<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994 Commission File No. 1-6736
STARRETT HOUSING CORPORATION
----------------------------
(Exact Name of Registrant as specified in its charter)
NEW YORK 13-5411123
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
909 THIRD AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)751-3100
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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 such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the close of the period covered by this report.
6,566,399 shares of common stock.
<PAGE> 2
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:
Statement of Consolidated Financial Position - September 30, 1994 . . . . . . . . . . . . . . . . . . . 3
Condensed Statement of Consolidated Financial Position -
December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Common Stockholders' Equity - September 30, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Consolidated Operations - For the Nine Months
ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Consolidated Operations - For the Three Months
ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Statements of Cash Flows - For the Nine Months
ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Management's Discussion of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit A - Computation of Primary Earnings per Share - For the
Nine Months ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 12
Exhibit B - Computation of Primary Earnings per Share - For the
Three Months ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
SEPTEMBER 30, 1994
(In Thousands)
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Cash and cash equivalents of $5,272 . . . . . . . . . . . . . . . . . . . . . . . . $ 11,904
U.S. Treasury/Certificates of Deposit . . . . . . . . . . . . . . . . . . . . . . . 818
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,032
Inventory of real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,049
Property and Equipment-Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,395
Land Held for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,997
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,585
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $122,780
========
LIABILITIES AND EQUITY:
Liabilities:
Payable Within One Year:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,813
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . 4,218
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,922
--------
Total Liabilities Payable Within One Year . . . . . . . . . . . . . . . . 28,953
Deferred Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,215
Deferred Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,520
Long-Term Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,059
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,747
--------
Common Stockholders' Equity
Common stock-par value, $1.00; authorized, 18,000 shares . . . . . . . . . . . . . 6,566
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . 23,933
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,860
Pension Liability Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . (736)
Shares held in treasury-at cost . . . . . . . . . . . . . . . . . . . . . . . . . (1,590)
--------
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,033
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $122,780
========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31,
1993
---------------
<S> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,171
U.S. Treasury/Certificates of Deposit . . . . . . . . . . . . . . . . . . . . . . . 7,811
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,724
Inventory of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,629
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,949
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,284
========
LIABILITIES AND EQUITY
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,853
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,639
Deferred Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,940
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,033
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,819
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,284
========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(In Thousands Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
--------------- ---------------
<S> <C> <C>
Common Stock - Par Value, $1.00; Authorized,
18,000,000 shares; Issued, 6,566,399 shares . . . . . . . . . . $ 6,566 $ 6,566
Capital in Excess of Par Value . . . . . . . . . . . . . . . . . 23,933 23,933
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . 16,860 13,646
Pension Liability Adjustment . . . . . . . . . . . . . . . . . . (736) (736)
Less: Shares Held in Treasury - at cost; 1994, 305,427
and 1993, 305,427 shares . . . . . . . . . . . . . . . (1,590) (1,590)
------- -------
TOTAL COMMON STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . $45,033 $41,819
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
For The Nine Months Ended September 30, 1994 and 1993
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Construction Contracts and Related Revenues . . . . . . . . . . . $88,305 $82,812
Construction and Related Costs . . . . . . . . . . . . . . . . . 48,507 46,685
------- -------
Income from Construction Contracts and
Related Revenues . . . . . . . . . . . . . . . . . . . . . . . . 39,798 36,127
------- -------
Expenses:
General and Administrative . . . . . . . . . . . . . . . . . . . 18,512 18,291
Security Service Labor & Other Costs . . . . . . . . . . . . . . 7,539 6,898
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,649 3,973
Mortgage and Closing Costs . . . . . . . . . . . . . . . . . . . 3,917 2,648
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494 658
Loss from Rental Operations-Net . . . . . . . . . . . . . . . . 171
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,111 32,639
------- -------
Income before Income Taxes . . . . . . . . . . . . . . . . . . . 5,687 3,488
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 2,473 1,814
------- -------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,214 $ 1,674
======= =======
Earnings per Common Share:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $.51 $.26
==== ====
Weighted average number of shares . . . . . . . . . . . . . . . . 6,261 6,372
===== =====
Cash Dividends per Share . . . . . . . . . . . . . . . . . . . . $.0625 None
====== ====
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE> 7
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
For The Three Months Ended September 30, 1994 and 1993
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Construction Contracts and Related Revenues . . . . . . . . . . . $32,868 $31,662
Construction and Related Costs . . . . . . . . . . . . . . . . . 18,486 18,968
------- -------
Income from Construction Contracts and
Related Revenues . . . . . . . . . . . . . . . . . . . . . . . . 14,382 12,694
------- -------
Expenses:
General and Administrative . . . . . . . . . . . . . . . . . . . 6,214 5,973
Security Service Labor & Other Costs . . . . . . . . . . . . . . 2,850 2,474
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,298 1,330
Mortgage and Closing Costs . . . . . . . . . . . . . . . . . . . 1,372 1,022
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 222
Loss from Rental Operations-Net . . . . . . . . . . . . . . . . 3
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,901 11,024
------- -------
Income before Income Taxes . . . . . . . . . . . . . . . . . . . 2,481 1,670
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 993 867
------- -------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,488 $ 803
======= =======
Earnings per Common Share:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $.23 $.12
==== ====
Weighted average number of shares . . . . . . . . . . . . . . . . 6,261 6,372
===== =====
Cash Dividends per Share . . . . . . . . . . . . . . . . . . . . $.0625 None
====== ====
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE> 8
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended September 30, 1994 and 1993
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,214 $ 1,674
Adjustments to Reconcile Income to Net Cash
Provided by Operating Activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 1,703 2,048
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 107 (970)
Loss (gain) on sale of rental facilities . . . . . . . . . . . (1,736) 195
Changes in Operating Assets and Liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . (3,308) 2,593
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . (1,181) (4,069)
Account payable . . . . . . . . . . . . . . . . . . . . . . . 1,960 2,775
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . (2,121) (37)
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . (1,113) 1,346
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . (420) (703)
------- -------
Cash Provided by (Used In) Operating Activities . . . . . . . . . (2,895) 4,852
------- -------
INVESTING ACTIVITIES:
Investments In And Advances To Partnerships . . . . . . . . . . . (5,817) (1,206)
U.S. Treasury/Certificates of Deposit . . . . . . . . . . . . . . 6,993 5,485
Purchase of Property and Equipment . . . . . . . . . . . . . . . (695) (639)
Proceeds relating to sale of rental and
other property and equipment, net . . . . . . . . . . . . . . . 3,399 4,164
------- -------
Net Cash Provided by Investing Activities . . . . . . . . . . . . 3,880 7,804
------- -------
FINANCING ACTIVITIES:
Repayment of Notes and Mortgage Payables . . . . . . . . . . . . (8,575) (14,780)
Proceeds from Long Term Obligations . . . . . . . . . . . . . . . 8,790 3,770
Payments of Promissory Notes . . . . . . . . . . . . . . . . . . (1,467) (5,846)
Purchase of Treasury Stock . . . . . . . . . . . . . . . . . . . (725)
------- -------
Net Cash Used In Financing Activities . . . . . . . . . . . . . . (1,252) (17,581)
------- -------
Decrease in Cash and Cash Equivalents . . . . . . . . . . . . . . (267) (4,925)
Cash and Cash Equivalents Beginning of Period . . . . . . . . . . 12,171 11,624
------- -------
Cash and Cash Equivalents End of Period . . . . . . . . . . . . . $11,904 $ 6,699
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
8
<PAGE> 9
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Starrett Housing
Corporation and its subsidiaries have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The consolidated financial statements as of and for the nine months
ended September 30, 1994 and 1993 are unaudited and are subject to year-end
audit and adjustments. The results of operations for the interim periods are
not necessarily indicative of the results of operations for the fiscal year.
For comparability purposes, certain 1993 amounts have been reclassified to
conform with the 1994 classifications. For further information, refer to the
consolidated financial statements and footnotes included thereto in the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS COMPARISON OF NINE AND THREE MONTHS
ENDED SEPTEMBER 30, 1994 AND 1993
During the nine and three months ended September 30, 1994 the Company
had net income of $3,214,000 ($.51 per share) and $1,488,000 ($.23 per share),
respectively, as compared with $1,674,000 ($.26 per share) and $803,000 ($.12
per share), respectively, for the similar periods in 1993. Earnings per share
were based on average shares outstanding of 6,261,000 and 6,372,000 in 1994 and
1993, respectively.
The increase in income for the nine and three month periods ended
September 30, 1994 was primarily attributable to Levitt Corporation. Levitt's
income increased to $3,262,000 from $1,484,000 for the nine month period in
1993, including income in 1994 from the sale of its interest in a rental
apartment project. For the three month period, Levitt's income increased to
$1,232,000 from $756,000 for the similar period in 1993. Levitt's backlog
increased from $58,061,000 or 410 units at September 30, 1993 to $85,850,000 or
525 units at September 30, 1994. The September 30, 1994 backlog includes
$13,003,000 and 82 units, respectively, relating to a joint venture in which
Levitt has a 50% interest. Levitt's sales increased in both its Puerto Rico
and Florida regions.
Levitt's gross profit margin increased in 1994 compared with 1993 as a
result of higher selling prices and a greater proportion of houses delivered in
the Puerto Rico region, where gross profits are higher as compared to the
domestic region.
The Company's management division reported an increase in profits for
the nine month period. The Company expects that the increased level of profits
for its management division will continue for the balance of the year and that
its construction division will turn a small profit in 1994.
The Company has three projects located on the Upper West Side of
Manhattan, in which it has a 50% residual partnership interest, with respect to
which the Company has made application for incentives under the Low Income
Housing Preservation and Resident Homeownership Act ("LIHPRHA"). The amount of
cash proceeds and profits, if any, the Company could receive for its 50%
residual interest in the projects as well as the time required to complete the
process is uncertain.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
STARRETT HOUSING CORPORATION
(Registrant)
s/ Paul Milstein
---------------------------------------
Paul Milstein - Chairman
s/ Lewis A. Weinfeld
-----------------------------------
Lewis A. Weinfeld - Executive Vice
President and Chief Financial Officer
(Principal Accounting Officer)
DATE: November 11, 1994
11
<PAGE> 12
EXHIBIT A
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
EXHIBIT SETTING FORTH THE COMPUTATION OF PRIMARY
EARNINGS PER SHARE INFORMATION
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1994 1993
------ ------
<S> <C> <C>
Weighted average number of shares outstanding
during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,372
===== =====
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,214 $1,674
====== ======
Primary earnings per share:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.51 $.26
==== ====
</TABLE>
12
<PAGE> 13
EXHIBIT B
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
EXHIBIT SETTING FORTH THE COMPUTATION OF PRIMARY
EARNINGS PER SHARE INFORMATION
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1994 1993
------ ------
<S> <C> <C>
Weighted average number of shares outstanding
during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,372
===== =====
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,488 $803
====== ====
Primary earnings per share:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.23 $.12
==== ====
</TABLE>
13
<PAGE> 14
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 11,904
<SECURITIES> 818
<RECEIVABLES> 26,032
<ALLOWANCES> 0
<INVENTORY> 62,049
<CURRENT-ASSETS> 100,803
<PP&E> 3,395
<DEPRECIATION> 0
<TOTAL-ASSETS> 122,780
<CURRENT-LIABILITIES> 28,953
<BONDS> 42,059
<COMMON> 6,566
0
0
<OTHER-SE> 38,467
<TOTAL-LIABILITY-AND-EQUITY> 122,780
<SALES> 88,305
<TOTAL-REVENUES> 88,305
<CGS> 48,507
<TOTAL-COSTS> 48,507
<OTHER-EXPENSES> 33,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 494
<INCOME-PRETAX> 5,687
<INCOME-TAX> 2,473
<INCOME-CONTINUING> 3,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,214
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
