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, 1995
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission file number 0-2670
60 EAST 42ND ST. ASSOCIATES
(Exact name of registrant as specified in its charter)
New York 13-6077181
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
60 East 42nd Street, New York, New York 10165
(Address of principal executive offices) (Zip Code)
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:
$7,000,000 of Participations in Partnership 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 30 through 32 of this Report.
Number of pages (including exhibits) in this filing: 52<PAGE>
PART I
Item 1. Business.
(a) General
Registrant is a partnership which was organized on
September 25, 1958. On October 1, 1958, Registrant acquired fee
title to the Lincoln Building (the "Building") and the land
thereunder, located at 60 East 42nd Street, New York, New York
(the "Property"). Registrant's partners are Donald A. Bettex,
Ralph W. Felsten, Melvyn H. Halper, Stanley Katzman, Peter L.
Malkin, Martin D. Newman, and C. Michael Spero (individually, a
"Partner" and, collectively, the "Partners"), each of whom also
acts as an agent for holders of participations in the Registrant
(each holder of a participation, individually, a "Participant"
and, collectively, the "Participants"). Registrant leases the
Property to Lincoln Building Associates (the "Lessee") pursuant to
a net operating lease (the "Lease") the current term of which
expires on September 30, 2008. There is one additional 25-year
renewal term which, if exercised, will extend the Lease until
September 30, 2033.
Lessee is a partnership whose members consist of, among
others, Mr. Malkin. The Partners in Registrant are also members
of the law firm of Wien, Malkin & Bettex, 60 East 42nd Street, New
York, New York, which acts as counsel to Registrant and to Lessee
(the "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, Lessee and certain of their respective affiliates.
As of December 31, 1995, the Building was approximately
92% occupied by approximately 515 tenants who engage principally
in the practice of law, accounting, real estate, engineering and
advertising. Registrant does not maintain a full-time staff. See
Item 2 hereof for additional information concerning the Property.
(b) The Mortgage
A new mortgage loan on the Property was closed on
October 6, 1994 (the "Mortgage Loan"). The material terms of the
Mortgage Loan are as follows:
(i) A principal amount of $12,020,814;
(ii) Annual charges of $1,063,842, payable in equal
monthly installments of $88,654, representing interest only at the
rate of 8.85% per annum; <PAGE>
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(iii) A term of ten years; and
(iv) A maturity date of October 31, 2004. The Mortgage
Loan is prepayable in whole after October 6, 1995, with a penalty
providing certain interest protection to the mortgagee. The
Mortgage Loan is prepayable in whole without penalty during the
90-day period prior to its maturity date.
(c) The Lease
The Lease, as modified, provides:
(i) Lessee is required to pay Registrant an annual
basic rent of $1,087,842 (the "Basic Rent"), which is equal to the
sum of $1,063,842, the constant annual charges on the first
mortgage calculated in accordance with the terms of the Lease plus
$24,000 for supervisory services payable to Counsel. See Note 4
of Notes to Financial Statements filed under Item 8 hereof (the
"Notes").
(ii) Lessee is also required to pay to Registrant (A)
additional rent (the "Additional Rent") equal to the lesser of (x)
Lessee's net operating income for the preceding lease year or (y)
$1,053,800 and (B) further additional rent (the "Further
Additional Rent") equal to 50% of any remaining balance of
Lessee's net operating income for such lease year. Lessee has no
obligation to make any payment of Additional Rent or Further
Additional Rent until after Lessee has recouped any cumulative
operating loss accruing from and after September 30, 1977.
(iii) Lessee is required to pay $1,053,800 per annum to
Registrant, as an advance against Additional Rent, an amount which
will permit basic distributions to Participants at the annual rate
of approximately 14.9% per annum on their remaining cash
investment in Registrant; provided, however, if such advances
exceed Lessee's net operating income for any Lease year, advances
otherwise required during the subsequent lease year shall be
reduced by an amount equal to such excess until Lessee shall have
recovered, through retention of net operating income, the full
amount of such excess.
(iv) For the period before the liquidation of the
mortgage, upon the first refinancing which results in an increase
in the amount of the outstanding principal balance of the mort-
gage, the annual basic rent would equal the sum of (1) annual
$24,000 payment to Counsel for supervisory services plus (2) an
amount equal to the product of (A) the new debt service percentage
rate under the refinanced mortgage multiplied by (B) the principal
balance of the mortgage immediately before each such refinancing.
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The balance of the mortgage charges would be borne by Registrant
from Additional Rent. In such circumstances, Registrant would be
entitled to retain the full net proceeds of the refinancing. If
there are subsequent refinancings which result in an increase in
the amount of the outstanding principal balance of the mortgage,
the principal balance immediately before such refinancing shall be
reduced by the amount of mortgage amortization payable from annual
basic rent under the Lease and subsequent to the first
refinancing. See Exhibit II under Item 10(b) of Registrant's
Annual Report on Form 10-K for the fiscal years ended December 31,
1976 and 1979.
Further Additional Rent income is recognized when earned
from the Lessee, at the close of the lease year ending September
30. Such income is not determinable until the Lessee, pursuant to
the Lease, renders to Registrant a certified report on the
operation of the Property. The Lease requires that this report be
delivered to Registrant annually within 60 days after the end of
each lease year. Accordingly, all Further Additional Rent income
and related supervisory service expenses can only be determined
after the receipt of such report. The Lease does not provide for
the Lessee to render interim reports to Registrant, so no Further
Additional Rent 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 the Notes regarding Further Additional Rent payments by
Lessee for the fiscal years ended December 31, 1995, 1994 and
1993.
(d) Competition
Pursuant to tenant space leases at the Building, the
average base rent payable to Lessee is approximately $26.00 per
square foot (exclusive of electricity charges and escalation).
Such rate is competitive with the average rental rate charged by
similar office buildings offering comparable space in the
immediate vicinity of the Building. Registrant has been advised
that buildings of comparable age and condition to the Building
charge rental rates within $1.00 - $2.00 per square foot of the
average rental rate at the Building. Rental rates for space are
in the high $30's to low $40's per square foot at the following
three nearby buildings: 101 Park Avenue (a new office building
with modern facilities and located at 40th Street); Republic
National Bank Building (a modern building on Fifth Avenue and 41st
Street); the Met Life Building (a premier building erected in
1961).
In the overall rental market for commercial space in
Manhattan, rents range from approximately $45 per square foot for
prime office space to approximately $7 per square foot in less
developed industrial and/or secondary commercial areas.
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Accordingly, the average rent 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
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 New York City. Any increase or de-
crease in the amount of rent payable by a tenant is governed by
the provisions of the tenant's lease, or, if a new tenant, by then
existing trends in the rental market for office space.
Item 2. Property.
Registrant owns the Building located at 60 East 42nd
Street, New York, New York, known as the "Lincoln Building", and
the land thereunder. See Item 1. Registrant's fee title to the
Property is encumbered by the Mortgage Loan with an unpaid
principal balance of $12,020,814 at December 31, 1995. For a
description of the terms of the Mortgage Loan, see Item 1 of
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and Note 3 of the Notes thereto. The Building,
erected in 1930, has 55 floors, a concourse and a lower lobby. It
is located, diagonally opposite Grand Central Station, on 42nd
Street between Park Avenue and Madison Avenue. The Building is
net leased to Lessee. See Item 1 hereof and Note 4 of the Notes
for additional information concerning the Lease.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which
Registrant is a party or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Participants.
During the fourth quarter of the fiscal year ended
December 31, 1995, Registrant did not submit any matter to a vote
of the Participants.
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PART II
Item 5. Market for the Registrant's Common Equity and Related
Security Holder Matters.
Registrant, a partnership, was organized on September
25, 1958.
The securities registered by it under the Securities
Exchange Act of 1934, as amended, consist of participations in the
partnership interests of the Partners in Registrant (the
"Participations") and are not shares of common stock or the
equivalent. The Participations represent each Participant's
fractional share in a Partner's undivided interest in Registrant.
One full unit of the Participations was offered at an original
purchase price of $10,000; fractional units were also offered for
proportionate purchase prices. Registrant has not repurchased
Participations in the past and 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 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. During 1995, Registrant was advised of
59 transfers of Participations. In eight instances, the indicated
purchase price was equal to two times the face amount of the
Participations transferred, i.e., $20,000 for a $10,000
participation. In all other cases, no consideration was
indicated.
(b) As of December 31, 1995, there were 726 holders of
Participations of record.
(c) Registrant does not pay dividends. During each of
the years ended December 31, 1995 and 1994, Registrant made
regular monthly distributions of $124.57 for each $10,000
Participation. On November 30, 1995 and November 30, 1994,
Registrant made additional distributions for each $10,000
Participation of $2,013.34 and $2,511.42, respectively. Such
distributions represented primarily Additional Rent and Further
Additional Rent payable by Lessee in accordance with the terms of
the Lease. See Item 1 hereof. There are no restrictions on
Registrant's present or future ability to make distributions;
however, the amount of such distributions, particularly dis-
tributions of Additional Rent and Further Additional Rent depends
solely on Lessee's ability to make payments of Basic Rent,
Additional Rent and Further Additional Rent to Registrant. See
Item 1 hereof. Registrant expects to make distributions so long
as it receives the payments provided for under the Lease. See
Item 7 hereof.
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Item 6.
60 EAST 42nd ST. ASSOCIATES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Basic rent income.......... $ 1,087,842 $ 1,122,040 $ 1,132,075 $ 1,132,075 $ 1,132,075
Advance of additional
rent income............... 1,053,800 1,053,800 1,053,800 1,053,800 1,053,800
Further additional
rent income............... 1,565,928 2,202,847 2,654,582 3,546,236 4,122,654
Total revenue........... $ 3,707,570 $ 4,378,687 $ 4,840,457 $ 5,732,111 $ 6,308,529
Net income................. $ 2,430,979 $ 3,051,227 $ 3,442,052 $ 4,240,312 $ 4,755,213
Earnings per $10,000
participation unit,
based on 700 participation
units outstanding during
the year.................. $ 3,473 $ 4,359 $ 4,917 $ 6,058 $ 6,793
Total assets............... $ 7,546,720 $ 7,660,149 $ 7,453,321 $ 7,497,458 $ 7,541,595
Long-term obligations...... $12,020,814 $12,020,814 $ - $12,061,506 $12,111,784
Distributions per $10,000
participation unit, based
on 700 participation
units outstanding during
the year:
Income.................. $ 3,473 $ 4,006 $ 4,908 $ 6,054 $ 6,793
Return of capital....... 35 - - - 2
Total distributions..... $ 3,508 $ 4,006 $ 4,908 $ 6,054 $ 6,795
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
Registrant was organized solely for the purpose of
acquiring the Property subject to a net operating lease held by
Lessee. Registrant is required to pay, from Basic Rent under the
Lease, mortgage charges and amounts for supervisory services.
Registrant is required to pay from Additional Rent and Further
Additional Rent additional amounts for supervisory services and
then to distribute the balance of such Additional Rent and Further
Additional Rent to the Participants. Under the Lease, Lessee has
assumed sole responsibility for the condition, operation, repair,
maintenance and management of the Property. Registrant need not
maintain substantial reserves or otherwise maintain liquid assets
to defray any operating expenses of the Property.
The following summarizes the material factors affecting
Registrant's results of operations for the three years ended
December 31, 1995:
(a) Total income decreased for the year ended December 31,
1995 as compared with the year ended December 31, 1994.
Such decrease is attributable to the payment of a
decreased amount of Further Additional Rent received by
Registrant in 1995. The amount of Further Additional
Rent is affected by the downturn in the New York City
economy and the real estate market. See Note 4 of the
Notes. It is difficult for management to forecast
whether the New York City real estate market will
improve over the next few years. Total income decreased
for the year ended December 31, 1994 as compared with
the year ended December 31, 1993. Such decrease is
attributable to the payment of a decreased amount of
Further Additional Rent to Registrant in 1994. See Note
4 of the Notes.
(b) Total expenses decreased for the year ended December 31,
1995 as compared with the year ended December 31, 1994.
Such decrease resulted from the net of a decrease in the
additional payment for supervision services payable with
respect to a decreased amount of Further Additional Rent
received by Registrant in 1995 and an increase in
interest expense on the Mortgage Loan due mainly to the
increase in the rate of interest for such Mortgage Loan.
In addition, there was a decrease in amortization of
mortgage refinancing costs. Total expenses decreased
for the year ended December 31, 1994 as compared with
the year ended December 31, 1993. Such decrease
resulted from the net of decreases in the additional
payment for supervisory services and amortization of
mortgage refinancing costs and an increase in interest
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expense on the Mortgage Loan. See Notes 3, 4 and 5 of
the Notes.
Liquidity and Capital Resources
There has been no significant change in Registrant's
liquidity for the year ended December 31, 1995 as compared with
the year ended December 31, 1994.
Assuming that the Building continues to generate an
annual net profit in future years comparable to that in the
current year 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 Loan balance at maturity.
There are no 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 while
the Lease is in effect.
Inflation
Inflationary trends in the economy do not directly
affect Registrant's operations since, as noted above, Registrant
does not actively engage in the operation of the Property.
Inflation may impact the operations of Lessee. Lessee is required
to pay Basic Rent, regardless of the results of its operations.
Inflation and other operating factors affect only the amount of
Additional Rent and Further Additional Rent payable by Lessee,
which is based on 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. Disagreement on Accounting and Financial Disclosure.
Not applicable.
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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 Partner. The table below sets forth as to each Partner as
of December 31, 1995 the following: name, age, nature of any
family relationship with any other Partner, business experience
during the past five years and principal occupation and employment
during such period, including the name and principal business of
any corporation or any organization in which such occupation and
employment was carried on and the date such individual became a
Partner:
Principal Date
Nature of Occupation Individual
Family Business and became
Name Age Relationship Experience Employment Partner
Donald A. Bettex 65 None Attorney-at-Law Senior Partner 1983
Wien, Malkin
& Bettex,
Counsellors
at-Law
Ralph W. Felsten 69 None Attorney-at-Law Senior Partner 1984
Wien, Malkin
& Bettex,
Counsellors-
at-Law
Melvyn H. Halper 55 None Attorney-at-Law Senior Partner 1995
Wien, Malkin
& Bettex,
Counsellors-
at-Law
Stanley Katzman 63 None Attorney-at-Law Senior Partner 1988
Wien, Malkin
& Bettex,
Counsellors-
at-Law
Peter L. Malkin 62 None Attorney-at-Law Senior Partner 1970
Wien, Malkin
& Bettex,
Counsellors-
at-Law
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<PAGE>
Principal Date
Nature of Occupation Individual
Family Business and became
Name Age Relationship Experience Employment Partner
Martin D. Newman 57 None Attorney-at-Law Senior Partner 1984
Wien, Malkin
& Bettex,
Counsellors-
at-Law
C. Michael Spero 59 None Attorney-at-Law Senior Partner 1990
Wien, Malkin
& Bettex,
Counsellors-
at-Law
As stated above, the Partners are also members 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, Lessee and
certain of their respective affiliates.
The names of entities which have a class of securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of
that Act, and in which the Partners are either a director, joint
venturer or general partner are as follows:
Donald A. Bettex is a general partner in Empire State
Building Associates and Garment Capitol Associates.
Peter L. Malkin is a joint venturer in 250 West 57th St.
Associates; and a general partner in Empire State
Building Associates, Garment Capitol Associates and
Navarre-500 Building Associates.
Ralph W. Felsten is a joint venturer in 250 West 57th
St. 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 current fiscal year
ended December 31, 1995 by Registrant to any of the Partners as
such. Registrant pays Counsel, for supervisory services and
disbursements, fees of $24,000 per annum plus 10% of all
distributions to Participants in any year in excess of the amount
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representing an annual return of 14% on the Participants' re-
maining cash investment in Registrant (which remaining cash
investment, at December 31, 1995, was equal to the Participant's
original cash investment of $7,000,000). Pursuant to such fee
arrangements, Registrant paid Counsel a total of $187,973 (con-
sisting of $24,000 as an annual basic payment for supervisory
services and $163,973 as an additional payment for supervisory
services) during the fiscal year ended December 31, 1995. The
supervisory services included preparing of reports and related
documentation required by the Securities and Exchange Commission,
monitoring of all areas of federal and local security law
compliance, preparing certain financial reports, as well as the
supervising 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 of this report, the Partners are also
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, 1995, no person owned of record or was
known by Registrant to own beneficially more than 5% of the
outstanding Participations.
(b) At December 31, 1995, the Partners (see Item 10
hereof) beneficially owned, directly or indirectly, the following
Participations:
Name and Address Amount of Percent
of Beneficial Beneficial of
Title of Class Owners Ownership Class
Participations Donald A. Bettex $10,000.00 .143%
in Partnership 700 Park Avenue
Interests New York, NY 10021
Ralph W. Felsten $0 .0000%
300 East 54th Street
New York, NY 10022
Melvyn H. Halper $0 .0000%
9 Latonia Road
Rye Brook, NY 10573
Stanley Katzman $0 .0000%
75-18 193rd Street
Flushing, NY 11366
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Name and Address Amount of Percent
of Beneficial Beneficial of
Title of Class Owners Ownership Class
Participations Martin D. Newman $ 8,750.00 .125%
in Partnership 535 Park Avenue
Interests New York, NY 10021
C. Michael Spero $ 7,500.00 .107%
1165 Park Avenue
New York, NY 10128
Peter L. Malkin $23,333.33 .333%
21 Bobolink Lane
Greenwich, CT 06830
At such date, certain of the Partners (or their
respective spouses) held additional Participations as follows:
Peter L. Malkin owned of record as trustee or
co-trustee, an aggregate of $55,714.29 of
Participations. Mr. Malkin disclaims any beneficial
ownership of such Participations.
Peter L. Malkin owned of record as co-trustee $10,000 of
Participations. Mr. Malkin has a remainder interest in
such trust.
Isabel Malkin, the wife of Peter L. Malkin, owned
individually and beneficially, $30,000 of
Participations. Mr. Malkin disclaims any beneficial
ownership of such Participations.
C. Michael Spero and Mildred W. Spero, Trustees under
the Will of Carl M. Spero, owned $5,000 of
Participations. Mr. Spero has a remainder interest in
such trust.
Carlton D. Klein, Udel Klein and C. Michael Spero,
Trustees under trust agreement, owned $20,000 of
Participations. Mr. Spero disclaims any beneficial
ownership of such Participations.
(c) Not applicable.
Item 13. Certain Relationships and Related Transactions.
(a) As stated in Items 1 and 10 hereof, Messrs. Bettex,
Felsten, Halper, Katzman, Malkin, Newman and Spero are the seven
Partners in Registrant and also act as agents for Participants in
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their respective partnership interests therein. Mr. Malkin is
also among the partners in Lessee. As a consequence of one of the
seven Partners being a partner in Lessee and all seven Partners
being members of Counsel (which represents Registrant and 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 Partners act as agents for the
Participants, certain transactions require the prior consent of a
specified number of the Participants in order for the agents to
act on the Participants' behalf. Such transactions, among others,
include modification and extension of the Lease or the Mortgage
Loan, or a sale or other disposition of the Property or
substantially all of Registrant's other assets.
See Items 1 and 2 hereof for a description of the terms
of the Lease. As of December 31, 1995, Mr. Malkin owned a
partnership interest in Lessee. The respective interests, if any,
of the Partners in Registrant and Lessee arise solely from
ownership of their respective Participations, and, in the case of
Mr. Malkin, his individual ownership of a partnership interest in
Lessee. The Partners receive no extra or special benefit not
shared on a pro rata basis with all other Participants in Regis-
trant or partners in Lessee. However, each of the Partners, by
reason of his respective 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 Lessee. See Item 11 hereof for a description of the
remuneration arrangements between Registrant and Counsel.
Reference is also made to Items 1 and 10 hereof for a
description of the relationship between Registrant and Counsel, of
which the Partners are among the members. The respective
interests of each Partner in any remuneration paid or given by
Registrant to Counsel arises solely from such Partner's ownership
of an interest in Counsel. See Item 11 hereof for a description
of the remuneration arrangements between Registrant and Counsel.
(b) Reference is made to paragraph (a) above.
(c) Not applicable.
(d) Not applicable.
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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 March 18, 1996.
Accountant's Report of Jacobs Evall & Blumenfeld LLP,
Certified Public Accountants, dated January 23, 1996.
Balance Sheets at December 31, 1995 and at December 31,
1994 (Exhibit A).
Statements of Income for the fiscal years ended December
31, 1995, 1994 and 1993 (Exhibit B).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1995 (Exhibit C-1).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1994 (Exhibit C-2).
Statement of Partners' Capital Deficit for the fiscal
year ended December 31, 1993 (Exhibit C-3).
Statements of Cash Flows for the fiscal years ended
December 31, 1995, 1994 and 1993 (Exhibit D).
Notes to Financial Statements for the fiscal years ended
December 31, 1995, 1994 and 1993.
(2) Financial Statement Schedules:
List of Omitted Schedules.
Real Estate and Accumulated Depreciation - December 31,
1995 (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.
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[LETTERHEAD OF
JACOBS EVALL & BLUMENFELD LLP
CERTIFIED PUBLIC ACCOUNTANTS
March 18, 1996
60 East 42nd St. Associates
New York, N. Y.
We consent to the use of our independent accountants' report dated January 23,
1996 covering our audits of the accompanying financial statements of 60 East
42nd St. Associates in connection with and as part of your December 31, 1995
annual report (Form 10-K) to the Securities and Exchange Commission.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants
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INDEPENDENT ACCOUNTANTS' REPORT
To the participants in 60 East 42nd St. Associates
(a Partnership)
New York, N. Y.
We have audited the accompanying balance sheets of 60 East 42nd St.
Associates as of December 31, 1995 and 1994, and the related statements of
income, partners' capital deficit and cash flows for each of the three
years in the period ended December 31, 1995, 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 60 East 42nd St.
Associates as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1995 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 23, 1996
-16-<PAGE>
<PAGE>
EXHIBIT A
60 EAST 42nd ST. ASSOCIATES
BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C> <C> <C>
Current Assets:
Cash in National Westminster Bank USA $ 677 $ 89,330
Cash in distribution account held
by Wien, Malkin & Bettex (Note 9)... 87,202 87,202
TOTAL CURRENT ASSETS........... 87,879 176,532
Real Estate (Notes 2a and 3):
Land................................. 7,240,000 7,240,000
Buildings............................ $16,960,000 $16,960,000
Less: Accumulated depreciation..... 16,960,000 - 16,960,000 -
Building improvements................ 1,574,135 1,574,135
Less: Accumulated depreciation..... 1,574,135 - 1,574,135 -
Other Assets:
Mortgage refinancing costs, less
accumulated amortization of
$30,681 in 1995 and $5,905
in 1994 (Note 2b)................... 218,841 243,617
TOTAL ASSETS................... $ 7,546,720 $ 7,660,149
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL DEFICIT
<TABLE>
<S> <C> <C>
Current Liabilities:
Accrued interest payable............. $ - $ 88,653
TOTAL CURRENT LIABILITIES...... - 88,653
Long-term Liabilities:
Bonds, mortgages and similar debt:
First mortgage payable (Note 3).... 12,020,814 12,020,814
TOTAL LIABILITIES.............. 12,020,814 12,109,467
Partners' Capital Deficit (Exhibit C).. (4,474,094) (4,449,318)
TOTAL LIABILITIES AND
PARTNERS' CAPITAL DEFICIT..... $ 7,546,720 $ 7,660,149
</TABLE>
See accompanying notes to financial statements.
-17-<PAGE>
<PAGE>
EXHIBIT B
60 EAST 42nd ST. ASSOCIATES
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Revenue:
Rent income, from a related party (Note 4).... $3,707,570 $4,378,687 $4,840,457
Expenses:
Interest on mortgage (Note 3)................. 1,063,842 1,061,738 1,057,430
Supervisory services, to a related party
(Note 5)..................................... 187,973 226,713 296,838
Amortization of mortgage refinancing costs
(Note 2b).................................... 24,776 39,009 44,137
1,276,591 1,327,460 1,398,405
NET INCOME, CARRIED TO PARTNERS'
CAPITAL DEFICIT (NOTE 8)........... $2,430,979 $3,051,227 $3,442,052
Earnings per $10,000 participation unit, based
on 700 participation units outstanding during
each year...................................... $ 3,473 $ 4,359 $ 4,917
</TABLE>
See accompanying notes to financial statements.
-18-<PAGE>
<PAGE>
EXHIBIT C-1
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1995 net income Distributions 1995
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (635,617) $ 347,283 $ 350,822 $ (639,156)
Melvin H. Halper Group
(formerly Alvin
Silverman Group)......... (635,617) 347,283 350,822 (639,156)
C. Michael Spero Group...... (635,617) 347,283 350,822 (639,156)
Donald A. Bettex Group...... (635,616) 347,283 350,823 (639,156)
Peter L. Malkin Group....... (635,617) 347,283 350,822 (639,156)
Ralph W. Felsten Group...... (635,617) 347,282 350,822 (639,157)
Martin D. Newman Group...... (635,617) 347,282 350,822 (639,157)
$(4,449,318) $2,430,979 $2,455,755 $(4,474,094)
</TABLE>
See accompanying notes to financial statements.
-19-<PAGE>
<PAGE>
EXHIBIT C-2
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1994 net income Distributions 1994
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (670,876) $ 435,889 $ 400,630 $ (635,617)
Alvin Silverman Group....... (670,876) 435,889 400,630 (635,617)
C. Michael Spero Group...... (670,876) 435,889 400,630 (635,617)
Donald A. Bettex Group...... (670,876) 435,890 400,630 (635,616)
Peter L. Malkin Group....... (670,876) 435,890 400,631 (635,617)
Ralph W. Felsten Group...... (670,876) 435,890 400,631 (635,617)
Martin D. Newman Group...... (670,877) 435,890 400,630 (635,617)
$(4,696,133) $3,051,227 $2,804,412 $(4,449,318)
</TABLE>
See accompanying notes to financial statements.
-20-<PAGE>
<PAGE>
EXHIBIT C-3
60 EAST 42nd ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL DEFICIT
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Partners'
Partners' capital deficit
capital deficit Share of December 31,
January 1, 1993 net income Distributions 1993
<S> <C> <C> <C> <C>
Stanley Katzman Group....... $ (671,806) $ 491,722 $ 490,792 $ (670,876)
Alvin Silverman Group....... (671,806) 491,722 490,792 (670,876)
C. Michael Spero Group...... (671,806) 491,722 490,792 (670,876)
Donald A. Bettex Group...... (671,806) 491,722 490,792 (670,876)
Peter L. Malkin Group....... (671,806) 491,722 490,792 (670,876)
Ralph W. Felsten Group...... (671,805) 491,721 490,792 (670,876)
Martin D. Newman Group...... (671,806) 491,721 490,792 (670,877)
$(4,702,641) $3,442,052 $3,435,544 $(4,696,133)
</TABLE>
See accompanying notes to financial statements.
-21-<PAGE>
<PAGE>
EXHIBIT D
60 EAST 42nd ST. ASSOCIATES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,430,979 $ 3,051,227 $3,442,052
Adjustments to reconcile net income to
cash provided by operating activities:
Payment of mortgage refinancing costs........ - (249,522) -
Amortization of mortgage refinancing
costs (Note 2b)............................. 24,776 39,009 44,137
Change in accrued interest payable........... (88,653) 705 (367)
Net cash provided by
operating activities................ 2,367,102 2,841,419 3,485,822
Cash flows from financing activities:
Cash distributions.............................. (2,455,755) (2,804,412) (3,435,544)
Proceeds from refinancing first mortgage........ - 12,020,814 -
Principal payments on long-term debt............ - (12,061,506) (50,278)
Net cash used in financing
activities.......................... (2,455,755) (2,845,104) (3,485,822)
Net change in cash................... (88,653) (3,685) -
Cash, beginning of year........................... 176,532 180,217 180,217
CASH, END OF YEAR.................... $ 87,879 $ 176,532 $ 180,217
Supplemental disclosure of cash flow information:
1995 1994 1993
Cash paid for:
Interest...................................... $ 1,152,495 $ 1,061,032 $1,057,797
</TABLE>
See accompanying notes to financial statements.
-22-<PAGE>
<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
1. Business Activity
60 East 42nd St. Associates ("Associates") is a general partnership which
owns commercial property situated at 60 East 42nd Street and 301 Madison
Avenue, New York, New York. The property is net leased to Lincoln Building
Associates (the "Lessee").
2. Summary of Significant Accounting Policies
a. Real Estate and Depreciation:
Real estate, consisting of land, buildings and building improvements, is
stated at cost. The buildings and building improvements are fully
depreciated.
b. Mortgage Refinancing Costs, Amortization and Related Party Transactions:
Mortgage refinancing costs of $308,961, incurred in connection with the
September 30, 1987 refinancing of the first mortgage payable (see Note
3), were charged to income ratably over the seven year term of the first
mortgage, from September 30, 1987 through October 1, 1994.
Mortgage refinancing costs of $249,522, incurred in connection with the
October 6, 1994 refinancing of the first mortgage payable (see Note 3),
are being charged to income ratably over the 10 year and 26 day term of
the mortgage, from October 6, 1994 through October 31, 2004. Such costs
include payments of $95,600 to the firm of Wien, Malkin & Bettex; some
partners in that firm are also partners in Associates. Such costs also
include a payment of $60,100 to the firm of W & M Properties, Inc.
("W&M"); the principal stockholders in W&M are also participants in
Associates.
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.
3. First Mortgage Payable
From September 30, 1987 through October 5, 1994, the first mortgage held by
the Apple Bank for Savings required annual mortgage charges of $1,108,075,
payable in equal monthly installments, applied first to interest at the rate
of 8 3/4% per annum and the balance to principal.
-23-<PAGE>
<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(continued)
3. First Mortgage Payable (Continued)
On October 6, 1994, a new first mortgage was placed on the property with
Morgan Guaranty Trust Company of New York, as trustee of a pension trust,
in the amount of $12,020,814 and the first mortgage with the Apple Bank for
Savings in the amount of $12,020,814 was paid. Annual mortgage charges are
$1,063,842, payable in equal monthly installments, for interest only at the
rate of 8.85% per annum. The first mortgage matures on October 31, 2004.
The real estate is pledged as collateral for the first mortgage.
Principal payments required to be made on long-term debt are as follows:
Year ending December 31, 2004 (payable in full,
October 31, 2004)......................................$12,020,814
4. Related Party Transactions - Rent Income
Rent income for the years ended December 31, 1995, 1994 and 1993, totaling
$3,707,570, $4,378,687 and $4,840,457, respectively, as provided under an
operating lease with the Lessee dated October 1, 1958, as modified,
consisted of the following:
1995 1994 1993
Basic rent income............... $1,087,842 $1,122,040 $1,132,075
Advance of additional rent...... 1,053,800 1,053,800 1,053,800
Further additional rent......... 1,565,928 2,202,847 2,654,582
$3,707,570 $4,378,687 $4,840,457
From October 1, 1987 through October 5, 1994, the lease, as modified,
provided for annual basic rent of $1,132,075, which is equal to the sum of
$1,108,075, the prior constant annual mortgage charges, plus $24,000.
Effective October 6, 1994, the lease, as modified, provides for annual basic
rent of $1,087,842, which is equal to the sum of $1,063,842, the new
constant annual mortgage charges, plus $24,000.
The modified lease also provides for payments of additional rent, as
follows:
1. Advances of additional rent are payable in equal monthly
installments totaling an amount equal to the lesser of
$1,053,800 or the defined net operating income of the Lessee
during the preceding fiscal year ended September 30th (the
"lease year"); and
2. Further additional rent is payable in an amount equal to 50% of
the Lessee's remaining net operating income, as defined, in each
lease year.
The modified lease further provides for changes to be made in the basic rent
paid in the event of a refinancing of the first mortgage (Note 3). In such
case, unless there is an increase in the mortgage balance, the annual basic
rent will be modified
-24-<PAGE>
<PAGE>
60 EAST 42nd ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(continued)
4. Related Party Transactions - Rent Income (Continued)
and will be equal to the sum of $24,000 plus an amount equal to the revised
mortgage charges. In the event such mortgage refinancing results in an
increase in the amount of outstanding principal balance of the mortgage, the
basic rent shall be equal to the sum of $24,000 plus an amount equal to the
product of the new debt service percentage rate under the refinanced
mortgage multiplied by the principal balance of the mortgage immediately
prior to the refinancing.
Additional rent is billed to and advanced by the Lessee in equal monthly
installments of $87,817. While it is not practicable to estimate that
portion of additional rent for the lease year ending on the ensuing
September 30th which would be allocable to the current three month period
ending December 31st, Associates' policy is to include in its income each
year the advances of additional rent income received from October 1st to
December 31st.
No other additional rent is accrued by Associates for the period between the
end of the Lessee's lease year ending September 30th and the end of
Associates' fiscal year ending December 31st.
The lease had an initial term expiring on September 30, 1983, with renewal
options for two additional periods of 25 years each. In 1982, the first
lease renewal option was exercised for the period from October 1, 1983
through September 30, 2008.
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 Associates is also a partner in the Lessee.
5. Related Party Transactions - Supervisory Services
Fees for supervisory services (including disbursements and costs of
accounting services) for the years ended December 31, 1995, 1994 and 1993,
totaling $187,973, $226,713 and $296,838, respectively, were paid to the
firm of Wien, Malkin & Bettex. Some partners in that firm are also partners
in Associates. 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 Associates each year.
6. Number of Participants
There were approximately 725 participants in the participating groups at
December 31, 1995, 1994 and 1993.
-25-<PAGE>
<PAGE>
60 EAST 42nd 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 over the mortgage requirements and cash expenses.
8. Distributions and Amount of Income per $10,000 Participation Unit
Distributions and amount of income per $10,000 participation unit during the
years 1995, 1994 and 1993, based on 700 participation units outstanding
during each year, consisted of the following:
Year ended December 31,
1995 1994 1993
Income........................ $3,473 $4,006 $4,908
Return of capital............. 35 - -
TOTAL DISTRIBUTIONS..... $3,508 $4,006 $4,908
Net income is computed without regard to income tax expense since Associates
does not pay a tax on its income; instead, any such taxes are paid by the
participants in their individual capacities.
9. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution account
held by Wien, Malkin & Bettex. The bank balance is insured by the Federal
Deposit Insurance Corporation up to $100,000, and at December 31, 1995 was
completely insured. The distribution account held by Wien, Malkin & Bettex
is not insured. The funds held in the distribution account were paid to the
participants on January 1, 1996.
10. Financial Instruments
Effective for years ended after December 15, 1995, FAS No. 107, "Disclosures
about Fair Value of Financial Instruments", requires disclosure of the fair
value of certain financial instruments for which it is practicable to
estimate that value. It was not practicable to estimate the fair value of
long-term debt because quoted market prices do not exist and an estimate
could not be made through other means without incurring excessive costs.
-26-<PAGE>
<PAGE>
60 EAST 42nd 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.
-27-<PAGE>
<PAGE>
SCHEDULE III
60 EAST 42nd ST. ASSOCIATES
Real Estate and Accumulated Depreciation
December 31, 1995
<TABLE>
<S> <C> <C>
Column
A Description Land, buildings and building
improvements situated at
60 East 42nd Street and
301 Madison Avenue, New York, N.Y.
B Encumbrances - Morgan Guaranty Trust Company of New York,
as trustee of a pension trust
Balance at December 31, 1995.................................... $12,020,814
C Initial cost to company
Land............................................................ $ 7,240,000
Buildings....................................................... $16,960,000
D Cost capitalized subsequent to acquisition
Building improvements........................................... $ 1,574,135
Carrying costs.................................................. $ None
E Gross amount at which carried at
close of period
Land........................................................... $ 7,240,000
Buildings and building improvements............................ 18,534,135
Total.......................................................... $25,774,135(a)
F Accumulated depreciation.......................................... $18,534,135(b)
G Date of construction 1930
H Date acquired October 1, 1958
I Life on which depreciation in latest
income statements is computed Not applicable
</TABLE>
(a) There have been no changes in the carrying values of real estate for
the years ended December 31, 1995, December 31, 1994 and December
31, 1993. The costs for federal income tax purposes are the same as
for financial statement purposes.
(b) Accumulated depreciation
Balance at January 1, 1993 $18,534,135
Depreciation:
F/Y/E 12/31/93 None
12/31/94 None
12/31/95 None None
Balance at December 31, 1995 $18,534,135
-28-<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
The individual signing this report on behalf of
Registrant is Attorney-in-Fact for Registrant and each of the
Partners in Registrant, pursuant to a Power of Attorney, dated
April 12, 1996 (the "Power").
60 EAST 42ND ST. ASSOCIATES
(Registrant)
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: April 12, 1996
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 Partners in Registrant, pursuant
to the Power, on behalf of Registrant and as a Partner in
Registrant on the date indicated.
By /s/ Stanley Katzman
Stanley Katzman, Attorney-in-Fact*
Date: April 12, 1996
______________________
* Mr. Katzman supervises accounting functions for Registrant.
-29-<PAGE>
<PAGE>
Exhibit Index
Number Document Page*
3(a) Partnership Agreement, dated September
25, 1958, which was filed by letter
dated March 31, 1981 (Commission File
No. 0-2670) as Exhibit No. 3 to
Registrant's Form 10-K for the fiscal
year ended December 31, 1980, 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 26, 1996,
reflecting a change in the Partners of
Registrant.
4 Form of Participating Agreement, which
was filed as Exhibit No. 4 to Regis-
trant's Form S-1 Registration Statement,
as amended (the "Registration State-
ment") by letter dated June 28, 1954 and
assigned File No. 2-10981, is incorpo-
rated by reference as an exhibit hereto.
10(a) Deed of Lincoln Building to WLKP Realty
Corp., which was filed as Exhibit No. 5
to Registrant's Registration Statement
by letter dated June 28, 1954 and
assigned File No. 2-10981, is
incorporated by reference as an exhibit
hereto.
10(b) First Mortgage evidenced by a Modifica-
tion, Extension & Consolidation
Agreement, dated March 31, 1954,
between WLKP Realty Corp. and The
Prudential Insurance Company of
America, ("Prudential"), which was
filed as Exhibit No. 6 to Registrant's
Registration Statement by letter dated
June 28, 1954 and assigned File No.
2-10981, is incorporated by reference
as an exhibit hereto.
______________________
* Page references are based on a sequential numbering system.
-30-<PAGE>
<PAGE>
Number Document Page*
10(c) Form of Net Lease between Registrant
and Lincoln Building Associates, which
was filed as Exhibit No. 9 to
Registrant's Registration Statement by
letter dated June 28, 1954 and assigned
File No. 2-10981, is incorporated by
reference as an exhibit hereto.
10(d) Deed from Lincoln Building Associates
to Registrant, dated October 1, 1958,
which was filed by letter dated March
31, 1981 (Commission File No. 0-2670)
as Exhibit No. 10(d) to Registrant's
Form 10-K for the fiscal year ended
December 31, 1980, is incorporated by
reference, as an exhibit hereto.
10(e) Second Modification of Lease Agreement,
dated January 1, 1977, which was filed
by letter dated March 28, 1980
(Commission File No. 0-2670) as Exhibit
II under Item 10(b) of Registrant's
Form 10-K for the fiscal year ended
December 31, 1979, is incorporated by
reference as an exhibit hereto.
10(f) Third Modification of Lease Agreement,
which was filed by letter dated March
28, 1980 (Commission File No. 0-2670)
as Exhibit II under Item 10(b) of
Registrant's Form 10-K for the fiscal
year ended December 31, 1979, is
incorporated by reference as an exhibit
hereto.
______________________
* Page references are based on a sequential numbering system.
-31-<PAGE>
<PAGE>
Number Document Page*
13(a) Letter to Participants, dated January
31, 1996 and supplementary financial
reports for the fiscal year ended
December 31, 1995. The foregoing
material shall not be deemed to be
"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, 1995 and accompanying financial
reports for the lease year ended
September 30, 1995. The foregoing
material shall not be deemed to be
"filed" with the Commission or
otherwise subject to the liabilities of
Section 18 of the Securities Exchange
Act of 1934.
24 Power of Attorney dated April 12, 1996
between Donald A. Bettex, Ralph W.
Felsten, Melvyn H. Halper, Stanley
Katzman, Peter L. Malkin, Martin D.
Newman and C. Michael Spero as Partners
of Registrant and Stanley Katzman and
Richard A. Shapiro.
27 Financial Data Schedule of Registrant
for the fiscal year ended December 31,
1995.
______________________
* Page references are based on a sequential numbering system.
-32-<PAGE>
<PAGE>
Exhibit 3(b)
AMENDED BUSINESS CERTIFICATE
The undersigned hereby certify that a certificate of business
under the assumed name
60 EAST 42ND ST. ASSOCIATES
for the conduct of business at 60 East 42nd Street, New York, New
York, was filed in the office of the County Clerk New York County,
State of New York, on the 30th day of September, 1958, under index
number 8453/53B; that the last amended certificate was filed on
the 20th day of September, 1990 in the office of said County Clerk
under index number 8453/53B.
It is hereby further certified that this amended certificate
is made for the purposes of more accurately setting forth the
facts recited in the original certificate or the last amended
certificate and to set forth the following changes in such facts.*
ALVIN SILVERMAN, residing at 110 Redwood Drive, Roslyn, New York
11576, has been succeeded as a partner by MELVYN H. HALPER,
residing at 9 Latonia Road, Rye Brook, New York 10573.
The members of 60 East 42nd St. Associates now consist of:
Donald A. Bettex, Ralph W. Felsten, Melvyn H. Halper, Stanley
Katzman, Peter L. Malkin, Martin D. Newman and C. Michael Spero.
In Witness Whereof, the undersigned have as of the 2nd day of
June, 1995 made and signed this certificate.
/s/ Alvin Silverman /s/ Martin D. Newman
ALVIN SILVERMAN MARTIN D. NEWMAN
/s/ Melvyn H. Halper
MELVYN H. HALPER
State of New York, County of New York ss.:
On this 2nd day of June, 1995, before me personally appeared
ALVIN SILVERMAN, MELVYN H. HALPER and MARTIN D. NEWMAN, to me
known and known to me to be the individuals described in and who
executed the foregoing certificate, and they thereupon duly
acknowledged to me that they executed the same.
/s/ Estelle Beeber
Notary Public
State of New York
No. 5241708
Qualified in New York County
Commission Expires 9/30/96<PAGE>
[LETTERHEAD OF
WIEN MALKIN & BETTEX
COUNSELLORS AT LAW]
January 31, 1996
To Participants in 60 East 42nd St. Associates
Federal Identification Number 13-6077181
We enclose the annual report of the partnership which owns
the premises at 60 East 42nd Street (the Lincoln Building), and at
301 Madison Avenue, New York City, for the year ended December 31,
1995.
The reported income for 1995 was $2,430,979. This was less
than distributions of $2,455,755, because of the amortization of
mortgage refinancing costs.
Monthly distributions during 1995 totalled $1,046,420, or
about 14.9% per annum on the original cash investment of
$7,000,000. The distributions were made possible by advances from
the lessee totalling $1,053,800 against additional rent.
Additional rent for the lease year ended September 30, 1995
was $2,619,728, or an excess of $1,565,928 over the advances of
$1,053,800. Wien, Malkin & Bettex received $156,593 and the bal-
ance of the excess rent of $1,409,335 was distributed to the par-
ticipants on November 30, 1995. The additional distribution of
$1,409,335 represented an annual return of about 20.1% on the cash
investment of $7,000,000, so that total distributions for 1995
were at the rate of about 35% per annum.
Taking into account that a portion of prior distributions
constituted a return of capital, the book value on December 31,
1995 of an original cash investment of $10,000 was a deficit bal-
ance of $6,392.
(over)
<PAGE>
Re: 60 East 42nd St. Associates 2.
The enclosed Schedule K-1 form(s) (Form 1065), containing
1995 tax information, must be reviewed in detail by your accoun-
tant.
If you have any question about the enclosed material, please
communicate with us at our New York office or, if it is more con-
venient, at our branch office in Palm Beach, Florida.
Please retain this letter and the enclosed Schedule K-1
form(s) for the preparation of your income tax returns for the
year 1995.
Cordially yours,
WIEN, MALKIN & BETTEX
By: Stanley Katzman
SK:fm
Encs.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the participants in 60 East 42nd St. Associates (a Partnership):
We have audited the accompanying balance sheet of 60 East 42nd St.
Associates ("Associates") as of December 31, 1995, and the related
statements of income, partners' capital (deficit) and cash flows for
the year then ended. These financial statements are the
responsibility of Associates' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Associates
as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally
accepted accounting principles.
Jacobs Evall & Blumenfeld LLP
January 23, 1996<PAGE>
60 EAST 42ND ST. ASSOCIATES
FINANCIAL STATEMENTS
AND
INDEPENDENT ACCOUNTANTS' REPORT
YEAR ENDED DECEMBER 31, 1995
<PAGE>
60 EAST 42ND ST. ASSOCIATES
BALANCE SHEET
DECEMBER 31, 1995
Assets
Cash in National Westminster Bank USA $ 677
Cash in distribution account held
by Wien, Malkin & Bettex 87,202
87,879
Real estate at 60 East 42nd Street and
301 Madison Avenue, New York City:
Buildings $16,960,000
Less: Accumulated depreciation 16,960,000 -
Building improvements 1,574,135
Less: Accumulated depreciation 1,574,135 -
Land 7,240,000
Mortgage refinancing costs 249,522
Less: Accumulated amortization 30,681 218,841
Total assets $ 7,546,720
Liabilities and partners' capital (deficit)
Liabilities:
First mortgage $12,020,814
Partners' capital (deficit) (4,474,094)
Total liabilities and
partners' capital (deficit) $ 7,546,720
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
Income:
Basic rent income $1,087,842
Additional rent income 2,619,728
Total income 3,707,570
Expenses:
Interest on first mortgage $1,063,842
Supervisory services 187,973
Amortization of mortgage refinancing costs 24,776
Total expenses 1,276,591
Net income $2,430,979
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
YEAR ENDED DECEMBER 31, 1995
Partners' capital (deficit), January 1, 1995 $(4,449,318)
Add, Net income for the year ended
December 31, 1995 2,430,979
(2,018,339)
Less, Distributions:
Monthly distributions, January 1,
1995 through December 31, 1995 $1,046,420
Distribution on November 30, 1995 of
balance of additional rent for the
lease year ended September 30, 1995 1,409,335
2,455,755
Partners' capital (deficit),
December 31, 1995 $(4,474,094)
See accompanying notes to financial statements.<PAGE>
60 EAST 42ND ST. ASSOCIATES
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
Cash flows from operating activities
Net income $ 2,430,979
Adjustments to reconcile net income to
cash provided by operating activities:
Amortization of mortgage refinancing costs 24,776
Change in accrued interest on first mortgage (88,653)
Net cash provided by operating activities 2,367,102
Cash flows from financing activities
Monthly distributions to participants (1,046,420)
Distribution on November 30, 1995 of
balance of additional rent for the
lease year ended September 30, 1995 (1,409,335)
Net cash used in financing activities (2,455,755)
Net change in cash (88,653)
Cash at beginning of year 176,532
Cash at end of year $ 87,879
Supplemental disclosure of cash flows information
Cash paid in 1995 for:
Interest $ 1,152,495
See accompanying notes to financial statements.
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Business Activity
60 East 42nd St. Associates ("Associates") is a general
partnership which owns commercial property at 60 East 42nd Street
and 301 Madison Avenue, New York, N.Y. The property is net leased
to Lincoln Building Associates.
2. Summary of Significant Accounting Policies
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.
Land, buildings, building improvements and depreciation:
Land, buildings and building improvements are stated at cost.
Depreciation was provided on the straight-line method over the
estimated useful life of the buildings, 26 years from October 1,
1958, and the estimated useful life of the building
improvements, 20 years, 5 months from May 1, 1964. The
buildings and building improvements are fully depreciated.
Mortgage refinancing costs and amortization:
Mortgage refinancing costs of $249,522, incurred in connection
with the October 6, 1994 refinancing of the first mortgage, are
being amortized ratably over the term of the mortgage, from
October 6, 1994 through October 31, 2004.
3. First Mortgage Payable
On October 6, 1994, a first mortgage was placed on the property
with Morgan Guaranty Trust Company of New York, as trustee of a
pension trust, in the amount of $12,020,814. The first mortgage
requires constant equal monthly payments
<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. First Mortgage Payable (continued)
totalling $1,063,842 per annum for interest only, at the rate of
8.85% per annum,and matures on October 31, 2004. The real estate
is pledged as collateral for the first mortgage.
Required principal payments on the first mortgage are as follows:
1996 through 2005 - 0 -
October 31, 2004 $12,020,814
4. Rent Income and Related Party Transactions
On January 4, 1982, Lincoln Building Associates exercised its
option to renew the lease for an additional period of 25 years,
and the lease period now extends through September 30, 2008. The
lease includes an option to renew for one additional period of 25
years through September 30, 2033.
Effective April 1, 1979, the lease was modified to provide for
annual basic rent of $1,255,194 through September 30, 1983, and
any renewal term of the lease, or until such time that the first
mortgage was refinanced. In the event of such mortgage
refinancing, unless there is an increase in the mortgage balance,
the annual basic rent will be modified and will be equal to the
sum of $24,000 plus an amount equal to the revised mortgage
charges. In the event that such mortgage refinancing results in
an increase in the amount of outstanding principal balance of the
mortgage, the basic rent shall be equal to $24,000 plus an amount
equal to the product of the new debt service percentage rate under
the refinanced mortgage multiplied by the principal balance of the
mortgage immediately prior to the refinancing.
Effective October 6, 1994, the annual basic rent is $1,087,842,
which is equal to the sum of $1,063,842, the constant annual
mortgage charges, plus $24,000.
The lease, as modified, also provides for additional rent, as
follows:
1. Additional rent equal to the first $1,053,800 of the
lessee's net operating income, as defined, in each lease
year.
2. Further additional rent equal to 50% of the lessee's
remaining net operating income, as defined, in each lease
year.<PAGE>
60 EAST 42ND ST. ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Rent Income and Related Party Transactions (continued)
For the lease year ended September 30, 1995, there was additional
rent of $2,619,728 based on an operating profit of $4,185,656
subject to additional rent.
Additional rent is billed to and advanced by the lessee in equal
monthly installments of $87,817. While it is not practicable to
estimate that portion of additional rent of the lease year ending
on the ensuing September 30th which would be allocable to the
current three month period ending December 31st, Associates'
policy is to include in its income each year the advances of
additional rent income received from October 1st to December 31st.
No other additional rent is accrued by Associates for the period
between the end of the lessee's lease year ending September 30th
and the end of Associates' fiscal year ending December 31st.
A partner in Associates is also a partner in the lessee.
5. Supervisory Services and Related Party Transactions
Payments for supervisory services, including disbursements and
cost of accounting services, are made to the firm of Wien, Malkin
& Bettex. Some partners in that firm are also partners in
Associates.
6. Income Taxes
Net income is computed without regard to income tax expense since
Associates does not pay a tax on its income; instead, any such
taxes are paid by the participants in their individual capacities.
7. Concentration of Credit Risk
Associates maintains cash balances in a bank and in a distribution
account held by Wien, Malkin & Bettex. The bank balance is
insured by the Federal Deposit Insurance Corporation up to
$100,000, and at December 31, 1995 was completely insured. The
distribution account held by Wien, Malkin & Bettex is not insured.
The funds held in the distribution account were paid to the
participants on January 1, 1996.
<PAGE>
[LETTERHEAD OF
WIEN MALKIN & BETTEX
COUNSELLORS AT LAW]
November 30, 1995
TO PARTICIPANTS IN 60 EAST 42ND ST. ASSOCIATES:
We enclose the operating report of the lessee, Lincoln
Building Associates, for the fiscal year of the lease ended
September 30, 1995. The lessee reported profit of $4,185,656
subject to additional rent for the lease year ended September 30,
1995, as against profit of $5,459,493 for the lease year ended
September 30, 1994. Additional rent for the lease year ended
September 30, 1995 was $2,619,728; $1,053,800 at $87,817 per
month was advanced against additional rent so that the balance of
additional rent is $1,565,928.
Wien, Malkin & Bettex receives an additional payment for
supervisory services of 10% of distributions in excess of 14% per
annum on the cash investment. Accordingly, Wien, Malkin & Bettex
received $156,593 of the additional rent and the balance of
$1,409,335 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 & Bettex and distribution
are enclosed.
The additional distribution of $1,409,335 represents a
return of about 20.1% on the cash investment of $7,000,000.
Regular monthly distributions are at the rate of about 14.9% a
year, so that distributions for the lease year ended September
30, 1995 were about 35% per annum.
If you have any question about the enclosed material,
please communicate with us at our New York office or, if it is
more convenient, at our branch office in Palm Beach, Florida.
Cordially yours,
WIEN, MALKIN & BETTEX
By: Stanley Katzman
SK:fm
Encs.<PAGE>
<PAGE>
[LETTERHEAD OF
KAUFMAN GOLDSTEIN
CERTIFIED PUBLIC ACCOUNTANTS]
Lincoln Building Associates
60 East 42nd Street
New York, New York 10165
Gentlemen:
In accordance with our engagement, we have reviewed the
special-purpose statement of income and expense of Lincoln
Building Associates for the lease year ended September 30, 1995.
Our engagement included the examination of statements of
receipts and disbursements for the property, together with
supporting records, but did not include the verification by direct
communication of the income from tenants or liabilities and
disbursements to vendors.
We have no knowledge of any contingent liabilities that
should be disclosed.
Based on our review, subject to the above, the accompanying
special-purpose statement of income and expense presents fairly
the net operating income, as defined, for the computation of
additional rent, of Lincoln Building Associates, for the lease
year ended September 30, 1995.
Respectfully submitted,
Kaufman Goldstein
New York, New York
October 12, 1995<PAGE>
<PAGE>
Lincoln Building Associates
Statement of Income and Expense
October 1, 1994 through September 30, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
Income:
Rent $22,126,085
Electricity - net 514,626
Other income 392,199
Total Income $23,032,910
Expenses:
Basic rent expense 1,093,553
Real estate taxes 6,949,754
Labor costs 4,859,828
Repairs, supplies and improvements 3,708,712
Steam 430,284
Management and leasing fees 752,060
Professional fees 358,229
Insurance 233,156
Water and sewer charges - net 206,682
Miscellaneous 254,996
Total Expenses 18,847,254
Net income subject to additional rent 4,185,656
Less, Net income subject to primary
additional rent 1,053,800
Net income subject to secondary additional rent $ 3,131,856
Secondary additional rent @ 50% $ 1,565,928
Computation of Additional Rent due Landlord:
Primary additional rent $ 1,053,800
Secondary additional rent 1,565,928
Total additional rent 2,619,728
Less, Advances against additional rent 1,053,800
Additional rent due landlord $ 1,565,928
</TABLE>
The accompanying letter of transmittal and notes
are an integral part of this statement.
-2-<PAGE>
<PAGE>
Lincoln Building Associates
Notes to Financial Statement
Note l - The lease as modified effective January l, 1977 provides
for additional rent, as follows:
Additional rent equal to the first $1,053,800 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.
<PAGE>
EXHIBIT 24
60 EAST 42ND STREET ASSOCIATES
FILE NO. 0-2670
POWER OF ATTORNEY
We, the undersigned general partners of 60 East 42nd
Street Associates ("Associates"), hereby severally constitute and
appoint Stanley Katzman and Richard A. Shapiro and each of them,
individually, our true and lawful attorneys with full power to
them and each of them to sign for us, and in our names and in the
capacities indicated below on behalf of Associates, any and all
reports or other statements required to be filed with the
Securities and Exchange Commission under Section 13 or 15(d) of
the Securities Exchange Act of 1934.
Signature Title Date
/s/Donald A. Bettex
Donald A. Bettex General Partner March 29, 1996
/s/Ralph W. Felsten
Ralph W. Felsten General Partner March 29, 1996
/s/Stanley Katzman
Stanley Katzman General Partner March 29, 1996
/s/Peter L. Malkin
Peter L. Malkin General Partner March 29, 1996
/s/Martin D. Newman
Martin D. Newman General Partner April 12, 1996
/s/Melvyn H. Halper
Melvyn H. Halper General Partner March 29, 1996
/s/C. Michael Spero
C. Michael Spero General Partner March 29, 1996<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of March, 1996 before me personally came
DONALD A BETTEX, RALPH W. FELSTEN, STANLEY KATZMAN, PETER L.
MALKIN, MELVYN H. HALPER and C. MICHAEL SPERO, to me known to be
the individuals described in and who executed the foregoing
instrument, and acknowledged that they executed the same.
/s/NOTARY PUBLIC
NOTARY PUBLIC
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 12th day of April, 1996 before me personally came
MARTIN D. NEWMAN, to me known to be the individual described in
and who executed the foregoing instrument, and acknowledged that
he executed the same.
/s/NOTARY PUBLIC
NOTARY PUBLIC
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet as of December 31, 1995 and the Statement Of Income
for the year ended December 31, 1995, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 87,879
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,879
<PP&E> 7,240,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,546,720<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (4,474,094)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 7,546,720<F3>
<SALES> 3,707,570<F4>
<TOTAL-REVENUES> 3,707,570
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 212,749<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,063,842
<INCOME-PRETAX> 2,430,979
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,430,979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,430,979
<EPS-PRIMARY> 3,473<F6>
<EPS-DILUTED> 3,473<F6>
<FN>
<F1>Includes unamortized mortgage refinance costs of $225,035
<F2>Partnership capital
<F3>Includes first mortgage
<F4>Rental income
<F5>Supervisory services and amortization of mortgage refinance costs
<F6>Earnings per $10,000 participation unit, based on 700 participation
units outstanding during the period
</FN>
</TABLE>
