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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
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 0-827
EMPIRE STATE BUILDING ASSOCIATES L.L.C.
(Exact name of registrant as specified in its charter)
A New York Limited Liability Company 13-6084254
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York
(Address of principal executive offices)
10165
(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 19 of this Report.
Number of pages (including exhibits) in this filing: 21
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Empire State Building Associates L.L.C.
Condensed Consolidated Statements of Income
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
Income:
Rent income, from a
related party (Note C) $1,504,688 $1,504,688 $4,514,063 $4,514,063
Dividend income 15,036 23,094 130,647 218,452
Interest income 2,694 -0- 5,786 -0-
Miscellaneous income (Note E) -0- 1,660,904 -0- 1,660,904
--------- ---------- --------- ------------
Total income 1,522,418 3,188,686 4,650,496 6,393,419
---------- --------- ----------- ----------
Expenses:
Leasehold rent (Note B) -0- 492,500 603,887 1,477,500
Interest on mortgage
(Note B) 1,015,896 -0- 1,835,166 -0-
Supervisory services, to a
related party (Note D) 39,855 39,855 119,563 119,563
Depreciation of building
(Note B) 310,601 -0- 569,435 -0-
Amortization of financing
costs (Note B) 44,907 -0- 82,330 -0-
Amortization of leasehold
(Note B) -0- 52,117 60,803 156,351
Special fees, including amounts to
a related party (Note E) (6,743) 65,206 46,690 119,483
Miscellaneous 89 12,000 432 12,000
--------- -------- ------- ----------
Total expenses 1,404,605 661,678 3,318,306 1,884,897
--------- -------- ----------- ----------
Net income $ 117,813 $2,527,008 $1,332,190 $4,508,522
======= ======== ======== ========
Earnings per $10,000 participation unit, based
on 3,300 participation units outstanding
during the period $ 35.70 $ 765.76 $ 403.69 $ 1,366.22
======== ======== ======== ========
Distributions per $10,000 participation consisted
of the following:
Income $ 35.70 $ 294.65 $ 403.69 $ 1,366.22
Return of capital 258.95 .00 7,480.24 3,521.31
--------- ----------- -------- ---------
Total distributions $ 294.65 $ 294.65 $ 7,883.93 $ 4,887.53
======= ======= ======= =======
At September 30, 2002 and 2001, there were $33,000,000 of participations
outstanding.
See notes to condensed consolidated financial statements.
-2-
Empire State Building Associates L.L.C.
Condensed Consolidated Balance Sheets
(Unaudited)
Assets September 30, 2002 December 31, 2001
Current assets
Cash $ 693,230 $ 327,850
Restricted cash re: mortgage
interest (Note C) 1,005,786 -0-
Fidelity U.S. Treasury Income Portfolio 3,391,494 29,520,266
Prepaid rent -0- 23,831
Additional rent due from Empire State
Building Company L.L.C., a related party -0- 72,502
------------ ----------------
Total current assets 5,090,510 29,944,449
------------- ---------------
Deferred charges -0- 110,050
------------ ---------------
Mortgage financing costs 1,796,287 -0-
Less, allowance for amortization 82,330 -0-
------------- ---------------
1,713,957 -0-
------------- ---------------
Real Estate (Note B)
Leasehold on Empire State Building -0- 39,000,000
Less, allowance for amortization -0- 36,706,830
---------- ---------------
-0- 2,293,170
------------ ----------------
Land 12,095,036 -0-
------------- ---------------
Building 48,380,151 -0-
Less, allowance for depreciation 569,435 -0-
------------- ---------------
47,810,716 -0-
-------------- ---------------
Total real estate 59,905,752 2,293,170
------------- ---------------
Total assets $66,710,219 $32,347,669
========== ==========
Liabilities and Members' Equity
Current liabilities:
Accrued fees, to a related party $ -0- $ 316,804
Accrued supervisory services,
to a related party -0- 1,474,468
Accrued interest payable (Note B) 338,632 -0-
------------ ---------------
-3-
Empire State Building Associates L.L.C.
Condensed Consolidated Balance Sheets
(Unaudited)
(CONTINUED)
September 30, 2002 December 31, 2001
Total current liabilities $ 338,632 $ 1,791,272
Long term debt (Note B) 60,500,000 -0-
--------------- -----------------
Total liabilities 60,838,632 1,791,272
--------------- ----------------
Members' equity:
Members' equity January 1, 30,556,397 18,145,097
Add, Net income:
January 1, 2002 through
September 30, 2002 1,332,190 -0-
January 1, 2001 through
December 31, 2001 -0- 29,512,491
----------- -------------
31,888,587 47,657,588
-------------- -------------
Less, Distributions:
Monthly distributions,
January 1, 2002 through
September 30, 2002 2,917,000 -0-
January 1, 2001 through
December 31, 2001 -0- 3,889,333
Additional distribution on
March 6, 2002 based on overage rent
for the lease year ended
December 31, 2001 23,100,000 -0-
Additional distribution on
March 2, 2001 based on overage rent
for the lease year ended
December 31, 2000 -0- 13,211,858
-------------- ---------------
Total distributions 26,017,000 17,101,191
-------------- ---------------
Members' equity:
September 30, 2002 5,871,587 -0-
December 31, 2001 -0- 30,556,397
------------ ---------------
Total liabilities and members'
equity
September 30, 2002 $66,710,219
December 31, 2001 =========== $32,347,669
==========
See notes to condensed consolidated financial statements
-4-
Empire State Building Associates L.L.C.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
January 1, 2002 January 1, 2001
through through
September 30, 2002 September 30, 2001
Cash flows from operating activities:
Net income $ 1,332,190 $ 4,508,522
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of building 569,435 -0-
Amortization of financing costs 82,330 -0-
Amortization of leasehold 60,803 156,351
Change in additional rent due
from sublessee 72,502 2,583,762
Decrease in prepaid rent 23,831 -0-
Change in accrued interest payable 338,632 -0-
Change in accrued supervisory services (1,474,468) (843,310)
Change in accrued fees (316,804) (1,854,565)
-------------- ---------------
Net cash provided by operating activities 688,451 4,550,760
------------- --------------
Cash flows from investing activities:
Purchase of real estate (58,132,770) -0-
--------------- -------------
Net cash used in investing activities (58,132,770) -0-
--------------- -------------
Cash flows from financing activities:
Cash distributions (26,017,000) (16,128,858)
Proceeds from mortgage payable 60,500,000 -0-
Mortgage financing costs (1,796,287) -0-
---------------- ----------------
Net cash provided by (used in)
financing activities 32,686,713 (16,128,858)
------------- ----------------
Net decrease in cash and cash equivalents (24,757,606) (11,578,098)
Cash and cash equivalents
beginning of period 29,848,116 15,733,741
------------- ----------------
Cash and cash equivalents
end of period $ 5,090,510 $ 4,155,643
========== ==========
Cash paid for:
Interest $ 1,496,535 $ -0-
========== ==========
See notes to condensed consolidated financial statements
-5-
Notes to Condensed Consolidated Financial Statements (unaudited)
Note A - Organization and Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of normal recurring
accruals, necessary to present fairly the financial position of Registrant as
of September 30, 2002, its results of operations for the nine months and three
months ended September 30, 2002 and 2001 and cash flows for the nine months
ended September 30, 2002 and 2001 and its changes in Members' equity for the
nine months ended September 30, 2002. Information included in the condensed
balance sheet as of December 31, 2001 has been derived from the audited
balance sheet included in Registrant's Form 10-K for the year ended
December 31, 2001 (the "10-K") previously filed with the Securities and
Exchange Commission (the "SEC"). Pursuant to rules and regulations of the
SEC, certain information and disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted
from these consolidated financial statements unless significant changes
have taken place since the end of the most recent fiscal year. Accordingly,
these unaudited condensed consolidated financial statements should be read in
conjunction with the financial statements, notes to financial statements and
the other information in the 10-K. The consolidated results of operations
for the nine months ended September 30, 2002 are not necessarily indicative
of the results to be expected for the full year.
Registrant was originally organized as a general partnership on July
11, 1961. On October 1, 2001, Registrant converted from a general partnership
to a limited liability company under New York law and is now known as Empire
State Building Associates L.L.C. The conversion does not change any aspect
of the assets and operations of Registrant other than to protect its
participants from any future liability to a third party.
Registrant's members are Peter L. Malkin, Anthony E. Malkin and Thomas
N. Keltner, Jr. (collectively, the "Agents"), each of whom also acts as an
agent for holders of participations in his respective member interest in
Registrant (the "Participants").
Note B- Purchase of Fee Title to The Empire State Building
and Land Thereunder, Mortgage Debt, and related
Depreciation and Amortization
Through April 16, 2002, Registrant owned the tenant's interest in a
master operating leasehold (the "Master Lease") on the Empire State Building
(the "Building"), located at 350 Fifth Avenue, New York, New York. On April
17, 2002, Registrant acquired, through a wholly owned limited liability
company (Empire State Land Associates L.L.C.), the fee title to the Building,
and the land thereunder (the "Land") (together, the "Real Estate"), at a
price of $57,500,000, and obtained a $60,500,000 first mortgage with North
Fork Bank (the "Mortgage") to finance the acquisition and certain related
costs.
-6-
The Real Estate is carried in the financial statements at a total cost
of $60,475,187, consisting of $57,500,000 for the purchase price paid to the
seller, $742,820 for acquisition costs, and $2,232,367 representing the
unamortized balance of the cost of the Master Lease on the date the Real
Estate was acquired. The cost of the Land is estimated to be 20% of the
total cost of the Real Estate, and the Building, 80%. Under the terms of the
contract of sale, the deed contains language to avoid the merger of the fee
estate and the leasehold, although on a consolidated financial statement
basis the Registrant incurred no leasehold rent expense after acquiring the
Real Estate.
The Mortgage matures on May 1, 2012. Monthly payments under the
mortgage are interest only at a fixed rate of 6.5% through maturity. Payments
commenced on June 1, 2002, except that short-term interest from the closing
until April 30, 2002 was due on May 1, 2002. The mortgage may be prepaid at
any time after 24 months with the payment of a premium equal to the greater
of (a) 1% of the amount prepaid and (b) an amount calculated pursuant to a
prepayment formula designed to preserve the Bank's yield to maturity. The
Mortgage loan is secured by a lien on the Real Estate and Registrant's
leasehold estate under the Master Lease of the Real Estate.
The Building is being depreciated on a straight-line basis using an
estimated life of 39 years from April 17, 2002. Mortgage financing costs,
totaling $1,796,287, are being amortized ratably over the life of the
Mortgage.
Acquisition costs to acquire the Real Estate and mortgage financing
costs include payments totaling $103,587 and $54,909, respectively, made to
the firm of Wien & Malkin LLP, a related party.
Note C Interim Period Reporting
The condensed consolidated financial statements include the accounts
of Empire State Building Associates L.L.C. and, effective April 17, 2002, its
wholly-owned limited liability company, Empire State Land Associates L.L.C.
All intercompany accounts and transactions have been eliminated in
consolidation.
The initial term of the Master Lease expired on January 5, 1992. On
January 30, 1989, Registrant exercised its first of four 21-year renewal
options contained in the Master Lease and extended the Master Lease through
January 5, 2013. The annual rent payable under the Master Lease was
$1,970,000 through January 5, 2013 and $1,723,750 annually during the term of
each renewal period thereafter.
Prior to the acquisition of the Real Estate in April 2002, the value
of the Master Lease was stated at cost and amortized using the straight-line
method over its lease term. Since the unamortized cost of the Master Lease
is included as part of the cost of the Real Estate as of April 17, 2002,
no amortization has been taken since that date.
Cash at September 30, 2002 includes $1,005,786 on deposit in a money
market account held at North Fork Bank pursuant to the terms of the Mortgage,
to be used monthly through April 2003 to satisfy a portion ($166,167) of
Registrant's mortgage interest obligation. In April 2003, and annually
thereafter, Registrant is obligated to deposit an additional $2,000,000 into
this restricted account under the same conditions.
Registrant does not operate the Property. It subleases the Property
to Empire State Building Company L.L.C. ("Sublessee") pursuant to a net
operating sublease (the "Sublease") with a term and renewal options
essentially coextensive with those contained in the Master Lease. On January
30, 1989, Sublessee elected to renew the Sublease for a term commencing
January 4, 1992 to January 4, 2013.
-7-
Sublessee is required to pay annual basic rent ("Basic Rent") of
$6,018,750 from January 1, 1992 through January 4, 2013 and $5,895,625 from
January 5, 2013 through the expiration of all renewal terms. Sublessee is
also required to pay Registrant overage rent of 50% of Sublessee's net
operating profit, as defined in the sublease, in excess of $1,000,000 for
each lease year ending December 31 ("Overage Rent").
Overage Rent and other accumulated interest and dividend income are
distributed annually after payment of any additional payments for supervisory
services to Supervisor (as described in Note D below). For 2001, Sublessee
reported net operating profit of $53,145,005; therefore, there was Overage
Rent of $26,072,502 for the year ended December 31, 2001. Registrant paid
Supervisor $1,474,468 as an additional payment for supervisory services.
Sublessee is a New York limited liability company in which Peter L.
Malkin is a member, and pass- through entities created by Peter L. Malkin for
family members are beneficial owners.
Note D - Supervisory Services
Registrant pays Supervisor for supervisory services and disbursements.
The supervisory fees are $100,000 per annum (the "Basic Payment") plus an
additional payment of 6% of all distributions to Participants in any year in
excess of the amount representing a return of 9% per annum on their remaining
original cash investment in any year ("Additional Payment"). At September
30, 2002, such remaining cash investment was $33,000,000, representing the
original cash investment of the Participants in Registrant.
The supervisory services provided to Registrant by Supervisor
include, but are not limited to, providing or coordinating counsel services
to Registrant, maintaining all of its entity and Participant records,
performing physical inspections of the Building, reviewing insurance coverage,
conducting annual supervisory review meetings, receipt of monthly rent from
Sublessee, 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 Sublessee and financial statements audited by and tax
information prepared by Registrant's independent certified public accountant,
and distribution of such materials to the Participants. Supervisor also
prepares quarterly, annual and other periodic filings with the Securities
and Exchange Commission and applicable state authorities.
Registrant pays Supervisor for other services at hourly rates.
Pursuant to the fee arrangements described herein, Registrant paid
Supervisor $75,000 of the Basic Payment for supervisory services for the
nine month period ended September 30, 2002 and $4,951 a month as the
Additional Payment for supervisory services. No remuneration was paid during
the nine month period ended September 30, 2002 by Registrant to any of the
Members as such.
Reference is made to Note C of this Item 1 ("Note C") for a
description of the terms of the Sublease between Registrant and Sublessee.
The respective interests of the Members in Registrant and in Sublessee
arise solely from ownership of their respective Participations in Registrant
and, in the case of Mr. Malkin, his family entities' ownership of member
interests in Sublessee. The Members receive no extra or special benefit not
shared on a pro rata basis with all other Participants in Registrant or
members in Sublessee. However, each of the Members, who hold senior
positions at Supervisor (which supervises Registrant and Sublessee), by
reason of their position at Supervisor, may receive income attributable to
supervisory or other remuneration paid to Supervisor for services rendered
to Registrant and Sublessee.
-8-
As of September 30, 2002 the Members owned of record and beneficially
an aggregate of $28,333 of participations in Registrant, representing less
than 1% of the currently outstanding participations therein totaling
$33,000,000.
In addition, as of September 30, 2002 certain of the Members held
additional Participations as follows:
Entities for the benefit of members of Peter L. Malkin's family owned of
record and beneficially $562,916 of Participations. Peter L. Malkin disclaims
any beneficial ownership of such Participations, except that related trusts
are required to complete scheduled payments to Peter L. Malkin.
Peter L. Malkin owned of record as trustee or co-trustee, but not beneficially,
$232,501 of Participations. Peter L. Malkin disclaims any beneficial
ownership of such Participations.
Anthony E. Malkin owned of record as trustee or co-trustee, but not
beneficially, $35,833 of Participations. Anthony E. Malkin disclaims
any beneficial ownership of such Participations.
Note E Special Fees and Miscellaneous Income
During the quarter ended September 30, 2002, reimbursement was
received for fees previously expensed in the amount of $6,743.
During the nine months ended September 30, 2001, previously accrued
fees of $1,854,565 were paid to the firm of Wien & Malkin LLP, a related
party. Fees of $119,483 for the nine months ended September 30, 2001,
included payments of $114,009 to Wien & Malkin LLP for advances to third-
party professionals for legal fees and disbursements relating to the
Studley litigation. See Part II, Item 1.
In September 2001, Registrant received from the Sublessee and
reflected in its financial statements as miscellaneous income, $1,660,904
as reimbursement for fees and disbursements previously incurred.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Registrant was organized for the initial purpose of acquiring the
Master Lease of the Property subject to the Sublease. Basic Rent received by
Registrant was used to pay annual rent due under the Master Lease and the
Basic Payment and a portion of the Additional Payment for supervisory
services; the balance of such Basic Rent was distributed to the Participants.
Currently, Basic Rent received by Registrant is used to pay the Basic Payment
and a portion of the Additional Payment for supervisory services, and debt
service on the new mortgage; the balance of such Basic Rent is distributed
to the Participants. Overage Rent and any interest and dividends accumulated
thereon are distributed to the Participants after the Additional Payment is
made to Supervisor. See Note C of Item 1 above. Pursuant to the Sublease,
Sublessee has assumed responsibility for the condition, operation, repair,
maintenance and management of the Property. Registrant is not required to
maintain liquid assets to defray any operating expenses of the Property.
-9-
Registrant does not pay dividends. During the nine month period ended
September 30, 2002 Registrant made regular monthly distributions of $98.21 for
each $10,000 participation ($1,178.52 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, particularly
distributions of Overage Rent, depends on the ability of Sublessee to make
payments of Basic Rent and Overage Rent to Registrant in accordance with the
terms of the Sublease. Registrant expects to make distributions in the
future so long as it receives the payments provided for under the Sublease.
See Note C.
Registrant's results of operations are affected primarily by the amount
of rent payable to it under the Sublease. The amount of Overage Rent payable
to Registrant is affected by the New York City economy and real estate market.
Total income decreased for the nine month period ended September 30, 2002
as compared with the nine month period ended September 30, 2001. The decrease
was the net result of a decrease in dividend income and the receipt of interest
income during the current period and to the receipt of miscellaneous income
being received during the period ended September 30, 2001.
Total expenses increased for the nine month period ended September 30,
2002 as compared with the nine month period ended September 30, 2001. Such
increase is the net result of the incurrence of mortgage interest expense,
the depreciation of the building, amortization of mortgage financing costs
and a decrease in rent expense during the nine month period ended September
30, 2002.
Sublessee was liable for New York State Utility Tax for periods after
December 31, 1992 through 1997. The State has settled all utility taxes for
the years 1993 through 1997 with a payment of $243,270 plus accrued interest
of approximately $183,613 through December 31, 2001. Payment of $428,883 in
connection with the foregoing was made by Sublessee on February 1, 2002. A
final payment of $2,129 was made on March 15, 2002.
Liquidity and Capital Resources
Registrant's liquidity has increased slightly for the nine month period
ended September 30, 2002, as compared with the nine month period ended September
30, 2001 as a result of the retention of residual mortgage proceeds from the
new Mortgage during the current period being offset by the receipt of
miscellaneous income during the prior period. Registrant may from time to time
establish a reserve for contingent or unforeseen liabilities.
-10-
No amortization payments are due under the Mortgage to reduce the
outstanding principal balance prior to maturity. Furthermore, Registrant does
not maintain any reserve to cover the principal 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 Property
continues to generate an annual net profit in future years comparable to that
in past years, Registrant anticipates that the value of the Master Lease and
Property would be well in excess of the amount of the Mortgage balance at
maturity.
Registrant anticipates that funds for working capital will be generated
by operations of the Building by Sublessee, which entity in turn is required
to make payments of Basic Rent and Overage Rent under the Sublease and, to the
extent necessary, from additional capital investment by the members of the
Sublessee and/or external financing.
Inflation
Registrant believes 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, 2001, which report and all exhibits thereto
are incorporated herein by reference and made a part hereof.
Item 4. Evaluation of Disclosure Controls and Internal Control Procedures.
(a) Evaluation of disclosure controls and procedures. Our chief executive
officer and our chief financial officer, after evaluating the effectiveness
of our "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date (the
"Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, our disclosure
controls and procedures were adequate and designed to ensure that material
information relating to Registrant, including its consolidated subsidiaries
would be made known to them by others within those entities.
(b) Changes in internal controls. There were no significant changes in our
internal controls or, to our knowledge, in other factors that could
significantly affect our internal controls and procedures subsequent to the
Evaluation Date.
-11-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Property of Registrant is the subject of the following pending litigation:
Wien & Malkin LLP, et. al. v. Helmsley-Spear, Inc., et. al. On June 19,
1997 Wien & Malkin LLP and Peter L. Malkin filed an action in the Supreme Court
of the State of New York, against Helmsley-Spear, Inc. and Leona Helmsley
concerning various partnerships which own, lease or operate buildings managed
by Helmsley-Spear, Inc., including Registrant's property. In their complaint,
plaintiffs sought the removal of Helmsley-Spear, Inc. as managing and leasing
agent for all of the buildings. Plaintiffs also sought an order precluding
Leona Helmsley from exercising any partner management powers in the
partnerships. In August, 1997, the Supreme Court directed that the foregoing
claims proceed to arbitration. As a result, Mr. Malkin and Wien & Malkin LLP
filed an arbitration complaint against Helmsley-Spear, Inc. and Mrs. Helmsley
before the American Arbitration Association. Helmsley-Spear, Inc. and Mrs.
Helmsley served answers denying liability and asserting various affirmative
defenses and counterclaims; and Mr. Malkin and Wien & Malkin LLP filed a reply
denying the counterclaims. By agreement dated December 16, 1997, Mr. Malkin
and Wien & Malkin LLP (each for their own account and not in any representative
capacity) reached a settlement with Mrs. Helmsley of the claims and
counterclaims in the arbitration and litigation between them. Mr. Malkin and
Wien & Malkin LLP then continued their prosecution of claims in the
arbitration for relief against Helmsley-Spear, Inc., including its termination
as the leasing and managing agent for various entities and properties,
including the Registrant's Lessee. The arbitration hearings were concluded
in June 2000, and the arbitrators issued their decision on March 30, 2001,
ordering that the termination of Helmsley-Spear, Inc. would require a new
vote by the partners in the Lessee, setting forth procedures for such a vote,
and denying the other claims of all parties. Following the decision, Helmsley-
Spear, Inc. applied to the court for confirmation of the decision, and Mr.
Malkin and Wien & Malkin LLP applied to the court for an order setting aside
that part of the decision regarding the procedure for partnership voting to
terminate Helmsley-Spear, Inc. and various other parts of the decision on
legal grounds. The court granted the motion to confirm the arbitrators'
decision and denied the application to set aside part of the arbitrators'
decision. Mr. Malkin and Wien & Malkin LLP have served notice of appeal of
the court's determination.
-12-
On November 29, 2001, an action entitled Irving Schneider v. Peter L.
Malkin et al. was brought in New York State Supreme Court by the holder of a
$10,000 original participation in Associates (representing 1/3300th of the
interests in Associates) against Associates' Agents, claiming that the Agents
had violated contractual and fiduciary duties and that the consent of the
Participants to Associates' program for acquisition and financing of the fee
title to the Empire State Building pursuant to the September 14, 2001
Solicitation is ineffective. On February 28, 2002, the Court granted an
order dismissing all of Mr. Schneider's claims. Mr. Schneider filed on March
8, 2002 a notice of appeal of the order dismissing his claims.
In April 2002, Leona M. Helmsley, who is a 63.75% member in Sublessee,
brought litigation against Sublessee's supervisor, Wien & Malkin LLP, and
member, Peter L. Malkin, claiming misconduct and seeking damages and
disqualification from performing services for Sublessee. Wien & Malkin LLP
and Mr. Malkin are defending against these claims.
Item 5. Other Information
Sublessee is to maintain the Building as a high-class office building
as required by the terms of the Sublease.
Based on Sublessee's review of the need for upgrades and improvements
to the property, it is projected by Sublessee that improvement costs of
approximately $4,200,000 will be incurred in 2002.
The Sublessee anticipates that the costs of improvements to be
incurred will reduce Overage Rent during the year 2002 but should have no
effect on the payment of Basic Rent.
Item 6. Exhibits and Reports on Form 8-K
(a) See exhibit index.
(b) Registrant filed a Form 8-K on May 8, 2002.
-13-
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
Powers of Attorney, dated August 6, 1996 and May 14, 1999 (collectively, the
"Power").
EMPIRE STATE BUILDING ASSOCIATES L.L.C.
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: November 19, 2002
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 Members in Registrant, pursuant to the Power, on behalf of Registrant
on the date indicated.
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: November 19, 2002
__________________________
* Mr. Katzman supervises accounting functions for Registrant.
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CERTIFICATIONS
I, Stanley Katzman, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Empire
State Building Associates L.L.C.;
(2) Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
(4) The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within the Registrant particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
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(b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material
weaknesses.
Date: November 19, 2002
By /s/ Stanley Katzman
Name: Stanley Katzman
Title: Member of Wien & Malkin LLP,
Supervisor of Empire State
Building Associates L.L.C.
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CERTIFICATIONS
I, Stanley Katzman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire State
Building Associates L.L.C.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within the Registrant particularly during the period
in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
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a. all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 19, 2002
By /s/ Stanley Katzman
Name: Stanley Katzman
Title: Senior Member of
Financial/Accounting Staff of Wien &
Malkin LLP, Supervisor of Empire State
Building Associates L.L.C.
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EXHIBIT INDEX
Number Document Page*
3(a) Attached hereto as Exhibit 3(c) is Registrant's Consent and
Operating Agreement dated as of September 30, 2001 as a
Limited Liability Company, which incorporates by reference
the Registrant's prior Partnership Agreement dated July 11,
1961, filed as Exhibit No. 1 to Registrant's Registration
Statement on Form S-1 as amended (the "Registration
Statement") by letter dated August 8, 1962 and assigned File
No. 2-18741 and, itself incorporated by reference as an exhibit
hereto.
3(b) Amended Business Certificate of Registrant filed with the
Clerk of New York County on August 19, 1996 reflecting
a change in the Partners of Registrant which was filed
as Exhibit 3(b) to Registrant's Annual Report on 10-K for the
fiscal year ended December 31, 1996 and is incorporated
by reference as an exhibit hereto.
3(c) Registrant's Consent and Operating
Agreement dated as of September 30, 2001
4 Registrant's form of Participating Agreement, filed as Exhibit
No. 6 to the Registration Statement by letter dated August 8,
1962 and assigned File No. 2-18741, is incorporated by
reference as an exhibit hereto.
13(a) Letter to Participants dated April 15, 2002 and supplementary
financial reports for the fiscal year ended December 31, 2001.
The foregoing material shall not be deemed "filed" with the
Commission or otherwise subject to the liabilities of Section
18 of the Securities Exchange Act of 1934.
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EXHIBIT INDEX
(cont.)
Number Document Page*
24 Powers of Attorney dated August 6, 1996 and May 14, 1999
between the Partners of Registrant and Stanley Katzman and
Richard A. Shapiro which was filed as Exhibit 24 to
Registrant's 10-Q for the quarter ended June 30, 1999 and is
incorporated herein by reference.
99 (1) Chief Executive Officer Certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
99 (2) Chief Financial Officer Certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
__________________________
* Page references are based on sequential numbering system.
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Exhibit 99(1)
Empire State Building Associates L.L.C.
Chief Executive Officer Certification
Pursuant to Section 906
of Sarbanes - Oxley Act of 2002
The undersigned, Stanley Katzman, is signing this Chief Executive
Officer certification as a member of Wien & Malkin LLP, the supervisor * of
Empire State Building Associates L.L.C.("Registrant") to certify that:
(1) the Quarterly Report on Form 10-Q of Registrant for the quarterly period
ended September 30, 2002(the "Report") fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C.78m
or 78o(d)); and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Registrant.
Dated: November 19, 2002
By /s/ Stanley Katzman
Stanley Katzman
Wien & Malkin LLP, Supervisor
*Registrant's organizational documents do not provide for a Chief Executive
Officer or other officer with equivalent rights and duties. As described in
the Quarterly Report, Registrant is a limited liability company which is
supervised by Wien & Malkin LLP. Accordingly, this Chief Executive Officer
certification is being signed by a member of Registrant's supervisor.
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Exhibit 99(2)
Empire State Building Associates L.L.C.
Chief Financial Officer Certification
Pursuant to Section 906
of Sarbanes - Oxley Act of 2002
The undersigned, Stanley Katzman, is signing this Chief Financial
Officer certification as senior member of the financial/accounting staff of
Wien & Malkin LLP, the supervisor* of Empire State Building Associates L.L.C.
("Registrant"), to certify that:
(1) the Quarterly Report on Form 10-Q of Registrant for the quarterly period
ended September 30, 2002(the "Report") fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C.78m
or 78o(d)); and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Registrant.
Dated: November 19, 2002
By /s/ Stanley Katzman
Stanley Katzman
Wien & Malkin LLP, Supervisor
*Registrant's organizational documents do not provide for a Chief Financial
Officer or other officer with equivalent rights and duties. As described in
the Quarterly Report, Registrant is a limited liability company which is
supervised by Wien & Malkin LLP. Accordingly, this Chief Financial Officer
certification is being signed by a senior member of the financial/accounting
staff of Registrant's supervisor.
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