<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) O THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from __________ to __________.
Commission file number 000-24167
EBS Building, L.L.C.
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(Name of Small Business Issuer in Its Charter)
Delaware 43-1794872
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
c/o PricewaterhouseCoopers LLP
800 Market Street
St. Louis, Missouri 63101-2695
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(Address of Principal Executive Offices) (Zip Code)
(314) 206-8500
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(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
---------------------- -----------------------------
N/A N/A
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Securities registered under Section 12(g) of the Exchange Act:
Class A Membership Units
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.
Yes [X] No [ ]
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Check if there are no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definative proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year.
$4,585,864
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) $17,571,635 FN1
Note. If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate
market value of the common equity held by non-affiliates of the basis
of reasonable assumptions, if the assumptions are stated.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. As of December 31, 1999,
there were 10,000,000 Class A Membership Units outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g. Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly described for identification purposes
(e.g. annual report to security holders for fiscal year ended December 24,
1990).
Form 8-K, filed November 24, 1999.
PART I
ITEM 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 (the "Chapter 11 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, known as Corporate Headquarters
Building (the "Building"), to
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FN1 Based on book value of the Class A Membership Units as there is no public
trading market for the Class A Membership Units. This number may or may not
reflect the true market value of such units.
<PAGE> 3
the Company on September 26, 1997 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 canceled 9,058,041 Class B
Membership Units and simultaneously issued 9,058,041 Class A Membership Units of
the Company to holders of Allowed General Unsecured Claims (as defined in the
Plan of Reorganization). All outstanding Class B Units were to eventually 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 December 31, 1998, all Class B Units held by
Edison were canceled and an equivalent number of Class A Units had been issued
to holders of Allowed General Unsecured Claims.
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.
The Members Agreement contemplates that the Company will sell the
Building by September 26, 2000, or if not by then, within the four year period
immediately following such date. Upon the sale of the Building, the Company will
distribute the sale proceeds to the Class A Members in accordance with the terms
of the Members Agreement. During 2000, the Company intends to continue actively
marketing the Building for sale.
The business in which the Company is engaged is highly competitive, in
terms of both leasing available office space and potentially 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. Such 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 Class A property for real estate investment
purposes. According to Insignia ESG, Inc., the vacancy rate in downtown St.
Louis for Class A properties was 10.5% as of December 1999. Market concerns
include both actual and potential departures of major St. Louis companies and/or
divisions of such companies.
The Company has no employees. The operations of the Company are the
responsibility of the Manager. (See Item 9 below).
<PAGE> 4
The Company entered into a commercial property management and leasing
agreement, effective January 1, 1998, (the "Insignia Agreement") with Insignia
Commercial Group, Inc. (the "Property Manager"). The Insignia Agreement granted
the Property Manager the exclusive right to lease office space located within
the Building commencing January 1, 1998. The Property Manager receives certain
commissions for its leasing work, which commissions range from 1.5% to 5% of
gross rentals, depending on the presence or absence of certain variables. The
Insignia Agreement also engaged the Property Manager to manage and operate the
Building commencing on February 1, 1998 in consideration of certain management
fees. Additionally, the Property Manager receives a construction management fee
with respect to non-routine capital improvements in the Building. The Company
reimburses the Property Manager for its on-site employee salaries, bonuses and
benefits and its out of pocket costs incurred in connection with its services.
The Property Manager is also provided with free rental of furnished office space
in the Building. In fiscal 1999, the Property Manager earned $409,604 in fees,
commissions and expense reimbursements.
The Company, through its Property Manager, utilizes computer software
for its corporate and real property accounting records and to prepare its
financial statements, as well as for internal accounting purposes. The principal
accounting system software has been updated and is now Year 2000 compliant. The
cost of such updates and testing was borne by the Property Manager. In addition,
a new operating system for the Building Management System ("BMS") was installed
in late August 1999 at a cost of $51,441. This system controls the fire system,
security, HVAC and lighting for the Building. As of January 1, 2000 all major
building systems continued operating normally. The Company has not endeavored to
determine whether or not its tenants experienced any Year 2000 compliance
problems, however, no delays in rent payments or other difficulties have
occurred to date as a result of a failure of its tenant's (or their financial
service providers') computer systems.
The Company files annual and periodic reports with the Securities and
Exchange Commission ("SEC"). You may read and copy any materials filed by the
Company with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet site (http://www.sec.gov) which contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC.
ITEM 2. DESCRIPTION OF PROPERTY.
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 was
<PAGE> 5
formerly the headquarters building of Edison and was deeded to the Company 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
will not otherwise invest in interests in real estate or real estate mortgages.
The Building is the only property in which the Company has an interest.
The Company believes that the Building is adequately insured. Liberty
Mutual Insurance Co., Greenwich Ins. Co., Lexington Insurance Company, GRE
Insurance Company and Continental Casualty Ins. Co. provide property insurance
for the Building.
There is only one tenant leasing greater than 10% of the rentable space
in the Building. The lease of such tenant is described below:
On September 30, 1998, the Company entered into a twelve-year lease
with Stifel Financial Corp. and Stifel, Nicolaus & Company, Incorporated
("Stifel") for 91,763 square feet of rentable office space, or approximately 21%
of total rentable space. An amendment to the Stifel lease was entered into on
December 17, 1999 and called for the rental of an additional 500 square feet of
storage space. The Stifel lease, which commenced on February 1, 1999, provides
annual rent ranging from $1,376,445 to $1,697,616 and expires in April 2011 with
two options to renew for five year renewal terms at then prevailing market
rental rates. Pursuant to the Stifel lease, the name of the Building has changed
to "One Financial Plaza". In addition, the Company incurred lease commission
costs of approximately $768,930 and tenant improvement costs of approximately
$2,555,855 in connection with the Stifel lease. Such costs have been capitalized
and will be amortized over the term of the Stifel lease.
On March 9, 1999, Edison, together with seven of its affiliates, filed
for Chapter 11 bankruptcy in the U.S. Bankruptcy court in Delaware. At that
time, Edison was the Building's largest tenant, occupying approximately 48% of
the total rentable space. In November, 1999, the Company negotiated a consensual
reduction of space under Edison's lease and an accelerated termination date for
the remaining space. The ultimate effects of the bankruptcy on the financial
condition and results of operations are not known at this time. See,
Management's Discussion and Analysis, below.
As of December 31, 1999, the annual average rental rate of all tenants
is $15.80 per square foot. Due to Edison's surrender of space, as of January 1,
2000 the annual average rental rate of all tenants is $15.74 per square foot.
The Building's total occupancy as of December 31, 1999 was 49%. The Building's
total occupancy as of January 1, 2000 was 47%.
The following table sets forth certain information with respect to the
leases in the Building as of December 31, 1999:
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<TABLE>
<CAPTION>
NUMBER OF ANNUAL RENT AS OF CURRENT % OF GROSS
YEAR EXPIRATIONS SQUARE FOOTAGE 12/31/99 ANNUAL RENT
- ---- ----------- -------------- ----------------- ------------------
<S> <C> <C> <C> <C>
2000 3 47,940(1) $ 721,228(1) 21%
2001 3 26,946 $ 544,399 16%
2003 1 2,835 $ 53,865 2%
2008 1 20,280 $ 278,850 8%
2009 1 22,397 $ 380,749 12%
2011 1 92,263 $1,380,445 41%
</TABLE>
(1) Effective January 1, 2000, the three leases expiring in the year 2000
represent 37,753 square feet of rental space and $548,049 in annualized
rental revenue due to Edison's surrender of 10,187 square feet.
During June 1999, the Company entered into a $12,000,000 revolving line
of credit with FinPro, L.L.C. to cover any shortfalls in cash flows (the "Line
of Credit"). The balance outstanding under the Line of Credit as of December 31,
1999 was $6,833,512. Subsequent to the end of the fiscal year, the Company drew
an additional $58,171 on the Line of Credit to fund tenant improvements. Future
advances under the Line of Credit are available to pay future tenant improvement
costs, operating deficits and accrued interest on the Line of Credit. Management
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.
The net federal tax basis of the Building approximates $15,265,424
(gross cost of $20,000,000 less accumulated depreciation of $4,734,576).
Included in the net federal tax basis is land cost of $1,222,815. The
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 for the Building for calendar year 1999 were
$373,880.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings.
The Company is not aware of any legal proceeding against the Company being
contemplated by any governmental authority.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters have been submitted to a vote of the Class A Members during
the fiscal year ended December 31, 1999.
PART II
<PAGE> 7
ITEM 5. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
As of March 27, 1999, there were approximately 2,055 record holders of
Class A Units and no holders of Class B Units of the Company. The Company is not
aware of any price quotations for the Class A Units.
The Company has not declared or paid any cash distributions on any of
its Class A Units during the fiscal year ended December 31, 1999. The Members
Agreement provides that the Manager will distribute the net profits of the
Company to the Class A Members in proportion to their respective Class A
Sharing Percentages (as defined in the Members Agreement), subject to the
payment of taxes, expenses, advisors fees, tax distributions to Edison, and
payment of outstanding loans. In addition, all distributions are subject to a
determination by the Manager that the Company will have sufficient reserves to
meet its current and anticipated needs to fulfill its business purpose.
All of the Class B Units have been exchanged by Edison for Class A
Units, and such Class A Units have been distributed by Edison to the holders of
Allowed General Unsecured Claims of Edison in accordance with the provisions of
the Member's Agreement.
All Class A Units are freely tradable by persons other than
"affiliates" of the Company without restriction under the Securities Act of
1933, as amended (the "Securities Act"). The Class A Units held by affiliates
may not be sold unless registered under the Securities Act or unless an
exemption from registration, such as Rule 144, is available. In general, under
Rule 144 each affiliate may sell within any period of three months a number of
Class A Units equal to the greater of 1% of the then outstanding Class A Units
and the average weekly trading volume of Class A Units reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the sale. The Company does not know whether any
sales of Class A Units will be so reported. Sales under Rule 144 are also
subject to certain restrictions relating to manner of sale, notice and the
availability of current public information about the Company.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
It should be noted that this Annual Report 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.
During the forthcoming twelve months of operations, the Company intends
to continue owning, managing, maintaining, repairing, leasing, selling,
hypothecating, mortgaging or otherwise dealing with the building located at 501
North Broadway, St. Louis, Missouri (the "Building"). Further, the Company
intends to continue actively marketing the Building for sale
<PAGE> 8
during the forthcoming twelve months as well as to continue to secure additional
tenant leasing agreements.
On March 9, 1999, Edison Brothers Stores, Inc. ("Edison"), the
Building's largest tenant, filed, together with seven of its affiliates, for
Chapter 11 bankruptcy in the U.S. Bankruptcy court in Delaware. In November
1999, the Company negotiated a consensual reduction of space under Edison's
lease and an accelerated termination date for the remaining space. Effective
January 1, 2000, Edison's rentable square footage was reduced to 18,587 square
feet or approximately 4% of total office space. Edison's rental square footage
as of December 31, 1998 was 206,450 square feet or approximately 48% of total
office space. Effective December 1, 1999, the rental rate for Edison's space
increased from $9 to $17 per square foot. This consensual reduction provides
greater certainty associated with the Edison lease and the Company's ability to
market the Building for sale. As of the date of this filing, the Company had an
unsecured claim against Edison in an amount equal to $28,344, which represents
pre-petition rent and parking fees.
During 1999, the Company commenced a twelve-year lease with Stifel
Financial Corp. and Stifel, Nicolaus & Company, Incorporated ("Stifel") for
92,263 square feet of rentable office space, or approximately 21% of total
rentable space. This new leasing agreement as well as the reduction in space
occupied by Edison resulted in a total occupancy rate of 49%, as of December 31,
1999, versus an occupancy rate of 64% as of December 31, 1998.
During the twelve months ended December 31, 1999, the Company's rental
income increased by 37% over the prior year, from $3.3 million during 1998 to
$4.4 million during 1999. Such increase was attributed to the commencement of
certain new leases, including the Stifel lease and a lease with Baird, Kurtz and
Dobson entered into during May 1999. The Company's total expenses also increased
by 24% over the prior year. These expenses included $1,616,042 in depreciation
costs as compared to $655,782 incurred during the prior year. Such increase in
cost is related to the additional tenant improvements and commission costs
associated with new tenant leases. Further the Company incurred greater
financing costs during the current fiscal year than in the prior year in order
to finance such tenant improvements and lease commissions.
During June 1999, the Company entered into a $12,000,000 revolving line
of credit with FinPro, L.L.C. to cover any shortfalls in cash flows (the "Line
of Credit"). The balance outstanding under the Line of Credit as of December 31,
1999 was $6,833,512. Such funds were primarily used to finance tenant
improvement and commission payments. Management 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.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements of the Company are submitted as a separate
section of this report on Form 10-KSB on pages F-1 through F-11.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no changes in the Company's independent public
accountants since the formation of the Company, and no disagreements with such
accountants on any matter of accounting principles, practices or financial
statement disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
PricewaterhouseCoopers LLP (the "Manager") has served as the Manager of
the Company since its inception. In accordance with the terms of Article III of
the Members Agreement, the Manager of the Company is responsible for all aspects
of the Company's operations, subject to the requirement that the Manager obtain
the approval of either the holders of a majority of the Class A Units (the
"Requisite Holders") or the Designation Members (as defined below) before taking
certain actions, which actions are specified in Section 3.5.2 of the Members
Agreement. The Manager will serve as the Manager of the Company until its
resignation or removal in accordance with Section 3.8 of the Members Agreement.
The Members Agreement defines "Designation Members" as "the three
[M]embers who, as of the date that any action is to be taken [under the Members
Agreement] by the Designation Members, hold at least 5% of the total Class A
Units and constitute the holders of record of the three largest amounts of Class
A Units (based on such Members' Class A Sharing Percentages); provided, however,
that (i) any [p]erson and its affiliates will be treated as a single [p]erson
for such purpose; (ii) no [p]erson who is an affiliate of Edison may be a
Designation Member, and (iii) any person who notifies the Company that such
[p]erson does not wish to be a Designation Member shall be disregarded in
determining the [p]ersons entitled to be a Designation Member.
As of December 31, 1999, the Manager believes that the following
entities are the Designation Members of the Company:
Swiss Bank Corporation
222 Broadway, 20th Floor
New York, NY 10038
Citibank, N.A.
599 Lexington Avenue, 21st Floor
New York, NY 10043
Contrarian Capital Management, L.L.C.
(on behalf of funds for which it acts as general partner)
411 West Putnam Ave., Suite 225
Greenwich, CT 06830
<PAGE> 10
The Designation Members or Requisite Holders have the power to remove
the Manager of the Company with or without cause. In addition, the Designation
Members have the power to call meetings of Members. Further, the approval of
either the Designation Members or the Requisite Holders is required prior to the
Manager (i) adopting any annual budget for the Company, (ii) entering into any
lease agreement for more than 20,000 square feet and (iii) making or committing
to make an expenditure in an aggregate amount exceeding $1,000,000 for additions
to the Company's property, plant or equipment. The approval of the Designation
Members or the Requisite Holders is also required before the Manager causes the
Company to enter into any contract for sale of the Building.
As indicated above, the Manager of the Company is
PricewaterhouseCoopers LLP, 800 Market Street, St. Louis, Missouri 63101-2695.
Keith F. Cooper, a partner of PricewaterhouseCoopers LLP, is the primary contact
for the Manager with respect to the Company.
The background and experience of Keith F. Cooper are as follows:
Keith F. Cooper is a Certified Public Accountant and a Partner of
PricewaterhouseCoopers LLP. He has been with PricewaterhouseCoopers LLP and its
predecessors for seventeen (17) years. He has provided extensive services to
debtors and creditors in reorganization and bankruptcy related matters, both
in-court and out-of-court. These services have included providing operational
and financial due diligence services, appointment as the Receiver in connection
with foreclosure actions and assistance in the liquidation of several companies.
He has also provided turnaround and crisis management services to
underperforming companies in a number of industries. These services involve the
development and implementation of measures to improve the operations and
financial condition of these companies. In this role, Mr. Cooper has served in
the capacity of interim management in the Chief Executive and Chief Operating
Officer roles in both public and private companies. In addition, he has also
provided extensive services to businesses and law firms in the resolution of
disputes including consulting and testimony on economic, financial and forensic
accounting issues.
Section 16(a) Beneficial Ownership Reporting Compliance:
Except as set forth below, to the best knowledge of the Company, all
reports required to be filed under Section 16 by any officer, director,
beneficial owner of more than 10% of any class of securities registered pursuant
to Section 12 of the Exchange Act or any other person subject to the reporting
requirements of Section 16 have been timely filed with the Commission: To
the best knowledge of the Company, Swiss Bank Corporation has not filed any
Section 16(a) filings.
ITEM 10. EXECUTIVE COMPENSATION.
<PAGE> 11
The Company does not have a Board of Directors or any corporate
officers. The Designation Members are not compensated by the Company in
connection with their service as Designation Members. The Manager is compensated
based upon the actual hours devoted to Company business by each staff member of
the Manager multiplied by the hourly billing rates of each such staff member.
The Manager was paid $122,540 for fees and expenses incurred in connection with
its services as Manager for fiscal year 1999 as well as tax consulting services
and preparation of the Company's annual and periodic reports. In addition, as of
December 31, 1999, the Company owed the Manager $20,128 for unpaid fees and
expenses incurred during 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Manager is not the beneficial owner, directly or indirectly, of any
Class A Units or of any of the Class B Units. As of December 31, 1999, all of
the issued and outstanding Class B Units had been canceled in accordance with
the terms of the Members Agreement and, therefore, Edison no longer holds any
Class B Units. As of December 31, 1999, the following entities were the
beneficial owners of greater than 5% of the Class A Units.
<TABLE>
<CAPTION>
NUMBER OF
CLASS A UNITS
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIALLY PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER OWNED CLASS
- ------------------------ ------------------- -------------- -------------
<S> <C> <C> <C>
Class A Membership Units Citicorp North America 1,597,451(1) 16.0%
599 Lexington Avenue
21st Floor
New York, NY 10043
Class A Membership Units Contrarian Capital Management, L.L.C. 2,677,842(2) 26.8%
and/or Contrarian Capital Advisors,
L.L.C.
411 West Putnam Ave.
Suite 225
Greenwich, CT 06830
Class A Membership Units Swiss Bank Corporation 1,582,317(3) 15.8%
222 Broadway, 20th Floor
New York, NY 10038
Class A Membership Units Loeb Partners Corporation 633,933(4) 6.3%
61 Broadway, 24th Floor
New York, NY 10006
Class A Membership Units Principal Mutual Life Insurance Co. 807,659(5) 8.1%
711 High Street
Des Moines, Iowa 50392
</TABLE>
<PAGE> 12
(1) Based on a letter from Citicorp North America to the
Company dated February 8, 2000.
(2) Based on a letter from Contrarian Capital Management to
the Company dated January 31, 2000.
(3) Based on a review of the Company's records.
(4) Based on a review of the Company's records and verbal
confirmation from Loeb Partners Corporation.
(5) Based on a letter from Principal Mutual Life Insurance to
the Company dated March 21, 2000. Principal sold 802,311 units
on January 1, 2000.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(A) INDEX TO EXHIBITS.
3.1: Articles of Organization of the Issuer filed with the
Delaware Secretary of State on September 24, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.1.
3.2: Members Agreement of EBS Building, L.L.C. a Limited
Liability Company, dated as of September 26, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.2.
4: See the Members Agreement, referenced as Exhibit 3.2.
10.6: Lease by and among EBS Building, L.L.C., Stifel
Financial Corp. and Stifel, Nicolaus & Company,
Incorporated, dated September 30, 1998 incorporated
by reference to the Issuer's Registration Statement
on Form 10-QSB filed on November 13, 1998, Exhibit
10.6.
10.7: Lease by and between EBS Building, L.L.C. and Edison
Brothers Stores, Inc., dated September 30, 1998
incorporated by reference to the Issuer's
Registration Statement on Form 10-QSB filed on
November 13, 1998, Exhibit 10.7.
10.8: Assignment of Lease by and between EBS Building,
L.L.C. and Edison Brothers Stores, Inc., dated
September 30, 1998 incorporated by reference to the
Issuer's Registration Statement on Form 10-QSB filed
on November 13, 1998, Exhibit 10.8.
10.9: First Amendment to Lease by and among EBS Building,
L.L.C., Stifel Financial Corp. and Stifel, Nicolaus &
Company, Incorporated, dated
<PAGE> 13
December 1, 1998, incorporated by reference to the
Issuer's Annual Report on Form 10-KSB, filed March
31, 1999.
10.10: Second Amendment to Lease by and among EBS Building,
L.L.C., Stifel Financial Corp. and Stifel, Nicolaus &
Company, Incorporated, dated February 1, 1999
incorporated by reference to the Issuer's Annual
Report on Form 10-KSB, filed March 31, 1999.
10.11: First Extension and Modification Agreement by and
between EBS Building, L.L.C. and First Bank dated
March 15, 1999 incorporated by reference to the
Issuer's Annual Report on Form 10-KSB, filed March
31, 1999.
10.12: Second Extension and Modification Agreement by and
between EBS Building, L.L.C. and First Bank dated
March 15, 1999 incorporated by reference to the
Issuer's Annual Report on Form 10-KSB, filed March
31, 1999.
10.13: Additional Promissory Note, by and between EBS
Building, L.L.C. and First Bank, dated March 23, 1999
incorporated by reference to the Issuer's Annual
Report on Form 10-KSB, filed March 31, 1999.
10.14: Amendment to Deed of Trust by and among EBS Building,
L.L.C., First Bank and First Land Trustee Corp.,
dated March 23, 1999 incorporated by reference to the
Issuer's Annual Report on Form 10-KSB, filed March
31, 1999.
10.15: Amendment to Assignment of Leases and Rents by and
between EBS Building, L.L.C. and First Bank, dated
March 23, 1999 incorporated by reference to the
Issuer's Annual Report on Form 10-KSB, filed March
31, 1999.
10.16 Credit Facility Agreement by and between EBS
Building, L.L.C. and FinPro, L.L.C., dated June 18,
1999, incorporated by reference to the Issuer's
Quarterly Report on Form 10-QSB, filed August 13,
1999.
10.17 Note by and between EBS Building, L.L.C. and FinPro,
L.L.C., dated June 18, 1999, incorporated by
reference to the Issuer's Quarterly Report on Form
10-QSB, filed August 13, 1999.
10.18 Deed of Trust, Security Agreement and Fixture Filing
by and between EBS Building, L.L.C. and FinPro,
L.L.C., dated June 18, 1999, incorporated by
reference to the Issuer's Quarterly Report on Form
10-QSB, filed August 13, 1999.
<PAGE> 14
10.19 Environmental Indemnity Agreement by and between EBS
Building, L.L.C. and FinPro, L.L.C., dated June 18,
1999, incorporated by reference to the Issuer's
Quarterly Report on Form 10-QSB, filed August 13,
1999.
11: Statement Regarding Computation of Earnings Per Share
See page F-10 of Financial Statements.
27: Financial Data Schedule.
(B) REPORTS ON FORM 8-K.
The Company filed a report on Form 8-K on March 11, 1999 and
November 24, 1999.
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
REGISTRANT:
EBS Building, L.L.C.
By: PricewaterhouseCoopers LLP, as Manager
By: /s/ Keith F. Cooper
-------------------------------
Keith F. Cooper, Partner
Date: March 30, 2000
<PAGE> 16
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, 1999 and 1998, and the
related statements of operations, changes in members' equity and cash flows for
the years then ended. 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 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 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, 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, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
February 18, 2000
F-1
<PAGE> 17
EBS BUILDING, L.L.C.
BALANCE SHEET
Assets
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998
--------------------------------
<S> <C> <C>
RENTAL PROPERTY $ 22,387,946 $ 19,683,977
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Cash - operating 520,774 512
Security deposit escrow 216,376 --
Tax and insurance escrow 82,244 --
Rents receivable 454,855 18,209
Prepaid expenses 20,810 19,931
Lease commissions, net 1,024,593 884,766
Lease restructuring costs, net 8,500 766,703
Loan costs, net 174,600 --
Deposits 202 202
- -------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 2,502,954 1,690,323
- -------------------------------------------------------------------------------------------------------------------------
$ 24,890,900 $ 21,374,300
=========================================================================================================================
Liabilities And Members' Equity
LIABILITIES
Note payable $ 6,833,512 $ 2,000,000
Accounts payable 44,744 180,061
Accrued expenses 221,658 638,307
Tenant security deposit 213,186 10,812
Prepaid rent 6,165 450
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 7,319,265 2,829,630
- -------------------------------------------------------------------------------------------------------------------------
MEMBERS' EQUITY
Membership units (Class A - 10,000,000 authorized,
issued and outstanding at December 31, 1999 and 1998) -- --
Paid-in capital 19,810,522 19,810,522
Retained earnings (deficit) (2,238,887) (1,265,852)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MEMBERS' EQUITY 17,571,635 18,544,670
- -------------------------------------------------------------------------------------------------------------------------
$ 24,890,900 $ 21,374,300
=========================================================================================================================
</TABLE>
See the accompanying notes to financial statements.
F-2
<PAGE> 18
EBS BUILDING, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Class A Class B Retained
Membership Membership Paid-In Earnings
Units Units Capital (Deficit) Total
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1998 9,058,041 941,959 $19,810,522 $ (137,700) $19,672,822
Units Transferred 941,959 (941,959) -- -- --
Current Year Loss -- -- -- (1,128,152) (1,128,152)
- ------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998 10,000,000 -- 19,810,522 (1,265,852) 18,544,670
Current Year Loss -- -- -- (973,035) (973,035)
- ------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 10,000,000 -- $19,810,522 $(2,238,887) $17,571,635
========================================================================================================================
</TABLE>
See the accompanying notes to financial statements
F-3
<PAGE> 19
EBS BUILDING, L.L.C.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Years
Ended December 31,
--------------------------------
1999 1998
--------------------------------
<S> <C> <C>
INCOME
Rent $ 4,447,555 $ 3,255,117
Other 138,309 100,926
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 4,585,864 3,356,043
- -------------------------------------------------------------------------------------------------------------------------
EXPENSES
Maintenance 861,759 1,199,400
Professional fees 547,167 829,829
Utilities 742,333 719,450
General and administrative 780,392 489,598
Interest expense 443,703 34,913
Real estate taxes 374,162 382,173
Other operating expenses 193,341 173,050
Depreciation and amortization 1,616,042 655,782
- -------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 5,558,899 4,484,195
- -------------------------------------------------------------------------------------------------------------------------
NET LOSS $ (973,035) $ (1,128,152)
=========================================================================================================================
Primary Earnings (Loss) Per Unit $ (0.10) $ (0.12)
=========================================================================================================================
Diluted Earnings (Loss) Per Unit $ (0.10) $ (0.11)
=========================================================================================================================
</TABLE>
See the accompanying notes to financial statements.
F-4
<PAGE> 20
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years
Ended December 31,
===============================
1999 1998
------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (973,035) $ (1,128,152)
Reconciliation of net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,616,042 655,782
Change in assets and liabilities:
(Increase) decrease in escrows, rents
receivable, prepaid expenses and deposits (736,145) 91,561
Increase (decrease) in liabilities, excluding
note payable (343,877) 383,977
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (437,015) 3,168
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to rental property (3,422,286) (598,792)
Payments for lease commissions (221,149) (895,041)
Payments for lease restructuring costs -- (912,742)
- -------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (3,643,435) (2,406,575)
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 4,833,512 2,000,000
Payments for loan costs (232,800) --
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,600,712 2,000,000
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 520,262 (403,407)
CASH - BEGINNING OF YEAR 512 403,919
- -------------------------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 520,774 $ 512
=========================================================================================================================
</TABLE>
See the accompanying notes to financial statements.
F-5
<PAGE> 21
EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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 in Note 5).
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. 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.
F-6
<PAGE> 22
EBS BUILDING, L.L.C.
Notes To Financial Statements (Continued)
CASH
Cash consists of an amount held in a demand deposit account in the
Company's name at a highly-rated financial institution. The Company
also maintains bank accounts for security deposits and a tax and
insurance escrow account at the same financial institution. Accounts in
this institution are insured by the Federal Deposit Insurance
Corporation up to $100,000.
RENTS RECEIVABLE AND RENTAL INCOME
Rents receivable and rental income include an accrual for the
straight-line recognition of escalating tenant rental rates in
accordance with Statement of Financial Accounting Standards No. 13,
Accounting for Leases. Such tenant rents are recognized on a
straight-line basis over the term of the leases.
RENTAL PROPERTY
Rental property includes land, building, building improvements and
tenant improvements. 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
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 and building improvements are depreciated
using the straight-line method over its estimated useful life of 38
years and 39 years, respectively. Tenant improvements are depreciated
over the term of the tenant's lease.
LEASE COMMISSIONS AND LEASE RESTRUCTURING COSTS
Lease commissions and lease restructuring costs are capitalized and
amortized over the term of the related lease.
LOAN COSTS
Loan costs in connection with building financing, including loan
commitment fee, legal fees and closing costs have been capitalized and
are amortized over the term of the loan.
RENTAL INCOME AND OPERATING EXPENSES
Rental income and operating expenses are recorded on the accrual basis
of accounting.
F-7
<PAGE> 23
EBS BUILDING, L.L.C.
Notes To Financial Statements (Continued)
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>
1999 1998
--------------------------------
<S> <C> <C>
Land $ 2,250,520 $ 2,250,520
Building 17,765,629 17,765,629
Building improvements 658,134 161,259
Tenant improvements 3,340,646 377,657
Construction in progress 22,298 59,876
-----------------------------------------------------------------------------------------------
24,037,227 20,614,941
Less: Accumulated depreciation 1,649,281 930,964
-----------------------------------------------------------------------------------------------
$ 22,387,946 $ 19,683,977
===============================================================================================
</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, 1999, the
Building had ten tenants leasing 212,661 square feet for an occupancy
rate of 49%. At December 31, 1998, the Building had eight tenants
leasing 275,677 square feet for an occupancy rate of 64%.
At December 31, 1999, there is one tenant which occupies greater than
10% of the leasable space. Stifel, Nicolaus & Company occupies 92,263
square feet or 21% of total leasable space. At December 31, 1998, there
was one tenant which occupied greater than 10% of the leasable space.
Edison occupied 206,450 square feet or 48% of total leasable space.
F-8
<PAGE> 24
EBS BUILDING, L.L.C.
Notes To Financial Statements (Continued)
At December 31, 1999, minimum payments due to the Company under
noncancellable operating lease agreements are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---------------------------------------------------------
<S> <C>
2000 $ 2,822,102
2001 2,369,869
2002 2,205,277
2003 2,229,627
2004 2,215,450
Thereafter 13,357,721
---------------------------------------------------------
$ 25,200,046
=========================================================
</TABLE>
4. NOTE PAYABLE
Effective March 16, 1998, the Company entered into a $2,000,000
revolving line of credit agreement. The note bore interest at an annual
rate equal to the LIBOR rate plus 2.25%. There was no commitment fee.
This note payable was secured by a first lien on the rental property
and an assignment of leases and rental income. Payments were for
interest only until maturity on April 15, 1999, when all outstanding
principal and interest was due and payable.
Effective March 23, 1999, the Company entered into a $5,200,000
revolving line of credit. The note bore interest at an annual rate
equal to the Prime Rate plus 2.0%. A $26,000 fee was paid related to
this line of credit. In addition, a credit facility fee of 0.25% of
the outstanding balance of the line of credit was due on the 1st day
of each month. Payments were for interest only until maturity on June
23, 1999, when all outstanding principal and interest was due and
payable.
Effective June 18, 1999, the Company entered into a new Credit Facility
Agreement to provide financing in an amount not to exceed $12,000,000.
The note bears interest at an annual rate equal to the LIBOR rate plus
3.5%. In connection with this financing, the Company paid a commitment
fee of $180,000. Also, there are additional fees in connection with the
loan that are due and payable throughout the term of the loan. This
note payable is secured by a first lien on the rental property and an
assignment of leases and rental income. Payments are for interest only
until maturity on May 31, 2001, when all outstanding principal and
interest is due and payable. At December 31, 1999, the Company had
outstanding borrowings of $6,833,512.
F-9
<PAGE> 25
EBS BUILDING, L.L.C.
Notes To Financial Statements (Continued)
5. MEMBERS' EQUITY
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, 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 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. At December 31, 1997, Edison held 941,959
Class B Membership Units.
During 1998, Edison exchanged the remaining Class B Membership Units
for an equal number of Class A Membership Units and simultaneously
distributed such units to holders of Allowed General Unsecured Claims.
At December 31, 1999 and 1998, there were 10,000,000 Class A Membership
Units outstanding.
6. EARNINGS (LOSS) PER UNIT
Primary and diluted earnings (loss) per unit is computed as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------
<S> <C> <C>
Numerator:
Net loss - primary and diluted $ (973,035) $ (1,128,152)
===============================================================================================
Denominator:
Weighted average units outstanding -
primary 10,000,000 9,438,704
Effect of potentially dilutive units -- 561,296
-----------------------------------------------------------------------------------------------
Units outstanding - diluted 10,000,000 10,000,000
===============================================================================================
Primary earnings (loss) per unit $ (0.10) $ (0.12)
===============================================================================================
Diluted earnings (loss) per unit $ (0.10) $ (0.11)
===============================================================================================
</TABLE>
F-10
<PAGE> 26
EBS BUILDING, L.L.C.
Notes To Financial Statements (Continued)
The weighted average units outstanding - primary was calculated on a
daily outstanding unit basis. The units outstanding - diluted for
December 31, 1998 was calculated assuming that all of the Class B units
issued and outstanding would eventually be converted into an equal
number of Class A units. All Class B units have been converted into an
equal number of Class A units as of December 31, 1999.
7. RELATED PARTY TRANSACTIONS
One of Edison's six board members is an employee of a Member of the
Company.
8. SUBSEQUENT EVENTS
Under the terms of a lease amendment between Edison and the Company,
Edison reduced their lease space to 28,774 square feet on December 1,
1999 and effective January 1, 2000 they reduced their leased space to
18,587 square feet. Effective April 1, 2000, the lease converts to a
month-to-month tenancy, whereby Edison may terminate the lease by
giving thirty (30) days prior written notice of such termination. In no
event will this month-to-month tenancy extend beyond June 30, 2000.
F-11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 819,394
<SECURITIES> 0
<RECEIVABLES> 454,855
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,068,089
<PP&E> 24,037,227
<DEPRECIATION> (1,649,281)
<TOTAL-ASSETS> 24,890,900
<CURRENT-LIABILITIES> 485,753
<BONDS> 6,833,512
0
0
<COMMON> 0
<OTHER-SE> 17,571,635
<TOTAL-LIABILITY-AND-EQUITY> 24,890,900
<SALES> 0
<TOTAL-REVENUES> 4,585,864
<CGS> 0
<TOTAL-COSTS> 5,115,196
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 443,703
<INCOME-PRETAX> (973,035)
<INCOME-TAX> 0
<INCOME-CONTINUING> (973,035)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (973,035)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
