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, 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 0-2670
60 EAST 42ND ST. ASSOCIATES L.L.C.
(Exact name of registrant as specified in its charter)
A New York Limited Liability Company 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 20 of this Report.
Number of pages (including exhibits) in this filing: 23
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
60 East 42nd St. Associates L.L.C.
Condensed Statements of Income
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
Income:
Basic rent, from a
related party (Note B) $ 542,095 $ 400,520 $ 1,482,348 $1,112,963
Advance of additional rent from
a related party (Note B) 263,450 263,450 790,350 790,350
Further additional rent from
a related party (Note B) 6,944,789 8,057,690 6,944,789 8,057,690
Interest income 25,906 18,309 28,863 138,733
------------ ---------- ---------- -----------
Total income $7,776,240 $8,739,969 $ 9,246,350 $10,099,736
------------ ---------- ---------- ------------
Expenses:
Interest on mortgages(Note B) $ 561,821 $ 412,829 $ 1,493,031 $ 1,233,696
Supervisory services,
to a related party (Note C) 700,676 813,614 316,366 829,304
Special fees, to a related party
( Note D) 1,892 2,791 1,892 2,791
Depreciation of building improvements
and equipment 131,586 10,828 344,245 32,484
Amortization of mortgage
refinancing costs 66,021 66,021 198,061 198,061
Miscellaneous -0- -0- 325 -0-
---------- ---------- ---------- ----------
Total expenses $1,461,996 $1,306,083 $2,753,920 $2,296,336
----------- ----------- ---------- ----------
Net Income $6,314,244 $7,433,886 $6,492,430 $7,803,400
======== ======== ======= ========
Earnings per $10,000 participation unit,
Based on 700 participation units
outstanding during the period $9,020.35 $10,619.84 $9,274.90 $11,147.71
======== ======== ======= ========
Distributions per $10,000 participation
unit consisted of the following:
Income $ 373.72 $ 373.72 $ 1,121.16 $ 1,121.16
----------- ---------- --------- ---------
Total distributions $ 373.72 $ 373.72 $ 1,121.16 $ 1,121.16
========= ========= ========= ========
At September 30, 2002 and 2001, there were $7,000,000 of participation units
outstanding.
See notes to condensed financial statements.
-1-
60 East 42nd St. Associates L.L.C.
Condensed Balance Sheets
(Unaudited)
Assets September 30, 2002 December 31, 2001
Current assets:
Cash $ 305,612 $1,950,750
Emigrant Money Market 12,790,765 -0-
Rent Receivable 33,269 -0-
Further additional rent due
from lessee, a related party (Note B) 6,944,789 -0-
----------- ----------
Total current assets 20,074,435 1,950,750
----------- ---------
Real estate
Land 7,240,000 7,240,000
---------- ---------
Buildings 16,960,000 16,960,000
Less, allowance for depreciation 16,960,000 16,960,000
----------- -----------
-0- -0-
----------- ----------
Building improvements and equipment 20,814,817 13,882,233
Less, allowance for depreciation 2,124,634 1,780,389
----------- ----------
18,690,183 12,101,844
----------- ---------
Mortgage refinancing costs 1,361,096 1,361,096
Less, allowance for amortization 810,940 612,879
---------- ----------
550,156 748,217
---------- -----------
Total assets $46,554,774 $22,040,811
=========== ===========
Liabilities and Members' Equity (Deficiency):
Current liabilities:
Accrued supervisory fees, to a
related party $ 692,831 $ -0-
Due to Lessee 4,396,554 2,372,779
Accrued expenses and building
improvement costs payable 1,165,586 55,030
----------- -----------
Total current liabilities 6,254,971 2,427,809
Long-term debt 40,000,000 25,020,814
----------- -----------
Total liabilities $46,254,971 $ 27,448,623
----------- -----------
-2-
60 East 42nd St. Associates L.L.C.
Condensed Balance Sheets
(Unaudited)
(CONTINUED)
September 30, 2002 December 31, 2001
Members'Equity (Deficiency):
Members'Deficiency, January 1, $(5,407,812) $(4,924,185)
Add, Net income:
January 1, 2002 through September 30, 2002 6,492,430 -0-
January 1, 2001 through December 31, 2001 -0- 7,814,714
----------- -----------
1,084,618 2,890,529
---------- -----------
Less Distributions:
Monthly distributions,
January 1, 2002 through September 30, 2002 784,815 -0-
January 1, 2001 through December 31, 2001 -0- 1,046,420
Distribution on November 30, 2001 of
Additional Rent for the lease year
ended September 30, 2001 -0- 7,251,921
----------- -----------
Total distributions 784,815 8,298,341
----------- -----------
Members' equity (deficiency):
September 30, 2002 299,803 -0-
December 31, 2001 -0- (5,407,812)
----------- -----------
Total liabilities and members'
equity (deficiency):
September 30, 2002 $46,554,774 -0-
December 31, 2001 -0- $ 22,040,811
=========== ==========
See notes to the condensed financial statements.
-3-
60 East 42nd St. Associates L.L.C.
Condensed 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 $ 6,492,430 $ 7,803,400
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of building improvements
and equipment 344,245 32,484
Amortization of mortgage
refinancing costs 198,061 198,061
Change in additional rent due
from lessee (6,944,789) (8,053,165)
Change in rent receivable
due from lessee (33,269) -0-
Accrued supervisory fees 692,831 805,769
Accrued expenses 72,424 87,057
----------- ----------
Net cash provided by operating
activities 821,933 873,606
----------- ----------
Cash flows from investing activities:
Purchase of Building Improvements,
including improvements in progress (5,894,452) (6,885,333)
---------- ----------
Net cash used in investing
activities (5,894,452) (6,885,333)
---------- ----------
Cash flows from financing activities:
Proceeds from second mortgage 14,979,186 -0-
Cash distributions (784,815) (784,815)
Increase in amounts advanced by lessee 2,023,775 1,469,255
----------- ----------
Net cash provided by
financing activities 16,218,146 684,440
----------- ----------
Net increase (decrease) in cash 11,145,627 (5,327,287)
Cash, beginning of period 1,950,750 5,987,609
----------- ----------
Cash, end of period $ 13,096,377 $ 660,322
=========== ==========
-4-
60 East 42nd St. Associates L.L.C.
Condensed Statements of Cash Flows
(Unaudited)
January 1, 2002 January 1, 2001
through through
September 30, 2002 September 30, 2001
(CONTINUED)
Cash paid for:
Interest $ 1,420,606 $1,146,639
========== ==========
Supplemental disclosure of
noncash investing activities:
Accrued building improvement
costs $ 1,038,132 $ -0-
=========== ===========
See notes to the condensed financial statements.
-5-
Notes to Condensed Financial Statements (Unaudited)
Note A Organization and basis of Presentation
In the opinion of management, the accompanying unaudited
condensed 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 (deficiency) 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 financial
statements unless significant changes have taken place since the end
of the most recent fiscal year. Accordingly, these unaudited
condensed financial statements should be read in conjunction with the
financial statements, notes to financial statements and the other
information in the 10-K. The 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.
Note B Interim Period Reporting
Registrant was originally organized as a partnership
which was organized on September 25, 1958. On October 1, 1958,
Registrant acquired fee title to the Lincoln Building (the "Building")
and the land thereunder, located at 60 East 42nd Street, New York, New
York (the "Property"). On November 28, 2001, Registrant converted to a
limited liability company under New York law and is now known as 60
East 42nd St. 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, Scott D.
Malkin, Thomas N. Keltner, Jr., Fred C. Posniak, Jack Feirman and Mark
Labell (individually, a "Member" and, collectively, the "Members"),
each of whom also acts as an agent for holders of participations in the
Registrant (individually, a "Participant" and, collectively,
"Participants").
-6-
Registrant leases the Property to Lincoln Building Associates
L.L.C. ("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 limited liability company whose
members consist of, among others, entities for the benefit of members
of Peter L. Malkin's family. Six of the seven members in Registrant
are at Wien & Malkin LLP, 60 East 42nd Street, New York, New York,
which provides supervisory and other services to Registrant and to
Lessee (the "Supervisor"). See Note C of this Item 1 ("Note C").
In 1999, the participants in Registrant and the partners in
Lessee consented to a building improvement program (the "Program")
estimated to cost approximately $28,000,000 and expected to take two to
three years to complete. To induce the Lessee to approve the Program,
Associates agreed to grant to the Lessee, upon completion of the
Program, an extension of the lease for an additional 50 years to 2083.
The Lease, as modified March 1, 2000, provides that Lessee
is required to pay Registrant:
(i) annual basic rent (the "Basic Rent") equal to the sum of
$24,000 for supervisory services payable to Supervisor plus the
constant installment payments of interest and amortization (excluding
any balloon principal due at maturity) payable during such year under
all mortgages to which the Lease is subordinate, provided that the
aggregate principal balance of all mortgages now or hereafter placed on
the Property does not exceed $ 40,000,000 plus refinancing costs.
(ii) (A) additional rent (the "Additional Rent") equal to the
lesser of (x) Lessee's net operating income for the lease year or (y)
$1,053,800 and (B) further additional rent ("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. There is currently no accumulated operating loss
against which to offset payment of Additional Rent or Further
Additional Rent.)
(iii) An advance against Additional Rent equal to the lesser
of (x) Lessee's net operating income for the preceding lease year or
(y) $1,053,800, which, in the latter amount, will permit basic
distributions to Participants at an annual rate of approximately 14.95%
per annum 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. After the participants have received
distributions equal to a return of 14% per annum, $7,380 is paid to
Supervisor from the advances against Additional Rent.
-7-
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 report on the operation of the Property.
Further Additional Rent for the lease year ended September 30, 2002 was
$6,944,789. After deducting fees of $16,480 relating to Registrant's
conversion to a limited liability company and payment of $692,831 to
Supervisor as an additional payment for supervisory services, the
balance of $6,235,478 will be distributed to the Participants on
November 29, 2002.
A refinancing of the existing 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.
A second mortgage loan with Emigrant Savings Bank in the
amount of $27,979,186 was closed on March 9, 2000 and as of September
30, 2002 all proceeds have been advanced. Monthly payments of interest
only at the rate of 8.21% per annum apply to the advances of $7,000,000
made through September 30, 2000. Amounts advanced from October 1, 2000
through September 30, 2002 in the amount of $20,979,186 are now at the
fixed interest rate of 3.39% commencing with the November 2002 payment.
Maturity is October 31, 2004.
During the prepayment period, Borrower has the option to
prepay the second mortgage note in whole only, on the first day of any
month upon (i) prior written notice given by prepaid registered or
certified mail at least sixty (60) days prior to the date fixed for
prepayment and (ii) the payment of the prepayment premium plus accrued
interest. There shall be no prepayment premium after October 1, 2004
to and including the Maturity Date.
Note C - Supervisory Services
Registrant pays Supervisor for supervisory services and
disbursements. The supervisory fees are $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, 2002,
such remaining cash investment was $7,000,000 representing the original
cash investment of Participants in Registrant.
-8-
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 and conducting annual supervisory review meetings,
receipt of monthly rent from 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 Lessee 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 also pays Supervisor for other services at hourly
rates.
Pursuant to the fee arrangements described herein, Registrant
paid Supervisor $18,000 of the Basic Payment and $5,535 on account of
the Additional Payment, for supervisory services for the nine month
period ended September 30, 2002. No remuneration was paid during the
nine month period ended September 30, 2002 by Registrant to any of the
Members as such. For the lease year ended September 30, 2002,
Registrant paid Supervisor $692,831 as an additional payment for
supervisory services. See Note B.
Reference is made to Note B of Item 1 ("Note B") for a
description of the terms of the Lease between Registrant and Lessee.
As of September 30, 2002, Peter L. Malkin owned a partnership interest
in Lessee. The respective interests, if any, of the Members in
Registrant and Lessee arise solely from ownership of their respective
participations in Registrant and, in the case of Peter L. Malkin, his
individual ownership of a member interest in Lessee. The Members as
such receive no extra or special benefit not shared on a pro rata basis
with all other Participants in Registrant or members in Lessee.
However, each of the seven Members who hold senior positions at
Supervisor (which supervises Registrant and Lessee), by reason of his
position at Supervisor, may receive income attributable to supervisory
or other remuneration paid to Supervisor for services rendered to
Registrant and Lessee.
As of September 30, 2002, the Members owned of record and
beneficially an aggregate $61,667 of participations in Registrant,
representing .88% of the currently outstanding participations therein.
In addition, as of September 30, 2002, certain of the Members
in Registrant held additional Participations in Registrant as follows:
Peter L. Malkin owned of record as trustee or co-trustee an
aggregate of $55,714 of Participations. Peter L. Malkin
disclaims any beneficial ownership of such Participations.
-9-
Entities for the benefit of members of Peter L. Malkin's
family owned of record and beneficially $107,500 of
Participations. Peter L. Malkin disclaims any beneficial
ownership of such Participations, except that related trusts
are required to complete scheduled payments to him.
Anthony E. Malkin owned of record as co-trustee an aggregate
of $25,000 of Participations. Anthony E. Malkin disclaims any
beneficial ownership of such Participations
Note D Special Fees
During the nine months ended September 30, 2002 and 2001,
special fees of $1,892 and $2,791, respectively, (computed on an hourly
basis for special services) were paid to the firm of Wien & Malkin LLP,
a related party.
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 under the
Lease, mortgage charges and amounts for supervisory services.
Registrant is required to pay from Additional Rent and Further
Additional Rent additional amounts for supervisory services and then to
distribute the balance of such Additional Rent and Further Additional
Rent to the Participants. 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 nine month
period ended September 30, 2002, 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 particularly distributions of
Additional Rent and Further Additional Rent, depends on the ability of
Lessee to make payments of Basic Rent, Additional Rent and Further
Additional Rent to Registrant. Registrant expects to make
distributions so long as it receives the payments provided for under
the Lease.
On November 29, 2002, Registrant will make an additional
distribution of $8,908 for each $10,000 participation. Such
distribution represents Further Additional Rent paid by the Lessee in
accordance with the terms of the Lease after the Additional Payment to
Supervisor and fees to convert Registrant to a limited liability
company. See Notes B and C.
Registrant's results of operations are affected primarily by
the amount of rent payable to it under the Lease. The amount of
Overage Rent payable to Registrant is affected by the New York City
economy and real estate rental market. It is difficult for management
to forecast the New York City real estate market. The following
summarizes, with respect to the current period and the corresponding
period of the previous year, the material factors regarding
Registrant's results of operations for such periods:
-10-
Total income decreased for the nine month period ended
September 30, 2002, as compared with the nine month
period ended September 30, 2001. Such decrease is the
net result of an increase in basic rent income to
cover an increase in debt service payable by
Registrant, a decrease in interest income and a
decrease in additional rent income for the period
ended September 30, 2002 as compared with 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 an increase in interest on the
mortgages paid by Registrant, an increase in
depreciation and a decrease in the additional
supervisory fee in the period ended September 30, 2002
as compared with the period ended September 30, 2001.
Liquidity and Capital Resources
Registrant's liquidity has increased significantly due to the
receipt of $14,979,186 from the second mortgage for the nine month
period ended September 30, 2002, as compared with the nine month period
ended September 30, 2001. Costs relating to the improvement program are
funded from proceeds of a second mortgage of $27,979,186, of which all
has been drawn down at September 30, 2002. Registrant may from time
to time establish a reserve for contingent or unforeseen liabilities.
No amortization payments are due under the Mortgages to fully
satisfy the outstanding principal balance at maturity, and furthermore
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 Property 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 well in excess of the amount of the mortgage
balance at maturity.
-11-
Registrant anticipates that funds for working capital for the
Property will be provided by rental payments received from Lessee and,
to the extent necessary, from additional capital investment by the
partners in Lessee and/or external financing. However, as noted above,
Registrant has no requirement to maintain substantial reserves to
defray any operating expenses of the Property.
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, 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 would be made known to it by others within the company.
(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.
-12-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The property of Registrant is the subject of the following
material 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.
At its May 20, 2002 special meeting, Lessee approved by the
requisite vote the removal of Helmsley-Spear, Inc. as managing and
-13-
leasing agent and its replacement by one or a combination of designated
independent firms (Cushman & Wakefield, Insignia/ESG and Newmark
Realty). On May 21, 2002, Peter L. Malkin and Wien & Malkin LLP filed a
court application to confirm the vote and to set the final date for
Helmsley-Spear, Inc's. termination. Helmsley-Spear, Inc. filed
objections. On September 10, 2002 the court confirmed such votes and
ruled that Helmsley-Spear, Inc. has been discharged and must effect an
orderly transition and departure within 60 days. On September 27, 2002,
Helmsley-Spear, Inc. moved in the Appellate Division to stay the
court's ruling pending an appeal. On October 31, 2002, the court denied
Helmsley-Spear, Inc.'s application for a stay. In accord with the
Lessee's approval, the expenses for the preparation of the solicitation
statement, the solicitation of votes, and the implementation of the new
program are being paid by the Lessee. Such payments have totaled
$ 226,711 from inception to date (including $ 70,151 to Wien & Malkin
LLP).
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits hereto are being incorporated by reference.
(b) Registrant has not filed any report on Form 8-K during
the quarter for which this report is being filed.
-14-
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 March 18, 1998, March 20, 1998
and May 14, 1998 (collectively, the "Power").
60 EAST 42ND ST. ASSOCIATES L.L.C.
(Registrant)
By: /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Dated: 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*
Dated: 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 60 East
42nd St. 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, 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
(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
-16-
(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 60 East 42nd St.
Associates L.L.C.
-17-
CERTIFICATIONS
I, Stanley Katzman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of 60 East 42nd
St. 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, 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
-18-
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 60 East 42nd St. Associates
L.L.C.
-19-
EXHIBIT INDEX
Number Document Page*
3(a) Attached hereto as Exhibit 3(c) is
Registrant's Consent and Operating
Agreement dated as of November 28,
2001 as a Limited Liability Company,
which incorporates by reference the
Registrant's prior Partnership
Agreement, dated September 25, 1958,
which was filed by letter dated
March 31, 1981 (Commission File No.
0-2670) filed as Exhibit No. 1 to
Registrant's Registraion Statement
on Form S-1 as amended (the
"Registration Statement"), 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 November 28,
1997, reflecting a change in the
Partners of Registrant, was filed as
Exhibit 3(b) to Registrant's 10-Q
for the quarter ended March 31,
1998, and is incorporated by
reference as an exhibit hereto.
3(c) Registrant's Consent and Operating
Agreement dated as of November 28,
2001
13(a) Letter to Participants dated April
16, 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.
24 Powers of Attorney dated March 18,
1998, March 20,1998and May 14, 1998
between the Partners of Registrant
and Stanley Katzman and Richard A.
Shapiro which were filed as Exhibit
24 to Registrant's 10-Q for the
-20-
EXHIBIT INDEX
(cont.)
Number Document Page*
quarter ended March 31, 1998 and is
incorporated by reference as an
exhibit hereto.
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.
-21-
Exhibit 99(1)
60 East 42nd St. 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 60 East 42nd St. 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.
-22-
Exhibit 99(2)
60 East 42nd St. 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 a senior member of the financial/accounting
staff of Wien & Malkin LLP, the supervisor* of 60 East 42nd St.
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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