-----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, LuFwoXZkis5u9su2TCpQrK/0m89EX2MEVbZLkDXl142+4IfpBe5zV+AMyxZAx6qh S6AmYIy+cnNIKte3EeGNqQ== 0000100412-02-000004.txt : 20020416 0000100412-02-000004.hdr.sgml : 20020416 ACCESSION NUMBER: 0000100412-02-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020415 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: 1934 Act SEC FILE NUMBER: 000-02666 FILM NUMBER: 02611479 BUSINESS ADDRESS: STREET 1: C/O WEIN & MALKIN LLP STREET 2: 60 WEST EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 2126878700 10-K 1 west.txt 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, 2001 [ ] 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 L.L.C. (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 33 through 35 hereof. Number of pages (including exhibits) in this filing: 47 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"). On November 30, 2001, Registrant converted to a limited liability company under New York law and is now known as 250 West 57th 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 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 New York partnership in which Trusts created by Peter L. Malkin for family members are beneficial owners of an interest in Net Lessee. 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, 2001, the Building was approximately 91% occupied by approximately 299 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 November 17, 2000 between 250 West 57th St. Associates, as lessor, and Fisk Building Associates, as lessee, provides that the basic rent will be equal to the sum of $28,000 plus the installment payments for interest and amortization ( not including any balloon payment due at maturity ) required annually under the new $15,500,000 first mortgage loan ( the "First Mortgage") from Emigrant Savings Bank. Basic rent is payable in monthly installments on the first day of each calendar month in an amount equal to $2,333.33 plus the projected debt service due on the First Mortgage on the first day of the ensuing calendar month ( with a reconciliation to be made as soon as practicable thereafter ): provided, however, that basic rent due on December 1, 2000 shall include interest prepaid at the closing of the First Mortgage or accrued thereafter. Basic rent shall be adjusted on a dollar-for-dollar basis by changes in the annual debt service on the First Mortgage. -1- 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 original cash investment. For the lease year ended September 30, 2001, Net Lessee reported net operating profit of $6,343,859 after deduction of Basic Rent. Net Lessee paid Primary Overage Rent of $752,000, together with Secondary Overage Rent of $2,732,389 for the fiscal year ended September 30, 2001. The Secondary Overage Rent of $2,732,389 represents 50% of the excess of the net operating profit of $6,343,859 over $752,000 less $63,451 representing interest earned and retained by Registrant on funds borrowed for the improvement program. After the payment of $273,239 to Supervisor as an additional payment for supervisory services, the balance of $2,459,150 was distributed to the Participants on November 30, 2001. 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, 2001, 2000 and 1999. The Net Lease provides for one renewal option of 25 years. The Participants in Registrant have consented to the granting of options to the Net Lessee to extend the Net Lease for three additional 25-year renewal terms on or before the expiration of the then applicable renewal term. (c) Mortgage Loan Refinancing Effective November 17, 2000, a new first mortgage was placed on the property with Emigrant Savings Bank in the amount of $15,500,000. The Mortgage matures on December 1, 2005. At the closing, the amount of $7,000,000 was advanced to pay off the existing first and second mortgages held by Apple Bank for Savings and to pay for closing and related costs and the costs of improvements made to the property. The balance of the first mortgage loan will be advanced in stages through May 31, 2003 to pay for additional improvements to the property. -2- Monthly payments under the mortgage are interest only. Amounts advanced at the closing bear interest at the rate of 7.511% throughout the term of the mortgage. Amounts advanced after the closing will bear interest at a floating rate equal to 1.65 percentage points above 30, 60, 90, 180 or 360 day LIBOR or the yield on 30-day U.S. Treasury Securities, as selected by Associates. On June 1, 2003 the interest rate on all amounts advanced following the closing will be converted to a fixed rate equal to 1.65 percentage points above the then-current yield on U.S. Treasury Securities having the closest maturity to December 1, 2005. The mortgage may be prepaid at any time, in whole only, upon payment of a prepayment penalty based on a yield maintenance formula. There will be no prepayment penalty if the mortgage is paid in full during the last 90 days of the term thereof. (d) Competition The average annual base rental rate payable to Net Lessee for leases being done at this time is $26.45 per square foot (exclusive of electricity charges and escalation). Current asking rents for the building range from $42 to $50 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 a Mortgage Loan which, at December 31, 2001, had an unpaid principal balance of $7,000,000. For a description of the terms of the Mortgage Loan 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. 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. -4- 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. 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 Equity and Related Security Holder Matters. Registrant was a joint venture pursuant to an agreement entered into among various individuals dated May 1, 1954. As of November 30, 2001, Registrant is a limited liability company. 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. -5- (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 30 transfers of Participations during 2001. In one instance, the indicated purchase price was equal to 3.6 times the face amount of the Participation transferred, i.e., $18,000 for a $5,000 Participation. In all other cases, no consideration was indicated. (b) As of December 31, 2001, there were 575 holders of Participations of record. (c) Registrant does not pay dividends. During the years ended December 31, 2001 and 2000, 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, 2001 and November 30, 2000, Registrant made additional distributions for each $5,000 Participation of $3,415 and $3,157, 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 L.L.C. (A Limited Liability Company) SELECTED FINANCIAL DATA
Year ended December 31, 2001 2000 1999 1998 1997 Basic minimum annual rent income $ 553,770 $ 429,740 $ 341,274 $ 317,157 $ 317,157 Primary overage rent income 752,000 752,000 752,000 752,000 752,000 Secondary overage rent income 2,732,389 2,525,723 2,262,956 2,282,064 1,326,984 Total revenues $4,038,159 $3,707,463 $3,356,230 $3,351,221 $2,396,141 Net income....................... $3,058,314 $2,952,546 $2,719,635 $2,787,347 $1,909,974 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year $ 4,248 $ 4,101 $ 3,777 $ 3,871 $ 2,653 Total assets $8,405,356 $6,759,030 $3,905,210 $2,212,651 $2,220,481 Long-term obligations $7,000,000 $7,000,000 $ - $2,789,171 $2,814,821 Distributions per $5,000 participation unit, based on 720 participation units outstanding during each year: Income $ 4,248 $ 4,101 $ 3,777 $ 3,850 $ 2,634 Return of capital 167 56 52 - - Total distributions $ 4,415 $ 4,157 $ 3,829 $ 3,850 $ 2,634
-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 then to 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. The following summarizes the material factors for the three most recent years affecting Registrant's results of operations for such periods: (a) Total income increased for the year ended December 31, 2001 as compared with the year ended December 31, 2000. The increase resulted from interest income and an increase in Basic minimum rent and Secondary Overage Rent. See Note 4 of the Notes. Total income increased for the year ended December 31, 2000 as compared with the year ended December 31, 1999. The increase resulted from an increase in Basic minimum rent, an increase in interest and dividend income and an increase in Secondary Overage Rent. See Note 4 of the Notes. (b) Total expenses increased for the year ended December 31, 2001 as compared with the year ended December 31, 2000. The increase resulted from an increase in second mortgage interest expense, an increase in the additional payment for supervisory services payable with respect to an increased amount of Secondary Overage Rent received by Registrant in 2001, and an increase in amortization of mortgage refinancing costs and depreciation. See Notes 3 and 5 of the Notes. Total expenses increased for the year ended December 31, 2000 as compared with the year ended December 31, 1999. The increase resulted from an increase in the additional payment for supervisory services, payment of second mortgage interest expense, and an increase in professional fees and amortization of mortgage refinancing costs. See Notes 3 and 5 of the Notes. -8- {SELECTED FINANCIAL DATA] Item 7. 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) QUARTERLY RESULTS OF OPERATIONS (Continued)
Three Months Ended March 31, June 30, September 30, December 31, 2001 2001 2001 2001 Statement of Income Data: Basic rent income $138,443 $138,442 $ 138,443 $138,442 Advance of primary overage rent income 188,000 188,000 188,000 188,000 Secondary overage rent income - - 2,732,389 - Dividend and interest income 21,864 16,123 11,248 4,826 Total revenues 348,307 342,565 3,070,080 331,268 Interest on mortgage 131,443 131,442 131,443 131,442 Supervisory services 15,000 15,000 288,239 15,000 Professional fees 68 462 23 20,102 Depreciation of building improvements 5,917 5,917 5,917 33,971 Amortization of mortgage refinancing costs 25,630 25,630 25,630 25,630 Total expenses 178,058 178,451 451,252 226,145 Net income $170,249 $164,114 $2,618,828 $105,123 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each period $ 236 $ 228 $ 3,637 $ 146
-9- [SELECTED FINANCIAL DATA} Item 7. 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) QUARTERLY RESULTS OF OPERATIONS The following table presents the Company's operating results for each of the eight fiscal quarters in the period ended December 31, 2001. The information for each of these quarters is unaudited and has been prepared on the same basis as the audited financial statements included in this Annual Report on Form 10-K. In the opinion of management, all necessary adjustments, which consist only of normal and recurring accruals, have been included to present fairly the unaudited quarterly results. This data should be read together with the financial statements and the notes thereto included in this Annual Report on Form 10-K.
Three Months Ended March 31, June 30, September 30, December 31, 2000 2000 2000 2000 Statement of Income Data: Basic rent income $101,518 $103,387 $ 104,707 $120,128 Advance of primary overage rent income 188,000 188,000 188,000 188,000 Secondary overage rent income - - 2,525,723 - Dividend and interest income 17,959 11,133 2,515 14,309 Total revenues 307,477 302,520 2,820,945 322,437 Interest on mortgages 87,673 89,370 90,520 110,706 Supervisory services 15,000 15,000 272,572 10,000 Professional fees - 74,660 - (34,300) Amortization of mortgage refinancing costs 34,114 8,610 8,610 18,298 Total expenses 136,787 187,640 371,702 104,704 Net income $170,690 $114,880 $2,449,243 $217,733 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each period $ 237 $ 160 $ 3,402 $ 302
-10- Liquidity and Capital Resources Registrant's liquidity has changed significantly for the twelve months ended December 31, 2001, as compared with the twelve months ended December 31, 2000, as a result of a new mortgage placed on the property in November, 2000, and Registrant may from time to time establish a reserve for contingent or unforeseen liabilities. No amortization payments are due under the Mortgage 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 in excess of the amount of the Mortgage balance at maturity. 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 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. -11- 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, 2001 the following: name, age, 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 67 Father of Real Estate Senior Partner 1982 Anthony E. Supervision and Chairman Malkin Wien & Malkin LLP Anthony E. Malkin 39 Son of Real Estate Senior Director 1998 Peter L. Supervision of Supervisory Malkin and management Services of Wien company & Malkin LLP and President of W&M Properties, L.L.C. 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 member in 60 East 42nd St. Associates L.L.C. and Empire State Building Associates L.L.C. and a general partner in Navarre-500 Building Associates and Garment Capitol Associates. Anthony E. Malkin is a member in 60 East 42nd St. Associates L.L.C. and Empire State Building Associates L.L.C. -12- 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, 2001 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, 2001, 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 $333,239 during the fiscal year ended December 31, 2001. Registrant also paid to Supervisor professional fees in the amount of $13,855 in connection with the limited liability conversion. See Item 4. The supervisory services provided to Registrant by Supervisor 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, conducting annual supervisory review meetings, receipt of monthly rent from 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 Net 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. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) Registrant has no voting securities. See Item 5 hereof. At December 31, 2001, 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. (b) At December 31, 2001, 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 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. -13- 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. Item 13. Certain Relationships and Related Transactions. (a) As stated in Item 1 hereof, each member acts as agent for his respective group of Participants. As a consequence of one of the two members 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 members 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 member in Registrant and in Net Lessee arises solely from ownership of Participations in Registrant and partnership interests or participations in Net Lessee. The members 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 member interest in Supervisor, is entitled to receive his pro rata share of any supervisory, service, 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. The respective interest of the members in any remuneration paid or given by Registrant to Supervisor arose and arises solely from the ownership of his respective member 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. -14- PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 10-K. (a)(1) Financial Statements: Consent of J.H. Cohn LLP, Certified Public Accountants, dated March 6, 2002. Accountant's Report of J.H. Cohn LLP, Certified Public Accountants, dated March 6, 2002. Balance Sheets at December 31, 2001 and at December 31, 2000 (Exhibit A). Statements of Income for the fiscal years ended December 31, 2001, 2000 and 1999 (Exhibit B). Statement of Members' Deficiency for the fiscal year ended December 31, 2001 (Exhibit C-1). Statement of Members' Deficiency for the fiscal year ended December 31, 2000 (Exhibit C-2). Statement of Members' Deficiency for the fiscal year ended December 31, 1999 (Exhibit C-3). Statements of Cash Flows for the fiscal years ended December 31, 2001, 2000 and 1999 (Exhibit D). Notes to Financial Statements for the fiscal years ended December 31, 2001, 2000 and 1999. (2) Financial Statement Schedules: List of Omitted Schedules. Real Estate and Accumulated Depreciation - December 31, 2001 (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. - 15- [LETTERHEAD OF J.H. COHN LLP ACCOUNTANTS & CONSULTANTS] INDEPENDENT ACCOUNTANTS' REPORT To the participants in 250 West 57th St. Associates L.L.C. (a Limited Liability Company) New York, N. Y. We have audited the accompanying balance sheets of 250 West 57th St. Associates L.L.C. (the "Company") as of December 31, 2001 and 2000, and the related statements of income, members' deficiency and cash flows for each of the three years in the period ended December 31, 2001, 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 auditing standards generally accepted in the United States of America. 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 L.L.C. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America, 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. March 6, 2002 -16- [LETTERHEAD OF J.H. COHN LLP ACCOUNTANT & CONSULTANTS] March 6, 2002 250 West 57th St. Associates L.L.C. New York, N.Y. We consent to the use of our independent accountants' report dated March 6, 2002, covering our audits of the accompanying financial statements of 250 West 57th St. Associates L.L.C. in connection with and as part of your December 31, 2001 annual report (Form 10-K) to the Securities and Exchange Commission. J.H. Cohn LLP -17- EXHIBIT A 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) BALANCE SHEETS A S S E T S
December 31, 2001 2000 Current Assets: Cash and cash equivalents (Note 10): Cash in banks $ 774,604 $1,739,790 Cash in distribution account held by Wien & Malkin LLP 60,000 60,000 Fidelity U.S. Treasury Income Portfolio 132,078 139,008 TOTAL CURRENT ASSETS 966,682 1,938,798 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 5,659,421 688,000 Less: Accumulated depreciation 739,722 4,919,699 688,000 - Tenants' installations and improvements 249,791 249,791 Less: Accumulated depreciation 249,791 - 249,791 - Building improvements, construction in progress - 2,198,805 TOTAL REAL ESTATE 7,037,134 4,316,240 Other Assets: Mortgage refinancing costs (Note 2c) 516,618 516,549 Less: Accumulated amortization 115,078 12,557 401,540 503,992 TOTAL ASSETS $8,405,356 $6,759,030 LIABILITIES AND MEMBERS' DEFICIENCY Current Liabilities: Accrued expenses $ 57,139 $ 43,814 Due to Fisk Building Associates, a related party 2,170,902 417,065 Principal payments of mortgages payable within one year (Note 3) - - TOTAL CURRENT LIABILITIES 2,228,041 460,879 Long-term Liabilities: Bonds, mortgages and similar debt: Mortgage payable (Note 3) $7,000,000 $7,000,000 Less: Current installments shown above - - 7,000,000 7,000,000 TOTAL LIABILITIES 9,228,041 7,460,879 Members' Deficiency (Exhibit C) (822,685) (701,849) TOTAL LIABILITIES AND MEMBERS' DEFICIENCY $8,405,356 $6,759,030 See accompanying notes to financial statements.
-18- EXHIBIT B 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENTS OF INCOME
Year ended December 31, 2001 2000 1999 Revenues: Rent income, from a related party (Note 4) $4,038,159 $3,707,463 $3,356,230 Dividend income 5,570 33,195 18,392 Interest income 48,491 12,721 - 4,092,220 3,753,379 3,374,622 Expenses: Interest on mortgages (Note 3) 525,770 378,269 287,423 Supervisory services, to a related party (Note 5) 333,239 312,572 286,296 Professional fees, including fees to a related party (Note 6) 20,655 40,360 37,748 Amortization of mortgage refinancing costs (Note 2c) 102,520 69,632 43,520 Depreciation of building improvements 51,722 - - 1,033,906 800,833 654,987 NET INCOME, CARRIED TO MEMBERS' DEFICIENCY (NOTE 9) $3,058,314 $2,952,546 $2,719,635 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year $ 4,248 $ 4,101 $ 3,777
See accompanying notes to financial statements. -19- EXHIBIT C-2 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENT OF MEMBERS' DEFICIENCY YEAR ENDED DECEMBER 31, 2000
Members' Members' deficiency Share of deficiency January 1, 2000 net income Distributions December 31, 2000 Anthony E. Malkin Joint Venture #1............. $ (66,124) $ 295,255 $ 299,315 $ (70,184) Anthony E. Malkin Joint Venture #2............. (66,124) 295,254 299,315 (70,185) Anthony E. Malkin Joint Venture #3............. (66,124) 295,254 299,315 (70,185) Anthony E. Malkin Joint Venture #4............. (66,124) 295,254 299,315 (70,185) Peter L. Malkin Joint Venture #1.............. (66,124) 295,254 299,315 (70,185) Peter L. Malkin Joint Venture #2.............. (66,125) 295,255 299,315 (70,185) Peter L. Malkin Joint Venture #3.............. (66,124) 295,255 299,316 (70,185) Peter L. Malkin Joint Venture #4.............. (66,125) 295,255 299,315 (70,185) Peter L. Malkin Joint Venture #5.............. (66,125) 295,255 299,315 (70,185) Peter L. Malkin Joint Venture #6.............. (66,125) 295,255 299,315 (70,185) $(661,244) $2,952,546 $2,993,151 $(701,849)
See accompanying notes to financial statements. -20- EXHIBIT C-3 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENT OF MEMBERS' DEFICIENCY YEAR ENDED DECEMBER 31, 1999
Members' Members' deficiency Share of deficiency 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. -21- EXHIBIT C-1 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENT OF MEMBERS' DEFICIENCY YEAR ENDED DECEMBER 31, 2001
Members' Members' deficiency Share of deficiency January 1, 2001 net income Distributions December 31, 2001 Anthony E. Malkin Joint Venture #1 $ (70,184) $ 305,831 $ 317,915 $ (82,268) Anthony E. Malkin Joint Venture #2 (70,185) 305,831 317,915 (82,269) Anthony E. Malkin Joint Venture #3 (70,185) 305,831 317,915 (82,269) Anthony E. Malkin Joint Venture #4 (70,185) 305,831 317,915 (82,269) Peter L. Malkin Joint Venture #1 (70,185) 305,831 317,915 (82,269) Peter L. Malkin Joint Venture #2 (70,185) 305,831 317,915 (82,269) Peter L. Malkin Joint Venture #3 (70,185) 305,832 317,915 (82,268) Peter L. Malkin Joint Venture #4 (70,185) 305,832 317,915 (82,268) Peter L. Malkin Joint Venture #5 (70,185) 305,832 317,915 (82,268) Peter L. Malkin Joint Venture #6 (70,185) 305,832 317,915 (82,268) $(701,849) $3,058,314 $3,179,150 $(822,685)
See accompanying notes to financial statements. -22- EXHIBIT D 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENTS OF CASH FLOWS
Year ended December 31, 2001 2000 1999 Cash flows from operating activities: Net income $ 3,058,314 $ 2,952,546 $ 2,719,635 Adjustments to reconcile net income to net cash provided by operating activities: Amortization 102,520 69,632 43,520 Change in additional rent due from Fisk Building Associates (1,469) 11,835 (11,835) Change in accrued expenses 13,325 11,491 10,273 Depreciation of building improvements 51,722 - - Net cash provided by operating activities 3,224,412 3,045,504 2,761,593 Cash flows from investing activities: Payments for building improvements, construction in progress - (1,953,845) - Payments for building improvements (2,772,615) - - Net cash used in investing activities (2,772,615) (1,953,845) - Cash flows from financing activities: Cash distributions (3,179,150) (2,993,151) (2,756,660) Principal payments on long-term debt - (4,289,171) (25,650) Proceeds from second mortgage payable - 7,000,000 1,500,000 Payment of mortgage refinancing costs (69) (516,649) (89,402) Advance from Fisk Building Associates 1,755,306 172,105 - Net cash used in financing activities (1,423,913) (626,866) (1,371,712) Net change in cash (972,116) 464,793 1,389,881 Cash and cash equivalents, beginning of year 1,938,798 1,474,005 84,124 CASH AND CASH EQUIVALENTS, END OF YEAR $ 966,682 $ 1,938,798 $ 1,474,005 Supplemental disclosures of cash flow information: Cash paid for: Interest $ 525,770 $ 364,669 $ 279,258 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. -23- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS 1. Business Activity and Reorganization 250 West 57th Street Associates L.L.C. (the "Company") 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"). The Company operated as a joint venture, 250 West 57th Street Associates, until November 30, 2001, when it converted to a limited liability company and changed its name. Ownership percentages in the Company were unchanged by the conversion. The Company continues to be treated as a partnership for tax purposes, and the joint venture's income tax basis of the assets and liabilities carried over to the limited liability company. 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 of $688,000, and tenants installations and improvements are fully depreciated. In connection with the building improvements program which began in 1999 (see Note 3), costs totaling $4,971,421 at December 31, 2001, including construction in progress at December 31, 2000 aggregating $2,198,805, have been put into service. Depreciation of these assets is being provided using the straight-line method over an estimated useful life of 39 years. c. Mortgage refinancing costs, amortization and related party transactions: Mortgage refinancing costs incurred in connection with the 1996 modification of the previous first mortgage (see Note 3) were amortized ratably over the extended term of the that mortgage, from March 1, 1996 through November 17, 2000. Mortgage refinancing costs incurred in connection with the second mortgage were amortized ratably over the extended term of the second mortgage, from September 22, 1999 through November 17, 2000. -24- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 2. Summary of Significant Accounting Policies (continued) c. Mortgage refinancing costs, amortization and related party transactions (continued): Mortgage refinancing costs paid in 2001 and 2000, totaling $516,618, include charges incurred in connection with the new first mortgage. Such charges include $38,817 paid to the firm of Wien & Malkin LLP, a related party. These mortgage refinancing costs are being amortized ratably over the term of the new first mortgage, from November 17, 2000 through December 1, 2005. d. Use of estimates: In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, 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. Mortgage Indebtedness, Building Improvements Program and Subsequent Event The previous first mortgage was held by Apple Bank for Savings and was scheduled to mature on December 1, 2000, as extended from June 1, 2000. Annual mortgage charges were $289,157, payable in equal monthly installments, applied first to interest at the rate of 9.4% per annum and the balance to principal. In connection with a building improvements program ("the Program") approved by the Participants and the Lessee, the Lessee began financing the Program in 1999 and billing the Company for costs incurred. 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 Program. The mortgage required monthly payments of interest only based on the 30-day LIBOR rate and was scheduled to mature on December 1, 2000, as extended from June 1, 2000. A new first mortgage was placed on the property effective November 17, 2000, with Emigrant Savings Bank in the amount of $15,500,000. The mortgage matures on December 1, 2005. At the closing, $7,000,000 was advanced to pay off the then-existing first and second mortgages held by Apple Bank for Savings and to pay for closing and related costs and the costs of improvements made to the property. The balance of the first mortgage loan will be advanced in stages through May 31, 2003 to pay for additional improvements to the property. All improvements made under the Program are owned by the Company and financed through an increase in the fee mortgage, which will be funded by an equivalent increase in the basic rent paid by the Lessee to the Company (See Note 4). On January 23, 2002 an additional $2,000,000 was drawn on the mortgage loan to pay for building improvement advances by the Lessee. -25- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 3. Mortgage Indebtedness, Building Improvements Program and Subsequent Event (continued) Monthly payments under the first mortgage are interest only. Amounts advanced at the closing bear interest at the rate of 7.511% throughout the term of the mortgage. Amounts advanced after the closing will bear interest at a floating rate equal to 1.65 percentage points above 30, 60, 90, 180 or 360 day LIBOR or the yield on 30-day U.S. Treasury Securities, as selected by the Company. On June 1, 2003, the interest rate on all amounts advanced following the closing will be converted to a fixed rate equal to 1.65 percentage points above the then current yield on U.S. Treasury Securities having the closest maturity to December 1, 2005. The real estate is pledged as collateral for the first mortgage. The estimated fair value of the Company's mortgage debt, based on the available market information or other appropriate valuation methodologies, was $7,100,000 and $7,000,000 at December 31, 2001 and 2000, respectively. 4. Related Party Transactions - Rent Income Rent income earned during the years ended December 31, 2001, 2000 and 1999, totaling $$4,038,159, $3,707,463 and $3,356,230, 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, September 1, 1999 and November 17, 2000) with the Lessee, consisting of the following: Year ended December 31, 2001 2000 1999 Basic minimum annual rent $ 553,770 $ 429,740 $ 341,274 Primary overage rent 752,000 752,000 752,000 Secondary overage rent 2,732,389 2,525,723 2,262,956 $4,038,159 $3,707,463 $3,356,230 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. The lease modification dated November 17, 2000 provides that the basic rent will be payable in equal monthly installments totaling an annual amount equal to the sum of $28,000, plus payments for interest and amortization (not including any balloon principal payment due at maturity) required annually under the new $15,500,000 first mortgage loan from Emigrant Savings Bank (Note 3), and any refinancings of such mortgage. -26- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 4. Related Party Transactions - Rent Income (continued) 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 member in the Company is also a partner in the Lessee. 5. Related Party Transactions - Supervisory Services Fees for supervisory services (including disbursements and cost of regular accounting services) during the years ended December 31, 2001, 2000 and 1999, totaling $333,239, $312,572 and $286,296, respectively, were paid to the firm of Wien & Malkin LLP. Some members of that firm are members 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. -27- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 6. Related Party Transactions - Professional Fees Professional fees (including disbursements) during the years ended December 31, 2001, 2000 and 1999, totaling $530, $34,260 and $31,855, 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, 2001, 2000 and 1999. 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 2001, 2000 and 1999, based on 720 participation units outstanding during each year, consisted of the following: Year ended December 31, 2001 2000 1999 Income $4,248 $4,101 $3,777 Return of capital 167 56 52 Total distributions $4,415 $4,157 $3,829 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. 10. Concentration of Credit Risk The Company maintains cash balances in two banks, a money market fund (Fidelity U.S. Treasury Income Portfolio) and in a distribution account held by Wien & Malkin LLP. The bank balances are each insured by the Federal Deposit Insurance Corporation up to $100,000. Uninsured balances of cash in banks amounted to approximately $767,000 at December 31, 2001. 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, 2002. -28- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 11. Contingencies Wien & Malkin LLP and Peter L. Malkin are engaged in a dispute with the Lessee's managing agent, Helmsley-Spear, Inc., concerning the management, leasing and supervision of the property that is subject to the net lease to the operating lessee. In this connection, certain legal and professional fees and other expenses have been paid and incurred by Wien & Malkin LLP and Mr. Malkin, and additional costs are expected to be incurred. Wien & Malkin LLP and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) a competent tribunal authorizes payment by the Company or (b) a participant voluntarily agrees that his or her proportionate share be paid. Accordingly, the Companys' allocable share of such costs is as yet undetermined, and the Company has not provided for the expense and related liability with respect to such costs in these financial statements. The original action commenced in June 1997 and was referred to arbitration. The March 30, 2001 decision of the arbitrators, which was confirmed by the court, (i) reaffirms the right of the partners in the Lessee to vote to terminate Helmsley- Spear, Inc. without cause, (ii) dismisses Helmsley-Spear, Inc.'s claims against Wien & Malkin LLP, and (iii) rejects the termination of Helmsley-Spear, Inc. for cause. Parts of the decision of the court are under appeal. 12. Receipt of Warrants and Stock in Telecommunications Companies In 2000, the Company received shares of common stock and warrants from certain unrelated companies in exchange for permission for those companies to provide high speed internet access and other telecommunication services to the building. The Lessee received an equal amount of shares and warrants. There are restrictions as to the transfer of stock, and neither the warrants nor the stock have had an ascertainable value since their issuance. Accordingly, the accompanying financial statements do not reflect any value for these securities. 13. Reclassifications Certain accounts in prior year financial statements have been reclassified to conform with the presentation in the financial statements for 2001. -29- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) 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. -30- SCHEDULE III 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) Real Estate and Accumulated Depreciation December 31, 2001 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 Emigrant Savings Bank Balance at December 31, 2001...................... $ 7,000,000 C Initial cost to company Land.............................................. $ 2,117,435 Building.......................................... $ 4,940,682 D Costs capitalized subsequent to acquisition Building improvements and tenant installations and improvements......... ....................... $ 5,909,212 Carrying costs....................................... $ NONE E Gross amount at which carried at close of period Land.............................................. $ 2,117,435 Building and building improvements and tenant installations and improvements........... 10,849,894 Total............................................. $12,967,329(a) F Accumulated depreciation............................. $ 5,930,195(b) G Date of construction 1921 H Date acquired September 30, 1953 I Life on which depreciation in latest income statements is computed 39 years (a) Gross amount of real estate Balance at January 1, 1999 $7,995,908 Purchase of building improvements and construction in progress(expenditures advanced by Lessee, a related party, and recorded by the Company): F/Y/E 12/31/99 $ 244,961 12/31/00 1,953,845 12/31/01 2,772,615 4,971,421 Balance at December 31, 2001 $12,967,329 The costs for federal income tax purposes are the same as for financial statement purposes. (b) Accumulated depreciation Balance at January 1, 1999 $5,878,473 Depreciation: F/Y/E 12/31/99 None 12/31/00 None 12/31/01 51,722 51,722 Balance at December 31, 2001 $5,930,195 -31- 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 L.L.C. (Registrant) By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: April 15, 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 Joint Venturers in Registrant, pursuant to the Powers, 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 15, 2002 ________________________ * Mr. Katzman supervises accounting functions for Registrant. -32- 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. -33- 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 March 8, 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. 13(b) Letter to Participants dated November 30, 2001 and supplementary financial reports for the lease year ended September 30, 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. _______________________ * Page references are based on a sequential numbering system. -34- 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. _______________________ * Page references are based on a sequential numbering system. -35- EX-13 3 r13arep.txt EXHIBIT 13A [LETTERHEAD OF WIEN & MALKIN LLP] March 8, 2002 To Participants in 250 West 57th St. Associates L.L.C. Federal Identification Number 13-6083380 We enclose the annual report of 250 West 57th St. Associates L.L.C., the limited liability company which owns the Fisk Building at 250 West 57th Street, New York City, for the year ended December 31, 2001. The reported income for 2001 was $3,058,314. This was less than distributions of $3,179,150 representing the current monthly distributions totaling $720,000 per annum and the additional distribution of $2,459,150, which was paid to participants on November 30, 2001. 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, 2001 of an original cash investment of $10,000 was a deficit balance of $2,285. Additional rent for the lease year ended September 30, 2001 was $3,547,930 or an excess of $2,732,389 over advances of $815,541 by the lessee against additional rent ($720,000 to participants, $32,000 to Wien & Malkin LLP and $63,541 of interest earned on funds borrowed for the improvement program.) As approved by the participants, Wien & Malkin LLP received $273,239. The balance of the additional rent of $2,459,150 was distributed to the participants on November 30, 2001. The additional distribution of $2,459,150 represented an annual return of about 68.31% 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, 2001 were about 88.31% on the original cash investment. The joint venture was converted to a limited liability company on November 30, 2001. Fees and costs of $13,325 were paid to Wien & Malkin LLP at its customary rates in connection with this conversion. The enclosed Schedule K-1 form(s) (Form 1065), containing 2001 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 2001. Cordially yours, WIEN & MALKIN LLP By: Stanley Katzman SK:fm Encs. [LETTERHEAD OF ROGOFF & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS] Independent Auditor's Report To the Participants in 250 West 57th St. Associates L.L.C. (a Partnership): We have audited the accompanying balance sheet of 250 West 57th St. Associates L.L.C. as of December 31, 2001, and the related statements of income, of members' 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 auditing standards generally accepted in the United States of America. 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 L.L.C. at December 31, 2001, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. New York, New York February 25,2002 250 West 57th St. Associates L.L.C. Balance Sheet December 31, 2001 Assets Cash and Cash Equivalents: Fleet Bank $ 112,962 Emigrant Savings Bank 100,000 Distribution account held by Wien & Malkin LLP 60,000 Fidelity Money Market Account (U.S. Treasury Income Portfolio) 132,078 Emigrant Savings Bank (Money Market Fund) 561,642 966,682 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 5,659,421 Less: Accumulated depreciation 739,722 4,919,699 7,037,134 Mortgage refinancing costs 516,618 Less: Accumulated amortization 115,077 401,541 Other investments (Note 3) - Total Assets $8,405,357 Liabilities and Members' Capital (Deficit) Liabilities: First mortgage $7,000,000 Accrued interest on mortgage 43,814 Due to Fisk Building Associates 2,170,902 Accrued expenses 13,325 Total liabilities 9,228,041 Members' capital (deficit), December 31, 2001 (822,684) Total Liabilities and Members' Capital (Deficit) $8,405,357 The Accompanying Notes are an Integral Part of these Financial Statements. 250 West 57th St. Associates L.L.C. Statement of Income For the Year Ended December 31, 2001 Income: Basic rent $ 553,770 Additional rent 3,484,389 Dividend income 5,570 Interest income 48,491 Total income 4,092,220 Expenses: Interest on first mortgage $525,770 Supervisory services 333,239 Professional fees 20,655 Total expenses 879,664 Net income before depreciation and amortization 3,212,556 Depreciation of building improvement 51,722 Amortization of mortgage refinancing costs 102,520 Total depreciation and amortization 154,242 Net income $3,058,314 The Accompanying Notes are an Integral part of these Financial Statements. 250 West 57th St. Associates L.L.C. Statement of Members' Capital (Deficit) December 31, 2001 Members' capital (deficit), January 1, 2001 $( 701,848) Add: Net income for the year ended December 31, 2001 3,058,314 2,356,466 Less: Monthly distributions to members January 1, 2001 through December 31, 2001 $ 720,000 Distribution to members on November 30, 2001 of balance of additional rent for the lease year ended September 30, 2001 2,459,150 3,179,150 Members' capital (deficit), December 31, 2001 $( 822,684) The Accompanying Notes are an Integral part of these Financial Statements. 250 West 57th St. Associates L.L.C. Statement of Cash Flows For the Year Ended December 31, 2001 Cash flows from operating activities: Net income $3,058,314 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of building improvements 51,722 Amortization of mortgage refinancing costs 102,520 Mortgage refinancing costs (69) Rent received in advance (1,469) Due to Fisk Building Associates 1,755,306 Accrued expenses 13,325 Net cash provided by operating activities 4,979,649 Cash flows from investing activities: Additions to building improvements (2,772,615) Cash flows from financing activities: Monthly distributions to members (720,000) Distribution on November 30, 2001 of balance of additional rent for the lease year ended September 30, 2001 (2,459,150) Net cash used by financing activities (3,179,150) Net change in cash and cash equivalents (972,116) Cash and cash equivalents at beginning of year 1,938,798 Cash and cash equivalents at end of year $ 966,682 Supplemental Cash Flow Disclosures Year Ended December 31, 2001 Cash paid during the year for interest $ 525,770 The Accompanying Notes are an Integral part of these Financial Statements. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2001 1. Business Activity 250 West 57th St. Associates L.L.C. ("Company") is a limited liability company which owns an office building located in New York City. The building is net leased to Fisk Building Associates. Effective November 30, 2001, 250 West 57th St. Associates ("Associates") converted from a joint venture to a limited liability company. Ownership percentages were unchanged by the conversion, and the partnership's income tax basis in its assets and liabilities carried over to the limited liability company. 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 costs of building improvements completed in 2001 are being depreciated over an estimated useful life of 39 years. Amortization Capitalized mortgages refinancing costs of $516,618 are being charged to expense ratably during the period of the mortgage through December 1, 2005. Cash Equivalents For purposes of the statement of cash flows, money market funds are considered to be cash equivalents. 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 reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2001 3. Other Investments In 2000, the Lessee received shares of common stock and warrants from certain unrelated companies in exchange for permission for those companies to provide high speed internet access and other telecommunication services to the building. Company received an equal amount of shares and warrants. The Lessee will receive from 5% to 10% of the revenues generated by such services from advertising and subscriptions with tenants of the building. There are restrictions as to the transfer of the stock, and neither the warrants nor the stock have an ascertainable value as of the balance sheet date. Accordingly, the accompanying financial statements do not reflect any value for these securities. 4. Lease and Related Party Transactions (a) Effective May 1, 1975, the lease between 250 West 57th St. Associates L.L.C., 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 November 17, 2000 provides that the basic rent will be equal to the sum of $28,000, plus the installment payments for interest and amortization (not including any balloon principal payment due at maturity) required annually under the new $15,500,000 first mortgage loan (the "First Mortgage") from Emigrant Savings Bank. Basic rent is payable in monthly installments on the first day of each calendar month in an amount equal to $2,333.33 plus the projected debt service due on the First Mortgage on the first day of the ensuing calendar month (with a reconciliation to be made as soon as practicable thereafter). Basic rent shall be adjusted on a dollar-for-dollar basis by changes in the annual debt service on the First Mortgage. (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, 2001 was $752,000. Advances against primary additional rent of $752,000 per annum for the lease year ending September 30, 2002 are being paid. No other additional rent is accrued by Company for the period between the end of the lessee's lease year ending September 30th and the end of Company'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, 2001 was $2,732,389. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2001 4. Lease and Related Party Transactions - continued (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 members in Company. 5. 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 members in Company. 6. 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 members in Company. 7. First Mortgage (a) Effective November 17, 2000, a new first mortgage was placed on the property with Emigrant Savings Bank in the amount of $15,500,000. The Mortgage matures on December 1, 2005. At the closing, the amount of $7,000,000 was advanced to pay off the existing first and second mortgages held by Apple Bank for Savings and to pay for closing and related costs and the costs of improvements made to the property. The balance of the first mortgage loan will be advanced in stages through May 31, 2003 to pay for additional improvements to the property. Monthly payments under the mortgage are interest only. Amounts advanced at the closing bear interest at the rate of 7.511% throughout the term of the mortgage. Amounts advanced after the closing will bear interest at a floating rate equal to 1.65 percentage points above 30, 60, 90, 180 or 360 day LIBOR or the yield on 30-day U.S. Treasury Securities, as selected by Company. On June 1, 2003 the interest rate on all amounts advanced following the closing will be converted to a fixed rate equal to 1.65 percentage points above the then-current yield on U.S. Treasury Securities having the closest maturity to December 1, 2005. (b) The mortgage may be prepaid at any time, in whole only, upon payment of a prepayment of penalty based on a yield maintenance formula. There will be no prepayment penalty if the mortgage is paid in full during the last 90 days of the term thereof. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2001 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 members in their individual capacities. 9. Concentration of Credit Risk Company maintains cash balances in a bank and money market funds. The Federal Deposit Insurance Corp. insures bank balances up to $100,000 each. Uninsured balances amount to approximately $766,682 as at December 31, 2001 as follows: Uninsured balances amount to $766,682 as at December 31, 2001 as follows: Cash in Bank $ 72,962 Investment in Fidelity Money Market Trust Fund (U.S. Treasury Income Portfolio) 132,078 Investment in Emigrant Savings Bank (Money Market Fund) 561,642 $766,682 The funds held in the distribution account were paid to the members on January 1, 2002. 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 that is subject to the net lease to the operating lessee. In this connection, certain legal and professional fees and other expenses have been paid and incurred by Wien & Malkin LLP and Mr. Malkin, and additional costs are expected to be incurred. Wien & Malkin LLP and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) a competent tribunal authorizes payment by Company or (b) a participant voluntarily agrees that his or her proportionate share be paid. Accordingly, Company's allocable share of such costs is as yet undetermined, and Company has not provided for the expense and related liability with respect to such costs in these financial statements. The original action commenced in June 1997 and was referred to arbitration. The March 30, 2001 decision of the arbitrators, which was confirmed by the court, (i) reaffirms the right of the partners in the lessee to vote to terminate Helmsley-Spear, Inc. without cause, (ii) dismisses Helmsley-Spear, Inc.'s claims against Wien & Malkin LLP, and (iii) rejects the termination of Helmsley-Spear, Inc. for cause. Parts of the decision of the court are under appeal. EX-13 4 r13brep.txt EXHIBIT 13B [LETTERHEAD OF WIEN & MALKIN LLP] November 30, 2001 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, 2001. The lessee reported profit of $6,343,859 subject to additional rent for the lease year ended September 30, 2001, as against profit of $5,903,444 for the lease year ended September 30, 2000. Additional rent for the lease year ended September 30, 2001 was $3,547,930; $815,541 was advanced against additional rent so that the balance of additional rent is $2,732,389. 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 $273,239 of the additional rent and the balance of $2,459,150 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 $2,459,150 represents a return of about 68.31% on the cash investment of $3,600,000. Regular monthly distributions are at the rate of 20% a year, so that distributions for the lease year ended September 30, 2001 were about 88.31% 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. 250 West 57th St. Associates Computation of Additional Payment for Supervisory Services and Distribution For the Lease Year Ended September 30, 2001 Secondary additional rent $2,732,389 Primary additional rent for the lease year ended September 30, 2001 752,000 3,484,389 Less, additional basic payment to Wien & Malkin LLP from primary overage rent 12,000 Total rent to be distributed 3,472,389 15% return on $3,600,000 investment 540,000 Subject to additional payment at 10% to Wien & Malkin LLP $2,932,389 Additional payment at 10% $ 293,239 Paid to Wien & Malkin LLP as advances for additional rent 20,000 Balance of additional payment to Wien & Malkin LLP $ 273,239 Summary: Additional distribution to participants $2,459,150 Payment to Wien & Malkin LLP, as above 273,239 Total secondary additional rent available for distribution to participants and payment to Wien & Malkin LLP $2,732,389 [LETTERHEAD OF ROGOFF & COMPANY P.C.] Accountants' Compilation Report Fisk Building Associates 60 East 42nd Street New York, New York 10165 We have compiled the special-purpose statement of income and expense of Fisk Building Associates for the lease year ended September 30, 2001 for the determination of additional rent due to 250 West 57th St. Associates in accordance with paragraph 2 (B) of the lease, as modified, between Fisk Building Associates and 250 West 57th St. Associates. Such report is not intended to be a presentation in conformity with generally accepted accounting principles. Our engagement was conducted in accordance with Statements for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting, in the form of financial statements, information that is the representation of management. We have not audited or reviewed the accompanying special-purpose financial statement and, accordingly, do not express an opinion or any other form of assurance on it. This report is intended solely for the information and use of the managements of Fisk Building Associates and 250 West 57th Street Associates, and should not be used for any other purpose. New York, New York October 19, 2001 Fisk Building Associates Special Purpose Statement of Income and Expense October 1, 2000 through September 30, 2001 Income: Rent income $11,653,584 Escalation income 766,647 Electric income, net 748,461 Other income 149,629 Total Income $13,318,321 Expenses: Real estate taxes $1,865,604 Labor costs 2,210,149 Repairs, supplies and improvements 761,356 Management and leasing 373,847 Fuel oil 146,345 Professional fees 327,435 Security 226,907 Security monitor system 80,769 Water 64,025 Insurance 83,700 Rubbish removal 33,661 Telephone 34,157 Advertising 214,885 Miscellaneous 16,168 Total expenses before rent expense 6,439,008 Net income before rent expense 6,879,313 Less, Basic rent expense 535,454 Net income subject to primary and secondary additional rent 6,343,859 Less, Primary additional rent 752,000 Net income subject to secondary additional rent $ 5,591,859 Secondary additional rent at 50% $ 2,795,930 Computation of Additional Rent due Landlord: Primary additional rent $ 752,000 Secondary additional rent 2,795,930 Total Additional Rent 3,547,930 Less, Advances against additional rent 815,541* Additional rent due landlord $ 2,732,389 *Consisting of primary additional rent of $752,000 and $63,341 of interest earned and retained by 250 West 57th St. Associates on funds borrowed for the improvement program. See accompanying Accountants' Compilation Report and Selected Information. Fisk Building Associates Selected Information 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. -----END PRIVACY-ENHANCED MESSAGE-----