<PAGE> 1
FILE NO.: 000-24167
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
EBS Building, L.L.C.
-------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 43-1794872
------------------------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
c/o PricewaterhouseCoopers LLP
(formerly Price Waterhouse LLP)
800 Market Street 63101-2695
St. Louis, Missouri
------------------------------------------------- --------------------
(Address of Principal Executive Offices) (Zip Code)
(314) 206-8500
-------------------------------------------------------------------------
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
-------------------- ------------------------------
N/A N/A
----------------------------------- ------------------------------
Securities to be registered under Section 12(g) of the Act:
Class A Membership Units
------------------------------------------------------------------------
(Title of Class)
<PAGE> 2
AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
INTRODUCTION.
This is Amendment No. 1 to the Registration Statement on Form
10-SB for the Class A Membership Units of EBS Building, L.L.C., a Delaware
limited liability company (the "Company"). The Registration Statement, as
amended hereby, contains the information required by Alternative 2 of Form
10-SB.
The Company began operations on September 26, 1997, the
effective date of the Joint Plan of Reorganization (the "Plan of
Reorganization"), of Edison Brothers Stores, Inc. ("Edison") and its affiliates.
Pursuant to the Plan of Reorganization, Edison transferred title to its land and
headquarters building at 501 North Broadway in downtown St. Louis, Missouri, to
the Company on September 26, 1997, as part of the overall distribution to
holders of Allowed General Unsecured Claims against Edison (as defined in the
Plan of Reorganization). Pursuant to the terms of the Members Agreement of the
Company, dated as of September 26, 1997 (the "Members Agreement"), the holders
of the Allowed General Unsecured Claims ultimately received Class A Membership
Units (the "Class A Units") in consideration of their respective claims.
Except as specifically provided herein, this Amendment No. 1
does not modify any of the information previously reported in the Registration
Statement on Form 10-SB.
PART I
ALTERNATIVE 2
DESCRIPTION OF BUSINESS (ITEM 6 OF MODEL B OF FORM 1-A)
This Registration Statement contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for the Company. Actual
results could differ materially from those contemplated by such statements.
The Company was formed as a limited liability company under the
Delaware Limited Liability Company Act (the "Delaware Act") on September 25,
1997, for the exclusive purpose of acquiring, owning, managing, maintaining,
repairing, leasing, selling, hypothecating, mortgaging or otherwise dealing with
the building located at 501 North Broadway, St. Louis, Missouri (the "Building")
and for receiving, administering and distributing any proceeds resulting
therefrom, as more fully described in the Members Agreement. The Company has no
business plans other than dealing with the Building as set forth above. The
Company was formed in connection with the reorganization of Edison and its
affiliates pursuant to the Plan of Reorganization filed in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). The
Bankruptcy Court issued its Order Confirming the Plan of Reorganization on
2
<PAGE> 3
September 9, 1997, as supplemented by an Order of the Bankruptcy Court dated
February 19, 1998 (collectively, the "Confirmation Order").
On September 26, 1997, Edison transferred the title of the Building to
the Company in exchange for 10,000,000 Class B Membership Units of the Company
(the "Class B Units"), which represented all of the outstanding Membership Units
of the Company. On December 12, 1997, in accordance with the Members Agreement
and the Plan of Reorganization, Edison canceled 9,058,041 Class B Units and
simultaneously issued 9,058,041 Class A Units to holders of Allowed General
Unsecured Claims. Subsequently, prior to April 30, 1998, Edison canceled an
additional 280,560 Class B Units and issued an additional 280,560 Class A Units
to holders of Allowed General Unsecured Claims. All outstanding Class B Units
eventually will be canceled and an equivalent number of Class A Units issued
to the holders of Allowed General Unsecured Claims as required by the Members
Agreement and the Plan of Reorganization. As of April 30, 1998, there were
9,338,601 issued and outstanding Class A Units.
The Members Agreement contemplates that the Company will sell the
Building by September 26, 2000, or if not by then, within an extension of the
term of the Company approved by the Bankruptcy Court. In certain circumstances,
the manager of the Company (the "Manager") has the right to extend the term of
the Company, with the approval of the Bankruptcy Court for good cause shown, for
one or more additional two year periods beyond September 26, 2000. See "SELECTED
ADDITIONAL DISCLOSURE ITEMS -- Summary of the Members Agreement - Term of the
Company," below. The Manager currently intends to cause the Company to sell the
Building by September 26, 2000. Upon the sale of the Building, the Company will
dissolve and the proceeds from such sale will be distributed to the Class A
Members in accordance with the terms of the Members Agreement. See "SELECTED
ADDITIONAL DISCLOSURE ITEMS -- Summary of the Members Agreement - Distributions
to Class A Members," below. In the event that (i) the Company has not sold the
Building by September 26, 2000, (ii) an extension of the term of the Company has
been granted by the Bankruptcy Court and (iii) the Edison lease (as described
below under "Description of Property") has not been renewed in accordance with
its terms, the Manager intends to market the space previously occupied by Edison
for lease to one or more new or existing tenants at such rental rates and on
such other terms as the Manager can obtain at such time.
The business in which the Company is engaged is highly competitive, in
terms of both leasing available office space and eventually selling the
Building. The Building is located in downtown St. Louis and is subject to
leasing competition from other similar types of properties in downtown St. Louis
and throughout the St. Louis area. The Company competes for tenants for the
Building with numerous other individuals and entities engaged in real estate
leasing activities. Competition is based on such factors as location, rent
schedules and services and amenities provided. In addition to leasing
competition, there is competition in the Company's business of disposing of the
Building considering the competition in the institutional real estate market for
attractive real estate investment properties.
The Building is considered a Class A property for real estate
investment purposes. According to Insignia Commercial Group, Inc., the vacancy
rate in downtown St. Louis for Class A property was less than ten percent as of
December 1997. Market concerns include both actual and potential departures of
major St. Louis companies and/or divisions of such companies
3
<PAGE> 4
including Ralston Purina Company, SBC Communications, Inc., The Boeing Company
and Trans World Airlines Inc., as well as consolidations in the banking
industry.
The Company has no employees. The operations of the Company are the
responsibility of the Manager. See "Directors, Executive Officers and
Significant Employees," below.
On September 26, 1997, the Company entered into a property management
agreement (the "Edison Property Management Agreement") with Edison to provide
interim management to the Building. Such agreement provided for the appointment
of Edison to operate, manage and supervise the Building. As compensation for
such services, Edison received a management fee equal to three percent of gross
operating receipts. In addition, the Company agreed to reimburse Edison for the
portion of salaries and fringe benefits paid to Edison facilities services
employees related to the operation and management of the Building as well as
other out-of-pocket expenditures. The Edison Property Management Agreement was
terminated on January 31, 1998.
On September 26, 1997, the Company entered into an exclusive listing
agreement (the "Cushman Agreement") with Cushman & Wakefield of Missouri, Inc.
("Cushman"). Such agreement granted Cushman the exclusive right to lease office
space located within the Building. The Cushman Agreement was terminated on
December 31, 1997.
On December 31, 1997, the Company entered into a commercial property
management and leasing agreement (the "Insignia Agreement") with Insignia
Commercial Group, Inc. ("Insignia"). The Insignia Agreement granted Insignia the
exclusive right to lease office space located within the Building commencing on
January 1, 1998. Insignia receives certain commissions for its leasing work,
which commissions could range up to five percent of gross rentals, depending on
certain variables. The Insignia Agreement also engaged Insignia to manage and
operate the Building commencing on February 1, 1998, in consideration of certain
management fees. Additionally, Insignia receives a construction management fee
with respect to non-routine capital improvements in the Building. The Company
reimburses Insignia for its on-site employee salaries, bonuses and benefits and
its out-of-pocket costs incurred in connection with its services. Insignia is
also provided with free rental of furnished office space in the Building.
The Company's transfer agent for the Class A Units is Norwest Bank
Minnesota, N.A., which was retained by the Company to serve in such capacity
pursuant to a transfer and paying agency agreement entered into on December 9,
1997.
During the next 12 months, the Company will continue to manage,
maintain, repair, lease, mortgage or otherwise deal with the administration of
the Building. The Company, through its leasing agent, intends to seek additional
leases for office space within the Building. Additionally, the Company may enter
into negotiations for the sale of the Building in accordance with the Members
Agreement.
The Company currently produces break-even cash-flows from operations.
However, in 1998, during which the Company intends to lease additional space in
the Building, negative cash-flows from operations are anticipated due to
commission costs paid to leasing agents, tenant improvement costs usually
incurred at the front-end of new leases and various corporate costs
4
<PAGE> 5
associated with the registration of the Class A Units under the Securities
Exchange Act of 1934, as amended. In March 1998, the Company entered into a
$2,000,000 revolving line of credit with First Bank to cover any shortfalls in
cash-flows. See "DESCRIPTION OF PROPERTY." Given the present occupancy rates and
leases affecting the Building, the Manager believes that funds from operations
and the Company's present availability under its revolving line of credit
provide sufficient resources to meet the Company's present and anticipated
financing needs. If there are future changes to the present occupancy of the
Building or modifications of certain leases, it may be necessary to seek
additional financing for the Company's operations.
DESCRIPTION OF PROPERTY (ITEM 7 OF MODEL B OF FORM 1-A).
The Building is a twelve-floor office building with 434,136 square feet
of rentable space, which square footage includes 9,393 square feet of meeting
rooms and 13,008 square feet of mezzanine space, and which also has a
subterranean parking garage containing 159 parking spaces. The Building is
located at 501 N. Broadway, St. Louis, Missouri. The Building serves as Edison's
headquarters and was deeded to the Company by Edison by quit claim deed on
September 26, 1997. The Building was built in 1985.
The Company does not own any real estate other than the Building and
underlying real estate, and will not otherwise invest in interests in real
estate or real estate mortgages.
The Company believes that the Building is adequately insured. Allendale
Mutual Insurance Company provided the property insurance as of January 31, 1998.
Commencing February 1, 1998, Travelers Indemnity of Illinois provides property
insurance for the Building.
The Building has tenants leasing 339,460 square feet for an occupancy
rate of 78% (such occupancy rate is based on 434,136 square feet of rentable
space which includes 9,393 square feet of meeting rooms which are currently not
available for lease and are used as a building amenity available to all
tenants).
The only tenant in the Building that occupies greater than 10% of the
rentable space is Edison with a lease of 273,068 rentable square feet which
represents 63% of the Building's total rentable square footage. The Edison
lease, as required by the Plan of Reorganization, provides for an effective
rental rate of $9.00 per square foot, excluding 13,008 square feet of mezzanine
space which is demised under Edison's lease rent free. The Edison lease expires
in September, 2000 with an option to extend for one year at $12.00 per square
foot or for seven years at prevailing market rates. Edison is primarily engaged
in the specialty retail apparel industry and utilizes the office space in the
Building for its headquarters. The Company has been advised that the Edison
lease is below market value for Class A properties in the downtown St. Louis
market.
The Company entered into a lease for office space on February 16, 1998,
with the term commencing March 1, 1998, for the lease of 20,280 square feet in
the Building. Such lease provides for the Company to pay for tenant improvements
of up to $304,200 in the aggregate as well as initial space planning fees of
$3,042. The lease expires on February 28, 2008.
The remainder of the occupied space in the Building serves as corporate
office space for various other tenants.
5
<PAGE> 6
As of April 30, 1998, the annual average rental rate of all tenants,
including Edison, is $10.17 per square foot. As of April 30, 1998, the annual
average rental rate of all tenants, excluding Edison, is $16.73 per square foot.
The following table sets forth certain information with respect to the
leases in the Building, as of April 30, 1998:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF ANNUAL RENT AS OF CURRENT % OF GROSS
YEAR EXPIRATIONS SQUARE FOOTAGE 4/30/98 ANNUAL RENT
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 1 5,559 $86,165 2%
- ---------------------------------------------------------------------------------------------------------------------
2000 2 286,675 $2,544,645 74%
- ---------------------------------------------------------------------------------------------------------------------
2001 3 26,946 $541,408 16%
- ---------------------------------------------------------------------------------------------------------------------
2008 1 20,280 $278,911 8%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective March 16, 1998, the Company entered into a $2,000,000
revolving line of credit with First Bank, a Missouri banking corporation (the
"Line of Credit"). The Company presently intends to use the Line of Credit for
working capital needs and tenant improvements. Borrowings under the Line of
Credit bear interest at a rate per annum equal to the LIBOR rate plus 225 basis
points. There was no commitment fee for this Line of Credit. Payments due for
borrowings on the Line of Credit are for interest only until maturity (March 15,
1999), when all outstanding principal and interest is due and payable. As of the
date of this report, there were no outstanding borrowings under the Line of
Credit. The Line of Credit is secured by a first mortgage on the Building. See
"DESCRIPTION OF BUSINESS."
The net federal tax basis of the Building is $7,303,794 (gross cost of
$41,820,332 less accumulated depreciation of $34,516,538). Included in the net
federal tax basis is land cost of $1,222,815. The accumulated depreciation
includes a depreciation allowance for the period September 26, 1997, to December
31, 1997, of $497,834. If calculated on a full year, the depreciation allowance
would have been $1,991,334. Such depreciation allowance is calculated using the
federal method of depreciation and recovery periods applicable for the year the
assets were placed into service.
Real estate taxes on the Building for calendar year 1997 were
$385,299.20. The Company's pro-rata share of these taxes, for the period from
September 26, 1997 to December 31, 1997 was $101,338.97.
6
<PAGE> 7
PART F/S
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS:
Exhibit Page
<S> <C>
Financial Statements for the Year Ended December 31, 1997: F-1
Independent Auditors Report. F-2
Balance Sheet (December 31, 1997). F-3
Statement of Operations for the Period Ended December 31, 1997. F-4
Statement of Change in Members Equity for the Period Ended December
31, 1997. F-5
Statement of Cash Flows for the Period Ended December 31, 1997. F-6
Notes to Financial Statements (December 31, 1997). F-7
Financial Statements for the Quarter Ended March 31, 1998 (unaudited): F-11
Balance Sheet (March 31, 1998). F-11
Statement of Operations for the Period Ended March 31, 1998. F-12
Statement of Change in Members Equity for F-13
Period Ended March 31, 1998.
Statement of Cash Flows for the Period Ended March 31, 1998. F-14
</TABLE>
7
<PAGE> 8
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this Amendment No. 1 to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
EBS BUILDING, L.L.C.
By: PricewaterhouseCoopers LLP, as
Manager
/s/ Keith F. Cooper
-------------------------
Dated: August 6, 1998 By: Keith F. Cooper
Partner
8
<PAGE> 9
PART F/S
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS:
Exhibit Page
<S> <C>
Financial Statements for the Year Ended December 31, 1997: F-1
Independent Auditors Report. F-2
Balance Sheet (December 31, 1997). F-3
Statement of Operations for the Period Ended December 31, 1997. F-4
Statement of Change in Members Equity for the Period Ended December
31, 1997. F-5
Statement of Cash Flows for the Period Ended December 31, 1997. F-6
Notes to Financial Statements (December 31, 1997). F-7
Financial Statements for the Quarter Ended March 31, 1998 (unaudited): F-11
Balance Sheet (March 31, 1998). F-11
Statement of Operations for the Period Ended March 31, 1998. F-12
Statement of Change in Members Equity for Period Ended March 31, 1998. F-13
Statement of Cash Flows for the Period Ended March 31, 1998. F-14
</TABLE>
<PAGE> 10
EBS BUILDING,
L.L.C.
REPORT AND FINANCIAL STATEMENTS
DECEMBER 31, 1997
F-1
<PAGE> 11
[Rubin, Brown, Gornstein & Co. LLP Letterhead]
Independent Auditors' Report
Members
EBS Building, L.L.C.
St. Louis, Missouri
We have audited the accompanying balance sheet of EBS Building, L.L.C., a
Delaware limited liability company, as of December 31, 1997 and the related
statements of operations, changes in members' equity and cash flows for the
period beginning September 26, 1997 and ended December 31, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 bases, 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EBS Building, L.L.C. as of
December 31, 1997, and the results of its operations and its cash flows for the
period beginning September 26, 1997 and ended December 31, 1997 in conformity
with generally accepted accounting principles.
April 2, 1998
F-2
<PAGE> 12
EBS BUILDING, L.L.C.
BALANCE SHEET
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
<S> <C>
ASSETS
Rental property $ 19,584,653
Cash 403,919
Rents receivable 7,465
Due from Edison Brothers Stores, Inc. 61,398
Prepaid expenses 61,040
------------
Total assets $ 20,118,475
============
LIABILITIES
Accounts payable $ 63,418
Accrued professional fees 139,297
Accrued utilities 72,644
Accrued salaries 45,777
Due to Edison Brothers Stores, Inc. 112,022
Other liabilities 12,495
------------
Total liabilities 445,653
------------
MEMBERS' EQUITY:
Membership Units (Class A - 10,000,000 authorized,
9,058,041 issued and outstanding; Class B - 941,959
authorized, issued and outstanding) -
Paid-in capital 19,810,522
Retained earnings (137,700)
------------
Total members' equity 19,672,822
------------
Total liabilities and members' equity $ 20,118,475
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 13
EBS BUILDING, L.L.C.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Income
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
DECEMBER 31, 1997
--------------------
<S> <C>
Income:
Rent $ 822,477
Other 25,455
---------
Total income 847,932
=========
Expenses:
Maintenance 274,034
Professional fees 157,918
Utilities 153,478
General and administrative 131,329
Depreciation 125,869
Property taxes 101,340
Other operating expenses 41,664
---------
Total expenses 985,632
=========
Net loss $(137,700)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 14
EBS BUILDING, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
MEMBERSHIP MEMBERSHIP PAID IN RETAINED
UNITS UNITS CAPITAL EARNINGS TOTAL
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 26, 1997 - - $ - $ - $ -
Original capital contribution - 10,000,000 19,810,522 - 19,810,522
Units transferred 9,058,041 (9,058,041) - - -
Current period loss - - - (137,700) (137,700)
--------- ---------- ----------- ---------- -----------
Balance, December 31, 1997 9,058,041 941,959 $19,810,522 $ (137,700) $19,672,822
========= ========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 15
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
DECEMBER 31, 1997
<S> <C>
Cash flows from operating
Net loss $ (137,700)
Reconciliation of net loss to cash
provided by operating
Depreciation expense 125,869
Changes in operating assets and
Increase in assets, excluding cash
and rental property (129,903)
Increase in liabilities 445,653
------------
Cash flows provided by operating activities 303,919
------------
Cash flows from financing activities
Capital contribution 100,000
------------
Cash flows provided by financing activities 100,000
------------
Net increase in cash 403,919
Cash, beginning of period -
------------
Cash, end of period $ 403,919
============
Supplemental disclosure of noncash financing activities
Contribution of land and building $ 19,710,522
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 16
1. DESCRIPTION OF BUSINESS
EBS Building, L.L.C. (the "Company") is a limited liability company
organized on September 26, 1997 under the Delaware Limited Liability
Company Act. The Company is governed by a Members Agreement, dated as
of September 26, 1997 (the "Members Agreement"). The Company was formed
in connection with the reorganization proceedings of Edison Brothers
Stores, Inc. ("Edison") under Chapter 11 of the United States
Bankruptcy Code. Pursuant to Edison's Chapter 11 plan of reorganization
(the "Plan of Reorganization"), Edison transferred title to its land
and building at 501 North Broadway in downtown St. Louis, Missouri (the
"Building") to the Company on September 26, 1997 as a part of the
overall distribution to holders of Allowed General Unsecured Claims
against Edison (as defined in the Plan of Reorganization), who received
Membership Units in the Company (as more fully described below in Note
4).
Pursuant to the Members Agreement, the Company is organized for the
exclusive purposes of acquiring, owning, managing, maintaining,
repairing, leasing, selling, hypothecating, mortgaging or otherwise
dealing with the Building, and for receiving, administering and
distributing any disposition proceeds relating thereto. It primarily
derives income from the rental of office space. The proceeds from the
eventual sale of the Building will be distributed along with any other
Company assets to the appropriate holders of Membership Units (the
"Members") in accordance with the Members Agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in evaluating the Company's financial statements included in this
report. These principles conform to generally accepted accounting
principles. The preparation of financial statements in conformity with
generally accepted accounting principles requires that management make
estimates and assumptions which impact the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
BASIS OF PRESENTATION
These financial statements include the accounts of EBS Building, L.L.C.
for the period from September 26, 1997 through December 31, 1997.
CASH
Cash consists of an amount held in a demand deposit account in the
Company's name at a highly-rated financial institution.
F-7
<PAGE> 17
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
RENTAL PROPERTY
Rental property includes land and building. Land and building were
recorded at their carryover basis from Edison (i.e., Edison's
historical book value) at September 26, 1997. Such carryover basis
reflects a review in accordance with Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of". Maintenance, repairs, and minor improvements are expensed
as incurred. The Building is depreciated using the straight-line method
over its estimated useful life of 38 years.
RENTAL INCOME AND OPERATING EXPENSES Rental income and operating
expenses are recorded on the accrual basis of accounting.
INCOME TAXES
The Company is not subject to income taxes. Instead, the members report
their distributive share of the Company's profits and losses on their
respective income tax returns.
3. RENTAL PROPERTY
Rental property includes the following:
<TABLE>
<CAPTION>
December 31, 1997
<S> <C>
Land $ 2,250,520
Building 17,765,629
______________
20,016,149
Accumulated depreciation (431,496)
______________
$ 19,584,653
</TABLE>
The Building is located in downtown St. Louis, Missouri and is
primarily leased to various businesses for office space. The Building
has 434,136 square feet of rentable space. At December 31, 1997, the
Building had six tenants leasing 319,180 square feet for an occupancy
rate of 74%. The average annual rent per square foot was $9.87 as of
December 31, 1997.
The only tenant in the Building that occupies greater than 10% of the
leasable space is Edison. Edison leases 273,068 square feet of rentable
office space, or approximately 63% of total rentable space, at an
annual rent of $2,340,540. Edison's lease expires in September 2000
with an option to renew for one year at $12 per square foot or for
seven years at prevailing market rates.
F-8
<PAGE> 18
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Below is a summary of lease expirations, by year, at December 31, 1997.
Amounts represent minimum lease requirements and do not include
revenues from rent escalations:
<TABLE> Percent
<CAPTION> Number of Square Annual of Gross
Year Expirations Feet Rent Annual Report
<S> <C> <C> <C> <C>
1999 1 5,559 $ 77,826 2%
2000 2 286,675 $ 2,544,645 81%
2001 3 26,946 $ 527,058 17%
</TABLE>
At December 31, 1997, minimum payments due to the Company under
noncancelable operating lease agreements are as follows:
<TABLE>
<CAPTION>
Annual
Year Rent
<S> <C>
1998 $ 3,172,834
1999 3,182,242
2000 2,364,155
2001 192,947
______________
$ 8,912,178
______________
</TABLE>
4. MEMBERS' EQUITY
On September 26, 1997, Edison transferred the title of the Building and
related land, with a carryover basis of $19,710,522, to the Company. In
addition, as of September 26, 1997, Edison was obligated to provide
cash funding to the Company of $100,000, which was subsequently paid on
November 18, 1997. These two capital contributions to the Company were
in exchange for 10,000,000 Class B Membership Units of the Company,
which represented all of the outstanding Membership Units of the
Company. On December 12, 1997, in accordance with the Company's Members
Agreement and the Plan of Reorganization, Edison exchanged 9,058,041
Class B Membership Units for 9,058,041 Class A Membership Units of the
Company and simultaneously distributed such units to holders of Allowed
General Unsecured Claims. All outstanding Class B Membership Units will
eventually be canceled and an equivalent number of Class A Membership
Units issued to the holders of Allowed General Unsecured Claims as
required by the Members Agreement and the Plan of Reorganization. At
December 31, 1997, Edison held 941,959 Class B Membership Units.
F-9
<PAGE> 19
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS
During 1997, Edison was employed by the Company as the property manager
of the Building. As property manager, the Company paid Edison
management fees and reimbursed Edison for employee salaries totaling
$104,150 for the period from September 26, 1997 through December 31,
1997. As of December 31, 1997, the Company was due $61,398 from Edison
primarily relating to overpayment of payroll costs. The Company owed
$112,022 as of December 31, 1997 primarily for property taxes paid by
Edison on behalf of the Company.
One of Edison's six board members is an employee of a Member of the
Company.
6. SUBSEQUENT EVENTS
UNUSED LINE OF CREDIT
Effective March 16, 1998, the Company entered into a $2,000,000
revolving line of credit with First Bank (the "Line of Credit"). The
Company presently intends to use the Line of Credit for working capital
needs and tenant improvements. Borrowings under the Line of Credit bear
interest at a rate per annum equal to the LIBOR rate plus 2.25%. There
was no commitment fee for this Line of Credit. Payments due for
borrowings on the Line of Credit are for interest only until maturity
(March 15, 1999), when all outstanding principal and interest is due
and payable. As of the date of this report, there were no outstanding
borrowings under the Line of Credit.
LEASE AGREEMENT
In February 1998, the Company entered into a ten-year lease agreement
with another tenant for 20,280 square feet of rentable office space,
thereby increasing the Building's occupancy rate from 74% to 78%. The
lease agreement provides for the Company to pay for tenant improvements
of up to $304,200 over the life of the lease.
TRANSFER OF MEMBERSHIP UNITS
During February 1998, Edison exchanged an additional 280,560 Class B
Membership Units for 280,560 Class A Membership Units of the Company
and simultaneously distributed such units to holders of Allowed
General Unsecured Claims.
F-10
<PAGE> 20
EBS BUILDING, L.L.C.
BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
BALANCE SHEET
(UNAUDITED)
ASSETS
<S> <C> <C>
Rental property $ 19,497,594 $ 19,584,653
Cash 489,765 403,919
Rents receivable 8,160 7,465
Due from Edison Brothers Stores, Inc. 73,479 61,398
Prepaid expenses (a) 129,903 61,040
Other Assets 402
------------------ --------------------
Total assets $ 20,199,303 $ 20,118,475
================== ====================
LIABILITIES
Accounts payable $ 208,133 $ 63,418
Accrued professional fees 235,579 139,297
Accrued utilities 75,479 72,644
Accrued salaries 25,775 45,777
Accrued property taxes 104,031
Accrued property insurance 23,746
Due to Edison Brothers Stores, Inc. 112,022
Other liabilities 6,559 12,495
------------------ --------------------
Total liabilities 679,303 445,653
------------------ --------------------
MEMBERS' EQUITY:
Membership Units (Class A - 10,000,000 authorized, 9,338,601
issued and outstanding; Class B - 661,399 authorized,
issued and outstanding) - -
Paid-in capital 19,810,522 19,810,522
Retained earnings (290,522) (137,700)
------------------ --------------------
Total members' equity 19,520,000 19,672,822
------------------ --------------------
Total liabilities and members' equity $ 20,199,303 $ 20,118,475
================== ====================
</TABLE>
Note: The accompanying unaudited financial statements, in the opinion of
management, include all adjustments necessary for a fair presentation of the
results for the interim period presented. These adjustments consist of normal
recurring accruals.
(a) - Prepaid expenses at March 31, 1998 include capitalized lease commissions
paid of $119,023, net of accumulated amortization of $992, related to a 10-year
lease entered into on February 16, 1998. Such commissions will be amortized over
the life of the lease.
F-11
<PAGE> 21
EBS BUILDING, L.L.C.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE 3 MONTHS
ENDED
MARCH 31, 1998
(UNAUDITED)
Income
<S> <C>
Rent $ 816,887
Other 30,318
------------------
Total income 847,205
------------------
Expenses
Maintenance 295,354
Professional fees 197,187
Utilities 170,281
Depreciation & amortization 115,051
General and administrative 78,311
Property taxes 104,030
Other operating expenses 39,813
------------------
Total expenses 1,000,027
------------------
Net loss $ (152,822)
==================
</TABLE>
F-12
<PAGE> 22
EBS BUILDING, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
<TABLE>
<CAPTION>
CLASS A CLASS B
MEMBERSHIP MEMBERSHIP PAID IN RETAINED
UNITS UNITS CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 9,058,041 941,959 $ 19,810,522 $ (137,700) $ 19,672,822
Units transferred (unaudited) 280,560 (280,560) - - -
Current period loss (unaudited) - - - (152,822) (152,822)
-------------- -------------- -------------- ------------- ------------
Balance, March 31, 1998 (unaudited) 9,338,601 661,399 $ 19,810,522 $ (290,522) $ 19,520,000
============== ============== ============== ============= ============
</TABLE>
F-13
<PAGE> 23
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 3 MONTHS ENDED
MARCH 31, 1998
(UNAUDITED)
Cash flows from operating activities:
<S> <C>
Net loss $ (152,822)
Reconciliation of net loss to cash flows provided by operating activities:
Depreciation & amortization expense 115,051
Changes in operating assets and liabilities:
Increase in assets, excluding cash
and rental property (83,033)
Increase in liabilities 233,650
---------------
Cash flows provided by operating activities 112,846
---------------
Cash flows from investing activities:
Capital Expenditures (net) (27,000)
---------------
Cash flows provided by investing activities (27,000)
---------------
Net increase in cash 85,846
Cash, beginning of period 403,919
---------------
Cash, end of period $ 489,765
===============
</TABLE>
F-14
