-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FAoMm5hnPjz4NdsUMnvtuWMFxn+P/l1pNWjgH0llHCtLuhPRmFNvp56Kt+paff1w F28oYOmSG7kDtlfUyBqEhA== 0000090794-95-000005.txt : 19951119 0000090794-95-000005.hdr.sgml : 19951119 ACCESSION NUMBER: 0000090794-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: 60 EAST 42ND STREET ASSOCIATES CENTRAL INDEX KEY: 0000090794 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 136077181 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02670 FILM NUMBER: 95591436 BUSINESS ADDRESS: STREET 1: C/O WEIN MALKIN & BETTEX STREET 2: 60 EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 2126878700 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ___________ Commission file number 0-2670 60 EAST 42ND ST. ASSOCIATES (Exact name of registrant as specified in its charter) A New York Partnership 13-6077181 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 60 East 42nd Street, New York, New York 10165 (Address of principal executive offices) (Zip Code) (212) 687-8700 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]. No [ ]. An Exhibit Index is located on Page 12 of this Report. Number of pages (including exhibits) in this filing: 12 PART I. FINANCIAL INFORMATION Item 1. Financial Statements 60 East 42nd St. Associates Condensed Statement of Income (Unaudited) For the Three Months For the Nine Months Ended September 30, Ended September 30, 1995 1994 1995 1994 Income: Basic rent from a related party (Note B) $ 271,961 $ 278,331 $ 815,881 $ 844,368 Additional rent from a related party (Note B) 263,450 263,450 790,350 790,350 Further additional rent income from a related party (Note B) 1,565,928 2,202,847 1,565,928 2,202,847 ---------- ---------- ---------- ---------- Total rent income 2,101,339 2,744,628 3,172,159 3,837,565 ---------- ---------- ---------- ---------- Expenses: Interest on mortgage (Note B) 265,961 263,057 797,881 790,067 Supervisory services, to a related party (Note C) 164,438 203,178 180,128 218,868 Amortization of mortgage refinancing costs 6,194 11,036 18,582 33,104 ---------- ---------- ---------- ---------- Total expenses 436,593 477,271 996,591 1,042,039 ---------- ---------- ---------- ---------- Net income $1,664,746 $2,267,357 $2,175,568 $2,795,526 ========== ========== ========== ========== Earnings per $10,000 participa- tion unit, based on 700 parti- cipation units outstanding during the year $2,378.21 $3,239.08 $3,107.95 $3,993.61 ========= ========= ========= ========= Distributions per $10,000 parti- cipation consisted of the following: Income $2,378.21 $3,239.08 $3,107.95 $3,993.61 Decrease in capital deficit (2,004.49) (2,865.36) (1,986.79) (2,872.45) --------- --------- --------- ---------- Total distributions $ 373.72 $ 373.72 $1,121.16 $1,121.16 ========= ========= ========= ========== At September 30, 1995 and 1994, there were $7,000,000 of participations outstanding. 60 East 42nd St. Associates 3. September 30, 1995 60 East 42nd St. Associates Condensed Balance Sheet (Unaudited) September 30, 1995 December 31, 1994 Assets Current assets: Cash $ 87,879 $ 176,532 Further additional rent due from a related party (Note B) 1,440,928 -0- ----------- ----------- Total current assets 1,528,807 176,532 Real estate Land 7,240,000 7,240,000 Buildings and Building Improvements 18,534,135 18,534,135 Less, allowance for depreciation 18,534,135 18,534,135 ----------- ----------- -0- -0- Mortgage refinancing costs 249,522 249,522 Less, allowance for amortization 24,487 5,905 ------------ --------- 225,035 243,617 ----------- ----------- Total assets $ 8,993,842 $ 7,660,149 =========== =========== Liabilities and Capital Current liabilities Accrued interest payable $ -0- $ 88,653 Accrued expense, to a related party (Note C) 31,593 -0- ----------- ----------- Total current liabilities 31,593 88,653 Long-term debt 12,020,814 12,020,814 Capital Capital deficit, January 1, (4,449,318) (4,696,133) Add, Net income: January 1, 1995 through September 30, 1995 2,175,568 -0- January 1, 1994 through December 31, 1994 -0- 3,051,227 ----------- ----------- (2,273,750) (1,644,906) ----------- ----------- Less, Distributions: Monthly distributions, January 1, 1995 through September 30, 1995 784,815 -0- January 1, 1994 through December 31, 1994 -0- 1,046,420 Distribution on November 30, 1994 of Additional Rent for the lease year ended September 30, 1994 -0- 1,757,992 ----------- ----------- Total distributions 784,815 2,804,412 ----------- ----------- Capital (deficit) September 30, 1995 (3,058,565) -0- December 31, 1994 -0- (4,449,318) ----------- ----------- Total liabilities and capital: September 30, 1995 $ 8,993,842 -0- December 31, 1994 -0- $ 7,660,149 =========== =========== 60 East 42nd St. Associates 4. September 30, 1995 60 East 42nd St. Associates Condensed Statements of Cash Flows (Unaudited) January 1, 1995 January 1, 1994 through through September 30, 1995 September 30, 1994 Cash flows from operating activities: Net income $2,175,568 $2,795,526 Adjustments to reconcile net income to cash provided by operating activities: Amortization of mortgage refinancing costs 18,582 33,104 Change in accrued interest payable (88,653) (296) Change in accrued expenses 31,593 45,333 Change in additional rent due (1,440,928) (1,812,347) Change in due to lessee -0- 4,688 ---------- ---------- Net cash provided by operating activities 696,162 1,066,008 ---------- ---------- Cash flows from financing activities: Cash distributions (784,815) (784,815) Deposit with mortgagee -0- (240,500) Principal payments on long-term debt -0- (40,693) ---------- ---------- Net cash used in financing activities (784,815) (1,066,008) ---------- ---------- Net increase (decrease) in cash (88,653) -0- Cash, beginning of period 176,532 180,217 ---------- ---------- Cash, end of period $ 87,879 $ 180,217 ========== ========== January 1, 1995 January 1, 1994 through through September 30, 1995 September 30, 1994 Cash paid for: Interest $ 886,534 $ 790,363 ========== ========== 60 East 42nd St. Associates 5. September 30, 1995 Notes to Condensed Financial Statements (Unaudited) Note A - Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and statement of cash flows in conformity with generally accepted accounting principles. The accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring accruals) which are, in the opinion of the partners in Registrant, necessary for a fair statement of the results for such interim periods. The partners in Registrant believe that the accompanying unaudited condensed financial statements and the notes thereto fairly disclose the financial condition and results of Registrant's operations for the periods indicated and are adequate to make the information presented therein not misleading. Note B - Interim Period Reporting The results for interim periods are not necessarily indicative of the results to be expected for a full year. Registrant is a New York partnership which was organized on September 25, 1958 and which owns fee title to the Lincoln Building and the land thereunder, located at 60 East 42nd Street, New York, New York 10165 (the "Property"). Registrant's partners are Donald A. Bettex, Ralph W. Felsten, Stanley Katzman, Peter L. Malkin, Martin D. Newman, Melvyn H. Halper and C. Michael Spero, (collectively the "Partners"), each of whom also acts as an agent for holders of participations (the "Participants") in their respective partnership interests in Registrant. Registrant leases the Property to Lincoln Building Associates ("Lessee") under a long-term net operating lease (the "Lease"), the current term of which expires on September 30, 2008. (There is one additional 25-year term which, if exercised, will extend the Lease until September 30, 2033.) Lessee is a partnership whose partners consist of, among others, Mr. Malkin. The Partners are also members of the law firm of Wien, Malkin & Bettex, 60 East 42nd Street, New York, New York, counsel to Registrant and Lessee ("Counsel"). See Note C of this Item 1 ("Note C"). The Lease, as modified, provides that Lessee is required to pay Registrant: (i) an annual basic rent of $1,087,842 (the "Basic Rent"), which is equal to the sum of $1,063,842, the constant annual charges on the first mortgage calculated in accordance with the terms of the Lease plus $24,000 for supervisory services payable to Counsel. 60 East 42nd St. Associates 6. September 30, 1995 (ii) (A) additional rent (the "Additional Rent") equal to the lesser of (x) Lessee's net operating income for the preceding lease year or (y) $1,053,800 and (B) further additional rent (the "Further Additional Rent") equal to 50% of any remaining balance of Lessee's net operating income for such lease year. (Lessee has no obligation to make any payment of Additional Rent or Further Additional Rent until after Lessee has recouped any cumulative operating loss accruing from and after September 30, 1977.) (iii) as an advance against Additional Rent, an amount which will permit basic distributions to Participants at the annual rate of 10% on their remaining cash investment in Registrant; provided, however, if such advances exceed Lessee's net operating income for any Lease year, advances otherwise required during the subsequent lease year shall be reduced by an amount equal to such excess until Lessee shall have recovered, through retention of net operating income, the full amount of such excess. Further Additional Rent income is recognized when earned from the Lessee, at the close of the lease year ending September 30. Such income is not determinable until the Lessee, pursuant to the Lease, renders to Registrant a certified report on the operation of the Property. Further Additional Rent for the lease year ended September 30, 1995 was $1,565,928. After payment of $156,593 to Counsel as an additional payment for supervisory services, the balance of $1,409,335 will be distributed to the Participants on November 30, 1995. A new first mortgage loan on the Property in the original principal amount of $12,020,814 was closed on October 6, 1994 (the "Mortgage"). Annual Mortgage charges are $1,063,842, payable in equal monthly installments of $88,654, representing interest only at the rate of 8.85% per annum. The Mortgage will mature on October 31, 2004 and is prepayable in whole after October 6, 1995 with a penalty providing interest protection to the mortgagee. The Mortgage is prepayable in whole without penalty during the 90-day period prior to its maturity date. The refinancing costs were capitalized by Registrant and are being expensed ratably during the period of the mortgage extension from October 6, 1994 to October 31, 2004. If the Mortgage is modified, upon the first refinancing which would result in an increase in the amount of the outstanding principal balance of the mortgage, the basic rent shall be equal to the Wien, Malkin & Bettex annual supervisory fee of $24,000 plus an amount equal to the product of the new debt service percentage rate under the refinanced mortgage multiplied by the principal balance of the mortgage immediately prior to such refinancing. If there are subsequent refinancings which result in an increase in the amount of the outstanding principal balance of the mortgage, the principal balance referred to above shall be reduced by the amount of the mortgage amortization payable from basic rent subsequent to the first refinancing. 60 East 42nd St. Associates 7. September 30, 1995 Note C - Supervisory Services Registrant pays Counsel for supervisory services and disbursements $24,000 per annum (the "Basic Payment"), plus an additional payment of 10% of all distributions to Participants in Registrant in any year in excess of the amount representing a return at the rate of 14% per annum on their remaining cash investment (the "Additional Payment"). At September 30, 1995, such remaining cash investment was $7,000,000 representing the original cash investment of Participants in Registrant. No remuneration was paid during the three and nine month periods ended September 30, 1995 by Registrant to any of the Partners as such. Pursuant to the fee arrangements described herein, Registrant paid Counsel $6,000 and $18,000, respectively, of the Basic Payment and $1,845 and $5,535 respectively, on account of the Additional Payment, for supervisory services for the three and nine month periods ended September 30, 1995. In addition, Registrant paid Counsel $125,000 in the three month period ended September 30, 1995 on account of additional payment for supervisory services of $156,593 with respect to Further Additional Rent. See Note B of this Item 1. The supervisory services provided to Registrant by Counsel include legal, administrative services and financial services. The legal and administrative services include acting as general counsel to Registrant, maintaining all of its partnership records, performing physical inspections of the Building, reviewing insurance coverage and conducting annual partnership meetings. Financial services include monthly receipt of rent from the Lessee, payment of monthly and additional distributions to the Participants, payment of all other disbursements, confirmation of the payment of real estate taxes, and active review of financial statements submitted to Registrant by the Lessee and financial statements audited by and tax information prepared by Registrants' independent certified public accountant, and distribution of such materials to the Participants. Counsel also prepares quarterly, annual and other periodic filings with the Securities and Exchange Commission and applicable state authorities. Reference is made to Note B for a description of the terms of the Lease between Registrant and Lessee. As of September 30, 1995, Mr. Malkin owned a partnership interest in Lessee. The respective interests, if any, of the Partners in Registrant and Lessee arise solely from ownership of their respective participations in Registrant and, in the case of Mr. Malkin, his individual ownership of a partnership interest in Lessee. The Partners receive no extra or special benefit not shared on a pro rata basis with all other Participants in Registrant or partners in Lessee. However, the Partners, by reason of their respective interests in Counsel, are entitled to receive their pro rata share of any legal fees or other remuneration paid to Counsel for legal services rendered to Registrant and Lessee. As of September 30, 1995, the Partners owned of record and beneficially an aggregate $49,583.34 of participations in 60 East 42nd St. Associates 8. September 30, 1995 Registrant, representing less than 1% of the currently outstanding participations therein. In addition, as of September 30, 1995, certain of the Partners in Registrant (or their respective spouses) held additional Participations in Registrant as follows: C. Michael Spero owned of record as trustee or co-trustee, but not beneficially, $50,714.29 of Participations. Mr. Spero disclaims any beneficial ownership of such Participations. Peter L. Malkin owned of record as trustee or co-trustee, an aggregate of $65,714.29 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations. Isabel Malkin, the wife of Peter L. Malkin, individually and beneficially, owned $30,000 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. As stated in Note B, Registrant was organized solely for the purpose of acquiring the Property subject to a net operating lease held by Lessee. Registrant is required to pay from Basic Rent the annual mortgage charges due under the Mortgage and the Basic Payment to Counsel for supervisory services. The balance of such Basic Rent is distributed to the Participants. Additional Rent and Further Additional Rent is distributed to the Participants after the Additional Payment to Counsel. See Note C of Item 1 above. Under the Lease, Lessee has assumed sole responsibility for the condition, operation, repair, maintenance and management of the Property. Registrant is not required to maintain substantial reserves or otherwise maintain liquid assets to defray any operating expenses of the Property. Registrant does not pay dividends. During the three and nine month periods ended September 30, 1995, Registrant made regular monthly distributions of $124.57 for each $10,000 participation ($1,494.89 per annum for each $10,000 participation). There are no restrictions on Registrant's present or future ability to make distributions; however, the amount of such distributions depends solely on the ability of Lessee to make payments of Basic Rent, Additional Rent and Further Additional Rent to Registrant in accordance with the terms of the Lease. Registrant expects to make distributions so long as it receives the payments provided for under the Lease. On November 30, 1995, Registrant will make an additional distribution of $2,013.34 for each $10,000 participation. Such distribution represents Further Additional Rent payable by Lessee in accordance with the terms of the Lease. 60 East 42nd St. Associates 9. September 30, 1995 Registrant's results of operations are affected primarily by the amount of rent payable to it under the Lease. The following summarizes, with respect to the current period and the corresponding period of the previous year, the material factors affecting Registrant's results of operations for such periods: Total income decreased for the three and nine month periods ended September 30, 1995, as compared with the three and nine month periods ended September 30, 1994. Such decrease resulted from a decrease in the Basic Rent now payable under the Lease and from a decrease in income from Further Additional Rent for the lease year ending September 30, 1995. See Note B. Total expenses decreased for the three and nine month periods ended September 30, 1995, as compared with the three and nine month periods ended September 30, 1994. Such decrease was the net result of (i) an increase in mortgage interest expense, (ii) a decrease in the additional payments for supervisory services with respect to Further Additional Rent for the lease year ended September 30, 1995, as compared with the payments for supervisory services with respect to Further Additional Rent for the lease year ended September 30, 1994, and (iii) a decrease in the amortization of mortgage refinancing costs. See Note B. Liquidity and Capital Resources There has been no significant change in Registrant's liquidity for the three and nine month periods ended September 30, 1995, as compared with the three and nine month periods ended September 30, 1994. No amortization payments are due under the Mortgage to fully satisfy the outstanding principal balance at maturity, and furthermore, the Registrant does not maintain any reserve to cover the payment of such Mortgage indebtedness at maturity. Therefore, repayment of the Mortgage will depend on Registrant's ability to arrange a refinancing. Assuming that the Building continues to generate an annual net profit in future years comparable to that in past years, and assuming further that current real estate trends continue in the geographic area in which the Property is located, Registrant anticipates that the value of the Property would be in excess of the amount of the Mortgage balance at maturity. Registrant foresees no need for it to make material commitments for capital expenditures while the Lease is in effect. Inflation Registrant has been advised that there has been no material change in the impact of inflation on its operations since the filing of its report on Form 10-K for the year ended December 31, 1994, which report and all exhibits thereto are incorporated herein by reference and made a part hereof. 60 East 42nd St. Associates 10. September 30, 1995 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) None. (b) Registrant has not filed any report on Form 8-K during the quarter for which this report is being filed. 60 East 42nd St. Associates 11. September 30, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The individual signing this report on behalf of Registrant is Attorney-in-Fact for Registrant and each of the Partners in Registrant, pursuant to a Power of Attorney, dated March 30, 1989 (the "Power"). 60 EAST 42ND ST. ASSOCIATES (Registrant) By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: November 9, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned as Attorney-in-Fact for each of the Partners in Registrant, pursuant to the Power, on behalf of Registrant and as a Partner in Registrant on the date indicated. By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: November 9, 1995 ______________________ * Mr. Katzman supervises accounting functions for Registrant. 60 East 42nd St. Associates 12. September 30, 1995 EXHIBIT INDEX Registrant is not filing any exhibit as part of this quarterly report on Form 10-Q. EX-27 2
5 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 357,477 0 0 0 0 381,308 39,000,000 35,403,902 3,977,406 0 0 0 0 0 3,977,406 3,977,406 4,514,063 4,547,591 0 0 1,753,414 0 0 2,794,177 0 2,794,177 0 0 0 2,974,177 846.72 846.72 Includes prepaid rent of $23,831 Rental income Includes dividend income of $33,528 Leasehold rent of $1,477,500, supervisory fees of $119,563 and amortization of leasehold of $156,351 Earnings per $10,000 participation unit, based on 3,300 participation units outstanding during the year
-----END PRIVACY-ENHANCED MESSAGE-----