<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 JUNE 30, 1994 COMMISSION FILE NO. 1-6736
STARRETT HOUSING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
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
</TABLE>
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 - JUNE 30, 1994 . . . . . . . . . . . . . . . . . . . 3
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION -
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY - JUNE 30, 1994
AND DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
STATEMENTS OF CONSOLIDATED OPERATIONS - FOR THE SIX MONTHS
ENDED JUNE 30, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
STATEMENTS OF CONSOLIDATED OPERATIONS - FOR THE THREE MONTHS
ENDED JUNE 30, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
CONSOLIDATED STATEMENTS OF CASH FLOWS - FOR THE SIX MONTHS
ENDED JUNE 30, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXHIBIT A - COMPUTATION OF PRIMARY EARNINGS PER SHARE - FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . . 13
EXHIBIT B - COMPUTATION OF PRIMARY EARNINGS PER SHARE - FOR THE
THREE MONTHS ENDED JUNE 30, 1994 AND 1993 . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
JUNE 30, 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,063
U.S. TREASURY/CERTIFICATES OF DEPOSIT . . . . . . . . . . . . . . . . . . . . . . 305
RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,285
INVENTORY OF REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,089
PROPERTY AND EQUIPMENT-NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,319
LAND HELD FOR INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,161
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,587
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $115,809
========
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
PAYABLE WITHIN ONE YEAR:
ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,557
CURRENT PORTION OF LONG-TERM OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 4,292
ACCRUED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,445
--------
TOTAL LIABILITIES PAYABLE WITHIN ONE YEAR . . . . . . . . . . . . . . . . 28,294
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,094
DEFERRED REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,529
LONG-TERM OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,347
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,264
--------
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,372
PENSION LIABILITY ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . (736)
SHARES HELD IN TREASURY-AT COST . . . . . . . . . . . . . . . . . . . . . . . . . (1,590)
---------
COMMON STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,545
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $115,809
========
</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 STOCKHOLDERS' 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>
JUNE 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 . . . . . . . . . . . . . . . . . . . . . . . 15,372 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 . . . . . . . . . . . . . . . . $43,545 $41,819
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
CONSTRUCTION CONTRACTS AND RELATED REVENUES . . . . . . . . . . . . . . . $55,437 $51,150
CONSTRUCTION AND RELATED COSTS . . . . . . . . . . . . . . . . . . . . . . 30,021 27,717
------- -------
INCOME FROM CONSTRUCTION CONTRACTS AND
RELATED REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,416 23,433
------- -------
EXPENSES:
GENERAL AND ADMINISTRATIVE . . . . . . . . . . . . . . . . . . . . . . . 12,298 12,318
SECURITY SERVICE LABOR AND OTHER COST . . . . . . . . . . . . . . . . . . 4,689 4,424
SELLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,351 2,643
MORTGAGE AND CLOSING COSTS . . . . . . . . . . . . . . . . . . . . . . . . 2,545 1,626
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 436
LOSS FROM RENTAL OPERATIONS-NET . . . . . . . . . . . . . . . . . . . . . 168
------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,210 21,615
------- -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . 3,206 1,818
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,480 947
------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,726 $ 871
======= =======
EARNINGS PER COMMON SHARE:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.28 $.14
==== ====
WEIGHTED AVERAGE NUMBER OF SHARES . . . . . . . . . . . . . . . . . . . . . 6,261 6,395
===== =======
CASH DIVIDENDS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . NONE 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 JUNE 30, 1994 AND 1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
CONSTRUCTION CONTRACTS AND RELATED REVENUES . . . . . . . . . . . . . . . . $28,042 $24,219
CONSTRUCTION AND RELATED COSTS . . . . . . . . . . . . . . . . . . . . . . 14,606 12,463
------- -------
INCOME FROM CONSTRUCTION CONTRACTS AND
RELATED REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,436 11,756
------- -------
EXPENSES:
GENERAL AND ADMINISTRATIVE . . . . . . . . . . . . . . . . . . . . . . . . 6,241 6,097
SECURITY SERVICE LABOR AND OTHER COST . . . . . . . . . . . . . . . . . . 2,503 2,332
SELLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,254 1,260
MORTGAGE AND CLOSING COSTS . . . . . . . . . . . . . . . . . . . . . . . . 1,370 724
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 219
LOSS FROM RENTAL OPERATIONS-NET . . . . . . . . . . . . . . . . . . . . . 9
------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,530 10,641
------- -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . 1,906 1,115
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875 568
------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,031 $ 547
======= =======
EARNINGS PER COMMON SHARE:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.17 $.09
==== ====
WEIGHTED AVERAGE NUMBER OF SHARES . . . . . . . . . . . . . . . . . . . . . 6,261 6,395
===== =====
CASH DIVIDENDS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . NONE NONE
==== ====
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
<PAGE> 8
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,726 $ 871
ADJUSTMENTS TO RECONCILE INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION . . . . . . . . . . . . . . . . . . 1,047 1,261
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . (14) 620
(GAIN) LOSS ON SALE OF RENTAL FACILITIES . . . . . . . . . . . . (1,645) 195
CHANGES IN OPERATING ASSETS AND LIABILITIES:
RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . 439 4,849
INVENTORIES . . . . . . . . . . . . . . . . . . . . . . . . . . 1,615 (303)
ACCOUNT PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . 1,704 516
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . (1,036) 14
ACCRUED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . (1,590) 22
DEFERRED REVENUES . . . . . . . . . . . . . . . . . . . . . . . (411) (698)
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . 1,835 7,347
-------- --------
INVESTING ACTIVITIES:
INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS . . . . . . . . . . . . (5,476) (1,135)
U.S. TREASURY/CERTIFICATES OF DEPOSIT . . . . . . . . . . . . . . . 7,506 5,494
PURCHASE OF PROPERTY AND EQUIPMENT . . . . . . . . . . . . . . . . ( 438) (418)
PROCEEDS RELATING TO SALE OF RENTAL AND OTHER
PROPERTY AND EQUIPMENT, NET . . . . . . . . . . . . . . . . . . . 3,355 4,164
-------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES . . . . . . . . . . . . . 4,947 8,105
-------- --------
FINANCING ACTIVITIES:
REPAYMENT OF NOTES AND MORTGAGE PAYABLES . . . . . . . . . . . . . (6,163) (13,671)
PROCEEDS FROM LONG TERM OBLIGATIONS . . . . . . . . . . . . . . . . 1,740
PAYMENTS OF PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . (1,467) (5,846)
PURCHASE OF TREASURY STOCK . . . . . . . . . . . . . . . . . . . . (37)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES . . . . . . . . . . . . . . . (5,890) (19,554)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . 892 (4,102)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD . . . . . . . . . . . 12,171 11,624
-------- --------
CASH AND CASH EQUIVALENTS END OF PERIOD . . . . . . . . . . . . . . $13,063 $ 7,522
======== ========
</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 SIX MONTHS
ENDED JUNE 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 SIX AND THREE MONTHS ENDED JUNE 30, 1994 AND 1993
DURING THE SIX AND THREE MONTHS ENDED JUNE 30, 1994, THE COMPANY HAD
NET INCOME OF $1,726,000 ($.28 PER SHARE) AND $1,031,000 ($.17 PER SHARE),
RESPECTIVELY, AS COMPARED WITH $871,000 ($.14 PER SHARE) AND $547,000 ($.09 PER
SHARE), RESPECTIVELY, FOR THE SAME PERIODS IN 1993. EARNINGS PER SHARE WERE
BASED ON AVERAGE SHARES OF 6,261,000 AND 6,395,000 IN 1994 AND 1993.
THE INCREASE IN INCOME FOR THE SIX AND THREE MONTH PERIODS ENDED JUNE
30, 1994 WAS PRIMARILY ATTRIBUTABLE TO LEVITT CORPORATION. LEVITT'S INCOME
INCREASED TO $2,030,000 FROM $728,000 FOR THE SIX MONTH PERIOD IN 1993,
INCLUDING INCOME IN THE 1994 PERIOD FROM THE SALE OF ITS INTEREST IN A RENTAL
APARTMENT PROJECT. FOR THE THREE MONTH PERIOD, LEVITT'S INCOME INCREASED TO
$1,311,000 FROM $360,000 FOR THE SIMILAR PERIOD IN 1993. LEVITT'S BACKLOG
INCREASED FROM $56,364,000 OR 420 UNITS AT JUNE 30, 1993 TO $88,195,000 OR 559
UNITS AT JUNE 30, 1994. LEVITT'S SALES (NEW CONTRACTS) DURING THE SIX MONTHS
ENDED JUNE 30, 1994 INCREASED TO $85,284,000 OR 543 UNITS COMPARED WITH
$57,127,000 OR 423 UNITS FOR THE SIMILAR PERIOD IN 1993. THE JUNE 30, 1994
BACKLOG AND SALES INCLUDE $8,481,000 AND 54 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 ANTICIPATES THAT SALES IN FLORIDA DURING 1994,
WHICH HAVE BEEN MADE AT INCREASED PROFIT MARGINS, WILL START TO BE REFLECTED IN
INCOME DURING THE FALL OF 1994.
THE COMPANY'S MANAGEMENT DIVISION REPORTED A 45% INCREASE IN PROFITS
FOR THE SIX MONTH PERIOD AND ITS CONSTRUCTION DIVISION A SMALL LOSS. THE
COMPANY EXPECTS THAT THE INCREASED LEVEL OF PROFITS FOR ITS MANAGEMENT DIVISION
WILL CONTINUE FOR THE BALANCE OF THE YEAR.
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"). ON APRIL 28,
1993, HUD PROVIDED THE PARTNERSHIP WITH A VALUE DETERMINATION LETTER FOR THE
FIRST OF ITS PROJECTS ESTABLISHING A SUBSTANTIAL VALUE FOR THE PROJECT, AND IN
AUGUST AND OCTOBER 1993 HUD PROVIDED
10
<PAGE> 11
TECHNICAL COMMENTS ON THE PLAN OF ACTION NECESSARY TO COMPLETE THE PROCESSING.
HUD HAS NOTIFIED THE COMPANY THAT IT WAS REVERSING ITS PRIOR VALUE
DETERMINATION AND CONSEQUENTLY WILL REQUIRE THE PARTNERSHIP TO REPROCESS THE
PROJECT, USING A DIFFERENT FORMULA FOR VALUATION, PRESENTLY BEING DEVELOPED BY
HUD. UNDER HUD'S REVISED FORMULA, THE PROJECT MAY HAVE A SUBSTANTIALLY
DIMINISHED VALUE. THE COMPANY DISAGREES WITH THE REVERSAL OF HUD'S PRIOR VALUE
DETERMINATION POSITION, HAS SO NOTIFIED HUD AND DISCUSSIONS ARE IN PROCESS
REGARDING THIS MATTER. IN LIGHT OF THE FOREGOING, THE AMOUNT OF CASH PROCEEDS
AND PROFITS, IF ANY, THE COMPANY COULD RECEIVE FOR ITS 50% RESIDUAL INTEREST IN
THE PROJECT AS WELL AS THE TIME REQUIRED TO COMPLETE THE PROCESS IS UNCERTAIN.
THE REVISED HUD POSITION ALSO AFFECTS PROCESSING UNDER LIHPRHA FOR THE TWO
SIMILAR PROJECTS IN WHICH THE COMPANY OWNS A 50% RESIDUAL INTEREST LOCATED ON
THE UPPER WEST SIDE OF MANHATTAN. IF SUSTAINED, THE REVISED HUD POSITION WILL
AFFECT ALL NEW YORK PROJECTS OF A SIMILAR NATURE.
11
<PAGE> 12
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.
<TABLE>
<S> <C>
STARRETT HOUSING CORPORATION
(REGISTRANT)
S/ PAUL MILSTEIN
-----------------------------------------
PAUL MILSTEIN - CHAIRMAN
S/ LEWIS A. WEINFELD
---------------------------------------
LEWIS A. WEINFELD - SENIOR VICE
PRESIDENT AND TREASURER
(PRINCIPAL ACCOUNTING OFFICER)
DATE: AUGUST 12, 1994
</TABLE>
12
<PAGE> 13
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>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1994 1993
------ ------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING
THE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,395
===== =====
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,726 $ 871
====== ======
PRIMARY EARNINGS PER SHARE:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.28 $.14
==== ====
</TABLE>
13
<PAGE> 14
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
JUNE 30,
-----------------------------
1994 1993
------ ------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING
THE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,395
===== =====
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,031 $547
====== ====
PRIMARY EARNINGS PER SHARE:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.17 $.09
==== ====
</TABLE>
14
