<PAGE>
As filed with the Securities and Exchange Commission on December ___, 1998
Registration No. -_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10/A
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
________________
EBS Pension, L.L.C.
(Exact name of registrant as specified in its charter)
________________
Delaware 42-1466520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
________________
Norwest Bank Minnesota, N.A.
Corporate Trust Services, Customized Fiduciary Services
Sixth and Marquette
Minneapolis, Minnesota 55479-0069
(612) 667-4803
Attn: Lon P. LeClair, Vice President
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Class A Membership Units
<PAGE>
FORWARD-LOOKING STATEMENTS
This Registration Statement of the Class A Membership Units of EBS
Pension, L.L.C. (the "Company") contains forward-looking statements. Forward-
looking statements are typically identified by the words "believe," "expect,"
"anticipate," "intend," "seek," "estimate," "project" and similar expressions.
These forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond the Company's control. Actual results
could differ materially from those contemplated by these forward-looking
statements as a result of factors including those described below. In light of
these risks and uncertainties, there can be no assurance that the results and
events contemplated by the forward-looking information contained in this
Registration Statement will in fact transpire. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
their respective dates.
ITEM 1. BUSINESS
Unless otherwise noted, references to the "Company" shall mean EBS
Pension, L.L.C., a Delaware limited liability company.
Background
On September 9, 1997, the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") entered an order in accordance
with section 1129 of the Bankruptcy Code, 11 U.S.C. (S)(S) 101-1330, et seq.,
(the "Bankruptcy Code") confirming the Amended Joint Plan of Reorganization
Under Chapter 11 of the Bankruptcy Code (the "Plan") filed by Edison Brothers
Stores, Inc. ("Edison") and its affiliated debtors in possession (collectively
with Edison, the "Debtors"). The Plan became effective on September 26, 1997
(the "Effective Date").
The Company was established pursuant to the Plan and the EBS
Pension, L.L.C. Members Agreement (the "Members Agreement"). Under the Plan,
each holder of an Allowed General Unsecured Claim (as defined in the Plan)
against Edison was entitled to receive a distribution on account of such claims
which distribution included, cash distributions, common stock, New Notes at 11%,
Class A Membership Units in EBS Building, L.L.C. and EBS Litigation, L.L.C. and
the holder's pro rata share of Class A Membership Units in the Company. The
initial distribution date under the Plan occurred on or about December 12, 1997.
Accordingly, in late December of 1997, holders of Allowed General Unsecured
Claims began receiving membership certificates evidencing their ownership of
Class A Membership Units in the Company. As of September 30, 1998, there were
9,466,938 Class A Membership Units and 533,062 Class B Membership Units of the
Company issued and outstanding. Between September 25, 1997 and September 30,
1998, one transfer of beneficial ownership of a Class A Membership Unit in the
Company was recorded on the membership register maintained by Norwest Bank
Minnesota, N.A. (in such capacity, the "Transfer Agent"). See "Item 11.
Description of Registrant's Securities to be Registered" for a description of
the Class A Membership Units.
The Plan further provided for the Debtors' transfer to the Company of
their right to receive the Pension Plan Proceeds, which the Plan defines as the
cash proceeds (the "Pension Plan Proceeds") to be received by the Debtors as a
result of the termination of the Edison Brothers Stores, Inc. Pension Plan, (the
"Pension Plan"), net of (a) the Pension Plan assets transferred to a qualified
replacement pension plan; (b) all costs, fees and expenses (collectively, the
"Pension Plan Termination Costs") relating to termination of the Pension Plan
and establishment of the replacement plan; and (c) all applicable taxes
incurred, or for which a reserve (the "Pension Plan Tax Reserve") is established
by Edison, in connection with termination of the Pension Plan. The Pension Plan
assets are the residual assets from the Pension Plan. The Pension Plan was
created for the purpose of providing pension benefits to the employees of Old
Edison. The Pension Plan was terminated by Edison pursuant to an order of the
Bankruptcy Court. Pursuant to the Plan, upon termination of the Pension Plan,
after (1) the liabilities of the Plan were paid, (2) the required excise taxes
were paid and the Pension Plan Tax Reserve was established, (3) a replacement
pension plan for the employees of Edison was funded, and (4) the Pension Plan
Termination Costs were paid, the residual assets, i.e., the Pension Plan
Proceeds, were distributed to the Company.
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<PAGE>
Company Formation and Summary of Certain Provisions of the Members Agreement
Formation
In accordance with the Plan, the Certificate of Formation of the
Company was filed on September 24, 1997 with the office of the Delaware
Secretary of State, for the purpose of forming the Company as a limited
liability company under the provisions and subject to the requirements of the
State of Delaware, in particular the Delaware Limited Liability Company Act,
Del. Code Ann. tit.6, ch. 18 (the "Delaware Act"). The Certificate of Formation
became effective, thereby providing for the formation of the Company, on
September 25, 1997 (the "Inception Date").
Purposes
The Company is organized for the exclusive purposes of (a) receiving
and administering the "Company Assets," which the Members Agreement defines as
all Pension Plan Proceeds as well as any other property or proceeds acquired by
the Company and; (b) distributing the Company Assets to holders of Membership
Units pursuant to the terms of the Members Agreement. The Company has no
objective to engage in the conduct of any trade or business. In essence, then,
the Company constitutes a vehicle for receiving the Pension Plan Proceeds and
then allocating and distributing all net funds to holders of Membership Units in
the Company. See "--Term of the Company."
Administration and the Manager
The Company Assets are administered, and the affairs of the Company
are managed, by the Manager. The Manager of the Company, as duly designated by
the Official Committee of Unsecured Creditors appointed in the Debtors' Chapter
11 Case (the "Creditors' Committee"), is Norwest Bank Minnesota, N.A. (in such
capacity, the "Manager"). As contemplated by the Members Agreement, the
principal office of the Company is maintained at the principal office of the
Manager, which is located at Sixth and Marquette Streets, Minneapolis, Minnesota
55479-0069, Attn: Lon P. LeClair. The telephone number is (612) 667-4803.
In furtherance of the Company's purposes and subject to the retained
jurisdiction of the Bankruptcy Court as provided for in the Plan, the Manager is
to make continuing efforts to (i) receive the Pension Plan Proceeds, and (ii)
make distributions of any Pension Plan Proceeds to the Members, in each case in
an expeditious but orderly manner intended reasonably to maximize the value of
such distributions to the Members, but subject to the judgment and discretion of
the Manager and the provisions of the Members Agreement. The Manager will not be
liable to the Company or to any Member for any action or inaction, except in the
case of its willful breach of a material provision of the Members Agreement or
gross negligence in connection with the performance of its duties under the
Members Agreement. See "Item 12. Indemnification of Officers and Directors."
The Manager is empowered to retain (and make reasonable compensation
and reimbursement from the Company Assets to) such independent experts and
advisors (including, but not limited to, law firms, tax advisors, consultants,
or other professionals) as the Manager may select to aid in the performance of
its duties and responsibilities and to perform such other functions as may be
appropriate in furtherance of the intent and purposes of the Members Agreement.
The Manager has selected the law firm of Jones, Day, Reavis & Pogue ("Jones
Day") to serve as counsel to the Company. Prior to the Effective Date, Jones Day
served as counsel to the Creditors' Committee. The Manager has selected
Pricewaterhouse Coopers LLP to provide the Company with financial reporting and
consulting services as well as tax-related services. Norwest Bank Minnesota,
N.A., which also serves as the Disbursing Agent under the Plan and the Transfer
Agent under the Members Agreement, maintains the ownership registers of the
Company and, at the direction of the Manager, coordinates distributions to
Members of the Company and performs related administrative duties. Rubin, Brown,
Gornstein & Company, LLP serves as the Company's independent auditors.
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<PAGE>
The Members Agreement also requires the Manager to designate one of
the Members as the "Tax Matters Partner" (as defined in the Section 6231 of the
Internal Revenue Code). The Tax Matters Partner is required to represent the
Company (at the Company's expense) in connection with all examinations of the
Company's affairs by tax authorities and to expend Company funds for
professional services associated therewith. The Tax Matters Partner also
arranges for the preparation and timely filing of all returns required to be
filed by the Company and the distribution of Form K-1 or other similar forms to
all Members. In accordance with the Members Agreement, the Manager has
designated Citibank, N.A., through its authorized representative Randolph I.
Thornton, Jr., to serve as the Tax Matters Partner of the Company.
Subject to the retained jurisdiction of the Bankruptcy Court as
provided for in the Plan, but without prior or further authorization, the
Manager may control and exercise authority over the Company Assets, over the
acquisition, management and disposition thereof and over the management and
conduct of the Company to the extent necessary to enable the Manager to fulfill
the intent and purposes of the Members Agreement. No person dealing with the
Company is obligated to inquire into the authority of the Manager in connection
with the acquisition, management or disposition of the Company Assets. In
connection with the administration of the Company Assets and the management of
the Company's affairs, the Manager has the power to take any and all actions as,
in the Manager's sole discretion, are necessary or advisable to effectuate the
purposes of the Company, including, without limitation, the power and authority
to (i) distribute the Company Assets to Members in accordance with the terms of
the Members Agreement, (ii) sell, convey, transfer, assign, liquidate or abandon
the Company Assets, or any part thereof or any interest therein, upon such terms
and for such consideration as the Manager, in its sole discretion, may deem
desirable, (iii) endorse the payment of notes or other obligations of any person
or to make contracts with respect thereto, (iv) borrow such sums of money, at
any time and from time to time, for such periods of time, upon such terms and
conditions, from such persons, for such purposes as may be deemed advisable, and
(v) appoint, engage, supervise and compensate such officers, employees and
agents of the Company and such other persons, as may be deemed necessary or
desirable. The Manager will not at any time, on behalf of the Company or the
Members, enter into or engage in any trade or business, and no part of the
Company Assets will be used or disposed of by the Manager in furtherance of any
such trade or business. All decisions and actions taken by the Manager under the
authority of the Members Agreement will be binding upon all of the Members and
the Company. Without the consent of all of the Members, the Manager may not (i)
take any action in contravention of the Members Agreement; (ii) take any action
which would make it impossible to carry on the activities of the Company; or
(iii) possess property of the Company or assign the Company's rights in specific
property for other than Company purposes.
Term of the Company; Dissolution
The Company's existence will terminate (unless dissolved earlier) the
third anniversary of the Effective Date unless extended by the Manager (with the
approval of the Bankruptcy Court) for one or more successive periods of two
years each if the Company Assets have not been fully liquidated and distributed
or all Disputed General Unsecured Claims (as defined in the Plan) have not been
resolved. The Company will be dissolved only upon the earlier to occur of: (i)
termination of the Company's existence; (ii) the entry of a final judgment,
order or decree of a court of competent jurisdiction adjudicating the Company to
be bankrupt and the expiration without appeal of the period, if any, allowed by
applicable law in which to appeal; or (iii) the unanimous written agreement of
all Members. In the event of the Company's dissolution, following the payment
of, or provision for, all debts and liabilities of the Company and all expenses
of liquidation, and subject to the right of the Liquidating Agent (as defined in
the Members Agreement) to set up reasonable cash reserves for any contingent or
unforeseen liabilities or obligations of the Company, all assets of the Company
(or the proceeds thereof) will be distributed to the General Members in
accordance with their respective Capital Account balances. No Member will have
any recourse against Edison or any other Member for any distributions with
respect to such Member's Capital Account balances.
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<PAGE>
OPERATIONS OF THE COMPANY SINCE ITS FORMATION
The Pension Plan Refund
The Pension Plan was terminated as of May 31, 1997. Data provided to
the Company by Edison indicates that Edison received a cash refund of $51.41
million on account of the Pension Plan termination. After deducting Pension Plan
Termination Costs of $1.68 million and establishing a Pension Plan Tax Reserve
of $5.74 million, on January 23, 1998, Edison remitted Pension Plan Proceeds
totaling $43,985,315.40 to the Company.
Initial Distribution to Members
The Members Agreement obligates the Manager to facilitate the prompt
distribution of Pension Plan Proceeds to holders of Class A Membership Units in
the Company. Accordingly, on February 13, 1998, the Manager, after establishing
the reserves and making the calculations discussed below, distributed the
aggregate sum of $39,426,117.35 to 1,337 certificated holders of record of Class
A Membership Units as of February 11, 1998. This aggregate distribution was
calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Total Pension Plan Proceeds Received $43,985,315.40
January Interest Earned $ 35,197.54
TOTAL FUNDS ON DEPOSIT (2/11/98) $44,020,512.94
less:
Reserve for Litigation Indemnification $ 1,500,000.00
Reserve for Administrative Expenses $ 300,000.00
Tax Distribution to Edison $ 959.58
TOTAL AMOUNT AVAILABLE FOR
FIRST DISTRIBUTION TO MEMBERS $42,219,553.36
less:
Reserve for Disputed Claims and
Claims Not Yet Eligible for Distribution $ 2,793,436.01
TOTAL DISTRIBUTED TO HOLDERS
OF CLASS A MEMBERSHIP UNITS ON
FEBRUARY 13, 1998 $39,427,156.32
</TABLE>
The reserve for litigation indemnification (the "Indemnification
Reserve") was established in accordance with the Plan and the Members Agreement.
See "Item 2. Financial Information - Management's Discussion and Analysis of
Financial Condition and Results of Operations".
See "Item 11. Description of Registrant's Securities to be Registered"
for a description of tax distributions to Edison.
STATUS AS OF SEPTEMBER 30, 1998
As of September 30, 1998, the balance in the Company's operating
account was $334,726. Following satisfaction of administrative expenses, any
funds remaining on deposit would be available for distribution to holders of
Class A Membership Units in the Company. In addition, any remaining balance of
the $1.5 million Indemnification Reserve ultimately would be available for such
distribution.
An additional potential component of a future distribution is the
Pension Plan Tax Reserve currently being held by Edison. In connection with the
termination of the Pension Plan, Edison sought a private letter ruling (the "Tax
Ruling") from the Internal Revenue Service ("IRS") to the effect that any income
realized by Edison as a result of the Pension Plan termination will be available
to offset certain deductions realized by the Debtors in the same taxable year.
On September 28, 1998, the IRS issued the Tax Ruling. The Company is advised
that as a result of the Tax
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<PAGE>
Ruling, there are no additional taxes to be paid by Edison in connection with
termination of the Pension Plan. Because there are no remaining Edison tax
liabilities to be paid from the Pension Plan Tax Reserve, it is the Company's
position that all Plan conditions precedent to Edison's release of the Pension
Plan Tax Reserve have been satisfied. Accordingly, the Company has formally
requested that Edison immediately transfer the Pension Plan Tax Reserve to the
Company.
As of the date hereof, Edison has declined to release the Pension Plan
Tax Reserve to the Company, in light of an ongoing audit by the Pension Benefit
Guaranty Corporation ("PBGC") of Edison's pension plan termination. Edison has
advised the Company that if the PBGC determines that Edison is obligated to make
an additional contribution to the qualified replacement plan established by
Edison upon termination of the Pension Plan, Edison may seek to make such
contribution from the funds in the Pension Plan Tax Reserve. The Company
disputes that Edison is entitled to utilize the Pension Plan Tax Reserve for
such a purpose. There can be no assurance, however, that the Company will
prevail if the pending dispute is adjudicated by the Bankruptcy Court or
otherwise.
In light of the foregoing, the Manager estimates that a second
distribution to holders of Class A Membership Units in the Company could range
from an aggregate of $100,000 to $8.2 million. Given the contingencies
associated with certain components of future distributions, however, there can
be no assurances that any future distribution will be made, or in what amount.
See "Item 2. Financial Information - Management's Discussion and Analysis of
Financial Condition and Results of Operations".
Reserved amounts (as hereinafter defined) totaled approximately
$4.0 million as of September 30, 1998.
ITEM 2. FINANCIAL INFORMATION
The following table sets forth selected financial information of the
Company as of and for the period ended December 31, 1997 since the Inception
Date and as of and for the nine months ended September 30, 1998. The selected
consolidated financial data as of and for the period ended December 31, 1997 has
been derived from the Company's financial statements, which were audited by
Rubin, Brown, Gornstein & Company, LLP. The selected consolidated financial data
as of and for the nine months ended September 30, 1998 have been derived from
the Company's unaudited financial statements. The following information should
be read in conjunction with the Company's financial statements and notes thereto
included elsewhere herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," presented below.
<TABLE>
<CAPTION>
Nine months ended
Period Ended September 30, 1998
December 31, 1997/(1)/ (Unaudited)
----------------------- --------------------
<S> <C> <C>
Operating Statement Data:
Income.................................... $ 0 278,275
General and administrative expenses....... 51,910 202,893
Net (loss) income......................... (51,910) 75,382
Distribution per Class A Membership Unit.. 0 4.22/(2)/
Balance Sheet Data (at period end):
Cash...................................... 0 4,178,180
Interest receivable....................... 0 15,935
Due from Edison........................... $43,985,315 0
Total assets.............................. 43,985,315 4,194,155
Accrued expenses.......................... 51,910 162,421
Members' equity........................... 43,933,405 4,031,694
</TABLE>
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/(1)/ The Company's inception date was September 25, 1997.
/(2)/ During February 1998, the Company distributed $39.4 million of the
initial proceeds received from Edison to the holders of the 9,338,601
Class A Membership Units that were outstanding at the date of
distribution. During June 1998, the Company distributed $0.6 million of
reserved amounts to the holders of the 128,616 Class A Membership Units
that were distributed in June 1998.
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<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is a discussion and analysis of the financial
condition at, and results of operations of the Company for, the period ended
December 31, 1997, and the nine months ended September 30, 1998, and of
certain factors that may affect the Company's prospective financial condition
and results of operations. The following should be read in conjunction with
the Company's financial statements and notes thereto appearing elsewhere
herein. References herein to the period ended December 31, 1997 are to the
period from September 25, 1997 (date of inception) to December 31, 1997.
The Company, which was formed pursuant to the Plan and the Members
Agreement, is a limited purpose entity which may not engage in any business.
The Company was organized for the exclusive purposes of (a) receiving and
administering the Company Assets and (b) distributing the Company Assets to
holders of the Company's Class A Membership Units pursuant to the terms of
the Members Agreement.
On January 23, 1998, the Company received from Edison the Pension
Plan Proceeds totaling $44.0 million. The Company recognizes income from
interest earned on its funds. The Company invests such funds in a money
market fund investing solely in direct obligations of the United States
Government. The Members Agreement permits all funds received by the Company
to be temporarily invested in United States treasury bills and notes with
maturities of 12 months or less, institutional money market funds and demand
or time deposits and certificates of deposit with U.S. federal or state
commercial banks having primary capital of not less than $500 million.
During the period ended December 31, 1997, the Company did not recognize any
interest income because it did not receive the Pension Plan Proceeds until
January 1998. During the nine months ended September 30, 1998, the Company
recognized $278,275 of interest income. The amount of interest income
recognized by the Company in future periods will be dependent on, among other
things, (i) fluctuations in interest rates, (ii) the amounts and timing of
any amounts received in the future from the Pension Plan Tax Reserve
(described below), (iii) the amounts and timing of any distributions to
holders of Class A Membership Units, and (iv) the amount and timing of the
Company's expenses. The Company may in the future receive funds currently
held in the Pension Plan Tax Reserve, aggregating approximately $5.74
million. At present, the Company has requested, but not received, the funds
currently on deposit as the Pension Plan Tax Reserve. The Company believes
that all Plan conditions precedent to the Company's receipt of the Pension
Plan Tax Reserve have been satisfied. There can be no assurance, however,
that any funds will be distributed to the Company from the Pension Plan Tax
Reserve.
The Company's general and administrative expenses consist primarily
of fees payable to the Transfer Agent, the Manager, and the Company's lawyers
and accountants. The Company had expenses of $51,900 and $202,893 for the
period ended December 31, 1997 and the nine months ended September 30, 1998,
respectively. These expenses are expected to fluctuate in future periods
based on, among other factors, the volume of transfers of Class B and Class A
Membership Units. The periodic reporting requirements imposed on the Company
under the Securities Exchange Act of 1934 is expected to result in an
increase in legal and accounting fees in future periods.
The Company, together with EBS Litigation, L.L.C. (another limited
liability company formed pursuant to the Plan), has agreed to indemnify the
Debtors and their present or former officers, directors and employees from
and against any losses, claims, damages or liabilities by reason of any
actions arising from or relating to the Company and any actions taken or
proceeding commenced by EBS Litigation, L.L.C. (other than with respect to
any Unresolved Avoidance Claims (as defined in the Plan) that EBS Litigation,
L.L.C. may have against such persons other than in their capacities as
officers, directors or employees of the Debtors. Pursuant to the Plan, the
Company established the Litigation Reserve ($1.5 million) from the Pension
Plan Proceeds for the benefit of these indemnified persons, to pay their
costs and expenses incurred in defending the LLC Related Claims (as defined
in the Plan). Payment of such cost and expenses must first be sought from
any applicable officers' and directors' insurance policy and then from the
Indemnification Reserve. The Company's indemnification liability is limited
to the amount of the Litigation Reserve, i.e. an aggregate of 1.5 million.
Although to date there has not been any indemnification claim, there can be
no assurance such a claim will not be made in the future. All liabilities of
the Company, including the foregoing indemnification obligations, will be
satisfied from the Company Assets.
At December 31, 1997, the Company had no cash or cash equivalents.
At September 30, 1998, the Company had cash and cash equivalents of $4.2
million, after the $39.4 million distribution to holders of Class A
Membership Units in February 1998 and the $0.6 million distribution in June
of 1998. When determining the amount and timing of the February distribution,
the Manager considered, among other things, (i) the terms of the Members
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Agreement governing distributions (see "Item 11. Description of Registrant's
Securities to be Registered - Distributions of Pension Plan Proceeds"), and
(ii) the anticipated amount of necessary reserves and future administrative
expenses. At the time of the February distribution, in accordance with the
Members Agreement, the Company reserved $2.79 million for distribution to
persons who could become holders of Class A Membership Units after February
11, 1998 arising from a holder of a disputed General Unsecured Claim becoming
a holder of an Allowed Unsecured Claim and the required conversion of Class B
Units to Class A Units for such distribution to the new holder of an Allowed
Unsecured Claim. The amount and timing of any future distributions of Pension
Plan Proceeds will be determined by the Manager in accordance with the terms
of the Members Agreement. There can be no assurance that any further
distributions will be made.
The Company is classified as a partnership for federal income tax
purposes and, therefore, does not pay any taxes. Instead, the Members pay
taxes on their proportionate share of the Company's income. See "Item 10. --
Taxation".
In the light of the limited nature of the Company's activities, it
does not believe its operations or financial condition are affected by Year
2000 issues, except insofar as it would be affected by a general interruption
of telephone and utility services or if its Transfer Agent were unable to
process distributions or transfers of Membership Units. The Company will
seek written assurances from its Transfer Agent as to Year 2000 compliance.
If the Company does not receive adequate assurances or if, notwithstanding
those assurances, the Transfer Agent were noncompliant, it would replace the
Transfer Agent with one that has systems that are Year 2000 compliant.
ITEM 3. PROPERTIES
The Company does not own or lease any properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Class A Membership Units of persons
owning of record or known to the Company to be the beneficial owner of more
than five percent of the outstanding Class A Membership Units as of September
30, 1998. The Manager of the Company owns 110 Class A Membership Units.
<TABLE>
<CAPTION>
Name and Address of Beneficial Number of Class A Nature of Beneficial
Owner Membership Units Ownership Percent
- ------------------------------ ----------------- -------------------- -------
<S> <C> <C> <C>
Citibank, N.A. 804,024 Sole Voting/Investment 8.04%
Morgens Waterfall Overseas Partners 618,752 Sole Voting/Investment 6.19%
Nomura Holding America, Inc. 722,724 Sole Voting/Investment 7.23%
Principal Mutual Life 771,668 Sole Voting/Investment 7.71%
Swiss Bank Corporation 1,532,519 Sole Voting/Investment 15.33%
</TABLE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The Company does not have any directors and the Manager acts as the
Company's sole executive officer. The Manager may resign at any time or be
removed by the Designation Members (defined below), with or without cause, at
any time, such resignation or removal to be effective upon the appointment of
a successor Manager. In the event of the resignation or removal of the
Manager, the Designation Members may appoint a successor Manager that is not
affiliated with Edison. If such appointment does not occur within 90 days,
the Manager may petition the Bankruptcy Court for the appointment of a
successor Trustee. The "Designation Members" means the three Members
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<PAGE>
who, at the applicable date for any action to be taken by Designation Members,
constitute the holders of record of the three largest amounts of Class A
Membership Units provided that (i) affiliated persons are treated as a single
person for these purposes; (ii) no affiliate of Edison may be a Designation
Member; and (iii) any person may notify the Company that it does not wish to be
a Designation Member.
ITEM 6. EXECUTIVE COMPENSATION
The Manager is to receive reasonable compensation for services
rendered to and on behalf of the Company, as well as reimbursement for the
reasonable expenses incurred in connection with the performance of its duties
under the Members Agreement.
With respect to services rendered from the Inception Date to December
31, 1997, the Company did not accrue for such services rendered by the Manager,
as this amount was not yet determined. With respect to services rendered during
the nine months ended September 30, 1998, the Company accrued approximately
$50,961 on its financial statements for services rendered by, and reimbursements
due to, the Manager.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 8. LEGAL PROCEEDINGS
None.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Company's Class
A Membership Units. As of September 30, 1998, there were 1,798 certificated
holders of record of the Class A Membership Units. See "Item 4. Security
Ownership of Certain Beneficial Owners and Management" for more information. See
"Item 1. Business--Operations of the Company since September 25, 1997," for a
discussion of the initial distribution to Members on February 13, 1998, and
"Item 11. Description of Registrant's Securities to be Registered" for a
discussion of distribution provisions in the Members Agreement.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
No securities of the Company which were not registered under the
Securities Act of 1933 (the "Securities Act") have been issued or sold by the
Company within the past three years, except that in connection with the Plan, as
of September 30, 1998, the Company had issued 10,000,000 Class B Membership
Units to Edison pursuant to the Plan. As of September 30, 1998, the Company had
issued 9,466,938 Class A Membership Units upon the cancellation of equivalent
number of Class B Membership Units. Section 1145(a)(1) of the Bankruptcy Code
exempts the offer and sale of securities under a plan of reorganization from
registration under the Securities Act and state securities laws if certain
requirements are met. The Company believes that it is a "successor" to Edison
under Section 1145(a)(1) of the Bankruptcy Code and that the offer and sale of
the Class A Membership Units pursuant to the Plan otherwise satisfies all of the
requirements of Section 1145(a)(1).
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<PAGE>
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The following summarizes certain provisions of the Members Agreement
relating to the Class A and Class B Membership Units. This summary does not
purport to be complete, and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Members Agreement, which has been
filed as an exhibit to this Registration Statement.
The Members and the Membership Units
The owners of the Company are known as Members. The ownership interest
of a Member is designated as a "Membership Unit." The Company has the following
classes of Membership Units: (i) "Class B Membership Units," which initially
represented all of the Company's ownership interests and which were and are held
by Edison pending the surrender thereof by Edison for cancellation from time to
time in exchange for an equivalent number of Class A Membership Units to be
distributed by Edison pursuant to the Plan, and (ii) "Class A Membership Units,"
which have been and will continue to be distributed by Edison from time to time
to holders of Allowed General Unsecured Claims pursuant to the Plan. Holders of
Class A Membership Units are sometimes referred to herein as "General Members."
Membership Units may be issued only as specifically provided for in the Members
Agreement and there shall be outstanding a total of 10,000,000 ownership
interests (whether Class A Membership Units or Class B Membership Units)
throughout the term of the Company's existence. Membership Units constitute
personal property and no Member has a claim to or interest in specific property
of the Company.
Each Class B Membership Unit is represented solely by an entry in the
books for registration and transfer provided for in the Members Agreement. Each
Class A Membership Unit, including without limitation any Class A Membership
Unit that may be issued upon transfer of a Class A Membership Unit, will be
evidenced by, and subject to the terms of, a Membership Unit certificate (a
"Membership Certificate") in substantially the form set forth in the Members
Agreement, with such changes, marks of identification or designation, and such
legends, summaries, or endorsements printed thereon as the Company may deem
appropriate and are not inconsistent with the provisions of the Members
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto. The Membership Certificates will be
executed on behalf of the Company by the manual or facsimile signature of the
Manager.
The Company is entitled to treat the registered holder of any
Membership Certificate as the sole owner of the Class A Membership Units
represented thereby.
Distributions of Membership Units
In connection with each distribution of Class A Membership Units
required to be made pursuant to the Plan, Edison first instructs the Company or
the Transfer Agent that Edison desires to surrender for cancellation a specified
number of Class B Membership Units in exchange for the issuance and delivery to
Edison of a like number of Class A Membership Units, to be evidenced by
Membership Certificates in such denominations and registered in the names of
such holders of Allowed General Unsecured Claims (or the designees thereof) as
may be specified in such instruction. Following issuance of the requested Class
A Membership Units, the Transfer Agent cancels the appropriate number of Class B
Membership Units and distributes the Class A Membership Certificates, in
accordance with Edison's instruction, to the requested holders of Allowed
General Unsecured Claims. All Class A Membership Units transferred by Edison to
holders of Allowed General Unsecured Claims issued pursuant to the Plan on any
distribution date are deemed to have been issued in exchange for Class B
Membership Units and distributed at the end of the last day of the preceding
fiscal quarter. All holders of Class A Membership Units agree to file all
federal, state, and local tax returns in a manner that is consistent with the
preceding sentence.
Capital Contributions; Capital Accounts
On the Effective Date, the Debtors transferred to the Company, in
accordance with the Plan, all of their respective rights, title and interest in
and to the Pension Plan Proceeds. In consideration for such initial contribution
or the obligations of the Debtors to make such additional contributions,
10,000,000 Class B Membership Units were issued to Edison on the Commencement
Date.
-10-
<PAGE>
From and after the Effective Date, Class A Membership Units have been
and will continue to be issued and delivered to Edison for distribution to
holders of Allowed General Unsecured Claims in accordance with the Plan and the
Members Agreement. Upon such issuance and delivery the persons in whose name
such Class A Membership Units are registered are admitted to the Company as
General Members. Similarly, each Person to whom record ownership of a Class A
Membership Unit is subsequently transferred in accordance with the Members
Agreement is admitted to the Company as a General Member upon the registration
of such transfer. See "--Transfers and Exchanges of Membership Units;
Restrictions on Transfers" below for a discussion of the transfer restrictions
with respect to the Class A Membership Units.
No General Member has any obligation to, nor will any General Member
be entitled to, make any additional contributions to the capital of the Company.
No Member is entitled to withdraw any portion of its contribution or Capital
Account, or to receive any distribution from the Company, except as otherwise
provided in the Members Agreement.
A Capital Account is maintained for each Member, in accordance with
the Members Agreement, for purposes of calculating taxes payable by each Member
with respect to the Company's activities. See "--Taxation."
Distributions of Pension Plan Proceeds
Subject to the application of funds and reserve provisions described
below, the Members Agreement requires the Manager to distribute to holders of
Class A Membership Units, in proportion to their respective Class A Sharing
Percentages (i.e., the percentage of all Class A Membership Units held by them),
any Pension Plan Proceeds (together with interest and proceeds thereon) promptly
following the Company's receipt thereof. Amounts available for distribution are
first applied to (i) pay related taxes and any administrative and professional
expenses, (ii) fund the Indemnification Reserve, (iii) make certain payments to
Edison with respect to taxable income allocated to Edison (described below),
(iv) repay any outstanding loans, and (v) reserve for the amount of future
administrative expenses for the term of the Company. In addition, at any time at
which Class B Membership Units remain outstanding, the Manager must withhold
from amounts distributed to holders of Class A Membership Units a percentage of
the amounts available equal to the percentage of Membership Units represented by
outstanding Class B Membership Units ("Reserved Amounts"). All Reserved Amounts
are held by the Manager separately for the benefit of Class A Membership Units
thereafter transferred pursuant to the Plan and are paid out of such separate
account (in proportion to the percentage of Class B Membership Units to be
transferred on such date) as Class A Membership Units are issued. The Manager is
entitled to establish record dates for purposes of determining the Members
entitled to receive distributions.
The Company is obligated to make distributions to Edison with respect
to taxable income of the Company allocated to Edison on account of its ownership
of Class B Membership Units.
Transfer and Exchanges of Membership Units; Restrictions on Transfer
Except as described below, any Membership Certificate may be
transferred, split up, combined, or exchanged for another Membership Certificate
or Membership Certificates. Any Member desiring to transfer, split up, combine,
or exchange any such Membership Certificate must make such request in writing
delivered to the Manager, and must surrender the Membership Certificate or
Membership Certificates to be transferred, split up, combined, or exchanged,
with a form of assignment duly executed by the Member thereof, at the principal
office of the Company or the Transfer Agent. Thereupon or as promptly as
practicable thereafter, the Company or the Transfer Agent will prepare, execute,
and deliver the Membership Certificate or Membership Certificates, as the case
may be, as so requested. Neither the Company nor the Transfer Agent will be
required to issue or deliver any Membership Certificates in connection with any
transfer, split up, combination, or exchange of Membership Certificates unless
and until the Member requesting the issuance or delivery thereof has paid to the
Manager the amount of any tax or governmental charge that may be payable in
connection with such transfer, split up, combination, or exchange or has
established to the satisfaction of the Manager that any tax or governmental
charge has been paid.
Upon receipt by the Company and the Manager of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Membership Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Manager of all reasonable expenses incidental thereto, and upon
surrender to the Manager and cancellation of the Membership Certificate if
mutilated, the
-11-
<PAGE>
Manager will prepare, execute, and deliver a new Membership Certificate of like
tenor to the Member in lieu of the Membership Certificate so lost, stolen,
destroyed, or mutilated.
All Membership Certificates surrendered for the purpose of transfer,
split-up, combination or exchange will be delivered to the Company or the
Transfer Agent for cancellation and will be canceled by the Company or the
Transfer Agent, and no Membership Certificates will be issued in lieu thereof
except as expressly provided in the Members Agreement.
A General Member may not transfer any beneficial interest in its Class
A Membership Unit, other than in an Unrestricted Transfer (as defined below).
Any purported transfer of a Class A Membership Unit by a General Member in
violation of the restriction of the Members Agreement are null and void.
Any Member may, upon providing (i) such evidence to the Company as the
Manager may reasonably require (including, if required by the Manager, an
opinion of counsel reasonably satisfactory to the Manager), to the effect that
such transfer will not result in the Company ceasing to be classified as a
partnership for federal income tax purposes, and (ii) such assurances as the
Manager may reasonably require with respect to the reimbursement of any expenses
that may be incurred by the Company in connection with such transfer, transfer
all or any portion of the record or beneficial interests in the Class A
Membership Units owned by such General Member to any person. Subject to the
foregoing and to applicable law, the following transfers constitute
"Unrestricted Transfers":
(i) A transfer or series of transfers by a Member within a thirty-
day period which involves the transfer of more than 2% of the
outstanding Class A Membership Units;
(ii) A transfer or series of related transfers by one or more Members
(acting together) which involves the transfer of 50% or more of
the outstanding Class A Membership Units;
(iii) Transfers of Class A Membership Units effected through a
qualified matching service (within the meaning of Treasury
Regulation (S) 1.7704-1(g)(2)); or
(iv) Transfers in which the basis of the Membership Unit in the hand
of the transferee is determined, in whole or in part, by
reference to its basis in the hands of the transferor.
The Members have agreed that irreparable damage would occur in the
event that any Member transfers, or attempts to transfer, any equity interest in
the Company in violation of the Members Agreement and that the Company shall be
entitled to specific performance with respect to these transfer restrictions in
addition to recovering attorney's fees from the breaching party and any other
remedy at law or equity.
Taxation
The Company is classified as a partnership for federal income tax
purposes and the Members may not make any election or take any action that would
cause the relationship of the Members under the Members Agreement to be treated
as other than a partnership for federal income tax purposes. Each Member's
Capital Account is increased by certain amounts, including such Member's share
of the Company's income and gain, and decreased by certain amounts, including
distributions to such Member. No Member with a deficit balance in its Capital
Account is obligated to restore or repay such deficit balance. The Company's
income and loss for any fiscal year is allocated to the Members as follows: (i)
first, all items of income consisting of interest or other earnings on Reserved
Amounts is allocated to the Class B Membership Units in proportion to their
respective Class B Sharing Percentages (i.e. the percentage of all Class B
Membership Units owned by them); and (ii) second, all other income and loss is
allocated to the Members in proportion to their Overall Sharing Percentages
(i.e. the percentage of all Class A and Class B Membership Units owned them). No
interest is paid by the Company with respect to the balance of any Capital
Account.
Withdrawal
No member may resign from the Company or effect a partial or complete
withdrawal from the Company.
-12-
<PAGE>
Reports to Members
The Company will furnish to the Members, promptly after filing thereof
with the Securities and Exchange Commission (the "SEC") each Annual Report on
Form 10-K filed by the Company with the SEC (or, if the Company is not required
to file an Annual Report on Form 10-K in respect of a particular fiscal year,
will furnish to the Members, within a comparable time frame following the end of
such fiscal year, an annual report containing information substantially
identical to that which would have been included in an Annual Report on Form
10-K).
Jurisdiction and Venue
Except with respect to the matters specified in the Members Agreement
for which the Bankruptcy Court has retained jurisdiction, any action or other
legal proceeding brought under the Members Agreement will be subject to the
jurisdiction of the State of Delaware or the courts of the United States located
in the State of Delaware. Each of the Members has consented to the jurisdiction
of Delaware for actions or legal proceedings brought by any other Member or the
Company arising out of or relating to the Members Agreement and has waived any
objection which it may have to the laying of the venue of such suit, action or
proceeding in any of such courts.
Legal Proceedings; Indemnification
No Member has any right by virtue of any provision of the Members
Agreement to institute any action or proceeding in law or in equity against
Edison or any party other than the Company upon or under or with respect to the
Company Assets. If any Member becomes involved in legal proceedings unrelated to
the business of the Company in which Edison or the Company is called upon to
provide information, the Member will indemnify and hold harmless Edison, the
Company and the Manager against all costs and expenses, including, without
limitation, fees and expenses of attorneys and other advisors, incurred by
Edison, the Company or the Manager in preparing or producing the required
information or in resisting any request for production or obtaining a protective
order limiting the availability of the information actually provided by the
Company or the Manager.
Waivers
Each of the Members has irrevocably waived any right or power that
such Member might have to: (i) cause the Company or any of the Company Assets to
be partitioned; (ii) cause the appointment of a receiver for all or any portion
of the Company Assets; (iii) compel any sale of all or any portion of the
Company Assets; and (iv) file a complaint, or to institute proceeding at law or
in equity, to cause the dissolution or liquidation of the Company.
Meetings of Members
Meetings of the Members may be called and held at the Company's
expense for any purpose by the Designation Members in which event the
Designation Members will designate any place, within or without the State of
Delaware, as the place for such meeting. A written or printed notice stating the
place, day and hour of the meeting and the purpose or purposes for which such
meeting is called, will be delivered by the Company to each Member not less than
ten (10) days nor more than fifty (50) days before the meeting. If all of the
Members meet at any time and place, either within or without the State of
Delaware, and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting any Company
action may be taken.
At each meeting of the Members, the holders of record of a majority of
the Class A Membership Units, present in person or by proxy, shall constitute a
quorum for the transaction of Company business. In the absence of a quorum any
Member present at such meeting in person or by proxy shall have the power to
adjourn such meeting until a quorum shall be constituted. Unless otherwise
provided by law or this Agreement, the affirmative vote of the holders of record
of a majority of the Class A Membership Units represented at a meeting at which
a quorum is present shall constitute an act of the Members. At any meeting of
the Members, a Member may vote by proxy executed in writing by such Member or by
his duly authorized representative. Such proxy shall be filed with the Company
before or at the time of the meeting. No proxy shall be valid after eleven (11)
months from the date of its execution, unless otherwise provided in such proxy.
Members may participate in any meeting through telephonic or similar
communications equipment by means of which all persons participating in the
meeting can hear one another, and such participation shall constitute presence
in person at such meeting.
-13-
<PAGE>
Any action required to, or which may, be taken by the Members may be
taken without a meeting if consent thereto in writing, setting forth the action
so taken, shall be signed by the holders of record of a majority of the Class A
Membership Units. A written consent may be in one or more instruments, each of
which may be signed by one or more Members. No notice need be given of action
proposed to be taken by written action, or an approval given by written action,
unless specifically required by the Delaware Act.
The Manager is entitled to establish record dates for purposes of
determining the Members entitled to receive notices or exercise voting rights.
There have been no meetings of Members through September 30, 1998.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following summarizes certain provisions of the Members Agreement
relating to the indemnity of the Manager. This summary does not purport to be
complete, and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Members Agreement, which has been filed as an
exhibit to this Registration Statement.
To the fullest extent permitted by the Delaware Act, the Company, to
the extent of its assets legally available for that purpose, will indemnify and
hold harmless the Manager from and against any and all loss, cost, damage,
expense (including without limitation fees and expenses of attorneys and other
advisors and any court costs incurred by the Manager) or liability by reason of
anything the Manager does or refrains from doing for, or in connection with, the
affairs of, the Company, except to the extent that it is finally judicially
determined by a court of competent jurisdiction that the loss, cost, damage,
expense or liability resulted primarily from the Manager's gross negligence or
willful breach of a material provision of the Members Agreement which in either
event causes actual material damage to the Company. The Company may pay in
advance or reimburse reasonable expenses (including advancing reasonable costs
of defense) incurred by the Manager who is or is threatened to be named or made
a defendant or a respondent in a proceeding concerning the affairs of the
Company.
To the extent future enactments or judicial decisions permit an
expansion of the rights of indemnification afforded to the Manager by the
Company, then the Members have expressed their intention and agreement to
automatically amend the Members Agreement to permit and authorize the
indemnification of the Manager by the Company to the maximum extent permitted by
law. The Members Agreement authorizes the Manager to execute, on behalf of all
Members, such amendments to the Members Agreement as may be appropriate to give
further effect to the agreement described in this paragraph.
To the extent commercially reasonable, the Manager will cause the
Company to purchase and maintain insurance, to the extent and in such amounts as
the Manager, in its sole discretion, deems reasonable, on behalf of the Manager,
against any liability that may be asserted against, or expenses that may be
incurred by, the Manager in connection with the activities of the Company,
regardless of whether the Company would have the power to indemnify the Manager
against such liability under the provisions of the Members Agreement.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 15 and pages F-1 to F-8.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-14-
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statement and Schedules
Financial Statements. The following Financial Statements of the
Company and the Report of Independent Auditors are included at pages F-2 through
F-8 of this Registration Statement.
<TABLE>
<S> <C>
Independent Auditor's Report F-2
EBS Pension, L.L.C.
Balance Sheet at December 31, 1997,
and September 30, 1998 (unaudited) F-3
EBS Pension, L.L.C.
Statement of Income for the periods ended
December 31, 1997, and September 30, 1998 (unaudited) F-4
EBS Pension, L.L.C.
Statement of Changes in Members' Equity for the
period ended September 30, 1998 (unaudited) F-5
EBS Pension, L.L.C.
Statement of Cash Flows for the periods ended
December 31, 1997 and September 30, 1998 (unaudited) F-6
EBS Pension, L.L.C.
Notes to Financial Statements F-7
</TABLE>
<TABLE>
<CAPTION>
Exhibits
--------
Exhibit
Number Item
- ------ ----
<S> <C>
2.1* Amended Joint Plan of Reorganization of Edison Brothers Stores, Inc.
3.1* EBS Pension, L.L.C. Certificate of Formation
3.2* EBS Pension, L.L.C. Membership Agreement
23.1* Consent of Independent Public Accountants
27.1 Financial Data Schedule
</TABLE>
* Incorporated by reference to the Company's Form 10 originally filed
with the Securities and Exchange Commission on July 29, 1998 (SEC File
No.000-24713).
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Minneapolis, Minnesota, on December 4, 1998.
EBS PENSION, L.L.C.
(Registrant)
By: NORWEST BANK MINNESOTA, N.A., in its
capacity as Manager of EBS Pension, L.L.C.
By: /s/ LON P. LECLAIR
------------------------------------
Lon P. LeClair
Vice President
-16-
<PAGE>
<TABLE>
<CAPTION>
Index to Financial Statements
<S> <C>
Independent Auditors' Report...................................................................... F-2
EBS Pension, L.L.C. Balance Sheet at December 31, 1997 and September 30, 1998 (unaudited)......... F-3
EBS Pension, L.L.C. Statement of Income for the periods ended December 31, 1997
and September 30, 1998 (unaudited)............................................................ F-4
EBS Pension, L.L.C. Statement of Changes in Members' Equity for the period ended
September 30, 1998 (unaudited)................................................................ F-5
EBS Pension, L.L.C. Statement of Cash Flows for the periods ended December 31, 1997
and September 30, 1998 (unaudited)............................................................ F-6
EBS Pension, L.L.C. Notes to Financial Statements................................................. F-7
</TABLE>
F-1
<PAGE>
Independent Auditors' Report
Rubin, Brown, Gornstein & Co., LLP
230 South Bemiston Avenue
St. Louis, MO 63105
Members
EBS Pension, L.L.C.
St. Louis, Missouri
We have audited the accompanying balance sheet of EBS Pension, 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 25, 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 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 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 Pension, L.L.C. as of
December 31, 1997, and the results of its operations and its cash flows for
the period beginning September 25, 1997 and ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ RUBIN, BROWN, GORNSTEIN & CO., LLP
--------------------
Rubin, Brown, Gornstein & Co., LLP
July 1, 1998
F-2
<PAGE>
EBS PENSION, L.L.C.
Balance Sheet
September 30, 1998 and December 31, 1997
- ----------------------------------------
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(unaudited) 1997
------------- ------------
<S> <C> <C>
Assets:
Cash
Available for general operations $ 334,726 $ -
Available for future holders of Class B -
Membership Units 2,304,974
Available for anticipated cost of legal -
indemnification of officers 1,538,480
Interest and distribution receivable 15,935 -
Due from Edison Brothers Stores, Inc. - 43,985,315
---------- -----------
Total assets $4,194,115 $43,985,315
========== ===========
Liabilities:
Accrued expenses $ 162,421 $ 51,910
---------- -----------
Total liabilities 162,421 51,910
---------- -----------
Members' equity:
Membership Units (Class A - 10,000,000
authorized, 9,466,938 and 9,058,041 issued
and outstanding at September 30, 1998 and
December 31, 1997, respectively; Class B -
533,062 and 941,959 authorized, issued and
outstanding at September 30, 1998 and
December 31, 1997, respectively)
Paid-in capital 4,008,222 43,985,315
Retained earnings 23,472 (51,910)
---------- -----------
Total members' equity 4,031,694 43,933,405
---------- -----------
Total liabilities and members' equity $4,194,115 $43,985,315
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
EBS PENSION, L.L.C.
Statement of Income
For the Periods Ended September 30, 1998 and December 31, 1997
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months
ended
September 30, 1998 Period ended
(unaudited) December 31, 1997
------------------ -----------------
<S> <C> <C>
Income: $278,275 $ -
General and administrative
expenses: 202,893 51,910
-------- --------
Net income (loss) $ 75,382 $(51,910)
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
EBS PENSION, L.L.C.
Statement of Changes in Members' Equity
For the Period Ended September 30, 1998
- --------------------------------------------------------------------------------
<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 $ 43,985,315 $(51,910) $ 43,933,405
Year-to-date capital distribution
(unaudited) - - (39,977,521) - (39,977,521)
Year-to-date units transferred
(unaudited) 409,176 (409,176) - - -
Units and proceeds returned from June (279) 279 428 - 428
distribution (unaudited)
Year-to-date Income (unaudited) - - - 75,382 75,382
--------- -------- ------------ -------- ------------
Balance, September 30, 1998
(unaudited) 9,466,938 533,062 $ 4,008,222 $ 23,472 $ 4,031,694
========= ======== ============ ======== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
EBS PENSION, L.L.C.
Statement of Cash Flows
For the Periods Ended September 30, 1998 and December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
September 30, 1998 Period Ended
(unaudited) December 31, 1997
------------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 75,382 $ (51,910)
Reconciliation of net income (loss) to cash
flows provided by operating activities:
Decrease in due from Edison Brothers, Inc. 43,985,315 -
Increase in interest and distribution -
receivable (15,935)
Increase in liabilities 110,511 51,910
------------ -----------
Cash flows provided by operating activities 44,155,273 -
------------ -----------
Cash flows from financing activities: -
Return of distribution proceeds 428
Capital distribution (39,977,521) -
------------ -----------
Cash flows used in financing activities (39,977,093) -
Net increase in cash 4,178,180
Cash at beginning of period - -
------------ -----------
Cash at end of period $ 4,178,180 $ -
============ ===========
Supplemental disclosure of noncash financing
activities:
Contribution of net cash pension proceeds (Due
from Edison Brothers Stores, Inc.)
$ - $43,985,315
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
EBS PENSION, L.L.C.
Notes to Financial Statements (Unaudited)
September 30, 1998 and December 31, 1997
- --------------------------------------------------------------------------------
1. Description of business
EBS Pension, L.L.C. (the "Company") is governed by a Members Agreement, dated
as of September 25, 1997 (the "Members Agreement"). Pursuant to the Members
Agreement, the Company is organized for the exclusive purposes of (a)
receiving and administering the cash proceeds (the "Pension Plan Proceeds")
to be received by Edison Brothers Stores, Inc. ("Edison") and its affiliated
debtors in possession (collectively with Edison, the "Debtors") as a result
of the termination of the Edison Brothers Stores, Inc. Pension Plan (the
"Pension Plan"), net of (i) the Pension Plan assets transferred to a
qualified replacement pension plans, (ii) all costs, fees and expenses
relating to termination of the Pension Plan and establishment of the
replacement Plan, and (iii) all applicable taxes incurred or for which a
reserve is established in connection with termination of the Pension Plan,
and (b) distributing such assets to holders of Class A 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 the Company for the
periods from September 25, 1997 (date of inception) through December 31, 1997
and January 1, 1998 through September 30, 1998.
The accompanying unaudited financial statements as of and for the nine months
ended September 30, 1998 include all adjustments necessary for a fair
presentation of the results for such interim period. These adjustments are
of a normal recurring nature.
Cash and cash equivalents
Cash consists of amounts held in an account in the Company's name at a
highly-rated financial institution, along with U.S. Treasury Securities
purchased and held in the Company's name.
Accrued expenses
Accrued expenses include amounts for legal, tax, accounting, manager and
transfer agent fees. Amounts are payable within one year.
Interest
Interest income is determined on the accrual basis. Interest receivable
includes amounts due to be received within one year.
Expenses
All expenses of the Company are recorded on the accrual basis of accounting.
Income Taxes
The Company is not subject to taxes. Instead, the Members report their
distributive share of the Company's profits and losses on their respective
income tax returns.
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3. Members' equity
On September 25, 1997, Edison transferred the right to receive net cash
proceeds from the termination of the Pension Plan in exchange for
10,000,000 Class B Membership Units of the Company, which represented all
of the outstanding Membership Units of the Company. The net cash proceeds
amounted to $43.9 million at December 31, 1997 and were due from Edison at
that date. An additional amount of $5.7 million is being held by Edison
for certain tax liabilities of Edison. Some portion of this amount may
ultimately be distributed by Edison to the Company, however the amount of
such distribution (if any) cannot be determined at this time.
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 Class A Membership Units to holders of Allowed General
Unsecured Claims.
In January 1998, Edison paid $43.9 million to the Company related to the
settlement of the Company's receivable recorded at December 31, 1997. Of
this amount, $39.4 million was distributed to Class A Members in February
1998. Of the remaining amount, $2.7 million is being held back for future
holders of Class B Membership Units, $1.5 million is held back for the
anticipated cost of legal indemnification of the officers of Edison, and
$0.3 million is held back for other anticipated expenses expected to be
incurred by the Company.
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. All outstanding Class B Membership Units will eventually
be exchanged and an equivalent number of Class A Membership Units
distributed to the holders of Allowed General Unsecured Claims as required
by the Members Agreement and the Plan of Reorganization.
(The information below has not been subjected to an audit.)
During June 1998, Edison exchanged an additional 128,616 Class B Membership
Units for 128,616 Class A Membership Units of the Company and
simultaneously distributed such units to holders of Allowed General
Unsecured Claims. During June 1998, the Company distributed $0.6 million
of reserved amounts to the holders of the Class A Membership Units that
were distributed in June 1998.
4. Subsequent events (unaudited)
Transfer of Membership Units
During November 1998, Edison exchanged an additional 87,436 Class B
Membership Units for 87,436 Class A Membership Units of the Company and
simultaneously distributed such Class A Membership Units to holders of
Allowed General Unsecured Claims that had not previously received Class A
Membership Units.
Return of Membership Units
As of December 4, 1998, certain Class A Membership Unit holders returned
279 Class A Membership Units to Edison as such Membership Units had been
distributed in error. The distribution proceeds relating to these returned
Membership Units are included in paid in capital at September 30, 1998 and
will be made available for future distributions to holders of Class A
Membership Units. At September 30, 1998, Edison held 533,062 Class B
Membership Units.
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