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, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number O-2666 250 WEST 57TH ST. ASSOCIATES (Exact name of registrant as specified in its charter) New York 13-6083380 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 60 East 42nd Street, New York, New York 10165 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 687-8700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: $3,600,000 of Participations in Joint-Venture Interests Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ] The aggregate market of the voting stock held by non-affiliates of the Registrant: Not applicable, but see Items 5 and 10 of this report. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. An Exhibit Index is located on pages 31 through 33 hereof. Number of pages (including exhibits) in this filing: 49 PART I Item 1. Business. (a) General Registrant is a joint venture which was organized on May 25, 1953. On September 30, 1953, Registrant acquired fee title to The Fisk Building, 250-264 West 57th Street, New York, New York (the "Building") and to the land thereunder (the "Property"). Registrant's joint venturers are Peter L. Malkin, Stanley Katzman and Ralph W. Felsten (individually, a "Joint Venturer" and, collectively, the "Joint Venturers") each of whom also acts as an agent for holders of participations in their undivided joint venture interests in Registrant (each holder of a participation, individually, a "Participant" and, collectively, the "Participants"). Registrant leases the Property to Fisk Building Associates (the "Net Lessee"), a partnership, under a net operating lease dated May 1, 1954 (the "Net Lease"), the current term of which expires on September 30, 2003. Net Lessee is a partnership in which Mr. Malkin is one of the Partners. Two of three Joint Venturers are also current members, and one is a retired, former member, of the law firm of Wien & Malkin LLP, 60 East 42nd Street, New York, New York, counsel to Registrant and the Net Lessee ("Counsel"). See Items 10, 11, 12 and 13 hereof for a description of the ongoing services rendered by, and compensation paid to, Counsel and for a discussion of certain relationships which may pose actual or potential conflicts of interest among Registrant, Net Lessee and certain of their respec- tive affiliates. As of December 31, 1996, the Building was approximately 93% occupied by approximately 280 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, Net Lessee must pay (i) annual basic rent equal to the sum of $28,000 plus an amount equal to the rate of constant payments for interest and amortization required annually under the first mortgage described below (the "Basic Rent"), and (ii)(A) primary overage rent equal to the lesser of (1) Net Lessee's net operating income for the lease year or (2) $752,000 (the "Primary Overage Rent"), and (B) secondary overage rent equal to 50% of any remaining balance of Net Lessee's net operating income for such lease year ("Secondary Overage Rent"). 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' original cash investment. For the lease year ended September 30, 1996, Net Lessee reported net operating profit of $4,068,953 after deduction of Basic Rent. Net Lessee paid Primary Overage Rent of $752,000, together with Secondary Overage Rent of $1,658,477 for the fiscal year ended September 30, 1996. The Secondary Overage Rent of $1,658,477 represents 50% of the excess of the net operating profit of $4,068,953 over $752,000. After the payment of $165,848 to Counsel as an additional payment for supervisory services, the balance of $1,492,629 was distributed to the Participants on November 30, 1996. 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 certified 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, 1996, 1995 and 1994. The Net Lease provides for one renewal option of 25 years. The Participants in Registrant and the partners in Net Lessee have agreed to execute three additional 25-year renewal terms on or before the expiration of the then applicable renewal term. (c) Mortgage Loan Refinancing Effective March 1, 1995, the first mortgage loan on the Property, in the principal amount of $2,890,758, held by Apple Bank for Savings ("Apple Bank") was refinanced (the "Refinancing"). The material terms of the refinanced mortgage loan (the "Mortgage Loan") are as follows: -2- (i) a maturity date of June 1, 2000; (ii) monthly payments of $24,096, aggregating $289,157 per annum, applied first to interest at the rate of 9.4% per annum and the balance in reduction of principal; (iii) no prepayment until after the third loan year. Thereafter, a 3% penalty will be imposed in the fourth loan year and a 2% penalty during the fifth loan year. No prepayment penalty will be imposed if the Mortgage Loan is paid in full during the last 90 days prior to maturity of the Mortgage Loan; and (iv) no Partner or Participant will have any personal liability for principal of, or interest on, the Mortgage Loan. Registrant incurred $36,758 of expenses in connection with the Refinancing, including $17,754 which was paid to Counsel for various services and disbursements. Net Lessee paid $14,453 of these expenses as additional basic rent and advanced the balance of $22,305, which was repaid from the receipt of Secondary Overage Rent, thus obviating the need to increase the principal amount of the Mortgage Loan. Net Lessee is obligated to pay Basic Rent equal to the sum of annual mortgage charges and basic supervisory fees. Accordingly, effective March 3, 1995, Basic Rent was reduced by $4,329 a year, such amount representing the annual savings in mortgage charges under the refinanced Mortgage Loan. Assuming that Net Lessee continues to earn a profit in excess of Basic Rent and Primary Overage Rent, Registrant should receive increased Secondary Overage Rent at the annual rate of $2,164 (one half of the annual savings on the Mortgage Loan). The Refinancing will not affect the amount of regular monthly distributions to the Participants. Prior to the Refinancing, the Property was subject to a mortgage loan with the following material terms: (i) a maturity date of June 1, 1995, with an option to extend the loan for an additional five-year term at 300 basis points over the highest five-year U.S. Treasury Note Yield, but not less than 9.75% per annum, with constant monthly payments based upon a 30-year amortization schedule; (ii) during the initial term, monthly payments of $24,457, aggregating $293,486 per annum, applied first to interest at the rate of 9.75% per annum and the balance in reduction of principal; and -3- (iii) no prepayment until the fourth loan year or, if Registrant exercises its option to extend the loan, no prepayment until the fourth extended loan year. Thereafter, prepayment in full, but not in part, upon furnishing to Apple Bank (a) not more than 120 days and not less than 60 days' prior written notice and (b) a prepayment fee of 3% based on the then outstanding principal balance, which fee shall decrease to 2% during the fifth loan year (or fifth extended loan year), except that no prepayment fee will be charged to Registrant if prepayment is made within 90 days prior to maturity under the initial term or extended term of the Mortgage Loan. (d) Competition Pursuant to currently offered tenant space leases at the Building, the average annual base rental rate payable to Net Lessee approximates $26 per square foot (exclusive of electricity charges and escalation). This rental rate is competitive with the average rental rates charged by similar office buildings currently offering comparable space in the immediate vicinity. Registrant has been advised that the currently offered average rental rate is approximately $27 per square foot at one neighboring office build- ing with certain upgraded interior improvements, located at 1775 Broadway (across 57th Street). A building located at 1780 Broadway, which contains 12 stories and provides no rear or side window exposure (due to its location in the middle of the block), offers space at approximately $22 per square foot. 1776 Broadway, a building which contains 24 stories and offers approximately the same grade facilities as the Building, currently offers a rental rate averaging approximately $26 per square foot. In the overall rental market for commercial space in Manhattan, rents range from approximately $50 per square foot on Fifth Avenue to approximately $12 per square foot in less- developed industrial and/or commercial areas. Accordingly, rents at the Building may be considered competitive in the area, given the relative condition of surrounding buildings and the nature of services, amenities and office space offered by them as compared to the Building. (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 -4- 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 the Mortgage Loan which, at December 31, 1996, had an unpaid principal balance of $2,859,449. For a description of the terms of the Mortgage Loan see Note 3 of the Notes. The Building, erected in 1921 and containing 26 floors, occupies the entire block front on the south side of West 57th Street between Broadway and Eighth Avenue, New York, New York. The Building has ten passenger and three freight elevators and is equipped with a combination of central and individual window unit air-conditioning. The Building is net leased to Net Lessee under the Net Lease. A modification of the Net Lease, effective October 1, 1984, provides for a further renewal term of 25 years, from October 1, 2003 through September 30, 2028. Registrant and Net Lessee have agreed to execute separate lease modification agreements covering three additional 25-year renewal terms on or before the expiration of the then applicable renewal term. There is no change in the terms of the Net Lease during the renewal periods. See Item 1 hereof. A majority of the Building's tenants are engaged in the entertainment business, insurance business, publishing, and the practice of law, accounting and dentistry. In addition, there are several commercial tenants located on the street level of the Building, including a restaurant and several retail stores. Item 3. Legal Proceedings. There are no material pending legal proceedings to which Registrant is a party. Item 4. Submission of Matters to a Vote of Security Holders. During the fourth quarter of the fiscal year ended December 31, 1996, Registrant did not submit any matter to a vote of the Participants through the solicitation of proxies or other- wise. -5- PART II Item 5. Market for Registrant's Common Stock and Related Security Holder Matters. Registrant is a joint venture organized pursuant to a joint venture agreement entered into among various individuals dated May 1, 1954. Registrant has not issued any common stock. The securities registered by it under the Securities Exchange Act of 1934, as amended, consist of participations in the joint venture interests of the Joint Venturers in Registrant (each, individually, a "Participation" and, collectively, "Participations") and are not shares of common stock or their equivalent. The Participations represent each Participant's fractional share in the Joint Venturers' undivided interest in Registrant and are divided approximately equally among the Joint Venturers. Each unit of the Participations was originally offered at a purchase price of $5,000; fractional units were also offered at proportionate purchase prices. Registrant has not repurchased Participations in the past and it is not likely to change its policy in the future. (a) The Participations neither are traded on an established securities market nor are readily tradable on a secondary market or the substantial equivalent thereof. Based on Registrant's transfer records, Participations are sold by the holders thereof from time to time in privately negotiated transactions and, in many instances, Registrant is not aware of the prices at which such transactions occur. Registrant was advised of 31 transfers of Participations during 1996. In four instances, the indicated purchase price was equal to 2.5 times the face amount of the Participation transferred, i.e., $12,500 for a $5,000 Participation. In all other cases, no consideration was indicated. (b) As of December 31, 1996, there were 550 holders of Participations of record. (c) Registrant does not pay dividends. During the years ended December 31, 1996 and 1995, 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, 1996 and November 30, 1995, Registrant made additional distributions for each $5,000 Participation of $2,073 and $1,415, respectively. Such distributions represented primarily Secondary Overage Rent payable by Net Lessee. There are no restrictions on Registrant's present or future ability to make distributions; -6- however, the amount of such distributions, particularly distributions of Secondary Overage Rent, depends solely on Net Lessee's ability to make payments of Basic Rent, Primary Overage Rent and Secondary Overage Rent to Registrant. (See Item 1 hereof). Registrant expects to make distributions so long as it receives the payments provided for under the Net Lease. See Item 7 hereof. -7- 250 WEST 57th ST. ASSOCIATES SELECTED FINANCIAL DATA Year ended December 31, 1996 1995 1994 1993 1992 Basic minimum annual rent income. $ 317,157 $ 331,691 $ 321,486 $ 321,486 $ 321,486 Primary overage rent income...... 752,000 752,000 752,000 752,000 752,000 Secondary overage rent income.... 1,658,477 1,154,342 1,367,772 1,146,828 1,003,181 Total revenue................. $2,727,634 $2,238,033 $2,441,258 $2,220,314 $2,076,667 Net income....................... $2,224,320 $1,781,573 $1,944,494 $1,744,631 $1,614,436 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year............................ $ 3,089 $ 2,474 $ 2,701 $ 2,423 $ 2,242 Total assets..................... $2,228,311 $2,236,141 $2,209,164 $2,226,533 $2,243,909 Long-term obligations............ $2,838,179 $2,859,449 $2,877,271 $2,893,621 $2,904,401 Distributions per $5,000 participation unit, based on 720 participation units outstanding during each year: Income........................ $ 3,073 $ 2,415 $ 2,701 $ 2,423 $ 2,242 Return of capital............. - - 9 11 12 Total distributions........... $ 3,073 $ 2,415 $ 2,710 $ 2,434 $ 2,254 -8- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. Registrant was organized solely for the purpose of owning the Property described in Item 2 hereof subject to a net operating lease of the Property held by Net Lessee. Registrant is required to pay, from Basic Rent, the mortgage charges and amounts for supervisory services, and to then distribute the balance of such Basic Rent to holders of Participations. Pursuant to the Net Lease, Net Lessee has assumed sole responsibility for the condition, operation, repair, maintenance and management of the Property. Accordingly, Registrant need not maintain substantial 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 amount of Secondary Overage Rent is affected by the New York City economy and its real estate market. It is difficult to forecast whether the New York City economy and real estate market will improve or deteriorate over the next few years. The following summarizes the material factors for the three most re- cent years affecting Registrant's results of operations for such periods: (a) Total income increased for the year ended December 31, 1996 as compared with the year ended December 31, 1995. The increase resulted from an increase in Secondary Overage Rent net of a decrease in Basic Rent received by Registrant for the lease year ended September 30, 1996 as compared with the lease year ended September 30, 1995. See Note 4 of the Notes. Total income decreased for the year ended December 31, 1995 as compared with the year ended December 31, 1994. The decrease resulted from a decrease in Secondary Overage Rent net of an increase in Basic Rent received by Registrant for the lease year ended September 30, 1995 as compared with the lease year ended September 30, 1994. See Note 4 of the Notes. (b) Total expenses increased for the year ended December 31, 1996 as compared with the year ended December 31, 1995. The increase was the net result of (i) an increase in supervisory service expense, (ii) a decrease in interest on the Mortgage Loan and (iii) a decrease in amortization of mortgage refinancing costs. See Notes 2b, 3a and 5 of the Notes. Total expenses decreased for the year ended December 31, 1995 as compared with the year ended December 31, 1994. The decrease was the result of (x) a decrease in supervisory service expense, (y) a decrease in interest on the Mortgage Loan, and (z) a decrease in amortization of mortgage refinancing costs. See Notes 2b, 3a and 5 of the Notes. -9- Liquidity and Capital Resources There has been no significant change in Registrant's liquidity for the year ended December 31, 1996 as compared with the year ended December 31, 1995. Based on the current net profit from the Building and current trends in the geographic area in which the Property is located, the value of the Property is estimated to be in excess of the amount of the Mortgage Loan balance at December 31, 1996. Consequently, there are no material changes anticipated in the short-term or long-term financial liquidity position of Registrant, other than the need to refinance the Mortgage Loan upon maturity. Registrant foresees no need to make material commitments for capital expenditures from its own resources while the Net Lease is in effect. Inflation Inflationary trends in the economy do not directly affect Registrant's operations since Registrant does not actively engage in the operation of the Property. Inflation may impact the operations of Net Lessee. Net Lessee is required to pay Basic Rent, regardless of the results of its operations. Inflation and other operating factors affect only the amount of Primary and Secondary Overage Rent payable by Net Lessee, which is based on Net Lessee's net operating profit. Item 8. Financial Statements and Supplementary Data. The financial statements, together with the accompanying report by, and the consent to the use thereof, of Jacobs Evall & Blumenfeld LLP immediately following, are being filed in response to this item. Item 9. Disagreements on Accounting and Financial Disclosure. Not applicable. -10- PART III Item 10. Directors and Executive Officers of the Registrant. Registrant has no directors or officers or any other centralization of management. There is no specific term of office for any Joint Venturer in Registrant. The table below sets forth as to each individual who served as a Joint-Venturer in Registrant as of December 31, 1996 the following: name, age, nature of any family relationship with any other Joint Venturer, business exper- ience during the past five years and principal occupation and employment during such period, including the name and principal business of any corporation or any organization in which such occupation and employment was carried on and the date such individual became a Joint-Venturer in Registrant: Date Principal Individual Nature of Occupation became Family Business and Joint Name Age Relationship Experience Employment Venturer Ralph W. Felsten 70 None Attorney-at-Law Retired Former 1990 Senior Partner Wien & Malkin, LLP, Counsellors- at-Law Stanley Katzman 64 None Attorney-at-Law Senior Partner 1995 Wien & Malkin LLP, Counsellors- at-Law Peter L. Malkin 63 None Attorney-at-Law Senior Partner 1982 Wien & Malkin LLP, Counsellors- at-Law As stated in Item 1 hereof, two of the Joint Venturers are current members and one of the Joint Venturers is now a retired former member of Counsel. See Items 11, 12 and 13 hereof for a description of the services rendered by, and the compensation paid to, Counsel and for a discussion of certain relationships which may pose actual or potential conflicts of interest among Registrant, Net Lessee and certain of their respec- tive affiliates. The names of entities which have a class of securities registered pursuant to Section 12 of the Securities Exchange Act -11- of 1934 or are subject to the requirements of Section 15(d) of that Act, and in which the Joint Venturers are also either a director, joint venturer or general partner are as follows: Ralph W. Felsten is a general partner in 60 East 42nd St. Associates. Stanley Katzman is a general partner in Garment Capitol Associates, 60 East 42nd St. Associates, Navarre-500 Building Associates and Empire State Building Associates. Peter L. Malkin is a general partner in Garment Capitol Associates, 60 East 42nd St. Associates, Navarre-500 Building Associates and Empire State Building Associates. Item 11. Executive Compensation. As stated in Item 10 hereof, Registrant has no directors or officers or any other centralization of management. No remuneration was paid during the fiscal year ended December 31, 1996 by Registrant to any of the Joint Venturers as such. Registrant pays Counsel, for legal fees and supervisory services and disbursements, fees of $40,000 per annum, plus 10% of all distributions to the Participants in any year in excess of the amount representing a return at the rate of 15% per annum on their remaining original cash investment. At December 31, 1996, such remaining original cash investment was $3,600,000. See Item 1 hereof. Pursuant to such fee arrangements, Registrant paid Counsel $225,848 during the fiscal year ended December 31, 1996. The supervisory services include, among other items, the preparation of reports and related documentation required by the Securities and Exchange Commission, the monitoring of all areas of federal and local securities law compliance, the preparation of certain financial reports, as well as the supervision of accounting and other documentation related to the administration of Registrant's business. Out of its fees, Counsel paid all disbursements and costs of regular accounting services. As noted in Items 1 and 10 hereof, the Joint Venturers are members of Counsel. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) Registrant has no voting securities. See Item 5 hereof. At December 31, 1996, no person owned of record or was known by Registrant to own beneficially more than 5% of the outstanding Participations in the undivided Joint Venture interests in Registrant. -12- (b) At December 31, 1996, the Joint Venturers (see Item 10 hereof) beneficially owned, directly or indirectly, the following Participations in Registrant: Name & Address Amount of of Beneficial Beneficial Percent Title of Class Owners Ownership of Class Participations Ralph W. Felsten $ 5,000.00 .1388% in Joint Venture 300 East 54th St. Interests Apartment 15H New York, NY 10022 Stanley Katzman $ 5,833.34 .1620% 30 East 62nd Street New York, NY 10021 Peter L. Malkin $18,333.34 .5093% 21 Bobolink Lane Greenwich, CT 06830 At such date, the spouse of one of the Joint Venturers (see Item 10 hereof) held additional Participations as follows: Isabel Malkin, the wife of Peter L. Malkin, owned of record and beneficially $70,000 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations. (c) Not applicable. Item 13. Certain Relationships and Related Transactions. (a) As stated in Item 1 hereof, each Joint Venturer acts as agent for his respective group of Participants. Mr. Malkin is also a partner in Net Lessee. Mr. Felsten is a participant in the Net Lessee. As a consequence of one of the three Joint Venturers being a partner in Net Lessee, one being a participant in the Net Lessee, and two of the three Joint Venturers currently being members of Counsel (which represents Registrant and Net Lessee), certain actual or potential conflicts of interest may arise with respect to the management and administration of the business of Registrant. However, under the respective participating agreements pursuant to which the Joint Venturers act as agents for the Participants, certain transactions require the prior consent from Participants owning a specified interest under the Agreements in order for the agents to act on their behalf. Such transactions include modifications and exten- sions 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. -13- Reference is made to Items 1 and 2 hereof for a description of the terms of the Net Lease between Registrant and Net Lessee. The respective interest, if any, of each Joint Venturer in Registrant and in Net Lessee arises solely from ownership of Participations in Registrant and partnership interests or participations in Net Lessee. The Joint Venturers receive no extra or special benefit not shared on a pro rata basis with all other Participants in Registrant or partners and participants in Net Lessee. However, each of the two Joint Venturers who is currently a member of Counsel, by reason of his respective partnership interest in Counsel, is entitled to receive his pro rata share of any legal fees or other remuneration paid to Counsel for professional services rendered to Registrant and Net Lessee. See Item 11 hereof for a description of the remuneration arrangements between Registrant and Counsel relating to supervisory services provided by Counsel. Reference is also made to Items 1 and 10 hereof for a description of the relationship between Registrant and Counsel of which the Joint Venturers are members. The respective interests of the Joint Venturers in any remuneration paid or given by Registrant to Counsel arose and arises solely from the ownership of their respective partnership interests therein. See Item 11 hereof for a description of the remuneration arrangements between Registrant and Counsel relating to supervisory services provided by Counsel. (b) Reference is made to Paragraph (a) above. (c) Not applicable. (d) Not applicable. -14- PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a)(1) Financial Statements: Consent of Jacobs Evall & Blumenfeld LLP, Certified Public Accountants, dated January 31, 1997. Accountant's Report of Jacobs Evall & Blumenfeld LLP, Certified Public Accountants, dated January 31, 1997. Balance Sheets at December 31, 1996 and at December 31, 1995 (Exhibit A). Statements of Income for the fiscal years ended December 31, 1996, 1995 and 1994 (Exhibit B). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1996 (Exhibit C-1). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1995 (Exhibit C-2). Statement of Partners' Capital Deficit for the fiscal year ended December 31, 1994 (Exhibit C-3). Statements of Cash Flows for the fiscal years ended December 31, 1996, 1995 and 1994 (Exhibit D). Notes to Financial Statements for the fiscal years ended December 31, 1996, 1995 and 1994. (2) Financial Statement Schedules: List of Omitted Schedules. Real Estate and Accumulated Depreciation - December 31, 1996 (Schedule III). (3) Exhibits: See Exhibit Index. (b) No report on Form 8-K was filed by Registrant during the last quarter of the period covered by this report. -15- [LETTERHEAD OF JACOBS EVALL & BLUMENFELD LLP CERTIFIED PUBLIC ACCOUNTANTS] INDEPENDENT ACCOUNTANTS' REPORT To the participants in 250 West 57th St. Associates (a Joint Venture) New York, N. Y. We have audited the accompanying balance sheets of 250 West 57th St. Associates (the "Company") as of December 31, 1996 and 1995, and the related statements of income, partners' capital deficit and cash flows for each of the three years in the period ended December 31, 1996 and the supporting financial statement schedule as contained in Item 14(a)(2) of this Form 10-K. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 250 West 57th St. Associates as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles, and the related financial statement schedule, when considered in relation to the basic financial statements, presents fairly, in all material respects, the information set forth therein. Jacobs Evall & Blumenfeld LLP Certified Public Accountants New York, N. Y. January 31, 1997 -16- January 31, 1997 250 West 57th St. Associates New York, N.Y. We consent to the use of our independent accountants' report dated January 31, 1997, covering our audits of the accompanying financial statements of 250 West 57th St. Associates in connection with and as part of your December 31, 1996 annual report (Form 10-K) to the Securities and Exchange Commission. Jacobs Evall & Blumenfeld LLP Certified Public Accountants -17- EXHIBIT A 250 WEST 57th ST. ASSOCIATES BALANCE SHEETS A S S E T S December 31, 1996 1995 Current Assets: Cash in NatWest Bank N.A................... $ 24,125 $ 24,125 Cash in distribution account held by Wien, Malkin & Bettex LLP (Note 9)...... 60,000 60,000 TOTAL CURRENT ASSETS............... 84,125 84,125 Real Estate, at cost: Property situated at 250-264 West 57th Street, New York, N. Y. (Notes 2a and 3): Land.................................... 2,117,435 2,117,435 Building................................ $4,940,682 $4,940,682 Less: Accumulated depreciation........ 4,940,682 - 4,940,682 - Building improvements................... 688,000 688,000 Less: Accumulated depreciation........ 688,000 - 688,000 - Tenants' installations and improvements........................... 249,791 249,791 Less: Accumulated depreciation....... 249,791 - 249,791 - Other Assets: Mortgage refinancing costs (Note 2b)....... 41,106 41,106 Less: Accumulated amortization........... 14,355 6,525 26,751 34,581 TOTAL ASSETS....................... $2,228,311 $2,236,141 LIABILITIES AND PARTNERS' CAPITAL DEFICIT Current Liabilities: Accrued interest payable................... $ 22,399 $ 22,551 Principal payments of first mortgage payable within one year (Note 3).......... 21,270 19,369 TOTAL CURRENT LIABILITIES.......... 43,669 41,920 Long-term Liabilities: Bonds, mortgages and similar debt: First mortgage payable (Note 3).......... $2,859,449 $2,878,818 Less: Current installments shown above................................. 21,270 19,369 2,838,179 2,859,449 TOTAL LIABILITIES.................. 2,881,848 2,901,369 Partners' Capital Deficit (Exhibit C)........ (653,537) (665,228) TOTAL LIABILITIES AND PARTNERS' CAPITAL DEFICIT......... $2,228,311 $2,236,141 See accompanying notes to financial statements. -18- EXHIBIT B 250 WEST 57th ST. ASSOCIATES STATEMENTS OF INCOME Year ended December 31, 1996 1995 1994 Revenues: Rent income, from a related party (Note 4)......... $2,727,634 $2,238,033 $2,441,258 Expenses: Interest on mortgage (Note 3)....................... 269,636 273,835 282,611 Supervisory services, to a related party (Note 5)....... 225,848 173,204 196,777 Amortization of mortgage refinancing costs (Note 2b)...................... 7,830 9,421 17,376 503,314 456,460 496,764 NET INCOME, CARRIED TO PARTNERS' CAPITAL DEFICIT (NOTE 8)....... $2,224,320 $1,781,573 $1,944,494 Earnings per $5,000 participation unit, based on 720 participation units outstanding during each year............................. $ 3,089 $ 2,474 $ 2,701 See accompanying notes to financial statements. -19- EXHIBIT C-1 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1995 Partners' Partners' capital deficit Share of capital deficit January 1, 1995 net income Distributions December 31, 1995 Ralph W. Felsten Joint Venture #1.............. $ (70,797) $ 178,157 $ 173,883 $ (66,523) Ralph W. Felsten Joint Venture #2.............. (70,797) 178,157 173,883 (66,523) Ralph W. Felsten Joint Venture #3.............. (70,797) 178,157 173,883 (66,523) Ralph W. Felsten Joint Venture #4.............. (70,797) 178,158 173,884 (66,523) Stanley Katzman Joint Venture #1 (formerly Alvin Silverman Joint Venture #1)............ (70,797) 178,158 173,884 (66,523) Stanley Katzman Joint Venture #2 (formerly Alvin Silverman Joint Venture #2)............ (70,797) 178,158 173,884 (66,523) Stanley Katzman Joint Venture #3 (formerly Alvin Silverman Joint Venture #3)............ (70,796) 178,157 173,883 (66,522) Stanley Katzman Joint Venture #4 (formerly Alvin Silverman Joint Venture #4)............ (70,797) 178,157 173,883 (66,523) Peter L. Malkin Joint Venture #1.............. (70,797) 178,157 173,883 (66,523) Peter L. Malkin Joint Venture #2.............. (70,796) 178,157 173,883 (66,522) $(707,968) $1,781,573 $1,738,833 $(665,228) See accompanying notes to financial statements. -20- EXHIBIT C-2 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1994 Partners' Partners' capital deficit Share of capital deficit January 1, 1994 net income Distributions December 31, 1994 Ralph W. Felsten Joint Venture #1.............. $ (70,147) $ 194,450 $ 195,100 $ (70,797) Ralph W. Felsten Joint Venture #2.............. (70,147) 194,450 195,100 (70,797) Ralph W. Felsten Joint Venture #3.............. (70,147) 194,450 195,100 (70,797) Ralph W. Felsten Joint Venture #4.............. (70,147) 194,450 195,100 (70,797) Alvin Silverman Joint Venture #1.............. (70,147) 194,449 195,099 (70,797) Alvin Silverman Joint Venture #2.............. (70,146) 194,449 195,100 (70,797) Alvin Silverman Joint Venture #3.............. (70,146) 194,449 195,099 (70,796) Alvin Silverman Joint Venture #4.............. (70,147) 194,449 195,099 (70,797) Peter L. Malkin Joint Venture #1.............. (70,147) 194,449 195,099 (70,797) Peter L. Malkin Joint Venture #2.............. (70,146) 194,449 195,099 (70,796) $(701,467) $1,944,494 $1,950,995 $(707,968) See accompanying notes to financial statements. -21- EXHIBIT C-3 250 WEST 57th ST. ASSOCIATES STATEMENT OF PARTNERS' CAPITAL DEFICIT YEAR ENDED DECEMBER 31, 1996 Partners' Partners' capital deficit Share of capital deficit January 1, 1996 net income Distributions December 31, 1996 Ralph W. Felsten Joint Venture #1.............. $ (66,523) $ 222,432 $ 221,263 $ (65,354) Ralph W. Felsten Joint Venture #2.............. (66,523) 222,432 221,263 (65,354) Ralph W. Felsten Joint Venture #3.............. (66,523) 222,432 221,263 (65,354) Ralph W. Felsten Joint Venture #4.............. (66,523) 222,432 221,262 (65,353) Stanley Katzman Joint Venture #1.............. (66,523) 222,432 221,263 (65,354) Stanley Katzman Joint Venture #2.............. (66,523) 222,432 221,263 (65,354) Stanley Katzman Joint Venture #3.............. (66,522) 222,432 221,263 (65,353) Stanley Katzman Joint Venture #4.............. (66,523) 222,432 221,263 (65,354) Peter L. Malkin Joint Venture #1.............. (66,523) 222,432 221,263 (65,354) Peter L. Malkin Joint Venture #2.............. (66,522) 222,432 221,263 (65,353) $(665,228) $2,224,320 $2,212,629 $(653,537) See accompanying notes to financial statements. -22- EXHIBIT D 250 WEST 57th ST. ASSOCIATES STATEMENTS OF CASH FLOWS Year ended December 31, 1996 1995 1994 Cash flows from operating activities: Net income.............................. $ 2,224,320 $ 1,781,573 $ 1,944,494 Adjustments to reconcile net income to cash provided by operating activities: Amortization......................... 7,830 9,421 17,376 Change in accrued interest payable... (152) (960) (88) Payments of mortgage refinancing costs: To a related party (Note 2b).......... - (17,754) - Other................................. - (19,004) - Net cash provided by operating activities........... 2,231,998 1,753,276 1,961,782 Cash flows from financing activities: Cash distributions...................... (2,212,629) (1,738,833) (1,950,995) Principal payments on long-term debt.... (19,369) (14,803) (10,780) Net cash used in financing activities..................... (2,231,998) (1,753,636) (1,961,775) Net change in cash.............. - (360) 7 Cash, beginning of year................... 84,125 84,485 84,478 CASH, END OF YEAR............... $ 84,125 $ 84,125 $ 84,485 Supplemental disclosures of cash flow information: Year ended December 31, 1996 1995 1994 Cash paid for: Interest............................. $ 269,788 $ 274,795 $ 282,699 See accompanying notes to financial statements. -23- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS 1. Business Activity 250 West 57th Street Associates (the "Company") is a joint venture which owns commercial property situated at 250 West 57th Street, New York, New York, known as the "Fisk Building". The property is net leased to Fisk Building Associates (the "Lessee"). 2. Summary of Significant Accounting Policies a. Real Estate and Depreciation: Land and building: The basis for building valuation was seventy per cent (70%) of the total purchase price in 1953 of the land and building, $7,058,117, which amounts to $4,940,682. The balance of the purchase price, $2,117,435, was allocated to land cost. The seventy per cent allocation of total cost to the building was based upon the percentage of assessed valuation of the building to the total assessed valuation on the land and building at the time of acquisition. The building, building improvements and tenants installations and improvements are fully depreciated. b. Mortgage Refinancing Costs, Amortization and Related Party Transactions: Mortgage refinancing costs of $87,333 were incurred in connection with the 1990 refinancing of the first mortgage payable and were charged to income ratably over the five year term of the mortgage (see Note 3a). Such costs include payments of $45,020 to the firm of Wien, Malkin & Bettex LLP; some members of that firm are partners in the Company. Effective March 1, 1995, the first mortgage was modified and extended (see Note 3b) and new mortgage refinancing costs of $36,758 were incurred. Mortgage refinancing costs of $41,106 consist of the unamortized balance of the 1990 refinancing costs of $4,348 plus the new refinancing costs of $36,758 (including payments of $17,754 to the firm of Wien, Malkin & Bettex LLP). Such costs are being amortized ratably over the extended term of the first mortgage, from March 1, 1995 through June 1, 2000. c. Use of Estimates: In preparing financial statements in conformity with generally accepted accounting principles, management often 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. -24- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 3. First Mortgage Payable a. On May 24, 1990, a first mortgage was placed on the property with Apple Bank for Savings in the amount of $2,934,861. Annual mortgage charges were $293,486, payable in equal monthly installments, applied first to interest at the rate of 9.75% per annum and the balance to principal. The first mortgage was scheduled to mature on June 1, 1995. b. Effective March 1, 1995, the first mortgage, having a balance of $2,890,758, was modified and extended to mature on June 1, 2000, when the principal balance will be $2,777,754. Annual mortgage charges are $289,157, payable in equal monthly installments, applied first to interest at the rate of 9.4% per annum and the balance to principal. Principal payments required to be made on long-term debt are as follows: Year ending December 31, 1997............................... $ 21,270 1998............................... 23,358 1999............................... 25,650 Through June 1, 2000............... 2,789,171 $2,859,449 The real estate is pledged as collateral for the first mortgage. 4. Related Party Transactions - Rent Income Rent income earned during the year ended December 31, 1996, 1995 and 1994, totaling $2,727,634, $2,238,033 and $2,441,258, 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 and October 1, 1984) with the Lessee, consisting of the following: Year ended December 31, 1996 1995 1994 Basic minimum annual rent... $ 317,157 $ 331,691 $ 321,486 Primary overage rent........ 752,000 752,000 752,000 Secondary overage rent...... 1,658,477 1,154,342 1,367,772 $2,727,634 $2,238,033 $2,441,258 The lease modification dated October 1, 1984 provides for rent income until September 30, 2003, as follows: A) A basic annual rent equal to the sum of $28,000 plus current mortgage requirements for interest and amortization. Upon any further refinancing of the first mortgage (Note 3), the annual basic rent will be modified and will be equal to the sum of $28,000 plus an amount equal to the rate of constant payments for interest and amortization required annually under any such first mortgage immediately subsequent to refinancing computed on the principal balance of the mortgage immediately prior to such refinancing; -25- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 4. Related Party Transactions - Rent Income (continued) B) A primary overage rent equal to the lesser of $752,000 per annum for each year ending September 30th, or the lessee's defined net operating profit for its lease year ending September 30th after deduction of basic rent and advances previously paid on account of primary overage rent; and C) A secondary overage rent consisting of 50% of any remaining balance of the lessee's defined net operating profit (after payment of basic rent and primary overage rent) for its lease year ending September 30th. Primary overage rent has been billed to and advanced by the Lessee in equal monthly installments of $62,667. While it is not practicable to estimate that portion of overage rent for the lease year ending on the ensuing September 30th which would be allocable to the current three month period ending December 31st, the Company's policy is to include in its income each year the advances of primary overage rent income received from October 1st to December 31st. No other overage rent is accrued by the Company for the period between the end of the Lessee's lease year ending September 30th and the end of the Company's fiscal year ending December 31st. In 1978, the Lessee exercised its option to renew the lease for a twenty-five year period from October 1, 1978 through September 30, 2003 on the same terms as provided during the balance of the initial period. The lease modification effective October 1, 1984 provides for an option for one renewal term of 25 years commencing October 1, 2003. The terms of the lease remain the same during the renewal period. The Lessee may surrender the lease at the end of any month, upon sixty days' prior written notice; the liability of the Lessee will end on the effective date of such surrender. A partner in the Company is also a partner in the Lessee. 5. Related Party Transactions - Supervisory Services Fees for supervisory services (including disbursements and cost of regular accounting services) during the years ended December 31, 1996, 1995 and 1994, totaling $225,848, $173,204 and $196,777, respectively, were paid to the firm of Wien, Malkin & Bettex LLP. Some members of that firm are partners in the Company. Fees for supervisory services are paid pursuant to an agreement, which amount is based on a rate of return of investment achieved by the participants of the Company each year. 6. Number of Participants There were approximately 550 participants in the various joint ventures as at December 31, 1996, 1995 and 1994. -26- 250 WEST 57th ST. ASSOCIATES NOTES TO FINANCIAL STATEMENTS (continued) 7. 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. 8. Distributions and Amount of Income per $5,000 Participation Unit Distributions per $5,000 participation unit for each fiscal period, based on 720 participation units outstanding during each such period, consisted of the following: Year ended December 31, 1996 1995 1994 Income................. $3,073 $2,415 $2,701 Return of capital...... - - 9 TOTAL DISTRIBUTIONS.. $3,073 $2,415 $2,710 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. 9. Concentration of Credit Risk The Company maintains cash balances in a bank and in a distribution account held by Wien, Malkin & Bettex LLP. The bank balance is insured by the Federal Deposit Insurance Corporation up to $100,000, and at December 31, 1996 was completely insured. The distribution account held by Wien, Malkin & Bettex LLP is not insured. The funds held in the distribution account were paid to the participants on January 1, 1997. -27- 250 WEST 57th ST. ASSOCIATES OMITTED SCHEDULES The following schedules have been omitted as not applicable in the present instance: SCHEDULE I - Condensed financial information of registrant. SCHEDULE II - Valuation and qualifying accounts. SCHEDULE IV - Mortgage loans on real estate. -28- SCHEDULE III 250 WEST 57th ST. ASSOCIATES Real Estate and Accumulated Depreciation December 31, 1996 Column A Description Office building and land located at 250-264 West 57th Street, New York, New York, known as the "Fisk Building". B Encumbrances Apple Bank for Savings Balance at December 31, 1996.................................. $2,859,449 C Initial cost to company Land.......................................................... $2,117,435 Building...................................................... $4,940,682 D Costs capitalized subsequent to acquisition Improvements.................................................. $ 937,791 Carrying costs................................................ $ NONE E Gross amount at which carried at close of period Land......................................................... $2,117,435 Building and Improvements.................................... 5,878,473 Total........................................................ $7,995,908(a) F Accumulated depreciation........................................ $5,878,473(b) G Date of construction 1921 H Date acquired September 30, 1953 I Life on which depreciation in latest income statements is computed Not applicable (a) There have been no changes in the carrying value of real estate for the year ended December 31, 1996, December 31, 1995 and December 31, 1994. The costs for federal income tax purposes are the same as for financial statement purposes. (b) Accumulated depreciation Balance at January 1, 1994 $5,878,473 Depreciation: F/Y/E 12/31/94 None 12/31/95 None 12/31/96 None None Balance at December 31, 1996 $5,878,473 -29- SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The individual signing this report on behalf of Registrant is Attorney-in-Fact for Registrant and each of the Joint Venturers in Registrant, pursuant to a Power of Attorney, dated March 29, 1996 (the "Power"). 250 WEST 57TH ST. ASSOCIATES (Registrant) By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: March __, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned as Attorney-in-Fact for each of the Joint Venturers in Registrant, pursuant to the Power, on behalf of the Registrant and as a Joint Venturer in Registrant on the date indicated. By /s/ Stanley Katzman Stanley Katzman, Attorney-in-Fact* Date: March __, 1997 ______________________ * Mr. Katzman supervises accounting functions for Registrant. -30- EXHIBIT INDEX Number Document Page* 3(a) Registrant's Joint Venture Agreement, dated May 25, 1953, which was filed as Exhibit No. 3(a) to Registrant's Registration Statement on Form S-1 (the "Registration Statement"), is incorporated by reference as an exhibit hereto. 3(b) Amended Business Certificate of Registrant filed with the Clerk of New York County on December 22, 1995 reflecting a change in the Partners of Registrant which was filed as Exhibit 3(b) to Registrant's Annual Report on 10-K for the fiscal year ended December 31, 1995 and is incorporated by reference as an exhibit hereto. 3(c) Registrant's Memorandum of Agreement among Joint Venturers in 250 West 57th St. Associates, dated June 9, 1953, filed as Exhibit 1 to the Registration Statement, is incorporated by reference as an exhibit hereto. 4 Registrant's form of Participation Agreement, which was filed as Exhibit No. 4(a) to the Registration Statement, is incorporated by reference as an exhibit hereto. 10(a) Net Lease between Registrant and Fisk Building Associates dated September 30, 1957, which was filed as Exhibit No. 2(d) to the Registration Statement, is incorporated by reference as an exhibit hereto. 10(b) Modification of Net Lease dated November 10, 1961, was filed by letter dated November 21, 1961 as Exhibit B to Registrant's Statement of Registration on Form 8-K for the month of October, 1961, is incorporated by reference as an exhibit hereto. ______________________ * Page references are based on a sequential numbering system. -31- Number Document Page* 10(c) Second Modification Agreement of Net Lease dated June 10, 1965, between Registrant and Fisk Building Associates which was filed by letter dated December 29, 1981 as Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the year ended September 30, 1981 is incorporated by reference as an exhibit hereto. 10(d) Fourth Lease Modification Agreement dated November 12, 1985 between Registrant and Fisk Building Associates, which was filed by letter dated January 13, 1986 as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended, September 30, 1985, is incorporated herein by reference as an exhibit hereto. 10(e) Modification of Mortgage dated as of March 1, 1995 between Registrant and the Apple Bank for Savings, which was filed on March 30, 1995 as Exhibit 10(e) to Registrant's Annual Report on Form 10-K, is incorporated herein by reference as an exhibit hereto. 13(a) Letter to Participants dated February 3, 1997 and supplementary financial reports for the fiscal year ended December 31, 1996. The foregoing material shall not be deemed "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934. 13(b) Letter to Participants dated November 30, 1996 and supplementary financial reports for the lease year ended September 30, 1996. The foregoing material shall not be deemed "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934. ______________________ * Page references are based on a sequential numbering system. -32- 24 Power of Attorney dated March 29, 1996, between Peter L. Malkin, Stanley Katzman and Ralph W. Felsten as partners of Registrant and Stanley Katzman and Richard A. Shapiro, attached as Exhibit 24 to Registrant's Annual Report on Form 10-K for the year ended 1995, and incorporated herein by reference as an exhibit hereto. 27 Financial Data Schedule of Registrant for fiscal year ended December 31, 1996. -33-