, legal, tax, data
processing, human resources and operational services. Also, Vornado makes
available to the Company, at Vornado's offices, space for the Company's
principal corporate office. For these services, the Company compensates Vornado
in an amount determined in good faith by Vornado as the amount an unaffiliated
third party would charge the Company for comparable services and reimburses
Vornado for certain costs incurred and paid to third parties on behalf of the
Company. For such services, the Company incurred $330,000, $330,000 and $371,000
in the years ended December 31, 2003, 2002 and 2001, respectively.

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.

9. MINORITY INTEREST

Minority interest represents limited partnership interests in Company
L.P. not owned by the Company. On October 16, 1998, (i) Interstate Properties
("Interstate"), a New Jersey general partnership owned by Steven Roth (Chairman
of the Board and Chief Executive Officer of Vornado and the Company), David
Mandelbaum (a trustee of Vornado), and Russell B. Wight, Jr. (a trustee of
Vornado and a director of the Company), exchanged 447,017 shares of common stock
for a 9.9% undivided interest in all of the Company's assets and (ii) Interstate
and the Company contributed all of their interests in such assets to Company
L.P. and in return Interstate received a 9.9% limited partnership interest and
the Company received the 90.1% sole general partnership interest therein.
Interstate has the right to have its limited partnership interest in Company
L.P. redeemed by Company L.P. either for (a) cash

-38-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

in an amount equal to the fair market value, at the time of redemption, of
447,017 shares of common stock or (b) 447,017 shares of common stock, in each
case as selected by the Company and subject to customary anti-dilution
adjustments.

During the year ended December 31, 2000, Interstate's investment in
Company L.P was fully absorbed by net losses. Interstate's share of net losses
in excess of its contributions ($2,163,000 at December 31, 2003) has been and
will be recognized by the Company as Interstate has no obligation to provide
additional funding to Company L.P.

Excluding rights distributed under the Stockholder Protection Rights
Plan, as discussed in Note 11, in 2002, no dividends or distributions have been
made to Interstate since inception.

10. LOSS PER SHARE

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

Year Ended December 31,
(amounts in thousands, except ---------------------------------------
share and per share amounts) 2003 2002 2001
---------- ---------- -----------

Numerator:
Net loss ................................ $ (785) $ (10,351) $ (7,421)
========== ========== ===========

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

Net loss per share - basic and diluted .... $ (0.19) $ (2.54) $ (1.82)
========== ========== ===========

The Company's stock options are not dilutive in the reporting periods
as the average market prices of the Company's common stock did not exceed the
exercise prices. The Company's rights are not dilutive in the reporting periods
as the rights were not exercisable. The limited partnership units of Company
L.P. not owned by the Company are not dilutive in the full year reporting
periods as the Company reported net losses.

11. STOCKHOLDER PROTECTION RIGHTS PLAN

On May 29, 2002, the Company adopted a Stockholder Protection Rights
Plan (the "Rights Plan") and declared a dividend of one right for each
outstanding share of the Company's common stock. The dividend was paid on June
7, 2002 to stockholders of record on that date. In addition, the Company issued
one right in respect of each outstanding limited partnership unit of Company
L.P. not owned by the Company. The initial issuance of the rights had no
accounting or tax consequences and did not change the way in which the common
stock is traded.

The rights become exercisable after the earlier of (i) ten business
days after any person commences a tender offer that would result in such person
becoming the beneficial owner of 10% or more of the common stock (an "Acquiring
Person") or (ii) on the first day on which any person becomes an Acquiring
Person, subject to certain exceptions. Pursuant to the terms of the Rights Plan,
rights owned by an Acquiring Person will automatically become void and each
other right will entitle the holder to receive, for $13.50, as adjusted under
the terms of the Rights Plan (the "Exercise Price"), cash in an amount, or debt
or other securities with a value, equal to (a) the closing market price of a
share of common stock on the date of exercise times (b) the number of shares of
common stock having an aggregate market value, as defined by the Rights Plan,
equal to twice the Exercise Price, or, at the Company's discretion, the number
of shares of common stock described in (b) above.

The rights will expire on June 7, 2012 unless they expire earlier as
provided in the Rights Plan. The Company may redeem the rights subject to
certain conditions.

12. 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.

-39-

VORNADO OPERATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

INCOME (LOSS) NET (LOSS)
FROM NET (LOSS) INCOME PER
(amounts in thousands, AMERICOLD NET (LOSS) INCOME PER SHARE
except per share amounts) LOGISTICS INCOME (1) SHARE (BASIC) (DILUTED) (2)
------------- ---------- ------------- -------------

2003
March 31.......................... $ 460(3) $ (205) $ (0.05) $ (0.05)
June 30........................... 475(3) (173) (0.04) (0.04)
September 30...................... 477(3) (267) (0.07) (0.07)
December 31....................... 478(3) (140) (0.03) (0.03)

2002
March 31.......................... $ (3,311) $ (4,074) $ (1.00) $ (1.00)
June 30........................... (3,927) (4,723) (1.16) (1.16)
September 30...................... (4,782) (5,730) (1.41) (1.41)
December 31....................... 4,718 4,175(4) 1.03 0.92

(1) The total for 2002 differs from the sum of quarters as a result of
rounding.

(2) The total for 2002 differs from the sum of quarters as the limited
partnership units of Company L.P. not owned by the Company are dilutive in
quarters in which the Company reported net income.

(3) The Company did not record $4,110, $ 7,141, $6,139 and $4,389 (the
respective 60% shares of AmeriCold Logistics' net losses of $6,850,
$11,902, $10,231 and $7,315) in the respective quarters 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.

(4) Net income for the three months ended December 31, 2002 includes the
Company's $1,335 share of AmeriCold Logistics' $2,225 gain on the sale of
its Carthage, Missouri and Kansas City, Kansas quarries and an $8,608
recovery from the $8,800 repayment of loans to AmeriCold Logistics
previously reduced by equity in losses.

-40-

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning directors of the Company will be contained in a
definitive Proxy Statement involving the election of directors and pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended. The
Company will file the Proxy Statement with the Securities and Exchange
Commission not later than 120 days after December 31, 2003. Such information is
incorporated by reference herein. For information concerning the executive
officers of the Company, see "Executive Officers of the Registrant" in Part I of
this Annual Report on Form 10-K. The Company has adopted a code of business
conduct and ethics that applies to each of its Chief Executive Officer and
Executive Vice President and Chief Financial Officer, among others. The code is
posted on the Company's website at www.vornadoopco.com. The Company intends to
satisfy its disclosure obligation regarding amendments and waivers of this code
applicable to its Chief Executive Officer, and Executive Vice President and
Chief Financial Officer by posting such information on its website at
www.vornadoopco.com.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation will be contained in the
Proxy Statement referred to above in "Item 10. Directors and Executive Officers
of the Registrant." Such information is incorporated by reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information concerning security ownership of certain beneficial owners
and management and related stockholder matters, except as set forth below, will
be contained in the Proxy Statement referred to in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

A summary of the Company's equity compensation plans follows.

Equity Compensation Plan Information
- --------------------------------------------------------------------------------------------------------------------------
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities reflected in
Plan Category warrants and rights (a) warrants and rights column (a))
- ----------------------------------- ----------------------- -------------------- -----------------------

Equity compensation plans approved
by security holders 355,554 $5.54 893,832

Equity compensation plans not
approved by security holders N/A N/A N/A
------- ----- -------

Total 355,554 $5.54 893,832

See "Note 7. Employees' Stock Options and Stock Appreciation Rights" to
the Company's consolidated financial statements included in this Annual Report
on Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions
will be contained in the Proxy Statement referred to in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information concerning principal accountant fees and services will be
contained in the Proxy Statement referred to in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

-41-

PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual
Report on Form 10-K:

1. The consolidated financial statements are set forth
in Item 8 of this Annual Report on Form 10-K.

2. The following financial statement schedules should be
read in conjunction with the consolidated financial
statements included in Item 8 of this Annual Report
on Form 10-K:

Pages in this
Annual Report on
Form 10-K
----------------

Vornado Crescent Logistics Operating Partnership and Subsidiary:

Independent Auditors' Report 44

Consolidated Balance Sheets at December 31, 2003 and 2002 45

Consolidated Statements of Operations for the Years Ended December 31,
2003, 2002 and 2001 46

Consolidated Statements of Partners' (Deficit) Capital for the Years
Ended December 31, 2003, 2002 and 2001 47

Consolidated Statements of Cash Flows for the Years Ended December 31,
2003, 2002 and 2001 48

Notes to Consolidated Financial Statements 49

Schedules other than those listed above are omitted
because they are not applicable, not required or the
information required is included in the consolidated
financial statements or the notes thereto.

3. Exhibits:

See Exhibit Index on page 61.

(b) Reports on Form 8-K:

During the last quarter of the period covered by this Annual
Report on Form 10-K, the Company did not file any reports on
Form 8-K.

-42-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

By: /s/ Joseph Macnow
--------------------------------
Joseph Macnow, Executive Vice President
and Chief Financial Officer

Date: March 2, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

By: /s/ Steven Roth Chairman of the Board of March 2, 2004
-------------------------------- Directors and Chief
(Steven Roth) Executive Officer (Principal
Executive Officer)

By: /s/ Michael D. Fascitelli President and Director March 2, 2004
--------------------------------
(Michael D. Fascitelli)

By: /s/ Douglas H. Dittrick Director March 2, 2004
--------------------------------
(Douglas H. Dittrick)

By: /s/ Joseph Macnow Executive Vice President and March 2, 2004
-------------------------------- Chief Financial Officer
(Joseph Macnow) (Principal Financial and
Accounting Officer)

By: /s/ Martin N. Rosen Director March 2, 2004
--------------------------------
(Martin N. Rosen)

By: /s/ Richard R. West Director March 2, 2004
--------------------------------
(Richard R. West)

By: /s/ Russell B. Wight, Jr. Director March 2, 2004
--------------------------------
(Russell B. Wight, Jr.)

-43-

INDEPENDENT AUDITORS' REPORT

To the Partners of
Vornado Crescent Logistics Operating Partnership and Subsidiary:

We have audited the accompanying consolidated balance sheets of Vornado
Crescent Logistics Operating Partnership and Subsidiary (the "Partnership") as
of December 31, 2003 and 2002 and the related consolidated statements of
operations, partners' (deficit) capital, and cash flows for each of the three
years in the period ended December 31, 2003. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Vornado Crescent Logistics
Operating Partnership and Subsidiary at December 31, 2003 and 2002, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
March 2, 2004

-44-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
-----------------------------------
(amounts in thousands) 2003 2002
------------- -------------

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................................................ $ 15,284 $ 14,891
Restricted cash.......................................................................... 27,420 21,093
Accounts receivable, net of allowance for doubtful accounts of $2,126 and $2,564,
respectively........................................................................... 69,709 76,328
Due from Vornado Crescent Carthage and KC Quarry, LLC.................................... 22 --
Other current assets..................................................................... 6,125 4,108
------------- -------------
Total current assets................................................................... 118,560 116,420
------------- -------------
PROPERTY, PLANT, AND EQUIPMENT
Land..................................................................................... 907 877
Building and improvements................................................................ 2,940 2,717
Machinery and equipment.................................................................. 67,545 57,562
------------- -------------
71,392 61,156
Accumulated depreciation................................................................. (34,198) (25,203)
------------- -------------
Property, plant, and equipment, net.................................................... 37,194 35,953
------------- -------------

OTHER ASSETS............................................................................... 10,284 11,717
------------- -------------
$ 166,038 $ 164,090
============= =============
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES
Accounts payable......................................................................... $ 12,792 $ 15,763
Accrued expenses......................................................................... 47,286 48,730
Current portion of long-term debt........................................................ 7,474 1,600
Current portion of capital lease obligations............................................. 3,210 1,787
Unearned revenue......................................................................... 7,850 9,474
Due to AmeriCold Realty Trust............................................................ 36,944 37,703
------------- -------------
Total current liabilities.............................................................. 115,556 115,057
Long-term debt............................................................................. -- 7,441
Long-term capital lease obligations........................................................ 9,547 8,132
Deferred rent obligation to AmeriCold Realty Trust......................................... 82,394 40,583
Straight-line rent liability to AmeriCold Realty Trust..................................... 18,510 14,661
Pension and retirement benefits............................................................ 13,533 17,341
Other liabilities.......................................................................... 2,570 2,508
------------- -------------
Total liabilities.......................................................................... 242,110 205,723
------------- -------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' DEFICIT
Partners' capital........................................................................ 38,723 38,723
Accumulated deficit...................................................................... (99,432) (63,134)
Accumulated other comprehensive loss..................................................... (15,363) (17,222)
------------- -------------
Total partners' deficit................................................................ (76,072) (41,633)
------------- -------------
$ 166,038 $ 164,090
============= =============

See notes to consolidated financial statements.

-45-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
(amounts in thousands) 2003 2002 2001
-------------- -------------- --------------

REVENUES $ 653,746 $ 646,332 $ 647,259
-------------- -------------- --------------
OPERATING EXPENSES
Cost of operations (not including depreciation,
depletion, and amortization)......................... 478,338 475,593 475,217
Rent expense on leases with AmeriCold Realty
Trust, net of $25,469 of forgiveness of 2001
contractual rents in 2001............................ 165,266 153,759 130,807
Forgiveness of 2000 contractual rents with
AmeriCold Realty Trust............................... -- -- (14,343)
General and administrative............................. 34,937 35,625 37,137
Severance and other charges............................ -- (949) 8,895
Depreciation, depletion, and amortization.............. 9,751 10,701 11,477
Gain on sale of quarries............................... -- (2,225) --
-------------- -------------- --------------

Total operating expenses............................. 688,292 672,504 649,190
-------------- -------------- --------------

OPERATING LOSS (34,546) (26,172) (1,931)

OTHER INCOME (EXPENSES)
Other income, net........................................ 1,755 1,495 945
Interest expense......................................... (3,507) (5,089) (4,702)
-------------- -------------- --------------

NET LOSS................................................. $ (36,298) $ (29,766) $ (5,688)
============== ============== ==============

See notes to consolidated financial statements.

-46-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL

ACCUMULATED
OTHER CAPITAL
PARTNERS' ACCUMULATED COMPREHENSIVE CONTRIBUTION COMPREHENSIVE
(amounts in thousands) CAPITAL DEFICIT LOSS RECEIVABLE TOTAL LOSS
-------- -------- -------- -------- -------- --------

BALANCE, JANUARY 1, 2001 ......... $ 48,723 $(27,680) $ (830) $ (4,000) $ 16,213

Cancellation of capital commitment (4,000) -- -- 4,000 --
Net loss ......................... -- (5,688) -- -- (5,688) $ (5,688)
Adjustment for minimum pension
liability ...................... -- -- (2,759) -- (2,759) (2,759)
-------- -------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 2001 ....... 44,723 (33,368) (3,589) -- 7,766 $ (8,447)
========

Issuance of note payable in
exchange for capital ........... (6,000) -- -- -- (6,000)
Net loss ......................... -- (29,766) -- -- (29,766) $(29,766)
Adjustment for minimum pension
liability ...................... -- -- (13,633) -- (13,633) (13,633)
-------- -------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 2002 ....... 38,723 (63,134) (17,222) -- (41,633) $(43,399)
========

Net loss ......................... -- (36,298) -- -- (36,298) $(36,298)
Adjustment for minimum pension
liability ...................... -- -- 1,859 -- 1,859 1,859
-------- -------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 2003 ....... $ 38,723 $(99,432) $(15,363) $ -- $(76,072) $(34,439)
======== ======== ======== ======== ======== ========

See notes to consolidated financial statements.

-47-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
--------------------------------
(amounts in thousands) 2003 2002 2001
-------- -------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................ $(36,298) $(29,766) $ (5,688)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Provision for bad debts ................................ 431 363 2,653
Depreciation, depletion, and amortization .............. 9,751 10,701 11,477
Straight-line rent expense ............................. 3,849 3,850 4,049
Forgiveness of 2000 contractual rents with AmeriCold
Realty Trust .......................................... -- -- (14,343)
Gain on sale of quarries ................................ -- (2,225) --
Changes in operating assets and liabilities:
Restricted cash ......................................... (6,327) 295 (6,652)
Accounts receivable, net ................................ 6,188 (9,035) 10,843
Due from Vornado Crescent Carthage and KC Quarry, LLC ... (22) -- --
Other assets ............................................ (584) 278 (522)
Accounts payable and accrued expenses ................... (4,415) 1,549 2,071
Due to AmeriCold Realty Trust ........................... (759) 129 4,879
Deferred rent obligations ............................... 41,811 32,248 (1,733)
Other liabilities ....................................... (3,511) (9,085) 354
-------- -------- --------
Net cash provided by (used in) operating activities ...... 10,114 (698) 7,388
-------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of quarries ......................... -- 8,929 --
Additions to property, plant, and equipment ............ (5,817) (10,284) (2,368)
-------- -------- --------
Net cash used in investing activities .................... (5,817) (1,355) (2,368)
-------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt ............... -- -- 18,940
Repayment of long-term debt ............................ (1,567) (10,706) (1,131)
Repayment of capital lease obligations ................. (2,337) (539) (855)
-------- -------- --------
Net cash (used in) provided by financing activities ...... (3,904) (11,245) 16,954
-------- -------- --------

Net increase (decrease) in cash and cash equivalents ..... 393 (13,298) 21,974
Cash and cash equivalents at beginning of period ......... 14,891 28,189 6,215
-------- -------- --------
Cash and cash equivalents at end of period ............... $ 15,284 $ 14,891 $ 28,189
======== ======== ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest ............................... $ 5,666 $ 5,140 $ 2,787
======== ======== ========

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Acquisitions of property under capital leases ............ $ 5,175 $ 5,042 $ 4,522
======== ======== ========

Issuance of note payable in exchange for capital ......... $ -- $ 6,000 $ --
======== ======== ========

Cancellation of notes payable upon sale of quarries ...... $ -- $ 11,071 $ --
======== ======== ========

See notes to consolidated financial statements.

-48-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

Vornado Crescent Logistics Operating Partnership (the "Partnership")
was formed on March 11, 1999. The Partnership holds its assets and conducts its
business through its wholly owned subsidiary, AmeriCold Logistics, LLC
("AmeriCold Logistics"). AmeriCold Logistics, headquartered in Atlanta, Georgia,
has approximately 5,800 employees and operates 102 temperature controlled
warehouse facilities nationwide with an aggregate of approximately 546 million
cubic feet of refrigerated, frozen, and dry storage space. Of the 102
warehouses, AmeriCold Logistics leases 87 temperature controlled warehouses with
an aggregate of approximately 441 million cubic feet of space from the Vornado
REIT/Crescent REIT Partnership ("AmeriCold Realty Trust" or the "Landlord") and
manages 15 additional warehouses containing approximately 105 million cubic feet
of space. The Vornado REIT/Crescent REIT Partnership is owned 60% by Vornado
Realty Trust ("Vornado") and 40% by Crescent Real Estate Equities Company
("Crescent"). AmeriCold Logistics provides the food industry with refrigerated
warehousing and transportation management services. Refrigerated warehouses are
comprised of production, distribution and public facilities. Production
facilities typically serve one or a small number of customers, generally food
processors, which are located nearby. These customers store large quantities of
processed or partially processed products in the facilities until they are
shipped to the next stage of production or distribution. Distribution facilities
primarily warehouse a wide variety of customers' finished products until future
shipment to end-users. Each distribution facility generally services the
surrounding regional market. Public facilities generally serve the needs of
local and regional customers under short-term agreements. Food manufacturers and
processors use these facilities to store capacity overflow from their production
facilities or warehouses. AmeriCold Logistics' transportation management
services include freight routing, dispatching, freight rate negotiation,
backhaul coordination, freight bill auditing, network flow management, order
consolidation and distribution channel assessment. AmeriCold Logistics'
temperature controlled logistics expertise and access to both frozen food
warehouses and distribution channels enable its customers to respond quickly and
efficiently to time-sensitive orders from distributors and retailers.
Additionally, AmeriCold Logistics operated two limestone quarries until their
sale on December 31, 2002.

On December 31, 2003, the Partnership's deficit was $76,072,000, which
includes $82,394,000 of deferred rent (rent recognized as expense but not paid
in cash) to the Landlord. On March 2, 2004, AmeriCold Logistics and the Landlord
extended the deferred rent period to December 31, 2005 from December 31, 2004.
Based on its right to defer rent, the management of AmeriCold Logistics
anticipates it will have sufficient cash flows to operate at least through
December 31, 2004. AmeriCold Logistics anticipates that in 2004, the Landlord
will restructure the leases to provide additional cash flow to AmeriCold
Logistics. Notwithstanding the foregoing, the Landlord is under no obligation to
restructure the leases and there can be no assurance that it will do so. If the
leases are restructured, AmeriCold Logistics expects to have sufficient cash
flows to repay its notes payable to Vornado Operating L.P. ("Vornado
Operating"). In the absence of the restructuring, AmeriCold Logistics
anticipates that Vornado Operating will extend the maturity of the notes
payable, although it has no obligation to do so.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION: The accompanying consolidated financial
statements of the Partnership include the accounts of the Partnership and its
subsidiary. All significant intercompany amounts have been eliminated .

PARTNERSHIP MATTERS: The Partnership is owned 60% by Vornado Operating
and 40% by COPI Cold Storage L.L.C., an affiliate of Crescent Operating, Inc.,
("COPI"). The partnership agreement provides that net income and losses are
allocated to each partner's account in relation to their ownership interests.
Subject to certain provisions, the Partnership continues for a term through
October 2027.

Vornado Operating's $6,000,000 contribution to AmeriCold Logistics on
March 7, 2000 was unmatched by COPI. Accordingly, the $4,000,000 contribution
receivable shown in partners' capital was cancelled at December 31, 2001. On
March 11, 2002, Vornado Operating's $6,000,000 became a special equity
contribution that has priority over the original equity amounts and accrues a
return of 12% compounded annually. On November 5, 2002, Vornado Operating's
$6,000,000 special equity contribution was converted into a loan collateralized
by certain trade receivables of AmeriCold Logistics. The conversion was
effective March 11, 2002. The loan bears interest of 12%, requires monthly
interest payments until maturity on December 31, 2004 and may be prepaid without
penalty.

-49-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Subject to confirmation of a plan of reorganization under Chapter 11 of
the United States Bankruptcy Code, COPI is expected to transfer its interest in
AmeriCold Logistics to an entity to be owned by the shareholders of Crescent.
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.

Substantial doubt exists as to Vornado Operating Company's ("VOOC"),
the parent of Vornado Operating, ability to continue as a going concern. VOOC
estimates that it has adequate borrowing capacity under a credit facility with
Vornado to meet its cash needs until December 31, 2004. However, the principal,
interest and fees outstanding under the line of credit come due on such date.
VOOC currently has no external sources of financing except this facility.
Although there can be no assurance, AmeriCold Logistics' management believes
that the substantial doubt about VOOC's ability to continue as a going concern
will not adversely affect AmeriCold Logistics.

ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Significant estimates in the consolidated financial
statements include estimates for workers' compensation, health insurance and
pension liabilities.

CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of highly
liquid investments purchased with original maturities of three months or less.

RESTRICTED CASH: This cash is restricted for the payment of rent
($7,229,000 at both December 31, 2003 and 2002) and the settlement of certain
self-insured liabilities ($20,191,000 and $13,864,000 at December 31, 2003 and
2002, respectively).

PROPERTY, PLANT, AND EQUIPMENT: Property, plant, and equipment is
stated at cost less accumulated depreciation. Depreciation is computed on a
straight-line basis over the estimated useful lives of the respective assets.
Depreciation begins in the month in which an asset is placed into service.
Depletion on the limestone quarries, which were sold on December 31, 2002, was
computed by the unit-of-production method based on estimated recoverable units.

AmeriCold Logistics' long-lived assets are reviewed for impairment if
events or changes in circumstances indicate that the carrying amounts may not be
recoverable. In such an event, a comparison is made of the expected future
operating cash flows of the long-lived assets on an undiscounted basis to the
carrying amounts of the long-lived assets. If the carrying amounts of the
long-lived assets exceed the sum of the expected undiscounted cash flows, an
impairment charge is recognized in an amount equal to the excess of the carrying
amounts over the estimated fair value of the long-lived assets. AmeriCold
Logistics also periodically reviews the appropriateness of the estimated useful
lives of its long-lived assets.

CAPITALIZED LEASES: Capitalized leases are recorded at the lower of the
present value of future lease payments or the fair market value of the property.
Capitalized leases are depreciated on a straight-line basis over the estimated
asset life or lease term, whichever is shorter. Depreciation expense on capital
leases is included in depreciation, depletion, and amortization expense.

REVENUE RECOGNITION: Revenues include storage, transportation and
handling fees, and management fees for locations managed on behalf of third
parties. Storage revenues are recognized as services are provided.
Transportation fees and expenses are recognized upon delivery. AmeriCold
Logistics charges customers for both inbound and outbound handling in advance
but defers the outbound handling revenue until the product has been shipped.
Management fees and related cost reimbursements are recognized as revenue as the
management services are performed and the costs are incurred. Costs related to
managed facilities are included in cost of operations. Revenues from the sale of
limestone were recognized upon delivery to customers.

-50-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SIGNIFICANT CUSTOMERS: During the years ended December 31, 2003, 2002,
and 2001, the following individual customers accounted for 10% or more of total
revenue:

YEAR ENDED DECEMBER 31,
------------------------------------------
2003 2002 2001
---- ---- ----

H.J. Heinz & Co................ 15% 16% 16%
ConAgra Foods, Inc............. 13% 11% 8%

INCOME TAXES: The Partnership and AmeriCold Logistics have elected to
be treated as partnerships for income tax purposes. Taxable income or loss of
the Partnership and AmeriCold Logistics is reported in the income tax returns of
the partners. Accordingly, no provision for income taxes is made in the
consolidated financial statements of the Partnership.

FAIR VALUE OF FINANCIAL INSTRUMENTS: All financial instruments of
AmeriCold Logistics are reflected in the accompanying consolidated balance
sheets at amounts which, in management's estimation, based upon an
interpretation of available market information and valuation methodologies,
reasonably approximates their fair values. Such fair values are not necessarily
indicative of the amounts that would be realized upon disposition of AmeriCold
Logistics' financial instruments.

COLLECTIVE BARGAINING AGREEMENTS: At December 31, 2003, approximately
28% of AmeriCold Logistics' labor force was covered by collective bargaining
agreements. Collective bargaining agreements covering approximately 10% of the
labor force will expire in 2004.

RECENTLY ISSUED ACCOUNTING STANDARDS: In January 2003, the Financial
Accounting Standards Board ("FASB") issued FASB Interpretation ("FIN") No. 46,
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.
FIN No. 46 required the consolidation of an entity by an enterprise if (i) that
enterprise, known as a "primary beneficiary," has an interest that will
absorb a majority of the entity's expected losses if they occur, receive a
majority of the entity's expected residual returns if they occur, or both and
(ii) the entity is a variable interest entity. An entity is a variable
interest entity if (a) the total equity investment at risk in the entity is not
sufficient to permit the entity to finance its activities without additional
subordinated financial support from other parties or (b) the equity investors do
not have the characteristics of a controlling financial interest in the entity.

In December 2003, FASB issued a revision to FIN No. 46 to, among other
things, clarify some of the provisions of FIN No. 46. The revision allows a
non-public entity, as defined in the revision, that has not previously applied
FIN No. 46 to an entity created before January 1, 2004 to implement the revision
no later than the beginning of the first annual period ending after December
15, 2004. The Partnership meets the criteria of the non-public entity definition
and has elected to implement the revision on January 1, 2005. The Partnership is
currently evaluating the impact the revision will have on its consolidated
financial statements.

RECLASSIFICATIONS: Certain amounts in the prior years' consolidated
financial statements have been reclassified to conform to the current year
presentation.

3. SALE OF QUARRIES

On December 31, 2002, Vornado and Crescent formed a new joint venture
(Vornado Crescent Carthage and KC Quarry, LLC or the "Quarry Company") in which
Vornado holds a 44% interest and Crescent holds a 56% interest. This new joint
venture acquired AmeriCold Logistics' Carthage, Missouri and Kansas City, Kansas
limestone quarries for $20,000,000, the appraised value. The purchase price
consisted of $8,929,000 in cash and the cancellation of $11,071,000 of notes
owed by AmeriCold Logistics to Crescent. AmeriCold Logistics recognized a gain
of $2,225,000 and used $8,800,000 of the cash proceeds to repay a portion of its
loans from Vornado Operating. Additionally, AmeriCold Logistics entered into a
management agreement with the Quarry Company to manage and operate the quarries
for an annual management fee of approximately $200,000 plus all direct expenses
incurred as operator of the quarries. The agreement is for a term of one year
and automatically renews for additional one-year periods unless terminated by
either party.

-51-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. SALES OF ACCOUNTS RECEIVABLE

On December 31, 2002, AmeriCold Logistics sold, without recourse,
accounts receivable of $5,720,000 to the Quarry Company for $5,600,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale.

On March 28, 2003, AmeriCold Logistics sold, without recourse, accounts
receivable of $6,640,000 to the Quarry Company for $6,500,000 in cash. AmeriCold
Logistics recognized a loss of $140,000 on the sale.

On January 20, 2004, AmeriCold Logistics sold, without recourse,
accounts receivable of $6,120,000 to the Quarry Company for $6,000,000 in cash.
AmeriCold Logistics recognized a loss of $120,000 on the sale. AmeriCold
Logistics also agreed to act as agent to collect the accounts receivable. The
Partnership does not believe that any significant servicing asset or liability
exists.

5. ACCRUED EXPENSES

A detail of accrued expenses is as follows:

DECEMBER 31,
--------------------------------
(amounts in thousands) 2003 2002
---------- ----------

Accrued payroll and related expenses.................. $ 12,808 $ 13,113
Accrued workers' compensation liabilities............. 10,887 10,199
Severance and other charges........................... 497 2,217
Other accrued expenses................................ 23,094 23,201
---------- ----------
$ 47,286 $ 48,730
========== ==========

6. LONG-TERM DEBT

A detail of long-term debt is as follows:

DECEMBER 31,
----------------------------------
(amounts in thousands) 2003 2002
------------ ------------

Notes payable to Vornado Operating:
12% promissory note payable (see Note 2).......... $ 6,000 $ 6,000
14% promissory note payable....................... 1,474 2,356
Notes payable to bank................................. -- 685
------------ ------------
7,474 9,041
Current maturities.................................... (7,474) (1,600)
------------ ------------
Long-term debt........................................ $ -- $ 7,441
============ ============

The 14% promissory note payable to Vornado Operating, as amended, is
payable in monthly installments of principal and interest of $99,000 and matures
on December 31, 2004. This note is secured by certain property and equipment
with a net book value of approximately $12,300,000 and may be prepaid without
penalty.

7. OTHER TRANSACTIONS WITH THE LANDLORD, VORNADO AND THE QUARRY COMPANY

During the years ended December 31, 2003, 2002 and 2001, AmeriCold
Logistics received a management fee of $276,000, $273,000 and $268,000,
respectively, from the Landlord for administrative services performed.

During the year ended December 31, 2003, AmeriCold Logistics received a
management fee of $214,000 from the Quarry Company for management services
provided.

During each of the years ended December 31, 2003, 2002 and 2001,
AmeriCold Logistics recorded a management fee of $487,000 due to Vornado. At
December 31, 2003 and 2002, other accrued liabilities included $2,340,000 and
$1,853,000, respectively, for these management fees.

-52-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. LEASE COMMITMENTS

AmeriCold Logistics entered into leases with the Landlord covering 87
of the warehouses used in this business. The leases, which commenced in March
1999, as amended, generally have 15-year terms with two five-year renewal
options and provide for the payment of fixed base rent and percentage rent based
on revenue from customers. The leases provide for fixed base rents of
approximately $136,000,000 in 2000, $137,000,000 per annum from 2001 through
2003, $140,000,000 per annum from 2004 through 2008, $145,000,000 per annum for
2009, $142,000,000 per annum for 2010, and $139,000,000 per annum from 2011
through February 2014. Percentage rent for each lease is based on a specified
percentage of revenues in excess of a specified base amount. The aggregate base
revenue amount under five of the six leases is approximately $350,000,000, and
the weighted average percentage rate is approximately 36% through 2003,
approximately 38% from 2004 through 2008 and approximately 40% from 2009 through
February 2014. The aggregate base revenue amount under the sixth lease is
approximately $32,000,000 through 2001, and approximately $26,000,000 from 2002
through February 2014, and the percentage rate is 24% through 2001, 37.5% from
2002 through 2006, 40% from 2007 through 2011 and 41% from 2012 through February
2014. The fixed base rent for each of the two five-year renewal options is
equal, generally, to the greater of the fair market rent at that time and the
fixed base rent for the immediately preceding lease year plus 5%.

On February 22, 2001, AmeriCold Logistics' leases with the Landlord
were restructured to, among other things, (i) reduce 2001 contractual rent to
$146,000,000, (ii) reduce 2002 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.

AmeriCold Logistics is required to pay for all costs arising from the
operation, maintenance and repair of the properties, including all real estate
taxes and assessments, utility charges, permit fees and insurance premiums, as
well as property capital expenditures in excess of $9,500,000 annually.

AmeriCold Logistics has the right to defer the payment of 15% of annual
fixed base rent and all percentage rent until December 31, 2004 to the extent
that available cash, as defined in the leases, is insufficient to pay such rent.
Pursuant thereto, AmeriCold Logistics exercised its deferral rights and deferred
fixed and percentage rents of $41,811,000 and $32,248,000 in the years ended
December 31, 2003 and 2002, respectively.

In the year ended December 31, 2001, AmeriCold Logistics reversed
$25,469,000 of the rent expense recorded in 2001. This resulted from the
Landlord waiving its rights to collect this portion of the rent. Further, the
Landlord waived $14,343,000 of the rent expense recorded by AmeriCold Logistics
in 2000; AmeriCold Logistics recorded this amount as income in the year ended
December 31, 2001. The aggregate amount waived by the Landlord of $39,812,000
represents a portion of the rent due under the leases, which AmeriCold Logistics
deferred in such years.

On January 23, 2002, four of the leases with the Landlord were combined
into one lease. This did not affect total contractual rent due under the
combined leases.

On March 2, 2004, AmeriCold Logistics and the Landlord extended the
deferred rent period in AmeriCold Logistics' leases with the Landlord to
December 31, 2005 from December 31, 2004. The parties previously extended the
deferred rent period to December 31, 2004 from December 31, 2003 on March 7,
2003.

On December 31, 2003, the Partnership's deficit was $76,072,000, which
includes $82,394,000 of deferred rent (rent recognized as expense but not paid
in cash) to the Landlord. On March 2, 2004 AmeriCold Logistics and the Landlord
extended the deferred rent period to December 31, 2005 from December 31, 2004.
Based on its right to defer rent, the management of AmeriCold Logistics
anticipates it will have sufficient cash flows to operate at least through
December 31, 2004. AmeriCold Logistics anticipates that in 2004, the Landlord
will restructure the leases to provide additional cash flow to AmeriCold
Logistics. Notwithstanding the foregoing, the Landlord is under no obligation to
restructure the leases and there can be no assurance that it will do so.

AmeriCold Logistics also has operating and capital lease agreements
with parties other than the Landlord for equipment and other facilities.
AmeriCold Logistics pays taxes, insurance, and maintenance costs on
substantially all of the leased property. Lease terms generally range from five
to 20 years with renewal or purchase options.

-53-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 2003, future minimum lease payments under the leases
with the Landlord and future minimum lease payments under operating leases with
parties other than the Landlord are as follows:

(amounts in thousands) The Landlord Other Lessors Total
------------ ------------ ------------

Year ending December 31,
2004..................................... $ 139,934 $ 3,942 $ 143,876
2005..................................... 139,681 3,437 143,118
2006..................................... 139,599 1,689 141,288
2007..................................... 139,599 1,009 140,608
2008..................................... 139,599 398 139,997
Thereafter............................... 727,993 206 728,199
------------ ------------ ------------
$ 1,426,405 $ 10,681 $ 1,437,086
============ ============ ============

Rent expense under leases with the Landlord, including the effect of
the straight-lining of rents, was $140,813,000 for fixed rent and $24,453,000
for percentage rent for the year ended December 31, 2003, $140,973,000 for fixed
rent and $12,786,000 for percentage rent for the year ended December 31, 2002
and $115,780,000 for fixed rent, net of the $25,469,000 contractual rent
forgiveness, as discussed above, and $15,027,000 for percentage rent for the
year ended December 31, 2001.

Rent expense under operating leases with parties other than the
Landlord was $8,041,000, $9,150,000, and $8,068,000 for the years ended December
31, 2003, 2002, and 2001, respectively.

At December 31, 2003, future minimum payments under capital leases are
as follows:

(amounts in thousands)

Year Ending December 31,
2004........................................ $ 4,119
2005........................................ 4,081
2006........................................ 3,300
2007........................................ 1,809
2008........................................ 867
Thereafter.................................. 651
-----------
Total minimum obligations................... 14,827
Interest portion............................ (2,070)
-----------
Present value of net minimum payments....... 12,757
Current portion............................. (3,210)
-----------
Long-term portion........................... $ 9,547
===========

At December 31, 2003 and 2002, property leased under capital leases had
a total cost of $20,636,000 and $15,776,000 and total accumulated depreciation
of $7,800,000 and $5,287,000, respectively.

9. SEVERANCE AND OTHER CHARGES

In the year ended December 31, 2001, AmeriCold Logistics recorded a
charge of $8,895,000 comprised of (i) severance and relocation costs associated
with a management restructuring and (ii) expenses arising from the consolidation
of a portion of the corporate office in Portland, Oregon into AmeriCold
Logistics' Atlanta, Georgia headquarters. Severance related charges were for the
termination of 199 employees, located primarily in the Atlanta and Portland
offices. In 2002, AmeriCold Logistics reduced the charge by $949,000. At
December 31, 2003, 50 of the original 199 employees had not been terminated.
AmeriCold Logistics anticipates that the remaining 50 employees will be
terminated during 2004. The other charges of $1,170,000 consisted primarily of a
signing bonus, recruitment and other exit costs.

-54-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

These charges and the related liability are summarized below:

(amounts in thousands) Severance Other Total
------------ ------------ ------------

Charges...................................... $ 7,725 $ 1,170 $ 8,895
Expenditures................................. (961) (1,170) (2,131)
------------ ------------ ------------
Liability at December 31, 2001............. 6,764 -- 6,764

Adjustment to severance charges.............. (949) -- (949)
Expenditures................................. (3,598) -- (3,598)
------------ ------------ ------------
Liability at December 31, 2002............. 2,217 -- 2,217

Expenditures................................. (1,720) -- (1,720)
------------ ------------ ------------
Liability at December 31, 2003............. $ 497 $ -- $ 497
============ ============ ============

10. COMMITMENTS AND CONTINGENCIES

The Partnership and AmeriCold Logistics are 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 Partnership's financial condition,
results of operations or cash flows.

At December 31, 2003, AmeriCold Logistics issued letters of credit for
certain self-insured liabilities totaling $20,155,000. These letters of credit
are secured by restricted cash.

11. VALUATION AND QUALIFYING ACCOUNTS

The changes in the allowance for doubtful accounts are summarized
below:

Balance at
Beginning of Charged to Balance at End of
(amounts in thousands) Period Expense Asset Write Offs Period
------------ ------------ ---------------- -----------------

Year ended December 31,
2001............................... $ 3,502 $ 2,653 $ (3,713) $ 2,442
2002............................... 2,442 363 (241) 2,564
2003............................... 2,564 431 (869) 2,126

12. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION AND POSTRETIREMENT PLANS: AmeriCold Logistics
has defined benefit pension plans that cover substantially all employees, other
than union employees covered by union pension plans under collective bargaining
agreements. Benefits under these plans are based on years of credited service
and compensation during the years preceding retirement, or on years of credited
service and established monthly benefit levels. AmeriCold Logistics also has
postretirement plans that provide life insurance coverage to eligible retired
employees (collectively with the defined benefit plans, the "Plans"). AmeriCold
Logistics expects to contribute $7,456,000 to the Plans in the year ending
December 31, 2004.

To develop the assumption for the long-term rate of return on assets,
the Partnership considered the historical returns and the future expectations
for returns for each asset class, as well as the target asset allocation of the
Plans' assets and the effect of periodic rebalancing, consistent with the Plans'
investment strategies. The Partnership assumed a long-term rate of return of
8.5%. The Plans are invested to maximize return on the Plans' assets while
minimizing risk by diversifying across a broad range of asset classes.

-55-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The allocations of the Plans' investments by fair value are as follows:

DECEMBER 31,
--------------------------
2003 2002
---- ----

Domestic equities......................... 51% 46%
International equities.................... 5 5
Fixed income securities................... 15 17
Real estate............................... 9 11
Hedge funds............................... 20 21
--- ---
100% 100%
=== ===

In accordance with the Plans' investment strategies, assets are
invested within the following target ranges:

Domestic equities........................... 40-60%
International equities...................... 0-10
Fixed income securities..................... 10-20
Real estate................................. 0-15
Hedge funds................................. 0-30

-56-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Actuarial information regarding the defined benefit pension plans and
postretirement benefits other than pensions is as follows:

DECEMBER 31, 2003
----------------------------------------------------------
Pension Benefits
--------------------------------- Other
Retirement National Service Postretirement
(amounts in thousands) Income Plan Related Plan Benefits
----------- ------------ --------

CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year................ $ (47,692) $ (10,019) $ (560)
Service cost........................................... (2,848) (228) (1)
Interest cost.......................................... (3,122) (664) (38)
Actuarial loss........................................ (3,697) (1,014) 14
Curtailments.......................................... -- -- --
Plan amendments....................................... -- (61) 55
Benefits paid.......................................... 4,917 531 --
----------- ----------- ------------
Benefit obligation at end of year...................... $ (52,442) $ (11,455) $ (530)
=========== =========== ============

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year......... $ 27,202 $ 7,743 $ --
Actual return on plan assets........................... 5,315 1,417 --
Employer contributions................................. 7,098 -- --
Benefits paid.......................................... (4,917) (531) --
----------- ----------- ------------
Fair value of plan assets at end of year............... $ 34,698 $ 8,629 $ --
=========== =========== ============

Funded status.......................................... $ (17,744) $ (2,826) $ (530)
Unrecognized actuarial loss (gain)..................... 19,671 3,937 (254)
Unrecognized prior service cost........................ 1,023 407 (336)
----------- ----------- ------------
Prepaid (accrued) benefit cost......................... $ 2,950 $ 1,518 $ (1,120)
=========== =========== ============

AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEET CONSIST OF
Accrued benefit liability.............................. $ (9,503) $ (2,826) $ (1,120)
Intangible asset....................................... 1,030 404 --
Accumulated other comprehensive loss................... 11,423 3,940 --
----------- ----------- ------------
Net amount recognized.................................. $ 2,950 $ 1,518 $ (1,120)
=========== =========== ============

WEIGHTED-AVERAGE ASSUMPTIONS AS OF
DECEMBER 31, 2003
Discount rate.......................................... 6.00% 6.00% 6.00%
Expected return........................................ 8.50 8.50 N/A
Rate of compensation increase.......................... 3.50 N/A N/A

-57-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 2002
----------------------------------------------------------
Pension Benefits
---------------------------------
Retirement National Service Other Postretirement
(amounts in thousands) Income Plan Related Plan Benefits
----------- ------------ --------

CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year................ $ (38,276) $ (8,824) $ (1,732)
Service cost........................................... (2,524) (211) (59)
Interest cost.......................................... (2,686) (626) (122)
Actuarial loss........................................ (8,018) (716) (136)
Curtailments.......................................... -- -- 1,486
Plan amendments....................................... (2) (55) --
Benefits paid.......................................... 3,814 413 3
----------- ----------- ------------
Benefit obligation at end of year...................... $ (47,692) $ (10,019) $ (560)
=========== =========== ============

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year......... $ 25,969 $ 8,887 $ --
Actual return on plan assets........................... (2,436) (768) --
Employer contributions................................. 7,483 37 3
Benefits paid.......................................... (3,814) (413) (3)
----------- ----------- ------------
Fair value of plan assets at end of year............... $ 27,202 $ 7,743 $ --
=========== =========== ============

Funded status.......................................... $ (20,490) $ (2,275) $ (560)
Unrecognized actuarial loss (gain)..................... 19,936 3,975 (222)
Unrecognized prior service cost........................ 1,103 369 (338)
----------- ----------- ------------
Prepaid (accrued) benefit cost......................... $ 549 $ 2,069 $ (1,120)
=========== =========== ============

AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEET CONSIST OF
Accrued benefit liability.............................. $ (13,809) $ (2,275) $ (1,120)
Intangible asset....................................... 1,111 369 --
Accumulated other comprehensive loss................... 13,247 3,975 --
----------- ----------- ------------
Net amount recognized.................................. $ 549 $ 2,069 $ (1,120)
=========== =========== ============

WEIGHTED-AVERAGE ASSUMPTIONS AS OF
DECEMBER 31, 2002
Discount rate.......................................... 6.75% 6.75% 6.75%
Expected return........................................ 9.00 9.00 N/A
Rate of compensation increase.......................... 4.00 N/A N/A

-58-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEAR ENDING DECEMBER 31, 2003
-------------------------------------------------------------
Pension Benefits
------------------------------------
Retirement Income National Service Other Postretirement
(amounts in thousands) Plan Related Plan Benefits
----------- ------------ --------

COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost....................................... $ 2,848 $ 228 $ 1
Interest cost...................................... 3,122 664 38
Expected return on plan assets..................... (2,512) (643) --
Recognized net actuarial loss...................... 1,159 280 (9)
Amortization of prior service cost................. 81 22 (57)
----------- ----------- ------------
$ 4,698 $ 551 $ (27)
=========== =========== ============

YEAR ENDING DECEMBER 31, 2002
-------------------------------------------------------------
Pension Benefits
------------------------------------
Retirement Income National Service Other Postretirement
(amounts in thousands) Plan Related Plan Benefits
----------- ------------ --------

COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost....................................... $ 2,524 $ 211 $ 59
Interest cost...................................... 2,686 626 122
Expected return on plan assets..................... (2,563) (785) --
Recognized net actuarial loss...................... 504 123 2
Amortization of prior service cost................. 81 19 (57)
----------- ----------- ------------
$ 3,232 $ 194 $ 126
=========== =========== ============

YEAR ENDING DECEMBER 31, 2001
-------------------------------------------------------------
Pension Benefits
------------------------------------
Retirement Income National Service Other Postretirement
(amounts in thousands) Plan Related Plan Benefits
----------- ------------ --------

COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost....................................... $ 2,977 $ 223 $ 55
Interest cost...................................... 2,562 632 126
Expected return on plan assets..................... (2,591) (876) --
Recognized net actuarial loss...................... 186 84 15
Amortization of prior service cost................. 81 6 (65)
----------- ----------- ------------
$ 3,215 $ 69 $ 131
=========== =========== ============

During the year ended December 31, 2002, AmeriCold Logistics terminated
certain postretirement healthcare and life insurance benefits for substantially
all of the individuals previously covered by such benefit plans. As a result of
the termination of these benefits, AmeriCold Logistics recognized a curtailment
gain of $1,111,000. The benefits provided the individuals with a fixed dollar
benefit for each year that the retired individuals were eligible to receive
benefits. All increases in medical costs had previously been paid for by the
individual and, therefore, no health care cost trend was assumed.

-59-

VORNADO CRESCENT LOGISTICS OPERATING PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MULTI-EMPLOYER PLANS: AmeriCold Logistics contributes to defined
benefit multi-employer plans that cover substantially all union employees.
Amounts charged to pension cost and contributed to the plans in the years ended
December 31, 2003, 2002 and 2001 were $1,013,000, $999,000, and $1,235,000,
respectively.

PROFIT SHARING: AmeriCold Logistics has defined contribution employee
benefit plans, which cover all eligible employees. The plans also allows
contributions by plan participants in accordance with Section 401(k) of the
Internal Revenue Code. Profit sharing expense for the years ended December 31,
2003, 2002 and 2001 was $7,130,000, $5,720,000 and $5,403,000, respectively.

DEFERRED COMPENSATION: AmeriCold Logistics has deferred compensation
and supplemental retirement plan agreements with certain of its executives. The
agreements provide for certain benefits at retirement or disability, and also
provide for survivor benefits in the event of death of the employee. AmeriCold
Logistics charges expense for the accretion of the liability each year. The net
expense (reversal) for all deferred compensation and supplemental retirement
plans for the years ended December 31, 2003, 2002 and 2001 was $175,000, $95,000
and ($12,000), respectively.

-60-

EXHIBIT INDEX

EXHIBIT NO.
- -----------

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 period ended March 31, 2000
(File No. 001-14525), as filed with the Commission on May 9, 2000)

4.1 Specimen stock certificate (incorporated by reference to Exhibit 4.1 *
of the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 2003 (File No. 001-14525), as filed with the
Commission on May 12, 2003)

-61-

EXHIBIT NO.
- -----------

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 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)

10.8 Second Amendment to Master Lease Agreement, effective as of February *
22, 2001, between URS Real Estate, L.P. and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.7(A) of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(File No. 001-14525), as filed with the Commission on May 11, 2001)

10.9 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)

-62-

EXHIBIT NO.
- -----------

10.10 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)

10.11 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)

10.12 Second Amendment to Master Lease Agreement, effective as of February *
22, 2001, between AmeriCold Real Estate, L.P. and AmeriCold
Logistics, LLC (incorporated by reference to Exhibit 10.10(A) of the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 (File No. 001-14525), as filed with the Commission on May
11, 2001)

10.13 Assignment and Assumption of Master Lease, dated as of February 28, *
1999, between AmeriCold Corporation and AmeriCold Logistics, LLC
(incorporated by reference 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)

10.14 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)

10.15 Amendment to Master Lease Agreement, dated as of November 30, 1999, *
between URS Logistics, Inc., and AmeriCold Logistics, LLC.
(incorporated by reference to Exhibit 10.12(A) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.16 Second Amendment to Master Lease Agreement, effective as of February *
22, 2001, between AmeriCold Corporation, as successor to URS
Logistics, Inc., and AmeriCold Logistics, LLC (incorporated by
reference to Exhibit 10.12(A) of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2001 (File No.
001-14525), as filed with the Commission on May 11, 2001)

10.17 Third Amendment to Master Lease Agreement, dated as of December 27, *
2001, between AmeriCold Corporation, as successor to URS
Logistics, Inc., and AmeriCold Logistics, LLC (incorporated by
reference to Exhibit 10.12(C) of the Company's Annual Report on Form
10-K for the year ended December 31, 2001 (File No. 001-14525), as
filed with the Commission on March 14, 2002)

10.18 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)

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EXHIBIT NO.
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10.19 Amendment to Master Lease Agreement, dated November 30, 1999, *
between AmeriCold Corporation and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.13(A) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.20 Second Amendment to Master Lease Agreement, effective February 22, *
2001, between AmeriCold Corporation and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.13(A) of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(File No. 001-14525), as filed with the Commission on May 11, 2001)

10.21 Third Amendment to Master Lease Agreement, dated as of December 27, *
2001, between AmeriCold Corporation and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.13(C) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.22 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)

10.23 Amendment to Master Lease Agreement, dated as of November 30, 1999, *
by and among each of the entities listed on Exhibit A to the lease,
or their successors thereto, and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.14(A) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.24 Second 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 Logistics, 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)

10.25 Third 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
(incorporated by reference to Exhibit 10.14(B) of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(File No. 001-14525), as filed with the Commission on May 11, 2001)

10.26 Fourth Amendment to Master Lease Agreement, dated as of December 27, *
2001, by and among each of the entities listed on Exhibit A to the
lease, or their successors thereto, and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.14(D) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

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EXHIBIT NO.
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10.27 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)

10.28 Amendment to Master Lease Agreement, dated as of November 30, 1999, *
between VC Omaha Holdings, L.L.C., and Carmar Freezers Thomasville
L.L.C., together as Landlord, and AmeriCold Logistics, LLC
(incorporated by reference to Exhibit 10.15(A) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.29 Second 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 (incorporated by reference to Exhibit 10.15(A) of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(File No. 001-14525), as filed with the Commission on May 11, 2001)

10.30 Third Amendment to Master Lease Agreement, dated as of December 27, *
2001, between VC Omaha Holdings, L.L.C., and Carmar Freezers
Thomasville L.L.C., together as Landlord, and AmeriCold Logistics,
LLC (incorporated by reference to Exhibit 10.15(C) of the Company's
Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 001-14525), as filed with the Commission on March 14,
2002)

10.31 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 period ended June 30, 2000
(File No. 001-14525), as filed with the Commission on August 7,
2000)

10.32 Consolidation of Master Lease Agreements, dated as of January 23, *
2002, made among (i) VC Omaha Holdings L.L.C., and Carmar Freezers
Thomasville L.L.C., together as Landlord I, (ii) VC Freezer
Amarillo, L.P., VC Freezer Fremont L.L.C., VC Freezer Garden City
L.L.C., VC Freezer Phoenix, L.L.C., VC Freezer Sioux Falls L.L.C.,
VC Freezer Springdale L.L.C., VC Freezer Russellville L.L.C., VC
Freezer Texarkana L.L.C., Carmar Freezers Russellville L.L.C., VC
Freezer Fort Worth L.L.C., AmeriCold Corporation, VC Freezer
Kentucky L.L.C., VC Freezer Massillon, L.L.C., VC Freezer Strasburg
L.L.C., VC Freezer Babcock L.L.C., together as Landlord II, (iii)
AmeriCold Corporation as Landlord III, and (iv) AmeriCold Logistics,
LLC as tenant (incorporated by reference to Exhibit 10.18 of the
Company's Quarterly Report on Form 10-Q for the period ended March
31, 2002 (File No. 001-14525), as filed with the Commission on May
2, 2002)

10.33 Secured Promissory Note from AmeriCold Logistics, LLC to Vornado *
Operating L.P., effective as of March 11, 2002 (incorporated by
reference to Exhibit 10.33 of the Company's Quarterly Report on Form
10-Q for the period ended September 30, 2002 (File No. 001-14525),
as filed with the Commission on November 14, 2002).

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EXHIBIT NO.
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10.34 Security Agreement by and between AmeriCold Logistics, LLC and *
Vornado Operating L.P., dated March 11, 2002 (incorporated by
reference to Exhibit 10.34 of the Company's Quarterly Report on Form
10-Q for the period ended September 30, 2002 (File No. 001-14525),
as filed with the Commission on November 14, 2002)

10.35 Consent of Vornado Operating L.P. and COPI Cold Storage L.L.C., *
dated November 5, 2002 (incorporated by reference to Exhibit 10.35
of the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2002 (File No. 001-14525), as filed with the
Commission on November 14, 2002)

10.36 Promissory Note from AmeriCold Logistics, LLC to Vornado Operating *
L.P., dated June 6, 2001 (incorporated by reference to Exhibit 10.36
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)

10.37 Guaranty by AmeriCold Logistics, LLC and the other guarantors listed *
therein, in favor of Vornado Operating L.P. and the other lenders
listed therein, dated June 6, 2001 (incorporated by reference to
Exhibit 10.37 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)

10.38 Security Agreement by AmeriCold Logistics, LLC and the other *
pledgors listed therein, in favor of Vornado Operating L.P. and
the other lenders listed therein, dated June 6, 2001 (incorporated
by reference to Exhibit 10.38 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)

10.39 First Allonge and Amendment to Promissory Note by and between *
AmeriCold Logistics, LLC, Vornado Operating L.P. and the
guarantors listed therein, effective as of March 11, 2002
(incorporated by reference to Exhibit 10.39 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)

10.40 Purchase Agreement by and between Vornado Crescent Carthage and KC *
Quarry L.L.C. and AmeriCold Logistics, LLC, dated December 31,
2002 (incorporated by reference to Exhibit 10.40 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)

10.41 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)

10.42 First Amendment to Master Lease Agreement No. 1, dated as of March 2,
2004, between ART Mortgage Borrower, L.P., as Landlord, and AmeriCold
Logistics, LLC, as Tenant

10.43 First Amendment to Master Lease Agreement No. 2, dated as of March 2,
2004, between AmeriCold Realty Trust, as Landlord, and AmeriCold
Logistics, LLC, as Tenant

10.44 Third Amendment to Master Lease Agreement, dated as of March 2, 2004,
between AmeriCold Realty Trust, as Landlord, and AmeriCold Logistics,
LLC, as Tenant

10.45 Third Amendment to Master Lease Agreement, dated as of March 2, 2004,
between AmeriCold Realty Trust, as Landlord, and AmeriCold Logistics,
LLC, as Tenant

21 Subsidiaries of Vornado Operating Company

23 Consent of Deloitte & Touche LLP

31.1 Rule 13a-14(a)/15d-14(a) certification of the Chief Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) certification of the Chief Financial Officer

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EXHIBIT NO.
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32.1 Section 1350 certification of the Chief Executive Officer

32.2 Section 1350 certification of the Chief Financial Officer

- --------------------------
* Incorporated by reference.

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