<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the fiscal year ended December 31, 1994
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from __________ to __________
Commission file number 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock - par value $1.00 per share American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
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 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 recipient'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. /X/
Aggregate market value of the Common Stock held by non-affiliates of the
Registrant, based on the closing price on the American Stock Exchange on March
20, 1995: $15,289,274 (For this purpose, all outstanding shares of Common
Stock have been considered held by non-affiliates, other than the shares owned
by directors, officers and 5% shareholders of the Registrant; certain of such
persons disclaim that they are affiliates of the Registrant.)
Number of shares of Common Stock outstanding at December 31, 1994: 6,566,402
Documents incorporated by reference: Portions of the definitive proxy statement
of Registrant in connection with its 1994 Meeting of Shareholders incorporated
by reference in Part III.
<PAGE> 2
PART I
Item 1. Business
Starrett Housing Corporation was organized in New York in
1922. Through its subsidiary Levitt Corporation ("Levitt"), the Company
engages in the construction and sale of single-family homes and garden
apartments in the United States and Puerto Rico. See "Levitt Corporation."
Over the years Starrett and its subsidiaries have constructed a wide range of
office, industrial, public and institutional buildings, among the most notable
being the Empire State Building, the Rockefeller Research Laboratories at
Memorial Sloan Kettering Cancer Center, the New York Psychiatric Institute,
Citicorp Center and Chemical Bank World Headquarters, and many well-known
residential communities and developments, including Starrett City, Manhattan
Park at Roosevelt Island and Trump Tower in New York City. The Company today
is actively engaged in various construction, development, management and
related businesses. See "Starrett's Construction Activities," "Development
Activities" and "Management and Rental Services."
Unless the context otherwise requires, references to the
"Company," the "Registrant" or "Starrett" include Starrett Housing Corporation
and/or one or more of its subsidiaries.
Levitt Corporation
Levitt's operations include sales of single family detached
homes and condominium garden apartments, development of rental apartment
complexes and mortgage banking.
Housing
Levitt's residential housing operations are concentrated in
Florida and Puerto Rico. In Puerto Rico, Levitt believes it is the largest
home builder and has been active on the island since 1960. Florida operations
were started in 1978 and are currently conducted on Florida's southeast and
southwest coasts.
During 1993 and 1994, several new sites were acquired and
opened in Florida. Although the projects are in various stages of development,
all have received favorable responses from home-buyers. During 1995, Levitt
expects sales to continue to increase due to delivery of units from these new
subdivisions in Florida. Additionally, new sites are under contract for future
developments.
Levitt has concentrated its significant Puerto Rican
homebuilding activities in the greater San Juan area. In recent years, Puerto
Rico operations have provided the majority of revenue and profits for Levitt.
Levitt has a major development called Encantada and other subdivisions in the
San Juan metropolitan area.
2
<PAGE> 3
Encantada is a planned unit development located in a suburb of
San Juan with excellent access to schools, shopping and business centers.
Encantada is planned for 2,600 homes of which more than 1,500
homes have been contracted for sale with over 1,350 deliveries as of February
28, 1995. Both single family homes and garden apartments are offered for sale
at various prices in the community. The Company believes that Encantada's
success can be attributed to the quality of the community, quality of the
housing and the family lifestyle provided. With approximately 1,100 more homes
to be sold, Encantada, together with the region's other projects, is expected
to continue as an important source of revenues and profits for the Company.
Levitt's business is affected by several issues such as
housing affordability, increased land costs, legislative growth restrictions,
sewer and water moratoriums, possible changes in the Internal Revenue Code,
including changes in Section 936 of the Internal Revenue Code relating to the
taxability of corporations doing business in Puerto Rico, and increasing
infrastructure demands.
Levitt's backlog of homes contracted for sale at December 31,
1994 was $80,523,000 compared to $32,320,000 at December 31, 1993. Included in
Levitt's sales backlog at December 31, 1994 is $39,490,000 from joint ventures
in which Levitt has 50% interests. Backlog consists of units which are under
sales contract but where title has not yet passed, and comprises completed and
uncompleted houses as well as houses where construction has not yet begun.
The following table sets forth information concerning homes
contracted for sale (net of cancellations during each period), housing units
delivered (construction completed and title passed), and backlog:
<TABLE>
<CAPTION>
Wholly-Owned Projects Year Ended December 31,
- --------------------- -----------------------
1994 1993 1992
---- ---- ----
(000's omitted from dollar amounts)
<S> <C> <C> <C>
Homes contracted (net of cancellations)
for sale during period:
Units 729 626 644
Dollar amount (estimated) $113,973 $88,089 $83,991
Homes delivered during period:
Units 714 666 592
Revenues $105,260 $89,534 $77,269
Backlog at end of period:
Units 247 232 272
Dollar amount (estimated) $41,033 $32,320 $33,765
</TABLE>
3
<PAGE> 4
The Company's backlog as of February 28, 1995 increased
significantly from the amounts at December 31, 1994 and February 28, 1994. The
increase is attributable to a higher level of sales experienced in the
Company's joint venture projects, coupled with level sales backlog of its
wholly-owned projects.
<TABLE>
<CAPTION>
Combined Backlog February 28,
- ---------------- ------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Backlog wholly-owned projects:
Units 333 406 337
Dollar amount (estimated) $56,031 $59,679 $42,943
Backlog joint ventures:
Units 314 23
Dollar amount (estimated) $51,668 $3,500
-------- ------- -------
$107,699 $63,179 $42,943
======== ======= =======
</TABLE>
After the initial contract has been received, contracts for
the sale of houses may be canceled at or prior to closing for various reasons,
including failure of the buyer to make the remainder of the required contract
deposit, or qualify for mortgage financing, or a default by the buyer. Levitt
retains the buyer's deposit only if cancellation results from default by the
buyer, except in Puerto Rico where under local law Levitt can retain only a
portion of the deposit. When computing homes contracted for sale and backlog,
Levitt makes no deduction for future cancellations, but nets cancellations as
they occur against sales contracts. Levitt generally estimates that of the
sales contracts entered into by buyers, approximately two-thirds have
historically resulted in delivered homes. Contracts for sale are not recorded
as revenues until the houses have been completed and title delivered.
Levitt generally builds subdivisions on undeveloped suburban
land having access to water and sewer services, although it does occasionally
purchase fully developed land. Development plans must be approved by local
authorities, which may take two years or more after the signing of a purchase
contract. See "Regulation of the Company's Activities," page 7.
Levitt provides home purchasers with warranties against
construction defects for a period of up to two years from the date of purchase.
In Puerto Rico there is a statutory warranty for certain construction defects
which appear generally within ten years after completion.
Rental Apartment Development
In 1991, Levitt, in joint venture with an established
apartment developer, constructed its first apartment project in Florida. This
224 unit apartment complex was completed and sold in 1992 to an institutional
investor at a substantial profit. The Company and the joint venture partner
completed a second complex and also sold it to an institutional investor at a
substantial profit in 1994. A third development with Levitt's joint venture
partner is nearing completion and leasing of the apartments is under way with
50% of the
4
<PAGE> 5
complex leased as of March 13, 1995. It is anticipated that this project will
be sold in late 1995 or early 1996.
Levitt's current policy is to develop, lease and sell the
apartment projects and not hold them for investment. The apartment development
program is an integral part of Levitt's business and is anticipated to provide
it with a continuous source of income. It is the Company's plan to develop at
least one or more apartment projects each year.
Mortgage Banking
Levitt Mortgage Corp. ("Mortgage") is a full service mortgage
lender that processes and originates loans in Puerto Rico and processes
mortgage loans domestically. Fees are earned on mortgage placements and
processing. Mortgage is a designated approved direct endorser of FHA loans in
Puerto Rico but does not service loans.
In Puerto Rico, Mortgage also acts as a mortgage banker for
third parties and processes and issues the mortgages it underwrites. These
mortgages are sold to investors in accordance with firm purchase commitments
with the investors. Mortgages are solicited through four offices in the San
Juan area. Mortgage is the fifth largest mortgage banker in Puerto Rico.
Development Activities
In its development activities, the Company's services, in
addition to those of a construction manager or general contractor, may include
initial planning and development, acquisition of the property, arranging for
financing and ownership of the project typically through general or limited
partnerships, and providing management, consulting and related services. The
Company anticipates marketing its development projects to investors or other
purchasers, based principally on cash flow, capital appreciation and other
non-tax considerations, and may in some instances retain ownership of such
projects. In connection with its sale of projects, the Company may provide
guarantees of completion and cash flow for varying periods. The Company has
focused its development efforts in the areas of rental housing and projects
sponsored by municipalities.
The Company is proceeding with certain development projects.
While the Company has generally been successful in developing such projects,
these projects are in differing stages of development, and there can be no
assurance that any particular project will be completed.
Ownership of Partnership Interests
The Company reviews from time to time projects in which it
acts as a general partner or in which it has an equity interest (which for the
most part have a low income tenancy subsidized in whole or in part by
government-assistance programs) to determine the possibility of refinancing,
resyndicating, selling, converting to condominiums, or co-oping such projects
to obtain fees and other economic benefits.
5
<PAGE> 6
Starrett's Construction Activities
Through its HRH Construction Corporation subsidiary ("HRH"),
the Company primarily acts as construction manager in the construction of
hospital and medical research facilities, institutional, office and residential
projects, most of which are located in the New York Metropolitan area. HRH
builds projects either as a construction manager on a cost plus fee basis or a
general contractor in which case it assumes the construction risk. The
construction management and general contracting fees and other income earned by
HRH during 1994, 1993 and 1992 were $4,278,000, $4,000,000 and $5,396,000,
respectively. See "Segment Information," page 7.
HRH has focused its activities on institutional construction
and construction funded by City, State and Federal governments and is seeking
to diversify into new areas of construction.
In the case of projects where HRH acts as general contractor
rather than construction manager (which has included projects in which the
Company acts as a developer or has an ownership interest), the Company is
required from time to time, as is customary in projects of this kind, to
furnish payment and performance bonds assuring payment to subcontractors. The
Company believes its bonding capacity is adequate for both present and
projected requirements. The aggregate amount of bonds or other security the
Company can obtain at any one time is dependent upon its overall financial
strength.
HRH's estimated backlog of fees for development work and
uncompleted construction in connection with construction projects, including
fees for projects where development work has begun but contracts have not yet
been executed, was $8,950,000 at December 31, 1994 as compared to $8,151,000
and $8,158,000 at the end of 1993 and 1992, respectively. HRH is actively
seeking to increase its backlog of business, particularly in the hospital and
medical research facilities, as well as, the governmental and institutional
sectors.
Management and Rental Services
Grenadier Realty Corp. ("Grenadier") is licensed in New York,
New Jersey and Connecticut and manages many different properties with rental,
condominium and cooperative residential units, commercial and retail space, and
garage parking. Its current management portfolio include more than 28,000
dwelling units and is listed as the 17th largest project manager in the United
States. Grenadier provides a full range of real estate management services,
including on-site administration, accounting, security, maintenance,
procurement, capital budgeting and owner and tenant communication programs to
private owners and to governmental and institutional property owners as well as
banks and thrift institutions. Grenadier operates two power plants and
provides technical services for the development of energy conservation
programs. In addition, Grenadier provides technical support for the
implementation and operation of reliable, cost-effective electrical and
mechanical building systems. Grenadier also designs security systems and
provides security services to a variety of residential, commercial and
industrial clients.
6
<PAGE> 7
Regulation of the Company's Activities
The development business and home building industry in which
the Company is engaged have, in the last several years, become subject to
increased environmental, building, land use, zoning and sales regulations
administered by various federal, state and local authorities, which affect
construction activities as well as sales activities and other dealings with
customers. Additionally, sewer moratoriums have been imposed from time to time
in Puerto Rico which have caused delays in the delivery of homes to customers.
The Company must obtain for its development and housing activities the approval
of numerous governmental authorities which often have wide discretion in such
matters. Changes in local circumstances or applicable law may necessitate
applications for additional approvals or the modification of existing
approvals. Compliance with these regulations has extended the time required to
market projects by prolonging the time between the initiation of projects and
the commencement and completion of construction. The Company is currently in
various stages of securing governmental approvals for its development and
homebuilding projects. Delay or inability to obtain all required approvals for
a project could have a materially adverse effect on the marketability or
profitability of such a project.
Segment Information
The Company's operations consist of (i) the development,
management and ownership of real estate properties; (ii) the single-family home
and garden apartment business conducted through its Levitt subsidiary; and
(iii) the supplying of construction services through its HRH subsidiary. The
Company groups its business into these three segments. The following table
sets forth the Company's revenues and operating profit attributable to the
respective segments of its operations for each of the years 1992 through 1994,
and the identifiable assets attributable to the respective segments as at the
end of each of those years:
<TABLE>
<CAPTION>
(Dollars in Thousands)
Development HRH
Management and Levitt Construction
1994 Ownership Corporation Corporation
- ---- -------------- ----------- ------------
<S> <C> <C> <C>
Revenues $25,635 $111,422 $4,278
Operating Profit 2,575 10,085 309
Identifiable Assets 20,539 85,423 10,305
1993
- ----
Revenues $24,504 $93,678 $4,000
Operating Profit (loss) 2,600 4,257 (372)
Identifiable Assets 25,797 86,300 8,187
1992
- ----
Revenues $23,487 $82,972 $ 5,396
Operating Profit 2,435 864 283
Identifiable Assets 31,299 94,335 11,104
</TABLE>
7
<PAGE> 8
Operating profit is comprised of revenues less operating
expenses. In computing operating profit, general corporate expenses and income
taxes have not been deducted.
There were no individual customers from which the Company
derived 10% or more of its revenues in 1992, 1993 or 1994.
Competition
The construction, development and home building industries in
all of the areas in which the Company operates are highly competitive, and the
Company competes with major concerns as well as with smaller contractors or
builders, some of whom have greater financial resources than the Company.
Raw Materials and Equipment
Substantially all the materials used by the Company in
projects now under construction, including fixtures, appliances and systems,
are readily available from many sources. The Company has from time to time
experienced some shortages, delays and increased costs in connection with
material shortages and increases in material prices but the Company does not
believe the effect to have been significant.
Employees--Labor Relations
The Company directly employed, at December 31, 1994, a total
of approximately 1,100 persons. The Company considers that it has satisfactory
relations with the unions whose members it employs.
Item 2. Properties
The Company leases 25,000 square feet of space for its
corporate offices and its main office for the construction management business,
HRH, located at 909 Third Avenue in New York City. The lease for such space,
which it occupied in 1973, expires in 1997. The Company also maintains a
mobile field office at each of its construction sites.
Levitt leases approximately 5,700 square feet of office space
which it uses for its executive office and main office for its Florida
homebuilding operation in Boca Raton, Florida, and also leases office space in
San Juan, Puerto Rico.
Item 3. Legal Proceedings
The Company is involved in litigation and claims incident to
the normal conduct of its business. Management believes that such litigation
and claims will not have a materially adverse effect on the Company's business
operations.
8
<PAGE> 9
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Executive Officers of the Company
The following table sets forth the names and ages of all
executive officers of the Company, the positions and offices with the Company
held by each such person, and the period during which each such person has
served as an executive officer.
<TABLE>
<CAPTION>
Has Served as
Offices and an Executive
Name Age Positions Held Officer Since
- ---- --- -------------- --------------
<S> <C> <C> <C>
Paul Milstein 72 Chairman of the 1994
Board
Irving R. Fischer 63 Chairman of the 1977
Board and Chief
Executive Officer of
HRH Construction
Corporation, a subsidiary
of the Company
Lewis A. Weinfeld 52 Executive Vice President, 1974
Chief Financial Officer
Elliott M. Wiener 60 Chairman of the Board and 1982
Chief Executive Officer
of Levitt Corporation,
a subsidiary of the Company
Robert C. Rosenberg 60 Chairman of the Board and 1976
Chief Executive Officer
of Grenadier Realty Corp.,
a subsidiary of the Company
</TABLE>
The term of office of each executive officer continues until
the first meeting of the Board of Directors of the Company following the next
annual meeting of shareholders, and until the election and qualification of
such officer's successor. There is no family relationship between the
executive officers listed above, or between such executive officers and
directors. All of the executive officers except Paul Milstein have been
principally engaged in his present employment for more than five years. Mr.
Milstein became Chairman on January 1, 1994, and for more than five years has
been active as a real estate developer and investor.
9
<PAGE> 10
PART II
Item 5. Market for the Company's Common Equity and Related Stockholder
Matters
On March 20, 1995, there were 774 record holders of the
Company's common stock and approximately 1,460 additional persons whose shares
of Common Stock were held in street name. Such common stock is listed on the
American Stock Exchange, which is the principal market on which such stock is
traded. High and low sales prices on the American Stock Exchange for the
Company's common stock during the last two years have been as follows:
<TABLE>
<CAPTION>
1995 High Low
---- ---- ---
<S> <C> <C>
First Quarter 8 6-3/4
</TABLE>
<TABLE>
<CAPTION>
1994 High Low
---- ---- ---
<S> <C> <C>
First Quarter 10-1/4 7-1/4
Second Quarter 8-1/4 6-1/4
Third Quarter 7-3/4 6-5/8
Fourth Quarter 8-1/2 6-1/2
</TABLE>
<TABLE>
<CAPTION>
1993 High Low
---- ---- ---
<S> <C> <C>
First Quarter 7-3/8 4
Second Quarter 6-3/4 5
Third Quarter 7-1/4 5-1/8
Fourth Quarter 8-5/8 5-3/4
</TABLE>
The Company established a program of regular annual cash
dividends of $.25 per share of common stock, payable $.0625 per quarter,
beginning with the third quarter of 1994. It is anticipated that the Company
will continue paying quarterly dividends.
10
<PAGE> 11
Item 6. Selected Financial Data
Starrett Housing Corporation and Subsidiaries
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $141,335 $122,182 $111,855 $111,089 $128,052
Income before income
taxes 10,306 4,588 1,045 2,283 7,454
Income before
extraordinary item and
cumulative effect of
accounting change 6,159 2,140 284 1,384 4,510
Extraordinary item 824
Cumulative effect of
accounting change 1,287
Less Preferred stock
requirements 1,537
Income attributable to
common stockholders $6,159 $2,140 $2,395 $1,384 $2,973
Earnings per share:
Income before
extraordinary item
and cumulative effect
of accounting change $.98 $.34 $.04 $.21 $.45
Extraordinary item .13
Cumulative effect of
accounting change .20
Income attributable to
common stockholders $.98 $.34 $.37 $.21 $.45
Total assets 116,267 120,284 136,738 150,290 167,867
Long-term obligations 36,066 41,033 32,603 60,922 69,511
Common
Stockholders' Equity 47,117 41,819 41,139 40,408 39,285
Cash dividends
(per share) .125 .25
</TABLE>
11
<PAGE> 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
1994 Compared to 1993
During the year ended December 31, 1994 the Company had income
from operations of $10,306,000 compared to $4,588,000 for the year ended
December 31, 1993 and net income of $6,159,000 ($.98 per share) as compared to
$2,140,000 ($.34 per share). Earnings per share were based on average shares
outstanding of 6,261,000 and 6,356,000 in 1994 and 1993, respectively.
The Company's revenues increased $19,153,000 compared with the
similar period in 1993. This increase was primarily attributable to Levitt
Corporation. Levitt's net income increased to $10,085,000 from $4,257,000 in
1993, including income in 1994 from the sale of its interest in a rental
apartment project. Levitt's backlog of homes contracted for sale at December
31, 1994 was $80,523,000 compared to $32,320,000 at December 31, 1993. The
December 31, 1994 backlog includes $39,490,000 relating to joint ventures in
which Levitt has a 50% interest. The backlog at February 28, 1995 was
$107,699,000 as compared to $63,179,000 at February 28, 1994, which includes
$51,668,000 and $3,500,000, respectively from joint ventures in which Levitt
has a 50% interest. Levitt's revenues were greater because of an increase in
the number of houses delivered, coupled with a higher average selling price.
The increase in the average selling prices are attributable to various factors,
including product mix, lot premiums, and sale of optional items.
Levitt's gross profit from house sales increased in 1994 as
compared to 1993. This increase in gross profit is due to the Florida regions
significantly improving the domestic gross profit margins, as well as, the
Puerto Rico region having an increase in gross profit margin.
Security service labor and other costs increased by $1,471,000
as a result of an increase in the security service operations and the
discontinuance of Levitt's life care management operations requiring 1995 costs
to be accrued in 1994.
Mortgage and closing costs increased due to local taxing
authorities in Puerto Rico assessing significant increased taxes related to
construction activity. Mortgage operation costs increased due to an expansion
of business in Levitt's Puerto Rico operation and the recent addition of branch
offices.
Levitt's interest, real estate taxes and sales costs incurred
with certain properties are capitalized in order to achieve better matching of
costs with revenues. The Company's interest incurred on loans was $3,435,000
in 1994 and $3,893,000 in 1993, of which $2,775,000 in 1994 and $2,959,000 in
1993 was capitalized by Levitt in its operations. Levitt amortized capitalized
interest of $4,941,000 in 1994 and $5,802,000 in 1993 to construction and
related costs.
HRH's estimated backlog of fees for development work and
uncompleted construction in connection with construction projects, including
fees for projects where development work has begun but contracts have not yet
been executed, was $8,950,000 at
12
<PAGE> 13
December 31, 1994 as compared to $8,151,000 and $8,158,000 at the end of 1993
and 1992, respectively. HRH is actively seeking to increase its backlog of
business, particularly in the hospital and medical research facilities, as
well as, governmental and institutional sectors.
Grenadier continued its steady profitability in 1994 and has
expanded its management services to private owners and institutional property
owners as well as banks and thrift institutions.
The Company has a project 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 project as well as the time required to complete the
process is uncertain.
1993 Compared to 1992
During the year ended December 31, 1993 the Company had income
from operations of $2,140,000 ($.34 per share) compared to $284,000 ($.04 per
share) for the year ended December 31, 1992. In addition, during the year
ended December 31, 1992, the Company reported an extraordinary gain net of tax
of $824,000 and an accounting change of $1,287,000 or $.13 and $.20 per share,
respectively, which when combined with the income from operations increased net
income to $2,395,000 ($.37 per share). Earnings per share were based on
average shares outstanding of 6,356,000 and 6,417,000 in 1993 and 1992,
respectively.
The Company's revenues increased $10,327,000 compared with the
similar period in 1992. This increase was primarily attributable to an
increase in revenues from the Company's Levitt division resulting from an
increase in the number of houses delivered in the Company's Puerto Rico region.
The increase in revenues from Levitt was offset by a decrease in revenues in
the Company's development and construction management divisions in 1993. In
1992 revenues also included Levitt's joint venture share of the gain on the
sale of a rental apartment project. Levitt's backlog of homes contracted for
sale at December 31, 1993 was $32,320,000 compared to $33,765,000 at December
31, 1992. The backlog at February 28, 1994 was $63,179,000 as compared to
$42,943,000 at February 28, 1993.
General and administrative expenses (which were reduced for
all divisions other than Grenadier which showed an overhead increase for the
year) declined by $3,044,000 in 1993 following a $2,200,000 reduction in 1992
as a result of continuing cost reduction programs. Interest expense decreased
by $655,000 for 1993 as compared to 1992 primarily as a result of both a
decrease in borrowings and a decline in interest rates.
Levitt's interest, real estate taxes and sales costs incurred
with certain properties are capitalized in order to achieve better matching of
costs with revenues. The Company's interest incurred on loans was $3,893,000
in 1993 and $5,964,000 in 1992, of which $2,959,000 in 1993 and $4,150,000 in
1992 was capitalized by Levitt in its operations. Levitt amortized capitalized
interest of $5,802,000 in 1993 and $5,177,000 in 1992 to construction and
related costs.
13
<PAGE> 14
HRH's estimated backlog of fees for development work and
uncompleted construction in connection with construction projects, including
fees for projects where development work has begun but contracts have not yet
been executed, was $8,151,000 at December 31, 1993 as compared to $8,158,000
and $9,409,000 at the end of 1992 and 1991, respectively. HRH is actively
seeking to increase its backlog of business, particularly in the governmental
and institutional sectors, while at the same time continuing to reduce its
overhead (overhead was reduced 21%, 25% and 20% in 1993, 1992 and 1991,
respectively) to reflect the lower level of business activity.
Grenadier continued its steady profitability in 1993 and has
expanded its management services to private owners and institutional property
owners as well as banks and thrift institutions.
Cash Flow and Liquidity
While the Company presently has various banking relationships,
it does not have any formal lines of credit other than in connection with its
Levitt subsidiary as described below.
Levitt has a balance of $16,400,000 under an unsecured credit
facility with a bank. This facility, which was originally $28,000,000, was
converted from a revolving loan to a term loan in 1991. During 1994, the
Company negotiated relief from certain covenants which previously prohibited
the Company from entering into certain types of financing transactions. Relief
from these restrictions has provided the Company with additional sources of
capital in the form of acquisition, development and construction loan
financings.
Levitt's Puerto Rico operations are financed by an unsecured
$15,000,000 revolving credit facility with a Puerto Rican bank. As provided
for in prior years by the Company's Puerto Rico bank and resulting from a
greater than expected demand for houses in the Company's Puerto Rico region,
the Company obtained in June 1994, a short-term $7,000,000 secured loan from
its Puerto Rican bank which funds were used for land development and
construction expenditures in 1994. At December 31, 1994, $13,000,000 and
$1,550,000 were outstanding on the unsecured and secured portion of the credit
facilities.
Levitt also finances the acquisition of property for its
operations on deferred payment terms provided by sellers of such property.
Levitt anticipates that funds generated by operations, together with its
existing credit relationships, will provide it with adequate financial
resources to satisfy its operating needs and to meet its anticipated capital
requirements for new projects.
The timing of introducing Levitt's new projects to the market,
weather conditions in certain of Levitt's regions, and traditional periods of
greater customer activity have tended to create seasonal trends in Levitt's
residential home building activities. Historically, the number of homes
delivered has been greater in the second half of the calendar year.
14
<PAGE> 15
Net Operating Loss Carryforwards
At December 31, 1994 the Company had net tax operating loss
carryforwards which can be utilized against future taxable income of
approximately $14,880,000 expiring in 2001 through 2009. Under current tax
laws, if the aggregate voting stock owned by the Company's 5% shareholders
increases over the lowest percentage owned by such shareholders during a
three-year period by an amount exceeding 50% of Starrett's total voting stock,
then Starrett's utilization of the net tax operating loss carryforwards could
be limited to an amount per year equal to the market value of all Starrett
equity securities multiplied by an adjusted federal long-term interest rate.
In general, all non-5% shareholders are treated as a single 5% shareholder for
the purpose of such calculations. Such an ownership change might be caused by
sales of shares by the Company's shareholders, repurchases of shares by the
Company, certain reorganizations, or certain other transactions.
Inflation
The Company believes that inflation has not had a material
adverse effect upon its construction, development and management business.
Levitt has from time to time been adversely affected by high interest costs and
increases in material and labor costs which it has not been able to pass
through entirely to home purchasers.
Item 8. Consolidated Financial Statements and Supplementary Data
See "Table of Contents to Consolidated Financial Statements
and Financial Statement Schedules," page 18.
Item 9. Disagreements on Accounting and Financial Disclosure
None
15
<PAGE> 16
PART III
The information called for by Items 10, 11, 12 and 13 is
incorporated herein by reference from the following portions of the definitive
proxy statement to be filed by the Company in connection with its 1995 Meeting
of Shareholders.
<TABLE>
<CAPTION>
Item Incorporated from
---- -----------------
<S> <C> <C>
Item 10. Directors and Executive "Election of Directors"
Officers of the Company
Item 11. Executive Compensation "Compensation and
Certain Transactions"
Item 12. Security Ownership of "Information as to
Certain Beneficial Stock Ownership"
Owners and Management
Item 13. Certain Relationships "Compensation and
and Related Transactions Certain Transactions"
</TABLE>
PART IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) See the accompanying Table of Contents to
Consolidated Financial Statements and Schedules and the accompanying Exhibit
Index.
(b) Reports on Form 8-K: The Registrant did not file any
report on Form 8-K during the quarter ended December 31, 1994.
16
<PAGE> 17
TABLE OF CONTENTS
TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Statements of Consolidated Financial Position at December 31, 1994 and 1993 . . . . . . . . . . . . . . 19
Statements of Consolidated Operations for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Statements of Stockholders' Equity for the Years Ended December 31, 1994, 1993
and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-36
Financial Statement Schedule of Condensed Financial Information of Registrant at
December 31, 1994 and 1993 and for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37-38
</TABLE>
Financial Statement Schedules, other than that listed above, are omitted
because of the absence of the conditions under which they are required, or
because the information required therein is set forth in the financial
statements or the notes thereto.
17
<PAGE> 18
[DELOITTE & TOUCHE LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
Starrett Housing Corporation
We have audited the consolidated financial statements and the related financial
statement schedule of Starrett Housing Corporation and consolidated
subsidiaries, listed in the foregoing table of contents. These consolidated
financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and its consolidated
subsidiaries at December 31, 1994 and 1993 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
As discussed in note 7, the Company changed its method of accounting for income
taxes effective January 1, 1992 to conform with Statement of Financial
Accounting Standard No. 109.
Deloitte & Touche LLP
March 21, 1995
18
<PAGE> 19
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
December 31, 1994 and 1993
(In Thousands)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
ASSETS:
Cash and Cash Equivalents of $4,636 in 1994
and $3,000 in 1993 (Note 1) . . . . . . . . . . . . . . . . . . . . $ 17,474 $ 12,171
U.S. Treasury/Certificates of Deposit . . . . . . . . . . . . . . . . 304 7,811
Receivables (Notes 2 and 8) . . . . . . . . . . . . . . . . . . . . . 25,918 22,724
Inventory of Real Estate (Notes 1, 3 and 8) . . . . . . . . . . . . . 52,332 60,629
Investments in Real Estate Joint Ventures (Note 4) . . . . . . . . . 6,701 2,016
Property and Equipment-Net (Notes 1 and 5) . . . . . . . . . . . . . 3,251 3,315
Land Held for Investment . . . . . . . . . . . . . . . . . . . . . . 1,997 2,236
Other Assets (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . 8,290 9,382
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $116,267 $120,284
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Payable Within One Year:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,874 $ 12,853
Current portion of long-term obligations (Note 8) . . . . . . . . . 4,526 6,496
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . 11,268 11,035
-------- --------
Total Liabilities Payable Within One Year . . . . . . . . . . . 26,668 30,384
Deferred Income Taxes (Notes 1 and 7) . . . . . . . . . . . . . . . . 4,565 4,108
Deferred Revenues (Note 1) . . . . . . . . . . . . . . . . . . . . . 1,851 2,940
Long-Term Obligations (Note 8) . . . . . . . . . . . . . . . . . . . 36,066 41,033
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,150 78,465
-------- --------
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common stock-par value, $1.00; authorized,
18,000 shares . . . . . . . . . . . . . . . . . . . . . . . . . . 6,566 6,566
Capital in excess of par value . . . . . . . . . . . . . . . . . . 23,933 23,933
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 19,022 13,646
Pension liability adjustment . . . . . . . . . . . . . . . . . . . (814) (736)
Shares held in treasury-at cost . . . . . . . . . . . . . . . . . . (1,590) (1,590)
-------- --------
Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 47,117 41,819
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $116,267 $120,284
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
19
<PAGE> 20
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
For the Years Ended December 31, 1994, 1993 and 1992
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues (Notes 1 and 10) . . . . . . . . . . . . . . . . $141,335 $122,182 $111,855
-------- -------- --------
Construction Costs . . . . . . . . . . . . . . . . . . . 82,859 73,015 62,694
Provision to Reduce Land Inventory to Net
Realizable Value (Note 3) . . . . . . . . . . . . . . . 1,810
-------- -------- --------
Total Cost . . . . . . . . . . . . . . . . . . . . . 82,859 73,015 64,504
-------- -------- --------
Income from Construction Contracts and
Related Revenues . . . . . . . . . . . . . . . . . . . . 58,476 49,167 47,351
-------- -------- --------
Expenses:
General and Administrative . . . . . . . . . . . . . . . 25,329 23,951 26,582
Security Service Labor and Other Costs . . . . . . . . . 10,909 9,438 8,018
Selling . . . . . . . . . . . . . . . . . . . . . . . . 5,853 5,725 5,960
Mortgage and Closing Costs . . . . . . . . . . . . . . . 5,419 4,039 3,430
Interest . . . . . . . . . . . . . . . . . . . . . . . . 660 880 1,535
Loss from Rental Operations-Net . . . . . . . . . . . . 546 781
-------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . 48,170 44,579 46,306
-------- -------- --------
Income before Income Taxes . . . . . . . . . . . . . . . 10,306 4,588 1,045
Income Taxes (Note 7) . . . . . . . . . . . . . . . . . . 4,147 2,448 761
-------- -------- --------
Income before extraordinary item and
cumulative effect of accounting change . . . . . . . . . 6,159 2,140 284
Extraordinary item - Gain on repurchase of
mortgage loan (net of income tax effect
of $490) . . . . . . . . . . . . . . . . . . . . . . . . 824
Cumulative effect of accounting change
(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . 1,287
-------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 6,159 $ 2,140 $ 2,395
======== ======== ========
Earnings per Common Share:
Income before extraordinary item and
cumulative effect of accounting change . . . . . . . . . $.98 $.34 $.04
Extraordinary Item . . . . . . . . . . . . . . . . . . . .13
Cumulative effect of accounting change . . . . . . . . . .20
----- ----- -----
Net Income . . . . . . . . . . . . . . . . . . . . . . . $.98 $.34 $.37
==== ==== ====
Weighted Average Number of Shares . . . . . . . . . . . . 6,261 6,356 6,417
===== ===== =====
Cash Dividends per Share . . . . . . . . . . . . . . . . $.125 None $.25
===== ==== ====
</TABLE>
See Notes to Consolidated Financial Statements
20
<PAGE> 21
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
(In Thousands Except Share Data)
<TABLE>
<CAPTION>
CAPITAL IN PENSION SHARES STOCK-
COMMON EXCESS OF RETAINED LIABILITY HELD IN HOLDERS'
STOCK PAR VALUE EARNINGS ADJUSTMENT TREASURY EQUITY
------ ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991
(6,566,402 common shares
issued and 146,927 shares
in Treasury) . . . . . . . . . . . . . $6,566 $23,908 $10,715 $(781) $40,408
Net Income . . . . . . . . . . . . . . 2,395 2,395
Vested Shares Issued under
Restricted Stock Agreement . . . . . . 25 25
Dividends to common
stockholders ($.25 a share) . . . . . (1,604) (1,604)
Purchase of Treasury Shares . . . . . . (85) (85)
------ ------- ------- ------- -------
Balance, December 31, 1992
(6,566,402 common shares
issued and 167,227 shares
in Treasury) . . . . . . . . . . . . . 6,566 23,933 11,506 (866) 41,139
Net Income . . . . . . . . . . . . . . 2,140 2,140
Pension Liability
Adjustment (Note 9) . . . . . . . . . $(736) (736)
Purchase of Treasury Shares . . . . . . (724) (724)
------ ------- ------- ----- ------- -------
Balance, December 31, 1993
(6,566,402 common shares
issued and 305,427 shares
in Treasury) . . . . . . . . . . . . . 6,566 23,933 13,646 (736) (1,590) 41,819
Net Income . . . . . . . . . . . . . . 6,159 6,159
Dividends to common
stockholders ($.125 a share) . . . . . (783) (783)
Pension Liability
Adjustment (Note 9) . . . . . . . . . (78) (78)
------ ------- ------- ----- ------- -------
Balance, December 31, 1994
(6,566,402 common shares
issued and 305,427 shares
in Treasury) . . . . . . . . . . . . . $6,566 $23,933 $19,022 $(814) $(1,590) $47,117
====== ======= ======= ===== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
21
<PAGE> 22
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993 and 1992
(In Thousands)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,159 $ 2,140 $ 2,395
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Cumulative Effect of Accounting Change . . . . . . . . . . . . . . . . . . . . . (1,287)
Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . 2,978 3,013 2,648
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 (1,087) (542)
Equity in Earnings (Losses) in Joint Ventures . . . . . . . . . . . . . . . . . (1,736) 595 (1,091)
Extraordinary Gain on Repurchase of Mortgage Loan . . . . . . . . . . . . . . . (1,314)
Reduction in Carrying Value of Inventory of Real Estate . . . . . . . . . . . . 1,810
Changes in Operating Assets and Liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,194) 5,088 (3,311)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,536 2,444 2,160
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,979) 1,290 (372)
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,655) (1,066) 600
Accrued Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (299) 955 436
Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (409) (708) (1,706)
------- ------- -------
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . 8,920 12,664 426
------- ------- -------
INVESTING ACTIVITIES:
Investment in Real Estate Joint Ventures . . . . . . . . . . . . . . . . . . . . . (6,466) (1,828)
U.S. Treasury/Certificates of Deposit . . . . . . . . . . . . . . . . . . . . . . . 7,507 5,485 7,791
Proceeds from Real Estate Joint Ventures . . . . . . . . . . . . . . . . . . . . . 3,517 22 3,897
Purchase of Property and Equipment . . . . . . . . . . . . . . . . . . . . . . . . (853) (1,002) (2,069)
Proceeds and Payments Relating to Sale of Rental and
Property and Equipment, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4,260 (1,327)
------- ------- -------
Net Cash Provided by Investing Activities . . . . . . . . . . . . . . . . . . . . . 3,711 6,937 8,292
------- ------- -------
FINANCING ACTIVITIES:
Repayment of Long-Term Obligations . . . . . . . . . . . . . . . . . . . . . . . . (16,460) (22,099) (22,475)
Proceeds from Long-Term Obligations . . . . . . . . . . . . . . . . . . . . . . . . 9,523 3,769 11,747
Payment of Cash Dividend to Common Stockholders . . . . . . . . . . . . . . . . . . (391) (1,604)
Purchase of Treasury Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . (724) (85)
------- ------- -------
Net Cash Used In Financing Activities . . . . . . . . . . . . . . . . . . . . . . . (7,328) (19,054) (12,417)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . 5,303 547 (3,699)
Cash and Cash Equivalents Beginning of Year . . . . . . . . . . . . . . . . . . . . 12,171 11,624 15,323
------- ------- -------
Cash and Cash Equivalents End of Year* . . . . . . . . . . . . . . . . . . . . . . $17,474 $12,171 $11,624
======= ======= =======
*Does not include U.S. Treasury/Certificates of Deposit
held at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $ 7,811 $13,296
======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE> 23
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Principles of Consolidation:
The consolidated financial statements include the accounts of
Starrett Housing Corporation and subsidiaries (the "Company").
Intercompany accounts and transactions have been eliminated in the
consolidated financial statements.
B. Recognition of Income:
The Company follows the percentage-of-completion method of
recording revenues and related costs from construction contracts using
the cost-to-cost method and provides currently for estimated losses on
uncompleted contracts. Profits relating to sales of limited
partnership interests and development fees are recognized on the
percentage-of-completion method and full accrual method as
appropriate.
Revenue from the sale of real estate in which the Company has
a continuing involvement is recognized in accordance with Statement of
Financial Accounting Standards No. 66. Reflected in the deferred
revenues account is that portion of the profit from the sale which is
required to be deferred under the provisions of such Statement.
Revenues from house sales and all related costs and expenses
are recognized upon passage of title to the buyer and receipt of an
adequate down payment.
Mortgage operations include loan origination and other fees
received for the processing and closing of mortgage loans. Revenues
from mortgage operations are primarily for houses constructed and sold
by the Company and are recorded when the transfer of the corresponding
mortgages to third parties has been consummated.
Revenues from cost-plus fee contracts are recognized on the
basis of costs incurred during the period plus the fee earned.
C. Inventory of Real Estate:
Inventory of real estate is stated at the lower of cost or
estimated net realizable value. Cost includes direct acquisition,
development and construction costs, interest and other indirect
construction costs. Estimated net realizable value is defined as an
estimate of sales proceeds less all estimated costs of carrying,
completing and disposing of the property. Interest is capitalized at
the effective interest rates paid on borrowings for interest costs
incurred on real estate inventory components during the
preconstruction and planning stage and the periods that projects are
under development. Capitalization of interest is discontinued if
development ceases at a project.
23
<PAGE> 24
Land and improvement costs are allocated based on a method
that approximates the relative sales value method. Construction costs
are charged to individual homesites based on specific identification.
D. Land Held for Investment:
Land parcels in which the Company has no formal plans to
develop or sell are classified as land held for investment. Land
purchased for investment is carried at cost. Land parcels previously
included in inventory of real estate and reclassified to land held for
investment are carried at the lower of its acquisition cost or fair
value at the time of transfer. The carrying value of land held for
investment is evaluated for other than temporary declines in value.
For the years 1994 and 1993, no adjustments for other than temporary
declines were necessary.
E. Property and Equipment:
Property and equipment are carried at cost less accumulated
depreciation and are depreciated using the straight-line method over
the estimated useful lives of the assets which range from three to
fifty years. Expenditures for maintenance and repairs are charged to
expense as incurred. Costs of major renewals and betterments which
extend useful lives are capitalized.
F. Capitalized Costs:
Mortgage interest, real estate taxes, and sales costs incurred
in connection with certain properties are capitalized in order to
achieve better matching of costs with revenues. Interest incurred on
loans was $3,435,000 in 1994, $3,893,000 in 1993 and $5,964,000 in
1992, of which $2,775,000 in 1994, $2,959,000 in 1993 and $4,150,000
in 1992 was capitalized. Amortization of capitalized interest of
$4,941,000 in 1994, $5,802,000 in 1993 and $5,177,000 in 1992 was
charged to construction costs.
Certain costs incurred that are used directly throughout the
selling period to aid in the sale of units, such as model furnishings
and decorations, sales office furnishings and facilities, exhibits,
displays and signage, are capitalized as deferred selling costs and
amortized over the number of units to be delivered. Costs incurred
during the initial and due diligence phases of a project, such as land
deposits and studies, are capitalized as preacquisition costs. The
unrecovered preacquisition costs are written off in the period the
Company ceases development of the project.
G. Income Taxes:
The Company adopted SFAS No. 109, "Accounting for Income
Taxes," effective January 1, 1992. The Company has reported the
change in accounting for income taxes as a cumulative effect of a
change in accounting method. Prior year amounts have not been
restated (Note 7).
24
<PAGE> 25
H. Investments in Partnerships and Real Estate Joint Ventures:
Investments in partnerships and joint ventures in which the
Company does not have a controlling interest are accounted for at cost
and investments in partnerships in which the Company does have a
controlling interest is accounted for on the equity method.
I. Cash and Cash Equivalents:
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
J. Reclassifications:
Certain prior year amounts have been reclassified in the
financial statements and segment information to conform with the 1994
presentation.
2. RECEIVABLES
Receivables are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Accounts . . . . . . . . . . . . . . . . . . . . $12,787 $11,371
Mortgage notes . . . . . . . . . . . . . . . . . 9,893 8,105
Notes . . . . . . . . . . . . . . . . . . . . . 3,714 3,724
------- -------
Total . . . . . . . . . . . . . . . . . . . 26,394 23,200
Less allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . 476 476
------- -------
Net . . . . . . . . . . . . . . . . . . . . $25,918 $22,724
======= =======
</TABLE>
It is expected that the receivables at December 31, 1994 as
set forth above will be collected as follows: $18,914,000 in 1995,
$602,000 in 1996, $40,000 in 1997, $44,000 in 1998, $49,000 in 1999
and $6,269,000 thereafter. At December 31, 1994, approximately
$1,700,000 ($2,201,000 at December 31, 1993) of these mortgage notes
receivable have been pooled into GNMA certificates which are
guaranteed by the United States Government. The Company has pledged
the mortgage notes as collateral to borrow funds from institutions at
interest rates lower than those earned on the mortgage notes
receivable and as collateral for GNMA matched payment serial notes
(Note 8). The remaining mortgage notes receivable have been
originated by the Company under firm commitments for sale to various
third parties.
The mortgage notes receivable, which result primarily from
sales of homes in Puerto Rico, are payable in monthly installments and
earn interest at stated interest rates which ranged from 7.5% to 12%
in 1994 and 1993.
25
<PAGE> 26
3. INVENTORY OF REAL ESTATE
Inventory of real estate is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Land and land development costs . . . . . . . . $41,508 $49,186
Construction costs - houses . . . . . . . . . . 10,824 11,443
------- -------
Total . . . . . . . . . . . . . . . . . . . . $52,332 $60,629
======= =======
</TABLE>
Due to the decline in demand for housing and the resultant
weak real estate markets in New York, New Jersey, Virginia-Washington,
D.C. and certain projects in Florida, the Company in 1990 implemented
aggressive home sales programs to reduce land positions and thereby
generate cash which was used to invest in better yielding
opportunities. In conjunction with this program as of December 31,
1993, the Company had non-cash reserves of $725,000 which reduced the
net carrying value of inventory of real estate to its estimated net
realizable value and such reserves were utilized during 1994.
4. INVESTMENTS IN REAL ESTATE JOINT VENTURES
The Company owns investments in real estate joint ventures
that are engaged in homebuilding and residential rental apartments.
Condensed financial information for the ventures is as follows:
<TABLE>
<CAPTION>
Combined Balance Sheets
1994 1993
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Combined Assets
Current Assets . . . . . . . . . . . . . . . . $ 1,247 $ 38
Inventory of real estate . . . . . . . . . . . 29,281 10,333
Other assets . . . . . . . . . . . . . . . . . 1,574 478
------- -------
$32,102 $10,849
======= =======
Combined Liabilities and Partner's Capital
Current liabilities . . . . . . . . . . . . . . $ 2,607 $ 1,118
Customer deposits on house sales . . . . . . . 3,097
Mortgage notes payable . . . . . . . . . . . . 19,070 7,048
Partners' capital accounts . . . . . . . . . . 7,328 2,683
------- -------
$32,102 $10,849
======= =======
</TABLE>
During 1994, in accordance with the partnership agreements,
the Company made capital contributions to the joint ventures in excess
of its proportionate ownership interests. The Partnership agreements
provide for the Company to receive preferential income and cash
distributions until the Company's invested capital is proportionate to
it's ownership interests.
26
<PAGE> 27
During 1994, the Company's joint ventures that are engaged in
homebuilding acquired land and thereon commenced land development and
home construction. Through December 31, 1994, no homes have been
delivered and, accordingly, no sales revenues have been recognized.
A residential rental apartment joint venture of the Company
sold its property during 1994, recognizing gross revenue of
$14,650,000. The Company recognized its allocable share, $1,736,000,
of the venture's net earnings.
During 1994, the Company's residential rental apartment joint
ventures recognized gross revenue of $14,650,000 from the sale of
rental projects and the Company recognized its share, $1,736,000, of
equity earnings.
In addition, the Company has an ownership interest in a joint
venture that owns a self-storage warehouse in New York. The joint
venture has $9,138,000 and $9,219,000 in assets with $8,627,000 and
$9,318,000 in liabilities at December 31, 1994 and 1993, respectively.
During 1994, the joint venture modified and extended its loan payable
of $8,250,000, for which the Company is jointly and severally liable
for $2,475,000. The Company presently is actively marketing the
project.
5. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Other property and equipment:
Building improvements . . . . . . . . . . . . . $ 194 $ 153
Machinery and equipment . . . . . . . . . . . . 1,905 1,834
Furniture, fixtures and leasehold
improvements . . . . . . . . . . . . . . . . . 8,392 8,159
------ ------
Total . . . . . . . . . . . . . . . . . . . 10,491 10,146
Less accumulated depreciation . . . . . . . . . 7,240 6,831
------ ------
Net . . . . . . . . . . . . . . . . . . . . $3,251 $3,315
====== ======
</TABLE>
27
<PAGE> 28
6. OTHER ASSETS
Other assets are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
(Dollars in Thousands)
<S> <C> <C>
Investments in and advances
to partnerships . . . . . . . . . . . . . . . . $ 1,287 $ 1,973
Prepaid development costs . . . . . . . . . . . 2,704 2,656
Deferred selling costs . . . . . . . . . . . . . 2,208 1,680
Preacquisition costs . . . . . . . . . . . . . . 407 694
Deferred financing costs . . . . . . . . . . . . 251 349
Other . . . . . . . . . . . . . . . . . . . . . 1,433 2,030
------- -------
Total . . . . . . . . . . . . . . . . . . . . $8,290 $9,382
====== ======
</TABLE>
7. INCOME TAXES
The Company and its domestic subsidiaries file a consolidated
federal income tax return. The provision for income taxes consists of
the following:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
(Dollars in Thousands)
<S> <C> <C> <C>
Federal tax - Deferred . . . . . . . . . . . . . . $ 161 $(1,302) $ (179)
State and foreign taxes:
Current . . . . . . . . . . . . . . . . . . . . . 3,628 3,535 1,303
Deferred . . . . . . . . . . . . . . . . . . . . 358 215 (363)
------ ------- -------
Total . . . . . . . . . . . . . . . . . . . . . $4,147 $ 2,448 $ 761
====== ======= =======
</TABLE>
Deferred income taxes result from temporary differences in the
recognition of revenue and expense for tax and financial reporting
purposes. The sources of these differences are primarily tax losses
from limited partnerships, recognition of fee income, non-cash
valuation reserves on land inventory and capitalization of interest and
overhead.
At December 31, 1994 the Company had a net tax operating loss
carryforward, which can be utilized against future taxable income, of
approximately $14,880,000 expiring in 2001 through 2009. There is no
net operating loss carryforward for financial statement reporting
purposes.
Cash payments for income taxes during the years ended December
31, 1994, 1993 and 1992 were $5,195,000, $2,251,000 and $1,143,000,
respectively.
28
<PAGE> 29
The effective tax rate was different from the statutory
Federal tax rate for the following reasons:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Statutory Federal tax rate . . . . . . . . . . . . 34.0% 34.0% 34.0%
Increase in taxes resulting
from state and foreign
taxes, net of Federal tax benefit . . . . . . . . 6.2 19.3 38.8
---- ---- ----
Effective tax rate . . . . . . . . . . . . . . . . 40.2% 53.3% 72.8%
==== ==== ====
</TABLE>
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes ("SFAS 109"). SFAS 109 requires the
Company to recognize deferred taxes for the temporary differences
between the tax bases of its assets and liabilities and the amounts
reported in the financial statements at enacted statutory tax rates.
The Company adopted SFAS 109 as of January 1, 1992. The
cumulative effect of this change is reported separately in the
Statement of Consolidated Operations for the Year Ended December 31,
1992. The tax effect of each type of temporary difference that gave
rise to the Company's deferred tax liability is as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------ ------
Asset (Liability)
(In Thousands)
<S> <C> <C>
Investments in and sales of limited
partnership interests . . . . . . . . . . . . . . . $(10,043) $(9,032)
Net tax operating loss carryforward . . . . . . . . 5,337 4,580
Capitalized interest and overhead . . . . . . . . . (802) (1,489)
Alternative minimum tax and other
miscellaneous Federal tax credits . . . . . . . . . 2,558 2,527
Deferred selling costs . . . . . . . . . . . . . . . (1,063) (650)
Other . . . . . . . . . . . . . . . . . . . . . . . (552) (44)
-------- -------
Net deferred income tax liability . . . . . . . . . $ (4,565) $(4,108)
======== =======
</TABLE>
Total deferred tax assets and liabilities were $11,942,000 and
$16,507,000, respectively, at December 31, 1994 and $11,709,000 and
$15,817,000, respectively, at December 31, 1993. No valuation
allowance was required for deferred tax assets.
29
<PAGE> 30
8. DEBT
Notes, mortgages payable and long-term obligations are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Subordinated promissory notes, at a
rate of 15% per annum, payable 1994
through 1997 (A) . . . . . . . . . . . . . . . . . . $ 4,400 $ 5,867
Notes payable under credit facility
agreement, 1 3/4% over LIBOR (total
facility under LIBOR contracts at
effective rate of 8.06% at
December 31, 1994) (B) . . . . . . . . . . . . . . . 16,400 18,400
Notes payable under credit facility
agreement (an effective rate of
approximately 6.55% at December
31, 1994) (C) . . . . . . . . . . . . . . . . . . . . 14,550 15,000
GNMA matched payments serial notes
at rates between 9% and 10% with
remaining maturities up to 20
years (D) . . . . . . . . . . . . . . . . . . . . . . 1,732 2,201
Other mortgage notes payable at
rates between 6.75% and 9.5%
payable in installments through
October 1997 (E) . . . . . . . . . . . . . . . . . . 3,510 6,061
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . $40,592 $47,529
======= =======
Classified in statements of consolidated
financial position as:
Current portion of long-term
obligations . . . . . . . . . . . . . . . . . . . . $ 4,526 $ 6,496
Long-term obligations . . . . . . . . . . . . . . . . 36,066 41,033
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . $40,592 $47,529
======= =======
</TABLE>
(A) On December 31, 1990, the Company redeemed all of
American Financial Corporation's $5.81 cumulative convertible
preferred stock and issued six equal subordinated promissory notes in
the aggregate principal amount of $8,800,000, maturing 1992 through
1997. The notes bear simple interest at the rate of 15% per annum.
In January 1995 the fourth promissory note in the amount of $1,466,667
was paid.
30
<PAGE> 31
(B) The Company has a balance of $16,400,000 under an
unsecured bank credit facility. The terms of the agreement require
the Company to maintain certain financial ratios, and restrict the
payment of cash dividends under certain conditions. This facility was
converted from an unsecured revolving credit loan to an unsecured term
loan as of November 1991. The term loan as of December 31, 1994 which
was originally $28,000,000 provides for semi-annual principal payments
in January and July of $1,000,000 in 1995, then $3,000,000 in January
1996, $1,000,000 in July 1996, $3,000,000 in January 1997 and a final
payment of $7,400,000 in July 1997.
(C) In June 1994, the Company amended its unsecured
$15,000,000 revolving credit agreement with its Puerto Rico bank to
increase the facility $7,000,000 to $22,000,000 and extended the
maturity to March 1996. The additional $7,000,000 facility is secured
by certain developed and undeveloped lots. At December 31, 1994,
$13,000,000 and $1,550,000 were outstanding on the unsecured and
secured portions of the credit facility, respectively. Terms of the
agreement require the Company's subsidiary to maintain certain
financial ratios and restrict the payment of cash dividends under
certain circumstances.
(D) On December 31, 1994, the Company had loans totalling
$1,700,000 (secured by a pledge of GNMA certificates in the same
amount) through the issuance of long-term debentures by a subsidiary
of a non-profit community development corporation in Puerto Rico.
Both the short-term loans and debentures, which are secured by
mortgage notes receivable pooled into GNMA certificates, bear interest
at rates lower than the interest rates on such mortgage receivables.
(E) During 1994, the Company entered into a loan
agreement with a local bank to provide financing for the acquisition
and site improvement of property and financing for construction of
residential units, collectively the Loans. The Loans provide advances
on a revolving loan basis up to a maximum outstanding balance of
$6,200,000. At December 31, 1994, $2,200,000 was outstanding on the
Loans and was included in the balance of other mortgage notes payable.
The Loans are secured by a mortgage on the property including all
improvements. The Loans require interest paid monthly at a variable
rate of one percent (1%) over prime (9.5% at December 31, 1994) and
require principal repayments as units are delivered. The Loans mature
October 1997.
On March 20, 1995, the Company borrowed $1,300,000
toward the acquisition of undeveloped land. These funds were under a
$9,700,000 revolving loan facility, the balance of which is to be
borrowed for land development and construction of residential units.
Notes and mortgages payable were collateralized by
real estate and mortgage notes receivable with net carrying values
aggregating $23,240,000 and $28,415,000 at December 31, 1994 and 1993,
respectively.
Debt obligations are scheduled to mature as follows:
$4,526,000 in 1995, $20,183,000 in 1996, $14,260,000 in 1997, $44,000
in 1998, $49,000 in 1999
31
<PAGE> 32
and $1,530,000 thereafter. Certain mortgage notes contain provisions
for reducing the principal as individual homes are sold by the
Company.
Interest paid for the years ended December 31, 1994,
1993 and 1992 was $3,402,000, $4,321,000 and $6,082,000, respectively.
As of December 31, 1994, the Company had outstanding
letters of credit totalling approximately $291,000 on which there are
service charges ranging from 0.5% to 1% on the outstanding balances.
The Company also had outstanding financial security bonds in the
amount of $4,487,000 securing various obligations.
9. PENSION PLAN
The Company and its subsidiaries have a
noncontributory defined benefit pension plan (the "Plan") covering
employees not represented by a union. The benefits are based on years
of service and the employees' compensation over the last five years.
Effective July 31, 1992, the Board of Directors
amended the Plan to freeze accrued benefits for all participants. The
Company will continue to fund the Plan as required, including any
interest at the assumed average rate of return on Plan assets.
As of December 31, 1994, the plan held fixed income
securities, life insurance policies and short-term investments.
Assumed average future rate of return on Plan assets was 8.75% and 8%
for the years ended December 31, 1994 and 1993, respectively, and the
projected benefit obligation was based on 8.75% and 7.75% assumed
discount rates at December 31, 1994 and 1993.
The total pension plan cost was $730,000 in 1992.
The components of net periodic pension cost (benefit) for the years
ended December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Cost (benefit) component: 1994 1993
-------- ---------
<S> <C> <C>
Interest cost . . . . . . . . . . . . . . . . . . . $601,000 $565,000
Actual return on plan assets . . . . . . . . . . . . 124,000 143,000
Net amortization and deferral . . . . . . . . . . . (584,000) (710,000)
-------- --------
Net periodic pension cost (benefit) . . . . . . . . $141,000 $ (2,000)
======== ========
</TABLE>
32
<PAGE> 33
The following table sets forth the Plan's funded
status as of December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
---------- ---------
<S> <C> <C>
Actuarial present value accumulated
benefit obligation:
Vested . . . . . . . . . . . . . . . . . . . . . . . $6,376,000 $7,331,000
Nonvested . . . . . . . . . . . . . . . . . . . . . 46,000 114,000
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $6,422,000 $7,445,000
========== ==========
Projected benefit obligation for service
rendered to date . . . . . . . . . . . . . . . . . . . . . $6,422,000 $7,445,000
Plan assets at fair value . . . . . . . . . . . . . . . . . 5,250,000 6,427,000
---------- ----------
Projected benefit obligation in excess
of plan assets . . . . . . . . . . . . . . . . . . . . . . 1,172,000 1,018,000
Unrecognized net loss . . . . . . . . . . . . . . . . . . . (1,573,000) (1,525,000)
Unrecognized net asset at date of transition . . . . . . . . 211,000 303,000
Additional minimum liability . . . . . . . . . . . . . . . . 1,362,000 1,210,000
---------- ----------
Accrued pension cost . . . . . . . . . . . . . . . . . . . . $1,172,000 $1,006,000
========== ==========
</TABLE>
In accordance with Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," an additional
minimum pension liability, representing the excess of accumulated
benefits over plan assets and accrued pension costs, was recognized at
December 31, 1994 and 1993. A corresponding amount, net of income tax
benefit, was recorded as a separate reduction to stockholders' equity.
The Plan made significant lump sum distributions
during 1994 resulting in a settlement of the Plan as defined by
Statement of Financial Accounting Standards No. 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension
Plans and for Termination of Benefits". As a result, the Company
recorded an additional expense of $451,000 for the year ended December
31, 1994.
The Company does not provide postretirement or
postemployment benefits other than pensions to employees. Therefore,
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits" have no impact on the Company's financial
statements.
33
<PAGE> 34
10. SEGMENT INFORMATION
The Company's operations consist of (i) the
development, management and ownership of real estate properties; (ii)
the single-family home and garden apartment business conducted
through its Levitt subsidiary; and (iii) the supplying of construction
services through its HRH subsidiary. The Company groups its business
into these three segments. The following table sets forth the
Company's revenues and operating profit attributable to the respective
segments of its operations for each of the years 1992 through 1994,
and the identifiable assets attributable to the respective segments as
at the end of each of those years:
<TABLE>
<CAPTION>
DEVELOPMENT HRH
MANAGEMENT AND LEVITT CONSTRUCTION
OWNERSHIP CORPORATION CORPORATION CONSOLIDATED
-------------- ----------- ----------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
1994
- ----
Revenues . . . . . . . . . . . . . . $25,635 $111,422 $ 4,278 $141,335
======= ======== ======== ========
Operating profit (loss) (1) . . . . . $ 2,575 $ 10,085 $ 309 $ 12,969
======= ======== ========
General corporate expenses . . . . . 2,663
--------
Income from operations
before income taxes . . . . . . . . $ 10,306
========
Identifiable assets . . . . . . . . . $20,539 $ 85,423 $ 10,305 $116,267
======= ======== ======== ========
1993
- ----
Revenues . . . . . . . . . . . . . . $24,504 $ 93,678 $ 4,000 $122,182
======= ======== ======== ========
Operating profit (loss) (1) . . . . . $ 2,600 $ 4,257 $ (372) $ 6,485
======= ======== ========
General corporate expenses . . . . . 1,897
--------
Income from operations
before income taxes . . . . . . . . $ 4,588
========
Identifiable assets . . . . . . . . . $25,797 $ 86,300 $ 8,187 $120,284
======= ======== ======== ========
1992
- ----
Revenues . . . . . . . . . . . . . . $23,487 $ 82,972 $ 5,396 $111,855
======= ======== ======== ========
Operating profit (1) . . . . . . . . $ 2,435 $ 864 $ 283 $ 3,582
======= ======== ========
General corporate expenses . . . . . 2,537
--------
Income from operations
before income taxes . . . . . . . . $ 1,045
========
Identifiable assets . . . . . . . . . $31,299 $ 94,335 $ 11,104 $136,738
======= ======== ======== ========
</TABLE>
(1) Operating profit is comprised of revenues less operating expenses. In
computing operating profit, general corporate expenses and income
taxes have not been deducted.
(2) There were no customers from which the Company derived more than 10%
of its revenues in 1994, 1993 or 1992.
34
<PAGE> 35
11. COMMITMENTS AND CONTINGENCIES
Roosevelt Island Associates ("RIA"), a partnership in
which a Company subsidiary is one of several partners, has provided
guaranteed payments to the investor partner. The Company's share of
such guarantees was $465,000 for 1994 and approximately $100,000 each
year until 2005, which will be paid by the Company if project cash
flow is insufficient to cover these amounts. In connection with this
project, the Company also provided cash flow guarantees from which it
will be released if the project achieves a certain cash flow level
over a specified period of time.
The Company's Levitt subsidiary provides for
estimated warranty costs when homes are sold and continuously monitors
its warranty exposure and service program.
Rent expense for the years ended December 31, 1994,
1993 and 1992 was $973,000, $1,004,000 and $1,042,000, respectively.
At December 31, 1994 the Company and its subsidiaries are committed
under long-term leases expiring at various dates through 1998. The
minimum rentals are $910,000 in 1995, $910,000 in 1996, $267,000 in
1997, $208,000 in 1998, and $106,000 in 1999, or an aggregate of
$2,401,000.
The Company is involved in litigation and claims
incident to the normal conduct of its business. Management believes
that such litigation and claims will not have a materially adverse
effect on the Company's consolidated financial position or results of
operations.
35
<PAGE> 36
12. QUARTERLY FINANCIAL DATA (Unaudited)
The quarterly financial data are set forth below
(dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
1994 1994 1994 1994 Annual
March 31, June 30, Sept. 30, Dec. 31, Amount
--------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . $27,395 $28,042 $32,868 $53,030 $141,335
Income from construction
contracts and related revenues . . . . . 11,980 13,436 14,382 18,678 58,476
Income before income
taxes . . . . . . . . . . . . . . . . . 1,300 1,906 2,481 4,619 10,306
Net income . . . . . . . . . . . . . . . 695 1,031 1,488 2,945 6,159
Earnings per common and
common equivalent share - Net
income . . . . . . . . . . . . . . . . . $.11 $.17 $.23 $.47 $.98
</TABLE>
<TABLE>
<CAPTION>
1993 1993 1993 1993 Annual
March 31, June 30, Sept. 30, Dec. 31, Amount
--------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . $26,931 $24,219 $31,662 $39,370 $122,182
Income from construction
contracts and related revenues . . . . . 11,677 11,756 12,694 13,040 49,167
Income before income
taxes . . . . . . . . . . . . . . . . . 703 1,115 1,670 1,100 4,588
Net income . . . . . . . . . . . . . . . 324 547 803 466 2,140
Earnings per common and
common equivalent share - Net
income . . . . . . . . . . . . . . . . . $.05 $.09 $.12 $.08 $.34
</TABLE>
Certain quarterly amounts have been reclassified to
conform with the annual presentation.
36
<PAGE> 37
Schedule III
STARRETT HOUSING CORPORATION
(Parent Company Only)
CONDENSED STATEMENTS OF FINANCIAL POSITION
December 31, 1994 and 1993
(In Thousands)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Assets:
- ------
Cash and cash equivalents of $4,636
in 1994 and $3,000 in 1993 . . . . . . . . . . . . . . . . . . $ 5,881 $ 3,559
U.S. Treasury/certificates of deposit . . . . . . . . . . . . . 256 7,762
Investments in subsidiaries, at
equity in underlying net assets . . . . . . . . . . . . . . . 77,592 70,263
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 8,097 8,203
-------- --------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,826 $ 89,787
======== ========
Liabilities and Stockholders' Equity:
- ------------------------------------
Liabilities payable within one year . . . . . . . . . . . . . . $ 6,403 $ 5,705
Advances from subsidiaries . . . . . . . . . . . . . . . . . . 30,276 31,547
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 3,246 3,376
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . 1,851 2,940
Long-term obligations . . . . . . . . . . . . . . . . . . . . . 2,933 4,400
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . 47,117 41,819
-------- --------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,826 $ 89,787
======== ========
</TABLE>
STARRETT HOUSING CORPORATION
(Parent Company Only)
CONDENSED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1994, 1993 and 1992
(In Thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $1,046 $2,035 $2,671
General and administrative expenses . . . . . . . . . . . . (2,663) (1,897) (2,537)
Other costs . . . . . . . . . . . . . . . . . . . . . . . . (33) (104) (19)
Interest . . . . . . . . . . . . . . . . . . . . . . . . . (660) (880) (1,442)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 1,111 132 223
------ ------ ------
Loss before equity in earnings
of subsidiaries . . . . . . . . . . . . . . . . . . . . . (1,199) (714) (1,104)
Equity in earnings of subsidiaries . . . . . . . . . . . . 7,358 2,854 2,212
Cumulative effect of accounting change . . . . . . . . . . 1,287
------ ------ ------
Net Income . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $2,395
====== ====== ======
</TABLE>
37
<PAGE> 38
Schedule III
STARRETT HOUSING CORPORATION
(Parent Company Only)
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $2,395
Adjustments to Reconcile Net Income to
Net Cash (Used In) Provided by
Operating Activities:
Changes not affecting funds . . . . . . . . . . . . . . . (7,488) (2,484) (4,620)
Changes in Operating Assets and Liabilities:
Liabilities payable within one year . . . . . . . . . . . 228 (995) 515
Advances from subsidiaries . . . . . . . . . . . . . . . . (1,242) 2,176 1,178
Other assets . . . . . . . . . . . . . . . . . . . . . . . 106 314 (1,274)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . (1,089) (708) (1,706)
------ ------ ------
Net Cash (Used In) Provided by
Operating Activities . . . . . . . . . . . . . . . . . . . (3,326) 443 (3,512)
------ ------ ------
INVESTING ACTIVITIES:
U.S. Treasury/Certificates
of Deposit . . . . . . . . . . . . . . . . . . . . . . . . 7,506 5,485 7,791
------ ------ ------
FINANCING ACTIVITIES:
Payment of Promissory Notes . . . . . . . . . . . . . . . . (1,467) (5,846) (5,846)
Payment of Cash Dividend to Common
Stockholders . . . . . . . . . . . . . . . . . . . . . . . (391) (1,604)
Receipt of Cash Dividend . . . . . . . . . . . . . . . . . 540
Purchase of Treasury Stock . . . . . . . . . . . . . . . . (724) (85)
------ ------ ------
Net Cash used in Financing Activities . . . . . . . . . . . (1,858) (6,030) (7,535)
------ ------ ------
Increase (Decrease) in Cash and
Cash Equivalents . . . . . . . . . . . . . . . . . . . . . 2,322 (102) (3,256)
Cash and Cash Equivalents Beginning of Year . . . . . . . . 3,559 3,661 6,917
------ ------ ------
Cash and Cash Equivalents End of Year . . . . . . . . . . . $5,881 $3,559 $3,661
====== ====== ======
</TABLE>
38
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
STARRETT HOUSING CORPORATION
Date: March 21, 1995 BY s/ Paul Milstein
---------------------------
Paul Milstein
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Date: March 21, 1995 By s/ Paul Milstein
---------------------------
Paul Milstein, Principal
Director
Date: March 21, 1995 By s/ Lewis A. Weinfeld
---------------------------
Lewis A. Weinfeld,
Principal Financial and
Accounting Officer
Date: March 21, 1995 By s/ Henry Benach
---------------------------
Henry Benach, Director
Date: March 21, 1995 By s/ John Zuccotti
---------------------------
John Zuccotti, Director
Date: March 21, 1995 By s/ Robert Berne
---------------------------
Robert Berne, Director
Date: March 21, 1995 By s/ Irving Fischer
---------------------------
Irving Fischer, Director
Date: March 21, 1995 By s/ Robert C. Rosenberg
---------------------------
Robert C. Rosenberg,
Director
Date: March 21, 1995 By s/ Elliott M. Wiener
---------------------------
Elliott M. Wiener,
Director
39
<PAGE> 40
STARRETT HOUSING CORPORATION
EXHIBITS
DECEMBER 31, 1994
COMMISSION FILE NUMBER 1-6736
<PAGE> 41
STARRETT HOUSING CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
3(a)(1) Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3(a)(1)
to Registrant's Registration Statement on Form S-4 dated September 16, 1988 and
incorporated herein by reference).
3(a)(2) Certificate of Amendment of the Restated Certificate of Incorporation of the
Registrant relating to $5.08 Cumulative Preferred Shares and $5.00 Cumulative
Preferred Shares (filed as Exhibit 10 to the Registrant's Form 8-K dated June 5,
1981 and incorporated herein by reference).
3(b) By-laws of the Registrant, as amended to January 1, 1987 (filed as Exhibit 3(b)
to Registrant's Registration Statement on Form S-4 dated September 16, 1988 and
incorporated herein by reference).
4(a) Amended and Restated Credit Agreement and Guarantee among Levitt Homes
Incorporated, Levitt Corporation, various subsidiary guarantors and Manufacturers
Hanover Trust Company dated as of August 29, 1988 (filed as Exhibit 4(a) to
Registrant's Registration Statement on Form S-4 dated September 16, 1988 and
incorporated herein by reference).
4(b) First Amendment dated as of March 6, 1990 to Amended and Restated Credit
Agreement and Guarantee (filed as Exhibit 4(b) to Registrant's Form 10-K for 1989
and incorporated herein by reference).
4(c) Amendment dated as of April 30, 1990 to Amended and Restated Credit Agreement and
Guarantee (filed as Exhibit 4(c) to Registrant's Form 10-K for 1990 and
incorporated herein by reference).
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(a) Form of Starrett Housing Corporation warrant for the purchase of 151,546 shares
of Common Stock dated May 24, 1984, and subsequently extended to June 2, 1986
(filed as Exhibit 10(o) to the Registrant's Form 10-K for 1984 and incorporated
herein by reference).
10(b) Stock Purchase Agreement dated March 1, 1985 between the Registrant and the
purchasers listed in Schedule 1 to the Agreement (filed as Exhibit 10(p) to the
Registrant's Form 10-K for 1985 and incorporated herein by reference).
10(c)(1) Amended and Restated Agreement, dated as of January 5, 1992, between Henry Benach
and the Registrant (filed as Exhibit 10(c)(1) to the Registrant's Form 10-K for
1991 and incorporated herein by reference).
10(c)(2) Incentive Compensation Agreement, dated as of January 5, 1989, between Henry
Benach and the Registrant (filed as Exhibit 10(c)(2) to Registrant's Form 10-K
for 1989 and incorporated herein by reference).
10(d)(1) Employment Agreement, dated as of June 1, 1981, between Irving R. Fischer and the
Registrant (filed as Exhibit 10(f)(2) to the Registrant's Form 10-K for 1981 and
incorporated herein by reference).
10(d)(2) Amendment, dated as of January 3, 1986, to the Employment Agreement between
Irving R. Fischer and the Registrant (filed as Exhibit 10(d)(5) to Registrant's
Registration Statement on Form S-4 dated September 16, 1988 and incorporated
herein by reference).
10(d)(3) Incentive Compensation Agreement, dated as of January 3, 1986, between Irving R.
Fischer and the Registrant (filed as Exhibit 10(d)(6) to Registrant's
Registration Statement on Form S-4 dated September 16, 1988 and incorporated
herein by reference).
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(d)(4) Restricted Stock Agreement, dated as of October 27, 1987, between Irving R.
Fischer and the Registrant (filed as Exhibit 10(d)(4) to Registrant's Form 10-K
for 1987 and incorporated herein by reference).
10(d)(5) Extension dated December 30, 1991 to Employment and Incentive Compensation
Agreements of Irving R. Fischer (filed as Exhibit 10(e)(5) to the Registrant's
Form 10-K for 1991 and incorporated herein by reference).
10(e)(1) Employment Agreement, dated as June 1, 1981, between Richard Bassuk and the
Registrant (filed as Exhibit 10(k) to the Registrant's Form 10-K for 1981 and
incorporated herein by reference).
10(e)(2) Amendment, dated as of January 3, 1986, to the Employment Agreement between
Richard Bassuk and the Registrant (filed as Exhibit 10(g)(4) to Registrant's Form
10-K for 1985 and incorporated herein by reference).
10(e)(3) Incentive Compensation Agreement, dated as of January 3, 1986, between Richard
Bassuk and the Registrant (filed as Exhibit 10(g)(5) to the Registrant's Form 10-
K for 1985 and incorporated herein by reference).
10(e)(4) Restricted Stock Agreement, dated as of October 27, 1987, between Richard Bassuk
and the Registrant (filed as Exhibit 10(e)(7) to Registrant's Form 10-K for 1987
and incorporated herein by reference).
10(e)(5) Extension dated December 30, 1991 to Employment and Incentive Compensation
Agreements of Richard Bassuk (filed as Exhibit 10(d)(5) to the Registrant's Form
10-K for 1991 and incorporated herein by reference).
10(e)(6) Extension dated January 5, 1993 to Employment and Incentive Compensation Agreements
of Richard Bassuk (filed as Exhibit 10(d)(6) to the Registrant's Form 10-K for 1993
and incorporated herein by reference).
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(f) Restricted Stock Agreement, dated as of October 27, 1987, between Stephen Salup
and the Registrant (filed as Exhibit 10(f) to Registrant's Form 10-K for 1987 and
incorporated herein by reference).
10(g)(1) Employment Agreement, dated as of January 1, 1987 between Lewis A. Weinfeld and
the Registrant (filed as Exhibit 10(g)(1) to Registrant's Form 10-K for 1987 and
incorporated herein by reference).
10(g)(2) Incentive Compensation Agreement, dated as of January 1, 1987, between Lewis A.
Weinfeld and the Registrant (filed as Exhibit 10(g)(2) to Registrant's Form 10-K
for 1987 and incorporated herein by reference).
10(g)(3) Restricted Stock Agreement, dated as of October 27, 1987, between Lewis A.
Weinfeld and the Registrant (filed as Exhibit 10(g)(3) to Registrant's Form 10-K
for 1987 and incorporated herein by reference).
10(g)(4) Letter Agreement dated June 9, 1989 between Lewis A. Weinfeld and Starrett
Housing Corporation (filed as Exhibit 10(g)(4) to Registrant's Form 10-K for 1989
and incorporated herein by reference).
10(h)(i) Employment Agreement dated as of July 1, 1983 between Elliott M. Wiener and
Levitt (filed as Exhibit 10(h)(i) to Registrant's Registration Statement on Form
S-4 dated September 16, 1988 and incorporated herein by reference).
10(h)(ii) First Amendment to Employment Agreement dated as of January 1, 1987 between
Elliott M. Wiener and Levitt (filed as Exhibit 10(h)(ii) to Registrant's
Registration Statement on Form S-4 dated September 16, 1988 and incorporated
herein by reference).
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(h)(iii) Second Amendment to Employment Agreement dated as of July 1, 1988 between Elliott
M. Wiener and Levitt (filed as Exhibit 10(h)(iii) to Registrant's Registration
Statement on Form S-4 dated September 16, 1988 and incorporated herein by
reference).
10(h)(iv) Third Amendment to Employment Agreement dated as of January 1, 1990 between
Elliott M. Wiener and Levitt (filed as Exhibit 10(h)(iv) to Registrant's Form 10-
K for 1989 and incorporated herein by reference).
10(i)(i) Letter Agreement, dated December 2, 1988, between American Financial Corporation
and Starrett Housing Corporation, with Form of Note attached thereto (filed as
Exhibit 10(j)(i) to Amendment No. 1 to the Registrants' Registration Statement on
Form S-4 dated December 13, 1988 and incorporated herein by reference).
10(i)(ii) Letter Agreement, dated December 2, 1988, between American Financial Corporation
and Henry Benach (filed as Exhibit 10(j)(ii) to Amendment No. 1 to the
Registrant's Registration Statement on Form S-4 dated December 13, 1988 and
incorporated herein by reference).
10(i)(iii) Letter Agreement, dated December 2, 1988, between American Financial Corporation
and Builtland Partners (filed as Exhibit 10(j)(iii) to Amendment No. 1 to the
Registrant's Registration Statement on Form S-4 dated December 13, 1988 and
incorporated herein by reference).
10(i)(iv) Letter Agreement, dated December 2, 1988, between American Financial Corporation
and Oded Aboodi (filed as Exhibit 10(j)(iv) to Amendment No. 1 to the
Registrant's Registration Statement on Form S-4 dated December 13, 1988 and
incorporated herein by reference).
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(i)(v) Letter, dated December 2, 1988, from Starrett Housing Corporation to Henry Benach
(filed as Exhibit 10(j)(v) to Amendment No. 1 to the Registrant's Registration
Statement on Form S-4 dated December 13, 1988 and incorporated herein by
reference).
10(i)(vi) Letter, dated December 2, 1988, from Starrett Housing Corporation to Builtland
Partners (filed as Exhibit 10(j)(vi) to Amendment No. 1 to the Registrant's
Registration Statement on Form S-4 dated December 13, 1988 and incorporated
herein by reference).
10(i)(vii) Letter, dated December 2, 1988, from Starrett Housing Corporation to Oded Aboodi
(filed as Exhibit 10(j)(vii) to Amendment No. 1 to the Registrant's Registration
Statement on Form S-4 dated December 13, 1988 and incorporated herein by
reference).
10(j)(i) Second Amended and Restated Partnership Agreement of Roosevelt Island Associates
dated February 28, 1989 (filed as Exhibit 10(j)(i) to Registrant's Current Report
on Form 8-K dated March 3, 1989 and incorporated herein by reference).
10(j)(ii) Participation Agreement dated February 28, 1989 by and among Roosevelt Island
Associates, Manhattan Park Leasing Corporation, HRH Construction Corporation, RIA
Construction Company, Starrett Housing Corporation, Grenadier Realty Corporation,
Manhattan Park, Inc., Cohen Roosevelt Associates and NCC RIA Company (Schedules
are omitted, and are available from the Registrant upon request (filed as Exhibit
10(j)(ii) to Registrant's Current Report on Form 8-K dated March 3, 1989 and
incorporated herein by reference).
10(j)(iii) Capital Adjustment Agreement dated February 28, 1989 between Starrett Housing
Corporation, Manhattan Park, Inc., Cohen Roosevelt Associates and NCC RIA Company
(filed as Exhibit 10(j)(iii) to Registrant's Current Report on Form 8-K dated
March 3, 1989 and incorporated herein by reference).
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(j)(iv) No-Negative Guaranty Agreement dated February 28, 1989 by and among Starrett
Housing Corporation, Cohen Roosevelt Associates, Grenadier Realty Corporation,
Manhattan Park Leasing Corporation and Roosevelt Island Associates (filed as
Exhibit 10(j)(iv) to Registrant's Current Report on Form 8-K dated March 3, 1989
and incorporated herein by reference).
10(j)(v) First Amendment to No-Negative Guaranty Agreement dated as of January 15, 1993 by
and among Starrett Housing Corporation, Cohen Roosevelt Associates, Grenadier
Realty Corporation, Manhattan Park Leasing Corporation and Roosevelt Island
Associates.
10(j)(vi) Construction Completion Guaranty Agreement dated February 28, 1989 by and among
Roosevelt Island Associates, Starrett Housing Corporation, and Cohen Roosevelt
Associates (filed as Exhibit 10(j)(v) to Registrant's Current Report on Form 8-K
dated March 3, 1989 and incorporated herein by reference).
10(j)(vii) Payment Allocation, Contribution and Indemnification Agreement made as of
February 28, 1989 by and among Starrett Housing Corporation, Manhattan Park,
Inc., HRH Construction Corporation, Grenadier Realty Corp.; and Roosevelt
Associates, RIA Construction Company, Charles Steven Cohen and Sherman Cohen
(filed as Exhibit 10(k)(vi) to Registrant's Form 10-K for 1988 and incorporated
herein by reference).
10(j)(viii) Amendment to Payment Allocation, Contribution and Indemnification Agreement,
dated as of February 28, 1989, a Second Amendment thereto dated October 30, 1992
and a Third Amendment thereto made as of February 28, 1989.
10(j)(ix) Master Refunding Agreement dated January 13, 1993 by and among Manhattan Park,
Inc., Cohen Roosevelt Associates, NCC RIA Company, Starrett Housing Corporation,
Charles Steven Cohen, Sherman Cohen and Roosevelt Island Associates.
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(k)(i) Letter Agreement dated August 26, 1988 between ITT Corporation and Starrett
Housing Corporation (filed as Exhibit 10(l) to Registrant's Form 10-K for 1988
and incorporated herein by reference).
10(k)(ii) Letter Agreement dated November 20, 1990 between ITT Corporation and Starrett
Housing Corporation and related forms of promissory notes (filed as Exhibit
10(k)(ii) to Registrant's Form 10-K for 1990 and incorporated herein by
reference).
10(l)(i) Agreement between Levitt Retirement Communities No. 1., Inc. and Resources
Funding Corporation, dated January 11, 1989 (filed as Exhibit 10(m)(i) to
Registrant's Current Report on Form 8-K dated April 20, 1989 and incorporated
herein by reference).
10(l)(ii) Guaranty and Undertaking, dated March 15, 1989 among Levitt Corporation,
Northpark Associates Limited Partnership, Resources Funding Corporation, Special
Housing for America's Retired and Elderly, L.P. and Northpark Corp. (filed as
Exhibit 10(m)(ii) to Registrant's Current Report on Form 8-K dated April 20, 1989
and incorporated herein by reference).
10(l)(iii) First, Second, Third and Fourth Promissory Notes, dated March 15, 1989, issued by
Special Housing for America's Retired and Elderly, L.P. to Levitt Retirement
Communities No. I, Inc. and Levitt Retirement Communities No. II, Inc. (filed as
Exhibit 10(m)(iii) to Registrant's Current Report on Form 8-K dated April 20,
1989 and incorporated herein by reference).
10(l)(iv) Management Agreement among Northpark Associates Limited Partnership, Resources
Property Management Corp. and Levitt Care Corporation (filed as Exhibit 10(m)(iv)
to Registrant's Current Report Form 8-K dated April 20, 1989 and incorporated
herein by reference).
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
10(l)(v) Master Agreement among Levitt Retirement Communities No. I, Inc., Levitt
Retirement Communities No. II, Inc., Levitt Corporation, Special Housing for
America's Retired and Elderly, L.P., Integrated Resources, Inc. and Manufacturers
Hanover Trust Company (filed as Exhibit 10(m)(v) to Registrant's Current Report
on Form 8-K dated April 20, 1989 and incorporated herein by reference).
10(l)(vi) Note Repurchase Agreement between Levitt Corporation and Manufacturers Hanover
Trust Company (filed as Exhibit 10(m)(vi) to Registrant's Current Report on Form
8-K dated April 20, 1989 and incorporated herein by reference).
11(a) Exhibit Setting Forth the Computation of Primary Earnings Per Share Information.* 50
11(b) Exhibit Setting Forth the Computation of Fully Diluted Earnings Per Share Information.* 51
22 List of Subsidiaries of the Registrant (filed as Exhibit 22 to Registrant's Form
10-K for 1987 and incorporated herein by reference).
27 Financial Data Schedule.* 52
Note: The Exhibits which have not previously been filed are marked with an
asterisk (*).
</TABLE>
49
<PAGE> 1
EXHIBIT A
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
EXHIBIT SETTING FORTH THE COMPUTATION OF PRIMARY
EARNINGS PER SHARE INFORMATION
(Dollars and number of shares in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Common and common equivalent
shares used in computing earnings
per share . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,356 6,417
====== ====== ======
Income before extraordinary item and
cumulative effect of accounting
change . . . . . . . . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $ 284
====== ====== ======
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $2,395
====== ====== ======
Income before extraordinary item and
cumulative effect of accounting change . . . . . . . . . . $.98 $.34 $.04
Extraordinary item . . . . . . . . . . . . . . . . . . . . .13
Cumulative effect of accounting change . . . . . . . . . . .20
------ ------ ------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $.98 $.34 $.37
==== ==== ====
</TABLE>
50
<PAGE> 1
EXHIBIT B
STARRETT HOUSING CORPORATION AND SUBSIDIARIES
EXHIBIT SETTING FORTH THE COMPUTATION OF FULLY DILUTED
EARNINGS PER SHARE INFORMATION
(Dollars and number of shares in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Common and common equivalent
shares used in computing earnings
per share . . . . . . . . . . . . . . . . . . . . . . . . 6,261 6,356 6,417
====== ====== ======
Income before extraordinary item and
cumulative effect of accounting
change . . . . . . . . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $ 284
====== ====== ======
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $6,159 $2,140 $2,395
====== ====== ======
Income before extraordinary item and
cumulative effect of accounting change . . . . . . . . . . $.98 $.34 $.04
Extraordinary item . . . . . . . . . . . . . . . . . . . . .13
Cumulative effect of accounting change . . . . . . . . . . .20
------ ------ ----
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $.98 $.34 $.37
==== ==== ====
</TABLE>
51
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 17,474,000
<SECURITIES> 304,000
<RECEIVABLES> 26,394,000
<ALLOWANCES> 476,000
<INVENTORY> 52,332,000
<CURRENT-ASSETS> 68,785,000
<PP&E> 10,491,000
<DEPRECIATION> 7,240,000
<TOTAL-ASSETS> 116,267,000
<CURRENT-LIABILITIES> 27,056,000
<BONDS> 0
<COMMON> 6,566,000
0
0
<OTHER-SE> 40,551,000
<TOTAL-LIABILITY-AND-EQUITY> 116,267,000
<SALES> 141,335,000
<TOTAL-REVENUES> 141,335,000
<CGS> 82,859,000
<TOTAL-COSTS> 82,859,000
<OTHER-EXPENSES> 47,510,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 660,000
<INCOME-PRETAX> 10,306,000
<INCOME-TAX> 4,147,000
<INCOME-CONTINUING> 6,159,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,159,000
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
