-----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, NRB+Oiahh5r8j6CkFhl9EU7Tpj7txTEwSemt+zMIUhzrpqPJICzsFCEjb1QV73rf R8rUQKT71QwfRnYE4JZ9vA== 0000100412-03-000004.txt : 20030415 0000100412-03-000004.hdr.sgml : 20030415 20030415144514 ACCESSION NUMBER: 0000100412-03-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030415 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: 03650333 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 west10k.txt 10K DOCUMENT 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, 2002 [ ] 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 LLC Member 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 25 through 28 hereof. Number of pages (including exhibits) in this filing: 45 250 West 57th St. Associates L.L.C. December 31, 2002 PART I FORWARD_LOOKING STATEMENTS Certain information included in this Annual Report contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Registrant cautions readers that forward-looking statements, including, without limitation, those relating to the Registrant's investment policies and objectives; the financial performance of the Registrant; the ability of the Registrant to service its debt; the competitive conditions which affect the Registrant's business; and the Registrant's liquidity and capital resources, are subject to certain risks and uncertanties. Actual results or outcomes may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors, including, without limitation, the Registrant's future financial performance; the availability of capital; general market conditions; national and local economic conditions, particularly long-term interest rates; Federal, state and local governmental regulations that affect the Registrant; and the competitive environment in which the Registrant operates, including, the availability of commercial space in the area where the Registrant's property is located. The forward-looking statements are made as of the date of this Annual Report and the Registrant assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those projected in such forward-looking statements. Item 1. Business. (a) General Registrant is a New York limited liability company which was organized as a joint venture 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 (collectively, 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 members are Peter L. Malkin and Anthony E. Malkin (collectively, the "Agents") each of whom also acts as an agent for holders of participations in his respective member interests in Registrant (the "Participants"). -1- 250 West 57th St. Associates L.L.C. December 31, 2002 Registrant leases the Property to Fisk Building Associates L.L.C.(the "Net Lessee"), 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 limited liability company, and entities created by Peter L. Malkin for family members are beneficial owners of an interest in Net Lessee. In addition, both of the Agents hold senior positions at 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, 2002, the Building was approximately 85.9% occupied by approximately 245 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 Under the Net Lease, effective May 1, 1975, between 250 West 57th St. Associates, as lessor, and Fisk Building Associates L.L.C., as lessee, basic rent was 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 L.L.C., 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). Basic rent shall be adjusted on a dollar-for-dollar basis by changes in the annual debt service on the First Mortgage. 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. -2- 250 West 57th St. Associates L.L.C. December 31, 2002 For the lease year ended September 30, 2002, Net Lessee reported net operating profit of $3,088,058 after deduction of Basic Rent. Net Lessee paid Primary Overage Rent of $752,000, together with Secondary Overage Rent of $1,152,633 for the fiscal year ended September 30, 2002. The Secondary Overage Rent of $1,152,633 represents 50% of the excess of the net operating profit of $3,088,058 over $752,000, less $15,396 representing interest earned and retained by Registrant on funds borrowed for the improvement program. Secondary overage rent of $1,152,633 plus $128,936 of accumulated interest income was available for distribution to the participants. After deducting $126,717 to Supervisor as an additional payment for supervisory services and $14,400 for fees relating to the conversion of Registrant to a limited liability company, the balance of $1,140,452 was distributed to the Participants on November 29, 2002. 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, 2002, 2001 and 2000. The Net Lease provides for one renewal option of 25 years expiring on September 30, 2028. 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. During 2002, an additional $5,000,000 was advanced. The balance of the First Mortgage loan will be advanced in stages through May 31, 2003 to pay for additional improvements to the Property. -3- 250 West 57th St. Associates L.L.C. December 31, 2002 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 Registrant. 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 $27.29 per square foot (exclusive of electricity charges and escalation). Current asking rents for the building range from $35 to $45 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. 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, 2002, had an unpaid principal balance of $12,000,000. For a description of the terms of the Mortgage Loan see Note 3 of the Notes. -4- 250 West 57th St. Associates L.L.C. December 31, 2002 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. 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 -5- 250 West 57th St. Associates L.L.C. December 31, 2002 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. The parts of the decision under appeal were affirmed by the Appellate Division on December 5, 2002, and were further appealed by Wien & Malkin LLP and Mr. Malkin on January 13, 2003. At its May 20, 2002 special meeting, Lessee approved by the requisite vote the removal of Helmsley-Spear, Inc. as managing and leasing agent and its replacement by one or a combination of designated independent firms (Cushman & Wakefield, Insignia/ESG and Newmark & Company Real Estate). On May 21, 2002, Peter L. Malkin and Wien & Malkin LLP filed a court application to confirm the vote and to set the final date for Helmsley-Spear, Inc. termination. Helmsley-Spear, Inc. filed objections. On September 10, 2002 the court confirmed such votes and ruled that Helmsley-Spear, Inc. has been discharged and must effect an orderly transition and departure within 60 days. Helmsley-Spear, Inc.'s September 27, 2002 motion in the Apellate Division to stay the court's ruling pending an appeal was denied on October 31, 2002. Helmsley-Spear, Inc.'s appeal was rejected by the Appellate Division in its February 20, 2003 decision, which affirmed the court's confirmation of the votes and Helmsley-Spear, Inc.'s termination. Since November 20, 2002, Helmsley-Spear, Inc. has not been the managing and leasing agent and has been replaced by Cushman & Wakefield. Helmsley-Spear, Inc. continues to pursue its appeal. In accord with the Lessee's approval, the expenses for the preparation of the solicitation statement, the solicitation of votes, and the implementation of the new program are being paid by the Lessee. Such payments have totaled $245,251 from inception to date (including fees of $72,052 plus disbursements of $10,522 to Wien & Malkin LLP). Item 4. Submission of Matters to a Vote of Participants. No matters were submitted to the Participants during the period covered by this report. -6- 250 West 57th St. Associates L.L.C. December 31, 2002 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 member inter- ests of the Agents 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 Agents' undivided interest in Registrant and are divided approximately equally among the members. 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 are neither 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 25 transfers of Participations during 2002. In one instance, the indicated purchase price was equal to 5.1 times the face amount of the Participation transferred, i.e., $25,500 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. In all other cases, no consideration was indicated. (b) As of December 31, 2002, there were 586 holders of Participations of record. (c) Registrant does not pay dividends. During the years ended December 31, 2002 and 2001, 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, 2002 and November 30, 2001, Registrant made additional distributions for each $5,000 Participation of $1,584 and $3,415, respectively. Such distributions represented the balance of Secondary Overage Rent paid by Net Lessee in accordance with the terms of the Net Lease after deducting the Additional Payment and certain fees to Supervisor. There are no restrictions on Regis- trant's present or future ability to make distributions; however, the amount of such distributions depends on the ability of Net -7- 250 West 57th St. Associates L.L.C. December 31, 2002 Lessee to make payments of Basic Rent, Primary Overage Rent and Secondary Overage Rent to Registrant in accordance with the terms of the Net Lease. (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. -8- [SELECTED FINANCIAL DATA] Item 6. 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) SELECTED FINANCIAL DATA
Year ended December 31, 2002 2001 2000 1999 1998 Basic minimum annual rent income.. $629,656 $553,770 $ 429,740 $ 341,274 $ 317,157 Primary overage rent income 752,000 752,000 752,000 752,000 752,000 Secondary overage rent income 1,152,633 2,732,389 2,525,723 2,262,956 2,282,064 Total revenues $ 2,534,289 $4,038,159 $3,707,463 $3,356,230 $3,351,221 Net income.................... $ 1,496,439 $3,058,314 $2,952,546 $2,719,635 $2,787,347 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year $ 2,078 $ 4,248 $ 4,101 $ 3,777 $ 3,871 Total assets $12,183,062 $8,405,356 $6,759,030 $3,905,210 $2,212,651 Long-term obligations $12,000,000 $7,000,000 $7,000,000 $ - $2,789,171 Distributions per $5,000 participation unit, based on 720 participation units outstanding during each year: Income $ 2,078 $ 4,248 $ 4,101 $ 3,777 $ 3,850 Return of capital 506 167 56 52 - Total distributions $ 2,584 $ 4,415 $ 4,157 $ 3,829 $ 3,850
-9- 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, 2002. 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 From 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 unaudit - -ed 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, 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 and miscellaneous 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 -10- 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, 2002 2002 2002 2002 Statement of Income Data: Basic rent income $152,803 $156,926 $ 157,130 $162,797 Advance of primary overage rent income 188,000 188,000 188,000 188,000 Secondary overage rent income - - 1,152,633 - Dividend and interest income 5,502 3,040 2,028 2,699 Total revenues 346,305 347,966 1,499,791 353,496 Interest on mortgage 145,802 149,927 150,130 155,796 Supervisory services 15,000 15,000 146,717 10,000 Professional fees and miscellaneous 13,650 (13,325) 750 492 Depreciation of building improvements 32,899 38,544 42,586 44,433 Amortization of mortgage refinancing costs 25,656 25,687 25,687 25,688 Total expenses 233,007 215,833 365,870 236,409 Net income $113,298 $132,133 $1,133,921 $117,087 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each period $ 157 $ 184 $ 1,575 $ 163 -11- 250 West 57th St. Associates L.L.C. December 31, 2002 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. Cautionary Statement Identifying Important Factors That Could Cause Registrant Actual Results to Differ From Those Projected in Forward-Looking Statements. Readers of this discussion are advised that the discussion should be read in conjunction with the financial statements of Registrant (including related notes thereto) appearing elsewhere in this Form 10-K. Certain statements in this discussion may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Registrant's current expectations regarding future results of operations, economic performance, financial condition and achievements of Registrant, and do not relate strictly to historical or current facts. Registrant has tried, wherever possible, to identify these forward-looking statements by using words such as "believe", "expect", "anticipate", "intend", "plan", "estimate" or words of similar meaning. Although Registrant believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those projected. Such factors include, but are not limited to, the following: general economic and business conditions, which will, among other things, affect demand for rental space, the availability of prospective tenants, lease rents and the availability of financing; adverse changes in Registrant's real estate market, including, among other things, competition with other real estate owners, risks of real estate development and acquisitions; governmental actions and initiatives; and environmental/safety requirements. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES The Securities and Exchange Commission ("SEC") recently issued disclosure guidance for "Critical Accounting Policies". The SEC defines Critical Accounting Policies as those that require the application of Management's most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. The discussion and analysis of Registrant's financial condition and results of operations are based upon its financial statements, the preparation of which takes into account estimates based on judgments and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from these estimates. The accounting policies and estimates used and outlined in Note 2 to Registrant's financial statements, which -12- 250 West 57th St. Associates L.L.C. December 31, 2002 are presented elsewhere in this annual report, have been applied consistently as at December 31, 2002 and 2001, and for the years ended December 31, 2002, 2001 and 2000. Registrant's representatives who are involved in the preparation of its financial statements and this report believe that the following accounting policies or estimates require the application of Management's most difficult, subjective, or complex judgments: Valuation of Long-Lived Assets: Registrant periodically assesses the carrying value of long-lived assets whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When Registrant determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flows method determined by Registrant's advisers. While Registrant's representatives who are involved in the preparation of its financial statements and this report believe that such discounted cash flow methods are reasonable, different assumptions regarding such cash flows may significantly affect the measurement of impairment. Revenue Recognition: Basic rent and additional rent, which is based on the lessee's annual net income as defined in the lease, are recognized when earned. Before Registrant can recognize revenue, it is required to assess, among other things, its collectibility. If the collectibility of revenue is incorrectly determined, Registrant's net income and assets could be overstated. 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. The following summarizes the material factors for the three most recent years affecting Registrant's results of op- erations for such periods: (a) Total income decreased for the year ended December 31, 2002 as compared with the year ended December 31, 2001. The -13- decrease was the net result of a decrease in Secondary Overage Rent received by Registrant in 2002 and a decrease in interest and dividend income and an increase in Basic minimum rent. Total income increased for the year ended December 31, 2001 as compared with the year ended December 31, 2000. The increase resulted from an increase in interest and dividend income and Basic minimum rent and Secondary Overage Rent received by Registrant in 2001. See Note 4 of the Notes. (b) Total expenses increased for the year ended December 31, 2002 as compared with the year ended December 31, 2001. The increase was the net result of an increase in second mortgage interest expense and depreciation expense and a decrease in the additional payment for supervisory services payable with respect to a decreased amount of Secondary Overage Rent received by Registrant in 2002, See Notes 3 and 5 of the Notes. 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, and amortization of mortgage refinancing costs and depreciation and a decrease in professional fees. -14- 250 West 57th St. Associates L.L.C. December 31, 2002 Liquidity and Capital Resources Registrant's liquidity has increased significantly due to the retention of residual mortgage proceeds at December 31, 2002, as compared to December 31, 2001. Costs relating to the improvement program are funded from proceeds of a second mortgage of $15,500,000, of which $3,500,000 is available to be drawn down at December 31, 2002. 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. -15- 250 West 57th St. Associates L.L.C. December 31, 2002 Item 8. Financial Statements and Supplementary Data. The financial statements, together with the accom- panying report by 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 Agent in Registrant. The table below sets forth as to each individual who served as an Agent in Registrant as of December 31, 2002 the following: name, age, nature of any family relationship with any other Agent, 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 an Agent in Registrant: Date Principal Individual Nature of Occupation became Family Business and an Name Age Relationship Experience Employment Agent Peter L. Malkin 69 Father of Real Estate Senior Partner 1982 Anthony E. Supervision and Chairman Malkin Wien & Malkin LLP Anthony E. Malkin 40 Son of Real estate Senior Director 1998 Peter L. Supervision of Supervisory Services Malkin and of Wien & Malkin LLP Management and President of W&M Properties, L.L.C. As stated in Item 1 hereof, all of the Agents are members 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. -16- 250 West 57th St. Associates L.L.C. December 31, 2002 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 Agents are also either a director, member 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. 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, 2002 by Registrant to any of the Agents as such. Registrant pays Supervisor for supervisory services and dis- bursements: (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, 2002, 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 $186,717 during the fiscal year ended December 31, 2002. See Item 1. The supervisory services provided to Registrant by Supervisor include, but are not limited to, providing or coordinating counsel services to Registrant, maintaining all of its entity and Participant records, performing physical inspections of the Building, review- ing 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. Registrant also pays Supervisor for other services at hourly rates. -17- 250 West 57th St. Associates L.L.C. December 31, 2002 Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) Registrant has no voting securities. See Item 5 hereof. At December 31, 2002, no person owned of record or was known by Registrant to own beneficially more than 5% of the outstanding Participations in the undivided Agent interests in Registrant. (b) At December 31, 2002, the Agents (see Item 10 hereof) did not beneficially own, directly or indirectly, any Participations in Registrant. At such date, certain of the Agents 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. 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 both Agents holding senior positions at 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 Agent in Registrant and in Net Lessee arises solely from ownership of -18- 250 West 57th St. Associates L.L.C. December 31, 2002 Participations in Registrant and member interests or participations in Net Lessee. The Agents receive no extra or special benefit not shared on a pro rata basis with all other Participants in Registrant or members and participants in Net Lessee. However, each of the Agents, who hold senior positions at Supervisor, by reason of his position at Supervisor, is entitled to receive his pro rata share of any supervisory 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. (b) Reference is made to Paragraph (a) above. (c) Not applicable. (d) Not applicable. Item 14. Evaluation of Disclosure Controls and Internal Control Procedures. (a) Evaluation of disclosure controls and procedures. Our Supervisor, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date (the "Evaluation Date") within 90 days before the filing date of this annual report, has concluded that, as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that information required to be disclosed in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods. (b) Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of their evaluation. -19- 250 West 57th St. Associates L.L.C. December 31, 2002 PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 10-K. (a)(1) Financial Statements: Independent Accountant's Report of J.H. Cohn LLP, dated February 28, 2003. Balance Sheets at December 31, 2002 and at December 31, 2001 (Exhibit A). Statements of Income for the fiscal years ended December 31, 2002, 2001 and 2000 (Exhibit B). Statement of Members' Deficiency for the fiscal year ended December 31, 2002 (Exhibit C-1). Statement of Members' Deficiency for the fiscal year ended December 31, 2001 (Exhibit C-2). Statement of Members' Deficiency for the fiscal year ended December 31, 2000 (Exhibit C-3). Statements of Cash Flows for the fiscal years ended December 31, 2002, 2001 and 2000 (Exhibit D). Notes to Financial Statements for the fiscal years ended December 31, 2002, 2001 and 2000. (2) Financial Statement Schedules: List of Omitted Schedules. Real Estate and Accumulated Depreciation - December 31, 2002 (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. -20- 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 Agents 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, 2003 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 Agents in Registrant, pursuant to the Power, on behalf of the Registrant and as an Agent in Registrant on the date indicated. By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: April 15, 2003 ________________________ * Mr. Katzman supervises accounting functions for Registrant. -21- CERTIFICATIONS I, Stanley Katzman, certify that: (1) I have reviewed this annual report on Form 10-K of 250 West 57th St. Associates L.L.C.; (2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; (3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this annual report; (4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant'' disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): -22- (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and (6) The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 15, 2003 By /s/ Stanley Katzman Name: Stanley Katzman Title: Member of Wien & Malkin LLP, Supervisor of 250 West 57th St. Associates L.L.C. -23- CERTIFICATIONS I, Stanley Katzman, certify that: (1) I have reviewed this annual report on Form 10-K of 250 West 57th St. Associates L.L.C.; (2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; (3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this annual report; (4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and -24- (6) The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 15, 2003 By /s/ Stanley Katzman Name: Stanley Katzman Title: Senior Member of Financial/Accounting Staff of Wien & Malkin LLP, Supervisor of 250 West 57th St. Associates L.L.C. -25- 250 West 57th St. Associates L.L.C. December 31, 2002 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. 3(d) Registrant's Consent and Operating Agreement dated as of November 30, 2001 3(e) Certificate of Conversion of Registrant to a limited liability company dated November 30, 2001 filed with the New York Secretary of State on December 5, 2001. 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 -26- 250 West 57th St. Associates L.L.C. December 31, 2002 EXHIBIT INDEX (cont.) Number Document Page* Registrant's Statement of Registration on Form 8-K for the month of October, 1961, is incorporated by reference as an exhibit hereto. 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 12, 2003 and supplementary financial reports for the fiscal year ended December 31, 2002. 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 29, 2002 and supplementary financial reports for the lease year ended September 30, 2002. 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. -27- 250 West 57th St. Associates L.L.C. December 31, 2002 EXHIBIT INDEX (cont.) 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. 99 (1) Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99 (2) Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 _______________________ * Page references are based on a sequential numbering system. -28- 250 West 57th St. Associates L.L.C. December 31, 2002 Exhibit 99(1) 250 West 57th St. Associates L.L.C. Chief Executive Officer Certification Pursuant to Section 906 of Sarbanes - Oxley Act of 2002 The undersigned, Stanley Katzman, is signing this Chief Executive Officer certification as a member of Wien & Malkin LLP, the supervisor - of 250 West 57th St. Associates L.L.C.("Registrant") to certify that: (1) the Annual Report on Form 10-K of Registrant for the period ended December 31, 2002(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C.78m or 78o(d)); and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant. Dated: April 15, 2003 By /s/ Stanley Katzman Stanley Katzman Wien & Malkin LLP, Supervisor *Registrant's organizational documents do not provide for a Chief Executive Officer or other officer with equivalent rights and duties. As described in the Report, Registrant is a limited liability company which is supervised by Wien & Malkin LLP. Accordingly, this Chief Executive Officer certification is being signed by a member of Registrant's supervisor. -29- Exhibit 99(2) 250 West 57th St. Associates L.L.C. Chief Financial Officer Certification Pursuant to Section 906 of Sarbanes - Oxley Act of 2002 The undersigned, Stanley Katzman, is signing this Chief Financial Officer certification as a senior member of the financial/accounting staff of Wien & Malkin LLP, the supervisor* of 250 West 57th St. Associates L.L.C.("Registrant"), to certify that: (1) the Annual Report on Form 10-K of Registrant for the period ended December 31, 2002(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C.78m or 78o(d)); and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant. Dated: April 15, 2003 By /s/ Stanley Katzman Stanley Katzman Wien & Malkin LLP, Supervisor *Registrant's organizational documents do not provide for a Chief Financial Officer or other officer with equivalent rights and duties. As described in the Report, Registrant is a limited liability company which is supervised by Wien & Malkin LLP. Accordingly, this Chief Financial Officer certification is being signed by a senior member of the financial/accounting staff of Registrant's supervisor. -30- [LETTERHEAD OF J.H. COHN, LLP] 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, 2002 and 2001, and the related statements if income, members' deficiency and cash flows for each of the three years in the period ended December 31, 2002, and the supporting financial statement schedule as contained in Item 15(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, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002 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. February 28, 2003 -31- EXHIBIT A 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) BALANCE SHEETS A S S E T S December 31, 2002 2001 Current Assets: Cash and cash equivalents (Note 10): Cash in banks $ 2,146,818 $ 774,604 Cash in distribution account held by Wien & Malkin LLP 60,000 60,000 Fidelity U.S. Treasury Income Portfolio - 132,078 2,206,818 966,682 Due from Fisk Building Associates, a related party 5,669 - TOTAL CURRENT ASSETS 2,212,487 966,682 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 8,313,123 5,659,421 Less: Accumulated depreciation 898,184 7,414,939 739,722 4,919,699 Tenants' installations and improvements 249,791 249,791 Less: Accumulated depreciation 249,791 - 249,791 - Building improvements in progress 138,227 - TOTAL REAL ESTATE 9,670,601 7,037,134 Other Assets: Mortgage refinancing costs (Note 2c) 517,770 516,618 Less: Accumulated amortization 217,796 115,078 299,974 401,540 TOTAL ASSETS $12,183,062 $8,405,356 LIABILITIES AND MEMBERS' DEFICIENCY Current Liabilities: Accrued expenses $ 55,777 $ 57,139 Due to Fisk Building Associates, a related party 1,313,983 2,170,902 OTAL CURRENT LIABILITIES 1,369,760 2,228,041 Long-term Liabilities: Bonds, mortgages and similar debt: Mortgage payable (Note 3) 12,000,000 7,000,000 TOTAL LIABILITIES 13,369,760 9,228,041 Commitments and contingencies (Notes 3 and 11) Members' Deficiency (Exhibit C) (1,186,698) (822,685) TOTAL LIABILITIES AND MEMBERS' DEFICIENCY $12,183,062 $8,405,356 See accompanying notes to financial statements. -32- EXHIBIT B 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENTS OF INCOME Year ended December 31, 2002 2001 2000 Revenues: Rent income, from a related party (Note 4) $2,534,289 $4,038,159 $3,707,463 Dividend income 2,523 5,570 33,195 Interest income 10,746 48,491 12,721 2,547,558 4,092,220 3,753,379 Expenses: Interest on mortgages (Note 3) 601,655 525,770 378,269 Supervisory services, to a related party (Note 5) 186,717 333,239 312,572 Professional fees, including fees to a related party (Note 6) 1,567 20,655 40,360 Amortization of mortgage refinancing costs (Note 2c) 102,718 102,520 69,632 Depreciation of building improvements (Note 2b) 158,462 51,722 - 1,051,119 1,033,906 800,833 NET INCOME, CARRIED TO MEMBERS' DEFICIENCY (NOTE 9) $1,496,439 $3,058,314 $2,952,546 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year $ 2,078 $ 4,248 $ 4,101 See accompanying notes to financial statements. -33- EXHIBIT C-3 250 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. -34- EXHIBIT C-1 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENT OF MEMBERS' DEFICIENCY YEAR ENDED DECEMBER 31, 2002
Members' Members' deficiency Share of deficiency January 1, 2002 net income Distributions December 31, 2002 Anthony E. Malkin Joint Venture #1............. $ (82,268) $ 149,643 $ 186,045 $ (118,670) Anthony E. Malkin Joint Venture #2............. (82,269) 149,644 186,045 (118,670) Anthony E. Malkin Joint Venture #3............. (82,269) 149,644 186,045 (118,670) Anthony E. Malkin Joint Venture #4............. (82,269) 149,644 186,045 (118,670) Peter L. Malkin Joint Venture #1.............. (82,269) 149,644 186,045 (118,670) Peter L. Malkin Joint Venture #2.............. (82,269) 149,644 186,045 (118,670) Peter L. Malkin Joint Venture #3.............. (82,268) 149,644 186,046 (118,670) Peter L. Malkin Joint Venture #4.............. (82,268) 149,644 186,046 (118,670) Peter L. Malkin Joint Venture #5.............. (82,268) 149,644 186,045 (118,669) Peter L. Malkin Joint Venture #6.............. (82,268) 149,644 186,045 (118,669) $(822,685) $1,496,439 $1,860,452 $(1,186,698)
See accompanying notes to financial statements. -35- EXHIBIT C-2 250 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. -36- EXHIBIT D 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) STATEMENTS OF CASH FLOWS Year ended December 31, 2002 2001 2000 Cash flows from operating activities: Net income $ 1,496,439 $ 3,058,314 $ 2,952,546 Adjustments to reconcile net income to net cash provided by operating activities: Amortization 102,718 102,520 69,632 Change in additional rent due from Fisk Building Associates (5,669) (1,469) 11,835 Change in accrued expenses (1,362) 13,325 11,491 Depreciation of building improvements 158,462 51,722 - Net cash provided by operating activities 1,750,588 3,224,412 3,045,504 Cash flows from investing activities: Payments for building improvements (2,791,929) (2,772,615) (1,953,845) Net cash used in investing activities (2,791,929) (2,772,615) (1,953,845) Cash flows from financing activities: Cash distributions (1,860,452) (3,179,150) (2,993,151) Principal payments on long-term debt - - (4,289,171) Proceeds from second mortgage payable 5,000,000 - 7,000,000 Payment of mortgage refinancing costs (1,152) (69) (516,649) Advance from (payments to) Fisk Building Associates (856,919) 1,755,306 172,105 Net cash provided by (used in) financing activities 2,281,477 (1,423,913) (626,866) Net change in cash 1,240,136 (972,116) 464,793 Cash and cash equivalents, beginning of year 966,682 1,938,798 1,474,005 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,206,818 $ 966,682 $ 1,938,798 Supplemental disclosures of cash flow information: Cash paid during year for interest $ 589,692 $ 525,770 $ 364,669 See accompanying notes to financial statements. -37- 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 $7,763,350 at December 31, 2002, including improvements in progress at December 31, 2002 aggregating $138,227, have been incurred. 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. -38- 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 2002, 2001 and 2000, totaling $517,770, were 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. Valuation of Long-Lived Assets: The Company periodically assesses the carrying value of long-lived assets whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When the Company determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flows method. e. Revenue Recognition: Basic minimum rent and overage rent, which is based on the Lessee's annual net income, as defined in the lease, are recognized when earned. f. 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 and Building Improvements Program 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. -39- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 3. Mortgage Indebtedness and Building Improvements Program (continued) A new first mortgage was placed on the property effective November 17, 2000, with Emigrant Savings Bank in the amount of $15,500,000. 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. On January 23, 2002 and December 16, 2002, respectively, additional mortgage advances of $2,000,000 and $3,000,000 were drawn on the mortgage loan to pay for building improvement advances by the Lessee. 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). Monthly payments under the first mortgage are interest only. Amounts advanced at the closing ($7,000,000) bear interest at the rate of 7.511% throughout the term of the mortgage. Amounts advanced after the closing until May 31, 2003 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. As of December 31, 2002, the effective floating rate on the mortgage proceeds drawn down after the closing ($5,000,000) was 4.0%. 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 matures on December 1, 2005, when the entire principal balance falls due. 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 $12,700,000 and $7,100,000 at December 31, 2002 and 2001, respectively. 4. Related Party Transactions - Rent Income Rent income earned during the years ended December 31, 2002, 2001 and 2000, totaling $2,534,289, $4,038,159 and $3,707,463, 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, 2002 2001 2000 Basic minimum annual rent $ 629,656 $ 553,770 $ 429,740 Primary overage rent 752,000 752,000 752,000 Secondary overage rent 1,152,633 2,732,389 2,525,723 $2,534,289 $4,038,159 $3,707,463 -40- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) 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. 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 refinancing of such mortgage. 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, 2002, 2001 and 2000, totaling $186,717, $333,239 and $312,572, 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. -41- 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 and 2000, totaling $530 and $34,260, respectively, were paid to the firm of Wien & Malkin LLP, a related party. 7. Number of Participants There were approximately 575 participants in the various joint ventures as of December 31, 2002, 2001 and 2000. 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 2002, 2001 and 2000, based on 720 participation units outstanding during each year, consisted of the following: Year ended December 31, 2002 2001 2000 Income $2,078 $4,248 $4,101 Return of capital 506 167 56 Total distributions $2,584 $4,415 $4,157 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, 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 $2,043,000 at December 31, 2002. The cash in 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, 2003. -42- 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS (continued) 11. Litigation Wien & Malkin LLP and Peter L. Malkin, a member in Associates, have been engaged in a dispute proceeding with Helmsley-Spear, Inc. commenced in 1997 concerning the management, leasing and supervision of the property subject to the net lease, in which Wien & Malkin and Mr. Malkin have sought an order removing Helmsley-Spear. In this connection, certain costs for legal and professional fees and other expenses have been paid and incurred by Wien & Malkin and Mr. Malkin, and additional costs are expected to be incurred. Wien & Malkin and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) a competent tribunal authorized payment or (b) an investor voluntarily agrees that his or her proportionate share be paid. Accordingly, Associates' allocable share of such costs is as yet undetermined, and Associates has not provided for the expense and related liability with respect to such costs in these financial statements. The original action was 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 investors in the Lessee to vote to terminate Helmsley- Spear without cause, (ii) dismisses Helmsley-Spear claims against Wien & Malkin and Peter Malkin, and (iii) rejects the termination of Helmsley-Spear for cause. The parts of the decision under appeal were affirmed by the Appellate Division on December 5, 2002, and were further appealed by Wien & Malkin and Mr. Malkin on January 13, 2003. At the Lessee's May 20, 2002 special meeting, a vote of the investors was conducted on proposals for the removal without cause of Helmsley-Spear as managing and leasing agent and its replacement by one or a combination of designated independent firms (Cushman & Wakefield, Insignia/ESG, and Newmark Realty), including payment by the Lessee of the expenses for the preparation of the solicitation statement, the solicitation of votes, and the implementat- ion of the new program. On May 21, 2002, the proponents of the proposals, Peter L. Malkin and Wien & Malkin, filed a court application to determine and confirm all investors' votes for removal without cause and replacement and to set the final date for Helmsley-Spear's termination. Helmsley-Spear filed objections, and on September 10, 2002 the court confirmed such votes and ruled that Helmsley-Spear has been discharged and must effect an orderly transition and departure within 60 days. As of November 20, 2002, Helmsley- Spear is no longer the managing and leasing agent and has been replaced by Cushman & Wakefield, Inc. Helmsley-Spear continues to pursue its appeal. In accord with the Lessee's May 20, 2002 vote, the expenses for the preparat- ion of the solicitation statements, the solicitation of votes and the imple- mentation of the new program are being paid by the Lessee. Such payments have totaled $245,251, including $82,574 to Wien & Malkin. 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 As a result of the conversion of Company in 2001 to a limited liability company (Note 1), certain accounts in the 2000 financial statements have been reclass- ified to conform with subsequent year presentation. -43- 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. -44- SCHEDULE III 250 WEST 57th ST. ASSOCIATES L.L.C. (A Limited Liability Company) Real Estate and Accumulated Depreciation December 31, 2002 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, 2002............................ $12,000,000 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......... ................... $ 8,701,141 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........ 13,641,823 Total....................................... $15,759,258(a) F Accumulated depreciation....................... $ 6,088,657(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, 2000 $ 8,240,869 Purchase of building improvements and building improvements in progress(expenditures advanced by Lessee, a related party, and recorded by the Company): F/Y/E 12/31/00 $1,953,845 12/31/01 2,772,615 12/31/02 2,791,929 7,518,389 Balance at December 31, 2002 $15,759,258 The costs for federal income tax purposes are the same as for financial statement purposes. (b) Accumulated depreciation Balance at January 1, 2000 $5,878,473 Depreciation: F/Y/E 12/31/00 None 12/31/01 $ 51,722 12/31/02 158,462 210,184 Balance at December 31, 2002 $6,088,657 -45- EX-13 3 west13a.txt EXHIBIT 13A [LETTERHEAD OF WIEN & MALKIN LLP] March 12, 2003 To Members and 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., for the year ended December 31, 2002. The limited liability company owns the Fisk Building at 250 West 57th Street, New York City. The reported income for 2002 was $1,496,438. This was less than distri- butions of $1,860,452 representing the current monthly distributions totaling $720,000 per annum and the additional distribution of $1,140,452, which was paid to participants on November 29, 2002. The difference results primarily from depreciation of building improvements and amortization of mortgage refin- ancing 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, 2002 of an original cash investment of $10,000 was a deficit balance of $3,296. Additional rent for the lease year ended September 30, 2002 was $1,920,029 (including $15,396 of interest earned and retained on funds borrowed for the improvement program loan funds) or an excess of $1,168,029 over advances of $752,000 by the lessee against additional rent ($720,000 to participants, $32,000 to Wien & Malkin LLP). As approved by the participants, Wien & Malkin LLP received $126,717 of the additional rent and $1,140,452 was distributed to the participants on November 29, 2002. The additional distri- bution of $1,140,452, including dividend income from prior years, represented an annual return of about 31.7% 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, 2002 were about 51.7% on the original cash investment. The enclosed Schedule K-1 form(s) (Form 1065), containing 2002 tax information, must be reviewed in detail by your accountant. If you have any question about the enclosed material, please communi- cate 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 2002. Cordially yours, WIEN & MALKIN LLP By: Stanley Katzman SK:dm Encs. [LETTERHEAD OF ROFOGG & COMPANY, P.C. CERTIFIED PUBLIC ACCONTANTS] Independent Auditor's Report To the Participants in 250 West 57th St. Associates L.L.C. We have audited the accompanying balance sheet of 250 West 57th St. Associates L.L.C. as of December 31, 2002 and the related statements of income, of members' 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, 2002 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 7, 2003 250 West 57th St. Associates L.L.C. Balance Sheet December 31, 2002 Assets Cash and Cash Equivalents: Fleet Bank $ 64,279 Emigrant Savings Bank 100,000 Distribution account held by Wien & Malkin LLP 60,000 Emigrant Savings Bank (Money Market Fund) 1,982,538 2,206,817 Rent receivable 5,669 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 8,313,123 Less: Accumulated depreciation 898,184 7,414,939 Improvements in progress 138,227 9,670,601 Mortgage refinancing costs 517,770 Less: Accumulated amortization 217,795 299,975 Other investments (Note 3) - Total Assets $12,183,062 Liabilities and Members' Capital (Deficit) Liabilities: First mortgage - Emigrant Savings Bank $12,000,000 Accrued interest on first mortgage 55,777 Due to Fisk Building Associates 1,313,983 Total liabilities 13,369,760 Members' (deficit), December 31, 2002 (1,186,698) Total Liabilities and Members' (Deficit) $12,183,062 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, 2002 Income: Basic rent $ 629,656 Additional rent 1,904,633 Dividend income 2,523 Interest income 10,746 Total income 2,547,558 Expenses: Interest on first mortgage $601,655 Supervisory services 186,717 Professional fees 1,568 Total expenses 789,940 Net income before depreciation and amortization 1,757,618 Depreciation of building improvements 158,462 Amortization of mortgage refinancing costs 102,718 Total depreciation and amortization 261,180 Net income $1,496,438 The Accompanying Notes are an Integral part of these Financial Statements. 250 West 57th St. Associates L.L.C. Statement of Members' Deficit December 31, 2002 Members' deficit, January 1, 2002 $( 822,684) Add: Net income for the year ended December 31, 2002 1,496,438 673,754 Less: Monthly distributions to members January 1, 2002 through December 31, 2002 $ 720,000 Distribution on November 29, 2002 of balance of additional rent for the lease year ended September 30, 2002 1,140,452 1,860,452 Members' deficit, December 31, 2002 $(1,186,698) 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, 2002 Cash flows from operating activities: Net income $1,496,438 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of building improvements 158,462 Amortization of mortgage refinancing costs 102,718 Mortgage refinancing costs (1,152) Rent receivable (5,669) Due to Fisk Building Associates (856,919) Accrued expenses (1,362) Net cash provided by operating activities 892,516 Cash flows from investing activities: Additions to building improvements (2,791,929) Cash flows from financing activities: Increase in first mortgage 5,000,000 Monthly distributions to members (720,000) Distribution on November 29, 2002 of additional rent for the lease year ended September 30, 2002 (1,140,452) Net cash provided by financing activities 3,139,548 Net change in cash and cash equivalents 1,240,135 Cash and cash equivalents at beginning of year 966,682 Cash and cash equivalents at end of year $2,206,817 Supplemental Cash Flow Disclosures Year Ended December 31, 2002 Cash paid during the year for interest $ 589,692 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, 2002 1. Business Activity 250 West 57th St. Associates L.L.C. ("Associates") 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 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 and 2002 are being depreciated over an estimated useful life of 39 years. Amortization Capitalized mortgages refinancing costs of $517,770 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. 3. First Mortgage - Emigrant Savings Bank (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 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2002 3.First Mortgage - Emigrant Savings Bank - continued pay for additional improvements to the property. Additional mortgage advances of $2,000,000 and $3,000,000 were received on January 23, 2002 and December 16, 2002. 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. 4. Lease (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, 2002 was $752,000. Advances against primary additional rent of $752,000 per annum for the lease year ending September 30, 2003 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. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2002 4. Lease - continued 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, 2002 was $1,152,633. (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. 5. Related Party Transactions a) Rent Income: Rent income is received from a related party since some members or participants in Associates are also members in the Lessee. b) Supervisory and Other Services: Supervisory and other services are provided to Associates by its supervisor, Wien & Malkin LLP, a related party in which Peter L. Malkin, a member in Associates, has an interest. Beneficial interests in Associates are held by one or more persons at Wien & Malkin, their family members, and/or trusts, limited liability companies, or similar entities owned for their family members. Transactions in 2002 with Wien & Malkin are as follows: Basic supervisory fees $ 60,000 Additional supervisory fees* 126,717 Total $186,717 *Wien & Malkin receives 20% of all distributions received by the participants in excess of 20% per annum on the cash investment of $3,600,000. Wien & Malkin also serves as supervisor for Associates' lessee and receives from the Lessee a basic annual fee for such service and a fee based on distributions to its members. Beneficial interests in the Lessee are held by one or more persons at Wien & Malkin, their family members, and/or trusts, limited liability companies, or similar entities owned for their family members. Some partners in Fisk Building Associates are also members in Associates. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2002 6. 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. 7. 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 $2,006,817 as at December 31, 2002 as follows: Cash in Bank $ 24,279 Investment in Emigrant Savings Bank (Money Market Fund) 1,982,538 $2,006,817 The funds held in the distribution account were paid to the members on January 1, 2003. 8. Litigation Wien & Malkin and Peter L. Malkin, a member in Associates, have been engaged in a dispute proceeding with Helmsley-Spear, Inc. commenced in 1997 concerning the management, leasing and supervision of the property subject to the net lease, in which Wien & Malkin and Mr. Malkin have sought an order removing Helmsley-Spear. In this connection, certain costs for legal and professional fees and other expenses have been paid and incurred by Wien & Malkin and Mr. Malkin and additional costs are expected to be incurred. Wien & Malkin and Mr. Malkin have represented that such costs will be recovered only to the extent that (a) a competent tribunal authorized payment or (b) an investor voluntarily agrees that his or her proportionate share be paid. Accordingly, Associates' allocable share of such costs is as yet undetermined, and Associates has not provided for the expense and related liability with respect to such costs in these financial statement. The original action was 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 investors in the Lessee to vote to terminate Helmsley-Spear without cause, (ii) dismisses Helmsley-Spear claims against Wien & Malkin and Peter Malkin, and (iii) rejects the termination of Helmsley-Spear for cause. The parts of the decision under appeal were affirmed by the Appellate Division on December 5, 2002, and were further appealed by Wien & Malkin and Mr. Malkin on January 13, 2003. 250 West 57th St. Associates L.L.C. Notes to Financial Statements December 31, 2002 8. Litigation - continued At the Lessee's May 20, 2002 special meeting, a vote of the investors was conducted on proposals for the removal without cause of Helmsley-Spear as managing and leasing agent and its replacement by one or a combination of designated independent firms (Cushman & Wakefield, Insignia/ ESG, and Newmark Realty), including payment by the Lessee of the expenses for the preparation of the solicitation statement, the solicitation of votes, and the implementation of the new program. On May 21, 2002, the proponents of the proposals, Peter L. Malkin and Wien & Malkin, filed a court application to determine and confirm all investors' votes for removal without cause and replacement and to set the final date for Helmsley-Spear's termination. Helmsley-Spear filed objections, and on September 10, 2002 the court confirmed such votes and ruled that Helmsley-Spear has been discharged and must effect an orderly transition and departure within 60 days. As of November 20, 2002, Helmsley-Spear is no longer the managing and leasing agent and has been replaced by Cushman & Wakefield, Inc. Helmsley-Spear continues to pursue its appeal. In accord with the Lessee's May 20, 2002 vote, the expenses for the preparation of the solicitation statement, the solicitation of votes and the implementation of the new program are being paid by the Lessee. Such payments have totaled $245,251 (including $72,052 plus disbursements of $10,522 to Wien & Malkin) and are included in other professional fees. 9. 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. Associates 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. No income from stock or warrants was received in 2002. EX-13 4 west13b.txt EXHIBIT 13B [LETTERHEAD OF WIEN & MALKIN LLP] November 29, 2002 TO PARTICIPANTS IN 250 WEST 57th ST. ASSOCIATES L.L.C.: We enclose the operating report of the lessee, Fisk Building Associates, for the fiscal year of the lease ended September 30, 2002. The lessee reported profit of $3,088,058 subject to additional rent for the lease year ended September 30, 2002, as against profit of $6,343,859 subject to additional rent for the lease year ended September 30, 2001. Additional rent for the lease year ended September 30, 2002 was $1,920,029. $752,000 was advanced against additional rent so that the balance of additional rent is $1,168,029. Although income of the lessee this lease year increased by approximately $400,000 over the prior year, the lessee expended $2,189,474 in connection with a very favorable new lease for portions of the ground floor, second floor and basement with JP Morgan Chase Bank, consisting of leasing commissions of $939,474 and lease termination fees of $1,250,000, net of a $1,700,000 contri- bution from JP Morgan Chase Bank. The new lease is for 16,892 rentable square and for a term of 15 years commencing August 1, 2002 with annual base rentals starting at $1,396,155 (an average of $82.65 per square foot) graduating to $1,846,415 (an average of $109.31 per square foot) in the eleventh year of the lease, plus escalation rent. Prior tenants were paying a blended rate of $32.95 a square foot including escalation. JP Morgan Chase Bank will receive seven months of free rent and certain rent credits. Wien & Malkin LLP receives an additional payment for supervisory services of 10% of distributions in excess of 15% per annum on the cash invest- ment. After deducting $14,400 for fees and costs relating to the conversion of 250 West 57th Street Associates to a limited liability company, including fee to Wien & Malkin LLP, as approved by the participants, and adding $113,540 in connection with interest earned in prior years on excess mortgage proceeds, $1,267,169 is available for distribution. Accordingly, Wien & Malkin LLP received $126,717 of the additional rent and the balance of $1,140,452 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 $1,140,452 represents a return of about 31.68% 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, 2002 were about 51.68% 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 L.L.C. Computation of Additional Payment for Supervisory Services and Distribution For the Lease Year Ended September 30, 2002 Secondary additional rent $1,168,029 Primary additional rent for the lease year ended September 30, 2002 752,000 1,920,029 Add: Additional in connection with interest earned in prior years on excess mortgage proceeds 113,540 $2,033,569 Less: Fees and costs relating to the conversion of 250 West 57th St. Associates to a limited liability company,including fees of $13,325 to Wien & Malkin LLP, as approved by the participants 14,400 $2,019,169 Less: Additional basic payment to Wien & Malkin LLP from primary overage rent 12,000 Total rent to be distributed 2,007,169 Less: 15% return on $3,600,000 investment 540,000 Subject to additional payment at 10% to Wien & Malkin LLP $1,467,169 Additional payment at 10% $ 146,717 Paid to Wien & Malkin LLP as advance for additional rent 20,000 Balance of additional payment to Wien & Malkin LLP $ 126,717 Summary: Additional distribution to participants $1,140,452 Payment to Wien & Malkin LLP, as above 126,717 Total secondary additional rent available for distribution to participants and payment to Wien & Malkin LLP $1,267,169 [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, 2002 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 31, 2002 Fisk Building Associates Special Purpose Statement of Income and Expense October 1, 2001 through September 30, 2002 Income: Rent income $12,175,836 Escalation income 821,692 Electric income, net 583,230 Other income 126,338 Total Income $13,707,096 Expenses: Real estate taxes $1,994,450 Labor costs 2,170,376 Repairs, supplies and improvements 1,325,207 Management and leasing 1,616,779 Fuel oil 69,123 Professional fees 782,871 Security 217,765 Security monitor system 61,190 Water 54,474 Insurance 177,375 Rubbish removal 30,617 Telephone 40,521 Advertising 198,916 Miscellaneous 24,075 Lease termination fees 1,250,000 Total expenses before rent expense 10,013,739 Net income before rent expense 3,693,357 Less, Basic rent expense 605,299 Net income subject to primary and secondary additional rent 3,088,058 Less, Primary additional rent 752,000 Net income subject to secondary additional rent $ 2,336,058 Secondary additional rent at 50% $ 1,168,029 Computation of Additional Rent due Landlord: Primary additional rent $ 752,000 Secondary additional rent 1,168,029 Total Additional Rent 1,920,029 Less, Advances against additional rent 767,396* Additional rent due landlord $ 1,152,633 *Consisting of primary additional rent of $752,000 and $15,396 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. EX-3 5 westcons.txt EXHIBIT 3D CONSENT AND OPERATING AGREEMENT FOR 250 WEST 57TH ST. ASSOCIATES L.L.C. Reference is made to 250 West 57th St. Associates ("Associates"), a joint venture existing under a May 25, 1953 Agreement among Lawrence A. Wien and others (the "Agreement"). It is the intent of the undersigned joint venturers in Associates to convert Associates to a limited liability company on the basis that, after such conversion, Associates will as specified in the applicable New York statute be the same entity with the same assets and that Associates' joint venturers and participants will have the same rights and duties, except that such joint venturers and participants will hereafter receive the benefit of the resulting insulation from liability to third parties. To effect the matters herein, the undersigned joint venturers in Associates hereby irrevocably consent and agree (i) to convert Associates to a New York limited liability company with the name "250 West 57th St. Associa- tes L.L.C.", (ii) to continue at all times to have the same rights and obliga- tions in relation to the other members of such company as the undersigned would have under applicable law as if such company were a joint venture, (iii) to cause Associates to continue to be treated as a partnership for income tax purposes, (iv) to instruct and authorize Wien & Malkin LLP, as Associates' Supervisor, to effect the conversion (including, without limitat- ion, acting as agent for Associates and its members in executing and filing any necessary certificate) with such changes in the Agreement as may be deemed necessary by Wien & Malkin LLP under New York law, so long as such changes do not substantively change the rights and responsibilities among the parties to the Agreement or the effect of such conversion as described herein, and (v) to adopt all terms of the Agreement as Associates' limited liability company operating agreement with only the following modifications: 1. Throughout the Agreement, "joint venture" shall be amended to read "limited liability company"; and "250 West 57th St. Associates" shall be amended to read "250 West 57th St. Associates L.L.C." 2. Paragraph 2 of the Agreement is hereby deleted. 3. The following shall be substituted for Paragraph 4 of the Agreement: "The parties acknowledge that Peter L. Malkin currently holds a three-fifths (3/5) interest and Anthony E. Malkin currently holds a two-fifths (2/5) interest in the limited liability company, in each case subject to succession hereunder and to any participation in such interest held by third parties. All profits and losses of the limited liability company shall be shared proportionately." 4. The last line of Paragraph 6 of the Agreement shall be amended by inserting "limited liability company" in place of "property". 5. The following shall be added as a new last sentence of Paragraph 7 of the Agreement: "No member shall have the right to withdraw and receive cash for his or her interest from the limited liability company prior to dissolution and liquidation of the company, but this provision shall not affect a member's right to sell, assign, pledge, or otherwise dispose of such interest hereunder." As amended hereunder, all terms of the Agreement are hereby confirmed and remain fully in effect as Associate's limited liability company operating agreement. By signing below, the undersigned irrevocably consent and become a party to the Agreement as amended hereunder, which shall be binding on the undersigned and their respective heirs, representatives, successors and assigns. The terms of Associates' participating agreements under which the undersigned serve as agents for participants are hereby confirmed and remain fully in effect without change. To confirm the foregoing, the undersigned have signed below as of the date indicated. Date: As of November 30, 2001 Peter L. Malkin Anthony E. Malkin 9241 EX-3 6 exh3d.txt EXHIBIT 3E CERTIFICATE OF CONVERSION OF 250 WEST 57TH ST. ASSOCIATES TO 250 WEST 57TH ST. ASSOCIATES L.L.C. UNDER SECTION 1006 OF THE LIMITED LIABILITY COMPANY LAW FIRST: The partnership was, in accordance with the provisions of the Limited Liability Company Law, duly converted to a limited liability company. SECOND: The name of the partnership was: 250 WEST 57TH ST. ASSOCIATES. THIRD: The name of the limited liability company is: 250 WEST 57TH ST. ASSOCIATES L.L.C. FOURTH: The county within this state in which the office of the limited liability company is to be located is: New York. FIFTH: The Secretary of State is designated as the agent of the limited liability company upon whom process against it may be served. The post office address within or without this state to which the Secretary of State shall mail a copy of process against the limited liability company served upon him or her is: Wien & Malkin LLP, 60 East 42nd Street, New York, New York 10165, Attn: Thomas N. Keltner, Jr. SIXTH: The limited liability company is to be managed by (check the appropriate box): x 1 or more members A class or classes of members 1 or more managers A class or classes of managers IN WITNESS WHEREOF, this certificate has been subscribed this 30th day of November 2001, by the undersigned who affirms that the statements made herein are true under the penalties of perjury. By /s/ Peter L. Malkin Peter L. Malkin, Authorized Person (signature) (name and capacity of signer) 8841 -----END PRIVACY-ENHANCED MESSAGE-----