-----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, GTRw0x0wcDKj9BHjKwp5UCrxO8cCj2s7v7yJRJhG6u5q+N0Qr2eDnMdimNoeTT/2 u213hRrOWctLJ55m1JHnWA== 0000032776-00-000015.txt : 20000417 0000032776-00-000015.hdr.sgml : 20000417 ACCESSION NUMBER: 0000032776-00-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 250 WEST 57TH ST ASSOCIATES CENTRAL INDEX KEY: 0000100412 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 136083380 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-02666 FILM NUMBER: 602348 BUSINESS ADDRESS: STREET 1: C/O WEIN MALKIN & BETTEX STREET 2: 60 WEST EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 2126878700 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 [ ] 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 O-2666 250 WEST 57TH ST. ASSOCIATES (Exact name of registrant as specified in its charter) New York 13-6083380 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) Registrant's telephone number, including area code (212) 687-8700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: $3,600,000 of Participations in Joint-Venture Interests 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ] The aggregate market of the voting stock held by non-affiliates of the Registrant: Not applicable, but see Items 5 and 10 of this report. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. An Exhibit Index is located on pages 31 through 33 hereof. Number of pages (including exhibits) in this filing: 50 PART I Item 1. Business. (a) General Registrant is a joint venture which was organized on May 25, 1953. On September 30, 1953, Registrant acquired fee title to The Fisk Building, 250-264 West 57th Street, New York, New York (the "Building") and to the land thereunder (the "Property"). Registrant's joint venturers are Peter L. Malkin and Anthony E. Malkin (individually, a "Joint Venturer" and, collectively, the "Joint Venturers") each of whom also acts as an agent for holders of participations in their undivided joint venture interests in Registrant (each holder of a participation, individually, a "Participant" and, collectively, the "Participants"). Registrant leases the Property to Fisk Building Associates (the "Net Lessee"), a partnership, under a long-term net operating lease dated May 1, 1954 (the "Net Lease"), the current term of which expires on September 30, 2003. Net Lessee is a partnership in which Mr. Peter L. Malkin is one of the Partners. In addition, one of the Joint Venturers is also a member of Wien & Malkin LLP, 60 East 42nd Street, New York, New York, which provides supervisory and other services to Registrant and the Net Lessee ("Supervisor"). See Items 10, 11, 12 and 13 hereof for a description of the on-going services rendered by, and compensation paid to, Supervisor and for a discussion of certain relationships which may pose actual or potential conflicts of interest among Registrant, Net Lessee and certain of their respective affiliates. As of December 31, 1999, the Building was approximately 98.87% occupied by approximately 340 tenants, a majority of whom are engaged in the practices of law, dentistry and accounting, and the businesses of publishing, insurance and entertainment. Registrant does not maintain a full-time staff. See Item 2 hereof for additional information concerning the Building. (b) Net Lease Effective May 1, 1975, the lease between 250 West 57th St. Associates, as lessor, and Fisk Building Associates, as lessee, provides for basic rent equal to mortgage principal and interest payments plus $28,000 payable to Wien & Malkin LLP for supervisory services. The lease modification dated September 1, 1999 provides that, upon any further refinancing of mortgages with an aggregate principal balance up to $12,800,000 (plus refinancing costs in connection therewith), the basic rent will be modified and will be equal to the sum of $28,000, plus an amount equal to the rate of constant payments for interest and amortization (not including any balloon principal payment due at maturity) required annually under any such mortgages immediately subsequent to refinancing; provided, however, that the refinanced mortgages must be made by an institutional lender on a nonrecourse basis and the proceeds of any increase in the principal amount thereof must be used in connection with the premises. Net Lessee is required to make a monthly payment to Registrant, as an advance against Primary Overage Rent, of an amount equal to its operating profit for its previous lease year in the maximum amount of $752,000 per annum. Net Lessee currently advances $752,000 each year, which permits Registrant to make regular monthly distributions at 20% per annum on the Participants' remaining cash investment. For the lease year ended September 30, 1999, Net Lessee reported net operating profit of $5,277,912 after deduction of Basic Rent. Net Lessee paid Primary Overage Rent of $752,000, together with Secondary Overage Rent of $2,262,956 for the fiscal year ended September 30, 1999. The Secondary Overage Rent of $2,262,956 represents 50% of the excess of the net operating profit of $5,277,912 over $752,000. After the payment of $226,296 to Supervisor as an additional payment for supervisory services, the balance of $2,036,660 was distributed to the Participants on November 30, 1999. Secondary Overage Rent income is recognized when earned from Net Lessee, at the close of the lease year ending September 30. Such income is not determinable until Net Lessee, pursuant to the Net Lease, renders to Registrant a report on the Net Lessee's operation of the Property. The Net Lease requires that this report be delivered to Registrant annually within 60 days after the end of each such lease year. Accordingly, all Secondary Overage Rent income and related supervisory service expense can only be determined after the receipt of such report. The Net Lease does not provide for the Net Lessee to render interim reports to Registrant, so no income is reflected for the period between the end of the lease year and the end of Registrant's fiscal year. See Note 4 of Notes to Financial Statements filed under Item 8 hereof (the "Notes") regarding Secondary Overage Rent payments by Net Lessee for the fiscal years ended December 31, 1999, 1998 and 1997. -2- The Net Lease provides for one renewal option of 25 years. The Participants in Registrant and the partners in Net Lessee have agreed to execute three additional 25-year renewal terms on or before the expiration of the then applicable renewal term. (c) Mortgage Loan Refinancing Effective March 1, 1995, the first mortgage loan on the Property, in the principal amount of $2,890,758, held by Apple Bank for Savings ("Apple Bank") was refinanced (the "Refinancing"). The material terms of the refinanced mortgage loan (the "Mortgage Loan") are as follows: (i) a maturity date of June 1, 2000; (ii) monthly payments of $24,096, aggregating $289,157 per annum, applied first to interest at the rate of 9.4% per annum and the balance in reduction of principal; (iii) no prepayment until after the third loan year. Thereafter, a 3% penalty will be imposed in the fourth loan year and a 2% penalty during the fifth loan year. No prepayment penalty will be imposed if the Mortgage Loan is paid in full during the last 90 days of the fifth loan year; and (iv) no Partner or Participant will have any personal liability for principal of, or interest on, the Mortgage Loan. Effective September 22, 1999, a second mortgage loan, also held by Apple Bank for Savings, in the amount of $1,500,000 was placed on the Property. The terms are interest only at the thirty day LIBOR rate with a maturity date of June 1, 2000. (d) Competition The average annual base rental rate payable to Net Lessee for leases being done at this time is $27.60 per square foot (exclusive of electricity charges and escalation). Current asking rents for the building range from $35 to $42 per square foot. (e) Tenant Leases Net Lessee operates the Building free from any federal, state or local government restrictions involving rent control or other similar rent regulations which may be imposed upon residential real estate in Manhattan. Any increase or decrease in the amount of rent payable by a tenant is governed by the provisions of the tenant's particular lease. With respect to the retail leases, the tenants are required to pay electricity charges and taxes, and some tenants are required to pay cost of living increases in rent. In one particular instance, percentage rent was included in the tenant's lease in lieu of cost of living increases. -3- Item 2. Properties. As stated in Item 1 hereof, Registrant owns the Building located at 250-264 West 57th Street, New York, New York, known as the "Fisk Building", and the land thereunder. Registrant's fee title to the Property is encumbered by Mortgage Loans which, at December 31, 1999, had unpaid principal balances of $4,289,171. For a description of the terms of the Mortgage Loans see Note 3 of the Notes. The Building, erected in 1921 and containing 26 floors, occupies the entire block front on the south side of West 57th Street between Broadway and Eighth Avenue, New York, New York. The Building has ten passenger and three freight elevators and is equipped with a combination of central and individual window unit air-conditioning. The Building is net leased to Net Lessee under the Net Lease. A modification of the Net Lease, effective October 1, 1984, provides for a further renewal term of 25 years, from October 1, 2003 through September 30, 2028. Registrant and Net Lessee have agreed to execute separate lease modification agreements covering three additional 25-year renewal terms on or before the expiration of the then applicable renewal term. There is no change in the terms of the Net Lease during the renewal periods. See Item 1 hereof. A majority of the Building's tenants are engaged in the entertainment business, insurance business, publishing, and the practice of law, accounting and dentistry. In addition, there are several commercial tenants located on the street level of the Building, including a restaurant and several retail stores. Item 3. 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 -4- 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 are continuing 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. Item 4. Submission of Matters to a Vote of Participants. No matters were submitted to the participants during the last quarter of the period covered by this report. PART II Item 5. Market for Registrant's Common Stock and Related Security Holder Matters. Registrant is a joint venture organized pursuant to a joint venture agreement entered into among various individuals dated May 1, 1954. Registrant has not issued any common stock. The securities registered by it under the Securities Exchange Act of 1934, as amended, consist of participations in the joint venture interests of the Joint Venturers in Registrant (each, individually, a "Participation" and, collectively, "Participations") and are not shares of common stock or their equivalent. The Participations represent each Participant's fractional share in the Joint Venturers' undivided interest in Registrant and are divided approximately equally among the Joint Venturers. Each unit of the Participations was originally offered at a purchase price of $5,000; fractional units were also offered at proportionate purchase prices. Registrant has not repurchased Participations in the past and it is not likely to change its policy in the future. (a) The Participations neither are traded on an established securities market nor are readily tradable on a secondary market or the substantial equivalent thereof. Based on Registrant's transfer records, Participations are sold by the holders thereof from time to time in privately negotiated transactions and, in many instances, Registrant is not aware of the prices at which such transactions occur. Registrant was advised of 40 transfers of Participations during 1999. In two instances, the indicated purchase price was equal to approximately 2.67 times the face amount of the Participation transferred, i.e., $13,333 for a $5,000 Participation. In one instance, the indicated purchase price was equal to 2.5 times the face amount of the Participation transferred, i.e., $6,250 for a $2,500 Participation. In one instance, the indicated purchase price was equal to two times the face amount of the Participation transferred, i.e., $5,000 for a $2,500 participation. In all other cases, no consideration was indicated. (b) As of December 31, 1999, there were 564 holders of Participations of record. -5- (c) Registrant does not pay dividends. During the years ended December 31, 1999 and 1998, Registrant made regular monthly distributions of $83.33 for each $5,000 Participation ($1,000 per annum for each $5,000 Participation). On November 30, 1999 and November 30, 1998, Registrant made additional distributions for each $5,000 Participation of $2,829 and $2,849, respectively. Such distributions represented primarily Secondary Overage Rent payable by Net Lessee. There are no restrictions on Registrant's present or future ability to make distributions; however, the amount of such distributions, particularly distributions of Secondary Overage Rent, depends solely on Net Lessee's ability to make payments of Basic Rent, Primary Overage Rent and Secondary Overage Rent to Registrant. (See Item 1 hereof). Registrant expects to make distributions so long as it receives the payments provided for under the Net Lease. See Item 7 hereof. -6- [SELECTED FINANCIAL DATA] Item 6. 250 WEST 57th ST. ASSOCIATES SELECTED FINANCIAL DATA
Year ended December 31, 1999 1998 1997 1996 1995 Basic minimum annual rent income........ $ 341,274 $ 317,157 $ 317,157 $ 317,157 $ 331,691 Primary overage rent income...... 752,000 752,000 752,000 752,000 752,000 Secondary overage rent income.... 2,262,956 2,282,064 1,326,984 1,658,477 1,154,342 Total revenue........ $3,356,230 $3,351,221 $2,396,141 $2,727,634 $2,238,033 Net income............. $2,719,635 $2,787,347 $1,909,974 $2,224,320 $1,781,573 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year.................. $ 3,777 $ 3,871 $ 2,653 $ 3,089 $ 2,474 Total assets............ $3,905,210 $2,212,651 $2,220,481 $2,228,311 $2,236,141 Long-term obligations... $ - $2,789,171 $2,814,821 $2,838,179 $2,859,449 Distributions per $5,000 participation unit, based on 720 participation units outstanding during each year: Income............... $ 3,777 $ 3,850 $ 2,634 $ 3,073 $ 2,415 Return of capital.... 52 - - - - Total distributions...$ 3,829 $ 3,850 $ 2,634 $ 3,073 $ 2,415
-7- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. Registrant was organized solely for the purpose of owning the Property described in Item 2 hereof subject to a net operating lease of the Property held by Net Lessee. Registrant is required to pay, from Basic Rent, the charges on the Mortgage Loan and amounts for supervisory services, and to then distribute the balance of such Basic Rent to holders of Participations. Pursuant to the Net Lease, Net Lessee has assumed responsibility for the condition, operation, repair, maintenance and management of the Property. Accordingly, Registrant need not maintain sub- stantial reserves or otherwise maintain liquid assets to defray any operating expenses of the Property. Registrant's results of operations are affected primarily by the amount of rent payable to it under the Net Lease. The amounts of Primary Overage Rent and Secondary Overage Rent are affected by the New York City economy and its real estate market. It is difficult to forecast the New York City economy and real estate market over the next few years. The following summarizes the material factors for the three most re- cent years affecting Registrant's results of operations for such periods: (a) Total income increased for the year ended December 31, 1999 as compared with the year ended December 31, 1998. The increase resulted from an increase in Basic minimum rent and dividend income. See Note 4 of the Notes. Total income increased for the year ended December 31, 1998 as compared with the year ended December 31, 1997. The increase resulted from an increase in Secondary Overage Rent received by Registrant for the lease year ended September 30, 1998 as compared with the lease year ended September 30, 1997. See Note 4 of the Notes. (b) Total expenses increased for the year ended December 31, 1999 as compared with the year ended December 31, 1998. The increase was the net result of an increase in mortgage interest expenses, professional fees and amortization of mortgage refinancing costs and a decrease in supervisory service expense. See Notes 2b, 3a and 5 of the Notes. Total expenses increased for the year ended December 31, 1998 as compared with the year ended December 31, 1997. The increase was the result of an increase in supervisory service expense. See Notes 2b, 3a and 5 of the Notes. -8- Liquidity and Capital Resources There has been no significant change in Registrant's liquidity for the year ended December 31, 1999 as compared with the year ended December 31, 1998. Based on the current net profit from the Building and current trends in the geographic area in which the Property is located, the value of the Property is estimated to be in excess of the amount of the Mortgage Loan balance at December 31, 1999. Consequently, there are no material changes anticipated in the short-term or long-term financial liquidity position of Registrant, other than the need to refinance the Mortgage Loan upon maturity. Registrant foresees no need to make material commitments for capital expenditures from its own resources while the Net Lease is in effect. Inflation Inflationary trends in the economy do not directly affect Registrant's operations since Registrant does not actively engage in the operation of the Property. Inflation may impact the operations of Net Lessee. Net Lessee is required to pay Basic Rent, regardless of the results of its operations. Inflation and other operating factors affect the amount of Primary and Secondary Overage Rent payable by Net Lessee, which is based on Net Lessee's net operating profit. Item 8. Financial Statements and Supplementary Data. The financial statements, together with the accom- panying report by, and the consent to the use thereof, of J.H. Cohn LLP immediately following, are being filed in response to this item. Item 9. Disagreements on Accounting and Financial Disclosure. Not applicable. PART III Item 10.Directors and Executive Officers of the Registrant. Registrant has no directors or officers or any other centralization of management. There is no specific term of office for any Joint Venturer in Registrant. The table below sets forth as to each individual who served as a Joint-Venturer in Registrant as of December 31, 1999 the following: name, age, -9- nature of any family relationship with any other Joint Venturer, business experience during the past five years and principal occupation and employment during such period, including the name and principal business of any corporation or any organization in which such occupation and employment was carried on and the date such individual became a Joint-Venturer in Registrant: Date Principal Individual Nature of Occupation became Family Business and Joint Name Age Relationship Experience Employment Venturer Peter L. Malkin 66 Father of Real Estate Senior Partner 1982 Anthony E. Supervision and Chairman Malkin and Law Wien & Malkin LLP Anthony E. Malkin 37 Son of President President of 1998 Peter L. of real estate W&M Properties, Malkin management Inc. company As stated in Item 1 hereof, one of the Joint Venturers is a member of Supervisor. See Items 11, 12 and 13 hereof for a description of the services rendered by, and the compensation paid to, Supervisor and for a discussion of certain relationships which may pose actual or potential conflicts of interest among Registrant, Net Lessee and certain of their respective affiliates. The names of entities which have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or are subject to the requirements of Section 15(d) of that Act, and in which the Joint Venturers are also either a director, joint venturer or general partner are as follows: Peter L. Malkin is a general partner in Garment Capitol Associates, 60 East 42nd St. Associates, Navarre-500 Building Associates and Empire State Building Associates. Anthony E. Malkin is a general partner in 60 East 42nd St. Associates. -10- Item 11. Executive Compensation. As stated in Item 10 hereof, Registrant has no direc- tors or officers or any other centralization of management. No remuneration was paid during the fiscal year ended December 31, 1999 by Registrant to any of the Joint Venturers as such. Registrant pays Supervisor, for legal fees and supervisory services and disbursements: (i) $40,000 per annum (the "Basic Payment"); and (ii) an additional payment of 10% of all distributions to Participants in any year in excess of the amount representing a return to them at the rate of 15% per annum on their remaining cash investment (the "Additional Payment"). At December 31, 1999, the Participants' remaining cash investment was $3,600,000. Of the Basic Payment, $28,000 is payable from Basic Rent and $12,000 is payable from Primary Overage Rent received by Registrant. See Item 1 hereof. Pursuant to such fee arrangements, Registrant paid Supervisor $286,296 during the fiscal year ended December 31, 1999. Registrant also paid to Supervisor professional fees in the amount of $31,855 in connection with the consent solicitation program related to the improvement program. See Item 4. The supervisory services provided to Registrant by Supervisor include real estate supervisory, legal, administrative and financial services. The services include, but are not limited to, providing or coordinating with counsel to Registrant, maintaining all of its partnership and Participant records, performing physical inspections of the Building, reviewing insurance coverage and conducting annual partnership meetings. Financial services include monthly receipt of rent from the Net 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 Net Lessee and financial statements audited by and tax information prepared by Registrants' 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. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) Registrant has no voting securities. See Item 5 hereof. At December 31, 1999, no person owned of record or was known by Registrant to own beneficially more than 5% of the outstanding Participations in the undivided Joint Venture interests in Registrant. -11- (b) At December 31, 1999, the Joint Venturers (see Item 10 hereof) did not beneficially own, directly or indirectly, any Participations in Registrant. At such date, certain of the Partners (or their respective spouses) held additional Participations as follows: Anthony E. Malkin owned of record as co-trustee an aggregate of $8,333 of Participations. Mr. Anthony E. Malkin disclaims any beneficial ownership of such Participations. Entities for the benefit of members of Peter L. Malkin's family owned of record and beneficially $88,333 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations, except that trusts related to such entities are required to complete scheduled payments to Mr. Malkin. (c) Not applicable. -12- Item 13. Certain Relationships and Related Transactions. (a) As stated in Item 1 hereof, each Joint Venturer acts as agent for his respective group of Participants. Mr. Malkin is also a partner in Net Lessee. As a consequence of one of the two Joint Venturers being a partner in Net Lessee and one of the two Joint Venturers being a member of Supervisor (which supervises Registrant and Net Lessee), certain actual or potential conflicts of interest may arise with respect to the management and administration of the business of Registrant. However, under the respective participating agreements pursuant to which the Joint Venturers act as agents for the Participants, certain transactions require the prior consent from Participants owning a specified interest under the Agreements in order for the agents to act on their behalf. Such transactions include modifications and extensions of the Net Lease or the Mortgage Loan, or a sale or other disposition of the Property or substantially all of Registrant's other assets. Reference is made to Items 1 and 2 hereof for a description of the terms of the Net Lease between Registrant and Net Lessee. The respective interest, if any, of each Joint Venturer in Registrant and in Net Lessee arises solely from ownership of Participations in Registrant and partnership interests or participations in Net Lessee. The Joint Venturers receive no extra or special benefit not shared on a pro rata basis with all other Participants in Registrant or partners and participants in Net Lessee. However, Mr. Peter L. Malkin, by reason of his respective partnership interest in Supervisor, is entitled to receive his pro rata share of any supervisory, service, legal or other remuneration paid to Supervisor for services rendered to Registrant and Net Lessee. See Item 11 hereof for a description of the remuneration arrangements between Registrant and Supervisor relating to supervisory services provided by Supervisor. Reference is also made to Items 1 and 10 hereof for a description of the relationship between Registrant and Supervisor of which one of the Joint Venturers is a member. The respective interest of the Joint Venturers in any remuneration paid or given by Registrant to Supervisor arose and arises solely from the ownership of his respective partnership interest therein. See Item 11 hereof for a description of the remuneration arrangements between Registrant and Supervisor relating to supervisory services provided by Supervisor. (b) Reference is made to Paragraph (a) above. (c) Not applicable. (d) Not applicable. -13- PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a)(1) Financial Statements: Consent of J.H. Cohn LLP, Certified Public Accountants, dated February 2, 2000. Accountant's Report of J.H. Cohn LLP, Certified Public Accountants, dated January 31, 2000. Balance Sheets at December 31, 1999 and at December 31, 1998 (Exhibit A). Statements of Income for the fiscal years ended December 31, 1999, 1998 and 1997 (Exhibit B). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1999 (Exhibit C-1). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1998 (Exhibit C-2). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1997 (Exhibit C-3). Statements of Cash Flows for the fiscal years ended December 31, 1999, 1998 and 1997 (Exhibit D). Notes to Financial Statements for the fiscal years ended December 31, 1999, 1998 and 1997. (2) Financial Statement Schedules: List of Omitted Schedules. Real Estate and Accumulated Depreciation - December 31, 1999 (Schedule III). (3) Exhibits: See Exhibit Index. (b) No report on Form 8-K was filed by Registrant during the last quarter of the period covered by this report. -14- [LETTERHEAD OF J.H. COHN LLP ACCOUNTANTS & CONSULTANTS] INDEPENDENT ACCOUNTANTS' REPORT To the participants in 250 West 57th St. Associates (a Joint Venture) New York, N. Y. We have audited the accompanying balance sheets of 250 West 57th St. Associates (the "Company") as of December 31, 1999 and 1998, and the related statements of income, partners' capital deficit and cash flows for each of the three years in the period ended December 31, 1999, and the supporting financial statement schedule as contained in Item 14(a)(2) of this Form 10-K. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 250 West 57th St. Associates as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles, and the related financial statement schedule, when considered in relation to the basic financial statements, presents fairly, in all material respects, the information set forth therein. J.H. Cohn LLP New York, N. Y. January 31, 2000 -15- February 2, 2000 250 West 57th St. Associates New York, N.Y. We consent to the use of our independent accountants' report dated January 31, 2000, covering our audits of the accompanying financial statements of 250 West 57th St. Associates in connection with and as part of your December 31, 1999 annual report (Form 10-K) to the Securities and Exchange Commission. J.H. Cohn LLP -16- EXHIBIT A 250 WEST 57th ST. ASSOCIATES BALANCE SHEETS A S S E T S
December 31, 1999 1998 Current Assets: Cash and cash equivalents (Note 10): Cash in Fleet Bank............. $ 32,274 $ 24,124 Cash in distribution account held by Wien & Malkin LLP.................. 60,000 60,000 Fidelity U.S. Treasury Income Portfolio....................... 1,381,731 - TOTAL CASH AND CASH EQUIVALENTS.... 1,474,005 84,124 Additional rent due from Fisk Building Associates, a related party..... 11,835 - TOTAL CURRENT ASSETS.............. 1,485,840 84,124 Real Estate, at cost: Property situated at 250-264 West 57th Street, New York, N. Y. (Notes 2b and 3): Land....................... 2,117,435 2,117,435 Building................... $4,940,682 $4,940,682 Less: Accumulated depreciation......... 4,940,682 - 4,940,682 - Building improvements............ 688,000 688,000 Less: Accumulated depreciation..688,000 - 688,000 - Tenants' installations and improvements....................249,791 249,791 Less: Accumulated depreciation..249,791 - 249,791 - Building improvements, construction in progress...... 244,960 - TOTAL REAL ESTATE......... 2,362,395 2,117,435 Other Assets: Mortgage refinancing costs (Note 2c)...................... 130,508 41,106 Less: Accumulated amortization... 73,533 30,014 56,975 11,092 TOTAL ASSETS....................... $3,905,210 $2,212,651 LIABILITIES AND PARTNERS' CAPITAL DEFICIT Current Liabilities: Accrued expenses........................ $ 32,323 $ 22,049 Due to Fisk Building Associates, a related party...................... 244,960 - Principal payments of mortgages payable within one year (Note 3)............. 4,289,171 25,650 TOTAL CURRENT LIABILITIES.......... 4,566,454 47,699 Long-term Liabilities: Bonds, mortgages and similar debt: First and second mortgages payable (Note 3).............$4,289,171 $2,814,821 Less: Current installments shown above...................... 4,289,171 25,650 - 2,789,171 TOTAL LIABILITIES.................. 4,566,454 2,836,870 Partners' Capital Deficit (Exhibit C)........ (661,244) (624,219) TOTAL LIABILITIES AND PARTNERS' CAPITAL DEFICIT.... $3,905,210 $2,212,651
See accompanying notes to financial statements. -17- EXHIBIT B 250 WEST 57th ST. ASSOCIATES STATEMENTS OF INCOME
Year ended December 31, 1999 1998 1997 Revenues: Rent income, from a related party (Note 4)......... $3,356,230 $3,351,221 $2,396,141 Dividend income................. 18,392 - - 3,374,622 3,351,221 2,396,141 Expenses: Interest on mortgages (Note 3)....................... 287,423 265,616 267,721 Supervisory services, to a related party (Note 5)....... 286,296 287,959 190,708 Professional fees, principally to a related party (Note 6).... 37,748 2,469 19,909 Amortization of mortgage refinancing costs (Note 2c).... 43,520 7,830 7,829 654,987 563,874 486,167 NET INCOME, CARRIED TO PARTNERS' CAPITAL DEFICIT (NOTE 9)....... $2,719,635 $2,787,347 $1,909,974 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year............................. $ 3,777 $ 3,871 $ 2,653
See accompanying notes to financial statements. -18- EXHIBIT C-1 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1999
Partners' Partners' capital deficit Share of capital deficit January 1, 1999 net income Distributions December 31, 1999 Anthony E. Malkin Joint Venture #1.. $ (62,422) $ 271,964 $ 275,666 $ (66,124) Anthony E. Malkin Joint Venture #2.... (62,422) 271,964 275,666 (66,124) Anthony E. Malkin Joint Venture #3.... (62,422) 271,964 275,666 (66,124) Anthony E. Malkin Joint Venture #4.... (62,422) 271,964 275,666 (66,124) Peter L. Malkin Joint Venture #1..... (62,422) 271,964 275,666 (66,124) Peter L. Malkin Joint Venture #2..... (62,422) 271,963 275,666 (66,125) Peter L. Malkin Joint Venture #3..... (62,421) 271,963 275,666 (66,124) Peter L. Malkin Joint Venture #4..... (62,422) 271,963 275,666 (66,125) Peter L. Malkin Joint Venture #5..... (62,422) 271,963 275,666 (66,125) Peter L. Malkin Joint Venture #6..... (62,422) 271,963 275,666 (66,125) $(624,219) $2,719,635 $2,756,660 $(661,244)
See accompanying notes to financial statements. -19- EXHIBIT C-2 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1998
Partners' Partners' capital deficit Share of capital deficit January 1, 1998 net income Distributions December 31, 1998 Anthony E. Malkin Joint Venture #1 (formerly Stanley Katzman Joint Venture #1)... $ (63,993) $ 278,735 $ 277,164 $ (62,422) Anthony E. Malkin Joint Venture #2 (formerly Stanley Katzman Joint Venture #2)... (63,993) 278,735 277,164 (62,422) Anthony E. Malkin Joint Venture #3 (formerly Stanley Katzman Joint Venture #3)... (63,993) 278,735 277,164 (62,422) Anthony E. Malkin Joint Venture #4 (formerly Stanley Katzman Joint Venture #4)... (63,993) 278,735 277,164 (62,422) Peter L. Malkin Joint Venture #1...... (63,993) 278,735 277,164 (62,422) Peter L. Malkin Joint Venture #2....... (63,993) 278,735 277,164 (62,422) Peter L. Malkin Joint Venture #3.... (63,993) 278,735 277,163 (62,421) Peter L. Malkin Joint Venture #4...... (63,993) 278,734 277,163 (62,422) Peter L. Malkin Joint Venture #5..... (63,993) 278,734 277,163 (62,422) Peter L. Malkin Joint Venture #6...... (63,993) 278,734 277,163 (62,422) $(639,930) $2,787,347 $2,771,636 $(624,219)
See accompanying notes to financial statements. -20- EXHIBIT C-3 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1997
Partners' Partners' capital deficit Share of capital deficit January 1, 1997 net income Distributions December 31, 1997 Stanley Katzman Joint Venture #1.. $ (65,354) $ 190,998 $ 189,637 $ (63,993) Stanley Katzman Joint Venture #2... (65,354) 190,997 189,636 (63,993) Stanley Katzman Joint Venture #3... (65,353) 190,997 189,637 (63,993) Stanley Katzman Joint Venture #4... (65,354) 190,997 189,636 (63,993) Peter L. Malkin Joint Venture #1.. (65,354) 190,997 189,636 (63,993) Peter L. Malkin Joint Venture #2... (65,353) 190,997 189,637 (63,993) Peter L. Malkin Joint Venture #3 (formerly Ralph W. Felsten Joint Venture #1)... (65,354) 190,998 189,637 (63,993) Peter L. Malkin Joint Venture #4 (formerly Ralph W. Felsten Joint Venture #2)... (65,354) 190,998 189,637 (63,993) Peter L. Malkin Joint Venture #5 (formerly Ralph W. Felsten Joint Venture #3)... (65,354) 190,998 189,637 (63,993) Peter L. Malkin Joint Venture #6 (formerly Ralph W. Felsten Joint Venture #4).... (65,353) 190,997 189,637 (63,993) $(653,537) $1,909,974 $1,896,367 $(639,930)
See accompanying notes to financial statements. -21- EXHIBIT D 250 WEST 57th ST. ASSOCIATES STATEMENTS OF CASH FLOWS
Year ended December 31, 1999 1998 1997 Cash flows from operating activities: Net income........................ $ 2,719,635 $ 2,787,347 $ 1,909,974 Adjustments to reconcile net income to net cash provided by operating activities: Amortization.................. 43,520 7,830 7,829 Change in additional rent due from Fisk Building Associates. (11,835) - - Change in accrued expenses..... 10,274 (183) (167) Net cash provided by operating activities..... 2,761,593 2,794,994 1,917,636 Cash flows from financing activities: Cash distributions................ (2,756,660) (2,771,636) (1,896,367) Principal payments on long-term debt. (25,650) (23,358) (21,270) Proceeds from second mortgage payable.................... 1,500,000 - - Payment of mortgage refinancing costs..................... (89,402) - - Net cash used in financing activities.......... (1,371,712) (2,794,994) (1,917,637) Net change in cash... 1,389,881 - (1) Cash and cash equivalents, beginning of year............. 84,124 84,124 84,125 CASH AND CASH EQUIVALENTS, END OF YEAR.......... $ 1,474,005 $ 84,124 $ 84,124 Supplemental disclosures of cash flow information: Cash paid for: Interest................... $ 279,258 $ 265,799 $ 267,888
Supplemental disclosures of noncash investing and financing activities: In 1999 the Company purchased certain building improvements, construction in progress, totaling $244,960, by means of a financing agreement with the Lessee. See accompanying notes to financial statements. -22- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS 1. Business Activity 250 West 57th Street Associates (the "Company") is a joint venture which owns commercial property situated at 250 West 57th Street, New York, New York, known as the "Fisk Building". The property is net leased to Fisk Building Associates (the Lessee"). 2. Summary of Significant Accounting Policies a. Cash and cash equivalents: Cash and cash equivalents include investments in money market funds and all highly liquid debt instruments purchased with a maturity of three months or less. b. Real Estate and Depreciation: Land and building: The basis for building valuation was seventy per cent (70%) of the total purchase price in 1953 of the land and building, $7,058,117, which amounts to $4,940,682. The balance of the purchase price, $2,117,435, was allocated to land cost. The seventy per cent allocation of total cost to the building was based upon the percentage of assessed valuation of the building to the total assessed valuation on the land and building at the time of acquisition. The building, building improvements and tenants installations and improvements are fully depreciated. In 1999 the Company began a building improvements program (see Note 12). At December 31, 1999 building improvements construction costing $244,960 was in progress. No depreciation has been taken on these assets since they were not finished or put into service as of December 31, 1999. c. Mortgage refinancing costs, amortization and related party transactions: Mortgage refinancing costs of $41,106 include charges incurred in connection with the 1996 modification of the first mortgage (see Note 3a); such charges include $17,754 paid to the firm of Wien & Malkin LLP, a related party. These mortgage refinancing costs are being amortized ratably over the extended term of the first mortgage, from March 1, 1996 through June 1, 2000. Mortgage refinancing costs paid in 1999, totaling $89,402, include charges incurred in connection with the second mortgage (see Note 3b). Such charges include $17,435 paid to the firm of Wien & Malkin LLP, a related party. These mortgage refinancing costs are being amortized ratably over the term of the second mortgage, from September 22, 1999 through June 1, 2000. -23- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 2. Summary of Significant Accounting Policies (continued) d. Use of estimates: In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. First Mortgage Payable a. The first mortgage is held by Apple Bank for Savings and matures on June 1, 2000, when the principal balance will be $2,777,754. Annual mortgage charges are $289,157, payable in equal monthly installments, applied first to interest at the rate of 9.4% per annum and the balance to principal. b. Effective September 22, 1999 a second mortgage was placed on the property with Apple Bank for Savings, in the amount of $1,500,000, to finance the building improvements program (see Note 12). The mortgage requires monthly payments of interest only based on the 30-day LIBOR rate and will mature on June 1, 2000. The real estate is pledged as collateral for the first and second mortgages. 4. Related Party Transactions - Rent Income Rent income earned during the year ended December 31, 1999, 1998 and 1997, totaling $3,356,230, $3,351,221 and $2,396,141, respectively, constitutes the basic minimum annual rental plus overage rent under an operating lease dated September 30, 1953 (as modified June 12, 1961, June 10, 1965, May 1, 1975, October 1, 1984 and September 1, 1999) with the Lessee, consisting of the following: Year ended December 31, 1999 1998 1997 Basic minimum annual rent... $ 341,274 $ 317,157 $ 317,157 Primary overage rent........ 752,000 752,000 752,000 Secondary overage rent...... 2,262,956 2,282,064 1,326,984 $3,356,230 $3,351,221 $2,396,141 -24- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 4. Related Party Transactions - Rent Income (continued) The lease, as modified, provides for rent income until September 30, 2003, as follows: A) A basic annual rent equal to the sum of $28,000 plus current mortgage requirements for interest and amortization. Upon the further refinancing of any mortgage with an aggregate principal balance of up to $12,800,000 (plus refinancing costs in connection therewith), the annual basic rent will be modified and will be equal to the sum of $28,000 plus an amount equal to the rate of constant payments for interest and amortization required annually under any such mortgage immediately subsequent to refinancing computed on the principal balance of the mortgage immediately prior to such refinancing; B) A primary overage rent equal to the lesser of $752,000 per annum for each year ending September 30th, or the Lessee's defined net operating profit for its lease year ending September 30th after deduction of basic rent and advances previously paid on account of primary overage rent; and C) A secondary overage rent consisting of 50% of any remaining balance of the Lessee's defined net operating profit (after payment of basic rent and primary overage rent) for its lease year ending September 30th. Primary overage rent has been billed to and advanced by the Lessee in equal monthly installments of $62,667. While it is not practicable to estimate that portion of overage rent for the lease year ending on the ensuing September 30th which would be allocable to the current three month period ending December 31st, the Company's policy is to include in its income each year the advances of primary overage rent income received from October 1st to December 31st. No other overage rent is accrued by the Company for the period between the end of the Lessee's lease year ending September 30th and the end of the Company's fiscal year ending December 31st. In 1978, the Lessee exercised its option to renew the lease for a 25 year period from October 1, 1978 through September 30, 2003 on the same terms as provided during the balance of the initial period. The lease modification effective October 1, 1984 provides for an option for one renewal term of 25 years commencing October 1, 2003. The terms of the lease remain the same during the renewal period. The Lessee may surrender the lease at the end of any month, upon sixty days' prior written notice; the liability of the Lessee will end on the effective date of such surrender. A partner in the Company is also a partner in the Lessee. -25- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 5. Related Party Transactions - Supervisory Services Fees for supervisory services (including disbursements and cost of regular accounting services) during the years ended December 31, 1999, 1998 and 1997, totaling $286,296, $287,959 and $190,708, respectively, were paid to the firm of Wien & Malkin LLP. Some members of that firm are partners in the Company. Fees for supervisory services are paid pursuant to an agreement, which amount is based on a rate of return of investment achieved by the participants of the Company each year. 6. Related Party Transactions - Professional Fees Professional fees (including disbursements) during the year ended December 31, 1999, 1998 and 1997, totaling $31,855, $2,469 and $19,909, respectively, were paid to the firm of Wien & Malkin LLP, a related party. 7. Number of Participants There were approximately 550 participants in the various joint ventures as of December 31, 1999, 1998 and 1997. 8. Determination of Distributions to Participants Distributions to participants during each year represent mainly the excess of rent income received over the mortgage requirements and cash expenses. 9. Distributions and Amount of Income per $5,000 Participation Unit Distributions and amount of income per $5,000 participation unit during the years 1999, 1998 and 1997, based on 720 participation units outstanding during each year, totaled $3,829, $3,850 and $2,634, respectively. The 1999 distribution of $3,829 consisted of income in the amount of $3,777 and a return of capital in the amount of $52. The 1998 and 1997 distributions consisted of income only. Net income is computed without regard to income tax expense since the Company does not pay a tax on its income; instead, any such taxes are paid by the participants in their individual capacities. 26- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 10. Concentration of Credit Risk The Company maintains cash balances in a bank, money market fund (Fidelity U.S. Treasury Income Portfolio) and in a distribution account held by Wien & Malkin LLP. The bank balance is insured by the Federal Deposit Insurance Corporation up to $100,000, and at December 31, 1999 was completely insured. The cash in the money market fund and the distribution account held by Wien & Malkin LLP is not insured. The funds held in the distribution account were paid to the participants on January 1, 2000. 11. Contingencies Wien & Malkin LLP and Peter L. Malkin, a partner in the Company, are engaged in a dispute with Helmsley-Spear, Inc., the managing agent of the Fisk Building, concerning the future management, leasing and supervision of the property. In this connection, certain legal and professional fees and other expenses have been paid and incurred and additional costs are expected to be incurred. The Company's allocable share of such costs cannot as yet be determined. Accordingly, the Company has not provided for the expense and related liability with respect to such costs in the accompanying financial statements. 12. Building Improvements Program In 1999 the participants of the Company and the Lessee approved a building improvements program (the "Program") estimated to cost between $7,700,000 and $10,000,000, and expected to take five years to complete. The Lessee is currently financing the Program and billing the Company for the costs incurred. The Company will own the improvements and finance them through an increase in the fee mortgage. In September 1999 the Company obtained a second mortgage (Note 3b) in the amount of $1,500,000 to initiate the financing of the Program. The Company intends to refinance the first and second mortgages when they mature on June 1, 2000 and obtain additional fee mortgage increases as work progresses. The increased mortgage charges will be paid by the Company from an equivalent increase in the basic rent paid by the Lessee to the Company (Note 4). -27- 250 WEST 57th ST. ASSOCIATES OMITTED SCHEDULES The following schedules have been omitted as not applicable in the present instance: SCHEDULE I - Condensed financial information of registrant. SCHEDULE II - Valuation and qualifying accounts. SCHEDULE IV - Mortgage loans on real estate. -28- SCHEDULE III 250 WEST 57th ST. ASSOCIATES Real Estate and Accumulated Depreciation December 31, 1999
Column A Description Office building and land located at 250-264 West 57th Street, New York, New York, known as the "Fisk Building". B Encumbrances Apple Bank for Savings Balance at December 31, 1999.............................. $4,289,171 C Initial cost to company Land...................................................... $2,117,435 Building.................................................. $4,940,682 D Costs capitalized subsequent to acquisition Improvements.............................................. $ 937,791 Building improvements, construction in progress........... $ 244,960 Carrying costs............................................ $ NONE E Gross amount at which carried at close of period Land...................................................... $2,117,435 Building, Improvements and Improvements in Progress....... 6,123,433 Total..................................................... $8,240,868(a) F Accumulated depreciation................................... $5,878,473(b) G Date of construction 1921 H Date acquired September 30, 1953 I Life on which depreciation in latest income statements is computed Not applicable
(a) For the year ended December 31, 1999 the Company began a Building Improvements Program (see Note 12) and incurred building improvements, construction in progress costs of $244,960, which increased the carrying value of real estate property to $8,240,868. The carrying value of real estate for the years ended December 31, 1998 and December 31, 1997 was $7,995,908. The costs for federal income tax purposes are the same as for financial statement purposes. (b) Accumulated depreciation Balance at January 1, 1997 $5,878,473 Depreciation: F/Y/E 12/31/97 None 12/31/98 None 12/31/99 None None Balance at December 31, 1999 $5,878,473 -29- SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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 Joint Venturers in Registrant, pursuant to a Power of Attorney, dated March 29, 1996 and May 14, 1998 (collectively, the "Power"). 250 WEST 57TH ST. ASSOCIATES (Registrant) By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: April 14, 2000 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 Joint Venturers in Registrant, pursuant to the Power, on behalf of the Registrant and as a Joint Venturer in Registrant on the date indicated. By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: April 14, 2000 ________________________ * Mr. Katzman supervises accounting functions for Registrant. -30- EXHIBIT INDEX Number Document Page* 3(a) Registrant's Joint Venture Agreement, dated May 25, 1953, which was filed as Exhibit No. 3(a) to Registrant's Registration Statement on Form S-1 (the "Registration Statement"), is incorporated by reference as an exhibit hereto. 3(b) Amended Business Certificate of Registrant filed with the Clerk of New York County on July 24, 1998 reflecting a change in the Partners of Registrant which was filed as Exhibit 3(b) to Registrant's Amended Quarterly Report on 10-Q for the period ended September 30, 1998 and is incorporated by reference as an exhibit hereto. 3(c) Registrant's Memorandum of Agreement among Joint Venturers in 250 West 57th St. Associates, dated June 9, 1953, filed as Exhibit 1 to the Registration Statement, is incorporated by reference as an exhibit hereto. 4 Registrant's form of Participation Agreement, which was filed as Exhibit No. 4(a) to the Registration Statement, is incorporated by reference as an exhibit hereto. 10(a) Net Lease between Registrant and Fisk Building Associates dated September 30, 1957, which was filed as Exhibit No. 2(d) to the Registration Statement, is incorporated by reference as an exhibit hereto. 10(b) Modification of Net Lease dated November 10, 1961, was filed by letter dated November 21, 1961 as Exhibit B to Registrant's Statement of Registration on Form 8-K for the month of October, 1961, is incorporated by reference as an exhibit hereto. _______________________ * Page references are based on a sequential numbering system. -31- EXHIBIT INDEX Number Document Page* 10(c) Second Modification Agreement of Net Lease dated June 10, 1965, between Registrant and Fisk Building Associates which was filed by letter dated December 29, 1981 as Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the year ended September 30, 1981 is incorporated by reference as an exhibit hereto. 10(d) Fourth Lease Modification Agreement dated November 12, 1985 between Registrant and Fisk Building Associates, which was filed by letter dated January 13, 1986 as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended, September 30, 1985, is incorporated herein by reference as an exhibit hereto. 10(e) Modification of Mortgage dated as of March 1, 1995 between Registrant and the Apple Bank for Savings, which was filed on March 30, 1995 as Exhibit 10(e) to Registrant's Annual Report on Form 10-K, is incorporated herein by reference as an exhibit hereto. 13(a) Letter to Participants dated February 18, 2000 and supplementary financial reports for the fiscal year ended December 31, 1999. 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. 13(b) Letter to Participants dated November 30, 1999 and supplementary financial reports for the lease year ended September 30, 1999. 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. _______________________ * Page references are based on a sequential numbering system. -32 EXHIBIT INDEX Number Document Page* 24 Power of Attorney dated March 29, 1996 and May 14, 1998 between Partners of Registrant and Stanley Katzman and Richard A. Shapiro, attached as Exhibit 24 to Registrant's 10-Q for the quarter ended March 31, 1998, and incorporated herein by reference as an exhibit hereto. 27 Financial Data Schedule of Registrant for fiscal year ended December 31, 1999. _______________________ * Page references are based on a sequential numbering system. -33 EX-13 2 EXHIBIT 13A Exhibit 13a [LETTERHEAD OF WIEN & MALKIN LLP] February 22, 2000 To Participants in 250 West 57th St. Associates Federal Identification Number 13-6083380 We enclose the annual report of 250 West 57th St. Associates, the joint venture which owns the Fisk Building at 250 West 57th Street, New York City, for the year ended December 31, 1999. The reported income for 1999 was $2,719,635. This was less than distributions of $2,756,660 representing the current monthly distributions totaling $720,000 per annum and the additional distribution of $2,036,660, which was paid to participants on November 30, 1999. The difference, results primarily from amortization of mortgage refinancing costs. Since the inception of this investment, a portion of the distributions has constituted a return of capital, and has not been reportable as income. As a result, the book value on December 31, 1999 of an original cash investment of $10,000 was a deficit balance of $1,837. Additional rent for the lease year ended September 30, 1999 was $3,014,956 or an excess of $2,262,956 over advances of $752,000 by the lessee against additional rent ($720,000 to participants plus $32,000 to Wien & Malkin LLP). As approved by the participants, Wien & Malkin LLP received $226,296. The balance of the additional rent of $2,036,660 was distributed to the participants on November 30, 1999. The additional distribution of $2,036,660 represented an annual return of about 56.6% on the original cash investment of $3,600,000. Regular monthly distributions are at the rate of 20% per annum on the cash investment so that total distributions for the year ended December 31, 1999 were about 76.6% on the original cash investment. The enclosed Schedule K-1 form(s) (Form 1065), containing 1999 tax information, must be reviewed in detail by your accountant. If you have any question about the enclosed material, please communicate with our office. Please retain this letter and the enclosed Schedule K-1 form(s) for the preparation of your income tax returns for the year 1999. Cordially yours, WIEN & MALKIN LLP By: Stanley Katzman SK:jf Encs. -34- [LETTERHEAD OF ROGOFF & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS] Independent Auditor's Report To the Participants in 250 West 57th St. Associates (a Partnership): We have audited the accompanying balance sheet of 250 West 57th St. Associates as of December 31, 1999, and the related statements of income, of partners' capital (deficit) and of cash flows for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 250 West 57th St. Associates at December 31, 1999, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Rogoff & Company, P.C. New York, New York January 31, 2000 -35- 250 West 57th St. Associates Balance Sheet December 31, 1999 Assets Cash: Fleet Bank $ 32,274 Distribution account held by Wien & Malkin LLP 60,000 Fidelity Money Market Account (U.S. Treasury Income Portfolio) 1,381,731 1,474,005 Fisk Building, 250 West 57th Street, New York City: Land $2,117,435 Building $4,940,682 Less: Accumulated depreciation 4,940,682 - Building improvements 688,000 Less: Accumulated depreciation 688,000 - Tenants' installations and improvements 249,791 Less: Accumulated amortization 249,791 - Building improvements in progress 244,960 2,362,395 Rent Receivable 11,835 Mortgage refinancing costs 130,508 Less: Accumulated amortization 73,533 56,975 Total Assets $3,905,210 Liabilities and Partners' Capital (Deficit) Liabilities: First mortgage $2,789,171 Second mortgage 1,500,000 Accrued interest on mortgages 30,214 Due to Fisk Building Associates 244,960 Accrued expenses 2,109 Total liabilities 4,566,454 Partners' Capital (Deficit), December 31, 1999 ( 661,244) Total Liabilities and Partners' Capital (Deficit) $3,905,210 The Accompanying Notes are an Integral Part of these Financial Statements. -36- 250 West 57th St. Associates Statement of Income For the Year Ended December 31, 1999 Income: Basic rent $ 341,274 Additional rent 3,014,956 Dividend income 18,392 Total income 3,374,622 Expenses: Interest on first mortgage $263,306 Interest on second mortgage 24,117 Supervisory services 286,296 Professional fees 37,748 Total expenses 611,467 Net income before amortization 2,763,155 Amortization of mortgage refinancing costs 43,520 Net income $2,719,635 The Accompanying Notes are an Integral part of these Financial Statements. -37- 250 West 57th St. Associates Statement of Partners' Capital (Deficit) December 31, 1999 Partners' capital (deficit), January 1, 1999 $( 624,219) Add: Net income for the year ended December 31, 1999 2,719,635 2,095,416 Less: Monthly distributions to participants January 1, 1999 through December 31, 1999 $ 720,000 Distribution to participants on November 30, 1999 of balance of additional rent for the lease year ended September 30, 1999 2,036,660 2,756,660 Partners' capital (deficit), December 31, 1999 $( 661,244) The Accompanying Notes are an Integral part of these Financial Statements. -38- 250 West 57th St. Associates Statement of Cash Flows For the Year Ended December 31, 1999 Cash flows from operating activities: Net income $2,719,635 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of mortgage refinancing costs 43,520 Rent receivable (11,835) Mortgage refinancing costs (89,402) Accrued interest on mortgages 8,165 Due to Fisk Building Associates 244,960 Accrued expenses 2,109 Net cash provided by operating activities 2,917,152 Cash flows from investing activities: Improvements in progress (244,960) Cash flows from financing activities: Proceeds from second mortgage 1,500,000 Principal payments on first mortgage (25,651) Monthly distributions to participants (720,000) Distribution on November 30, 1999 of balance of additional rent for the lease year ended September 30, 1999 (2,036,660) Net cash used by financing activities (1,282,311) Net change in cash 1,389,881 - Cash at beginning of year 84,124 Cash at end of year $1,474,005 Supplemental Cash Flow Disclosures Year Ended December 31, 1999 Cash paid during the year for interest $ 279,258 The Accompanying Notes are an Integral part of these Financial Statements. -39- 250 West 57th St. Associates Notes to Financial Statements December 31, 1999 1. Business Activity 250 West 57th St. Associates ("Associates") is a joint venture which owns an office building located in New York City. The building is net leased to Fisk Building Associates. 2. Significant Accounting Policies Basis of Presentation The financial statements have been prepared on the accrual basis of accounting. Depreciation Depreciation of the cost of the building was computed by the straight-line method over estimated useful life of 30 years through September 30, 1983. The cost of the building improvements was depreciated by the straight-line method over various periods from date of completion of improvement through September 30, 1983. The cost of tenants' installations and improvements was amortized by the straight-line method over the terms of the leases. Amortization Capitalized mortgages refinancing costs of $130,508 are being charged to expense ratably during the period of the mortgage through June 1, 2000. Use of Estimates Preparing financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reportedamounts of income and expenses during the reporting period. Actual results could differ from those estimates. 3. Lease and Related Party Transactions (a) Effective May 1, 1975, the lease between 250 West 57th St. Associates, as lessor, and Fisk Building Associates, as lessee, provides for basic rent equal to mortgage principal and interest payments plus $28,000 payable to Wien & Malkin LLP for supervisory services. (b) The lease modification dated September 1, 1999 provides that, upon any further refinancing of mortgages with an aggregate principal balance up to $12,800,000 (plus refinancing costs in connection therewith), the basic rent will be modified and will be equal to the sum of $28,000, plus an amount equal to the rate of constant payments for interest and amortization (not including any balloon principal payment due at maturity) required annually under any such mortgages immediately subsequent to refinancing; provided, however, that the refinanced mortgages must be made by an institutional lender on a nonrecourse basis and the proceeds of any increase in the principal amount thereof must be used in connection with the premises. -40- 250 West 57th St. Associates Notes to Financial Statements December 31, 1999 3. Lease - (continued) (c) In accordance with a lease modification, effective October 1, 1984, primary additional rent is equal to the lesser of $752,000 per annum or the net operating profit of the property, as defined, after deduction of basic rent. If the full primary additional rent of $752,000 is paid, it will equal 20% of the original $3,600,000 cash investment plus $32,000 payable to Wien & Malkin LLP for supervisory services. Advances against primary additional rent are paid by the lessee based on the net operating profit of the property for the prior year to a maximum amount of $752,000. Primary additional rent for the lease year ended September 30, 1999 was $752,000. Advances against primary additional rent of $752,000 per annum for the lease year ending September 30, 2000 are being paid. No other additional rent is accrued by Associates for the period between the end of the lessee's lease year ending September 30th and the end of Associate's fiscal year ending December 31st. Secondary additional rent is equal to 50% of the net operating profit of the property after payment of basic rent and primary additional rent for lease years ending September 30. Secondary additional rent for the lease year ended September 30, 1999 was $3,014,956. (d) The lessee has exercised its option to renew the lease for a period of 25 years, from October 1, 1978 through September 30, 2003. The lease modification, effective October 1, 1984, provides for an additional renewal term of 25 years from October 1, 2003 through September 30, 2028; the holders of more than 80% of the participations in 250 West 57th St. Associates have consented to the granting of options to the lessee to extend the lease for three additional 25-year renewal terms. There is no change in the terms of the lease during the renewal periods. (e) Some partners in Fisk Building Associates are also partners in Associates. 4. Supervisory Services and Related Party Transactions Payments for supervisory services, including disbursements and cost of accounting services, are made to the firm of Wien & Malkin LLP. Some partners in that firm are also partners in Associates. 5. Professional Fees and Related Party Transactions Payments for professional fees, including disbursements, are made to the firm of Wien & Malkin LLP. Some members of that firm are partners in Associates. 6. First Mortgage (a) Effective March 1, 1995, a new first mortgage was placed on the property with the Apple Bank for Savings in the amount of $2,890,758. Annual mortgage charges are $289,157, payable in equal monthly installments, applied first to interest at the rate of 9.40% per annum and the balance to principal. The mortgage will mature on June 1, 2000, with a balance of $2,777,754. -41- 250 West 57th St. Associates Notes to Financial Statements December 31, 1999 6. First Mortgage - (continued) (b) Prepayment privileges: The mortgage is not prepayable until March 1, 1998. Thereafter, a 3% penalty will be imposed through February 28, 1999 and a 2% penalty will be imposed until March 2, 2000. There will be no prepayment penalty if the mortgage is paid in full during the last 90 days of the term of the mortgage. 7. Second Mortgage Effective September 22, 1999, a new second mortgage was placed on the property with Apple Bank for Savings in the amount of $1,500,000. Monthly payments of interest only are being made at the thirty day LIBOR rate. The mortgage will mature on June 1, 2000. 8. Income Taxes Net income is computed without regard to income tax expense, since the partnership does not pay a tax on its income; instead, any such taxes are paid by the participants in their individual capacities. 9. Concentration of Credit Risk Associates maintains cash balances in a bank, in a money market fund, and in a distribution account held by Wien & Malkin LLP. The bank balance is insured by the Federal Deposit Insurance Corporation up to $100,000, and at December 31, 1999 was completely insured. The distribution account held by Wien & Malkin LLP is not insured. The funds held in the distribution account were paid to the participants on January 1, 2000. The money market account is not insured. 10.Contingencies Wien & Malkin LLP and Peter L. Malkin are engaged in a dispute with Helmsley- Spear, Inc. concerning the management, leasing and supervision of the property. In this connection, certain legal and professional fees and other expenses have been paid and incurred and additional costs are expected to be incurred. The Partnership's allocable share of such costs is as yet undetermined. Accordingly, the Partnership has not provided for the expense and related liability with respect to such costs in the attached financial statements. -42- EX-13 3 EXHIBIT 13B Exhibit 13 b [LETTERHEAD OF WIEN & MALKIN LLP] November 30, 1999 TO PARTICIPANTS IN 250 WEST 57TH ST. ASSOCIATES: We enclose the operating report of the lessee, Fisk Building Associates, for the fiscal year of the lease ended September 30, 1999. The lessee reported profit of $5,277,912 subject to addi- tional rent for the lease year ended September 30, 1999, as against profit of $5,316,127 for the lease year ended September 30, 1998. Additional rent for the lease year ended September 30, 1999 was $3,014,956; $752,000 was advanced against additional rent so that the balance of additional rent is $2,262,956. Wien & Malkin LLP receives an additional payment for supervisory services of 10% of distributions in excess of 15% per annum on the cash investment. Accordingly, Wien & Malkin LLP received $226,296 of the additional rent and the balance of $2,036,660 is being distributed to the participants. A check for your share of the additional distribution and the computation of the additional payment to Wien & Malkin LLP and distribution are enclosed. The additional distribution of $2,036,660 represents a return of about 56.6% on the cash investment of $3,600,000. Regular monthly distributions are at the rate of 20% a year, so that dis- tributions for the lease year ended September 30, 1999 were about 76.6% per annum. If you have any question about the enclosed material please communicate with the undersigned. Cordially yours, WIEN & MALKIN LLP By: Stanley Katzman SK/fm Encs. -43- 250 West 57th St. Associates Computation of Additional Payment for Supervisory Services and Distribution For the Lease Year Ended September 30, 1999 Secondary additional rent $2,282,064 Primary additional rent for the lease year ended September 30, 1999 752,000 3,014,956 Less, additional basic payment of Wien & Malkin LLP from primary overage rent 12,000 Total rent to be distributed 3,002,956 15% return on $3,600,000 investment 540,000 Subject to additional payment at 10% to Wien & Malkin LLP $2,462,956 Additional payment at 10% $ 246,296 Paid to Wien & Malkin LLP as advances for additional rent 20,000 Balance of additional payment to Wien & Malkin LLP $ 226,296 Summary: Additional distribution to participants $2,036,660 Payment to Wien & Malkin LLP, as above 226,296 Total secondary additional rent available for distribution to participants and payment to Wien & Malkin LLP $2,262,956 -44- [LETTERHEAD OF ROGOFF & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS] Fisk Building Associates 60 East 42nd Street New York, New York 10165 Gentlemen: In accordance with our engagement, we have compiled the special-purpose statement of income and expense of Fisk Building Associates for the lease year ended September 30, 1999. Our engagement included the examination of statements of receipts and disbursements for the property, together with supporting records, but did not include the verification by direct communication of the income from tenants or liabilities and disbursements to vendors. We have no knowledge of any other contingent liabilities that should be disclosed. Based on our compilation, subject to the above, the accompanying special-purpose statement of income and expense presents fairly the net operating income, as defined, for the computation of additional rent, of Fisk Building Associates, for the lease year ended September 30, 1999. Rogoff & Company P.C. New York, New York October 20, 1999 -45- Fisk Building Associates Statement of Income and Expense October 1, 1998 through September 30, 1999 Income: Rent income $10,623,133 Escalation income 683,653 Electric income, net 759,838 Other income 41,750 Total Income 12,108,374 Expenses: Real estate taxes $1,799,424 Labor costs 1,885,147 Repairs, supplies and improvements 1,346,455 Management and leasing 579,578 Fuel oil 52,258 Professional fees 216,595 Security 236,663 Security monitor system 82,183 Water 86,600 Insurance 33,704 Rubbish removal 51,074 Telephone 24,326 Advertising 106,403 Miscellaneous 12,895 Total expenses before rent expense 6,513,305 Net income before rent expense 5,595,069 Less, Basic rent expense 317,157 Net income subject to primary and secondary additional rent 5,277,912 Less, Primary additional rent 752,000 Net income subject to secondary additional rent $ 4,525,912 Secondary additional rent at 50% $ 2,262,956 Computation of Additional Rent due Landlord: Primary additional rent $ 752,000 Secondary additional rent 2,262,956 Total Additional Rent 3,014,956 Less, Advances against additional rent 752,000 Additional rent due landlord $ 2,262,956 The accompanying letter of transmittal and notes are an integral part of this statement. -46- Fisk Building Associates Notes to Financial Statement Note 1 - The lease as modified effective October 1, 1984 provides for additional rent, as follows: Additional rent equal to the first $752,000 of the Lessee's net operating income, as defined, in each lease year. Further additional rent equal to 50% of the Lessee's remaining net operating income, as defined, in each lease year. -47- EX-27 4
5 This schedule contains summary financial information extracted from the Company's Balance Sheet as of December 31, 1999 and the Statement Of Income for the year ended December 31, 1999, and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 1,474,005 0 0 0 0 1,485,840 8,240,868 3,905,210 3,905,210 4,566,454 0 0 0 0 (661,244) 3,905,210 3,356,230 3,374,622 0 0 367,564 0 287,423 2,719,635 0 2,719,635 0 0 0 2,719,635 3,777 3,777 Includes unamortized mortgage costs Accrued interest on mortgage and mortgage principal payment due within one year Partnership capital Includes long-term debt Rental income Supervisory services, amortization of mortgage refinance costs and Professional fees Earnings per $5,000 participation unit, based on 720 participation units outstanding during the period. -49-
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