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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission File No. 1-6736
STARRETT CORPORATION
(Exact Name of Registrant as specified in its charter)
NEW YORK 13-5411123
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
909 THIRD AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)751-3100
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
6,566,402 shares of common stock.
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STARRETT CORPORATION AND SUBSIDIARIES
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TABLE OF CONTENTS
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Consolidated Financial Statements:
Statement of Consolidated Financial Position - March 31, 1996...........................................3
Condensed Statement of Consolidated Financial Position -
December 31, 1995......................................................................................4
Statements of Consolidated Operations - For the Three Months
ended March 31, 1996 and 1995..........................................................................5
Statements of Consolidated Stockholders' Equity - March 31, 1996
and December 31, 1995..................................................................................6
Statements of Consolidated Cash Flows - For the Three Months
ended March 31, 1996 and 1995..........................................................................7
Notes to Consolidated Financial Statements..............................................................8
Management's Discussion of Financial Condition and
Results of Operations..................................................................................9
Signatures.............................................................................................11
Exhibit A - Computation of Primary Earnings per Share - For the
Three Months ended March 31, 1996 and 1995...........................................12
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STARRETT CORPORATION AND SUBSIDIARIES
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STATEMENT OF CONSOLIDATED FINANCIAL POSITION
--------------------------------------------
MARCH 31, 1996
(In Thousands)
<S> <C>
(Unaudited)
ASSETS:
Cash and cash equivalents ....................................................... $ 8,938
Receivables...................................................................... 31,982
Inventory of real estate......................................................... 56,541
Investments in real estate joint ventures........................................ 4,638
Property and Equipment-Net....................................................... 3,887
Land Held for Investment......................................................... 1,734
Other Assets..................................................................... 14,262
--------
Total................................................................... $121,982
========
LIABILITIES AND EQUITY:
Liabilities:
Payable Within One Year:
Accounts payable................................................................ $ 12,329
Current portion of long-term obligations........................................ 6,881
Accrued liabilities............................................................. 14,057
--------
Total Liabilities Payable Within One Year............................... 33,267
Deferred Income taxes............................................................ 6,464
Deferred Revenues................................................................ 1,326
Long-Term Obligations............................................................ 28,010
--------
Total................................................................... 69,067
--------
Stockholders' Equity
Common stock-par value, $1.00; authorized, 18,000 shares ....................... 6,566
Capital in excess of par value.................................................. 23,933
Retained earnings............................................................... 25,599
Pension liability adjustment.................................................... (1,593)
Shares held in treasury-at cost................................................. (1,590)
--------
Common Stockholders' Equity...................................................... 52,915
--------
Total................................................................... $121,982
========
See Notes to Consolidated Financial Statements
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STARRETT CORPORATION AND SUBSIDIARIES
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CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
------------------------------------------------------
(In Thousands)
(Unaudited
December 31,
1995
--------------
ASSETS
<S> <C>
Cash and Cash Equivalents........................................................ $ 10,762
Receivables...................................................................... 32,590
Inventory of Real Estate......................................................... 59,052
Investments in Real Estate Joint Ventures........................................ 6,527
Other Assets..................................................................... 17,414
---------
Total....................................................................... $126,345
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LIABILITIES AND EQUITY
Accounts Payable................................................................. $ 11,332
Other Liabilities................................................................ 27,090
Deferred Revenues................................................................ 1,326
Long-Term Debt................................................................... 34,459
Common Stockholders' Equity...................................................... 52,138
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Total....................................................................... $126,345
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See Notes to Consolidated Financial Statements
4
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STARRETT CORPORATION AND SUBSIDIARIES
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STATEMENTS OF CONSOLIDATED OPERATIONS
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For The Three Months Ended March 31, 1996 and 1995
(In Thousands Except Per Share Data)
(Unaudited)
1996 1995
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<S> <C> <C>
Revenues................................................ $32,761 $30,281
Construction Costs...................................... 16,924 16,902
-------- --------
Income from Construction Contracts and
Related Revenues....................................... 15,837 13,379
-------- --------
Expenses:
General and Administrative............................. 7,928 6,395
Security Service Labor and Other Costs................. 2,596 2,479
Selling................................................ 1,594 1,452
Mortgage and Closing Costs............................. 1,597 1,210
Interest............................................... 72 108
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Total.............................................. 13,787 11,644
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Income before Income Taxes.............................. 2,050 1,735
Income Taxes............................................ 882 746
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Net Income.............................................. $ 1,168 $ 989
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Earnings per Common Share:
Net Income............................................... $.19 $.16
==== ====
Weighted average number of shares........................ 6,261 6,261
===== =====
Cash Dividends per Share................................. $.0625 $.0625
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See Notes to Consolidated Financial Statements
5
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STARRETT CORPORATION AND SUBSIDIARIES
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STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
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(In Thousands Except Share Data)
(Unaudited)
March 31, December 31,
1996 1995
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<S> <C> <C>
Common Stock - Par Value, $1.00; Authorized
18,000,000 shares; Issued, 6,566,402 shares $ 6,566 $ 6,566
Capital in Excess of Par Value......................................... 23,933 23,933
Retained Earnings...................................................... 25,599 24,822
Pension Liability Adjustment........................................... (1,593) (1,593)
Less: Shares Held in Treasury - at cost;
1996, 305,442 and 1995, 305,442
shares........................................................ (1,590) (1,590)
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STOCKHOLDERS' EQUITY................................................... $52,915 $52,138
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See Notes to Consolidated Financial Statements
6
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STARRETT CORPORATION AND SUBSIDIARIES
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STATEMENTS OF CONSOLIDATED CASH FLOWS
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For The Three Months Ended March 31, 1996 and 1995
(In Thousands)
(Unaudited)
1996 1995
-------- ------
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income...................................................... $ 1,168 $ 989
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used In) Operating Activities:
Depreciation and amortization................................. 815 712
Deferred income taxes......................................... 87 37
Equity in earnings in joint ventures.......................... (919)
Changes in Operating Assets and Liabilities:
Receivables.................................................. 608 271
Inventories.................................................. 2,511 (2,402)
Account payable.............................................. 997 (1,658)
Other assets................................................. (2,748) (1,759)
Accrued liabilities.......................................... 731 979
Deferred revenues............................................ (39)
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Net Cash Provided by (Used In) Operating Activitie 3,250 (2,870)
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INVESTING ACTIVITIES:
Investment in Joint Ventures.................................... (801)
Distributions From Joint Ventures............................... 2,810 145
Purchase of Property and Equipment.............................. (538) (157)
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Net Cash Provided by (Used In) Investing Activities 2,272 (813)
--------- --------
FINANCING ACTIVITIES:
Repayment of Long Term Obligations.............................. (21,994) (6,371)
Proceeds from Long Term Obligations............................. 15,039 2,571
Payment of Cash Dividends to Common
Stockholders................................................... (391) (391)
--------- --------
Net Cash Used In Financing Activities........................... (7,346) (4,191)
--------- --------
Net Decrease in Cash and Cash Equivalents (1,824) (7,874)
Cash and Cash Equivalents Beginning of Period 10,762 16,950
--------- --------
Cash and Cash Equivalents End of Period......................... $ 8,938 $ 9,076
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</TABLE>
See Notes to Consolidated Financial Statements
7
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STARRETT CORPORATION AND SUBSIDIARIES
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
The accompanying consolidated financial statements of Starrett Corporation
and its subsidiaries have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The consolidated financial
statements as of and for the three months ended March 31, 1996 and 1995 are
unaudited and are subject to year-end audit and adjustments. The results of
operations for the interim periods are not necessarily indicative of the results
of operations for the fiscal year. For comparability purposes, certain 1995
amounts have been reclassified to conform with the 1996 classifications. For
further information, refer to the consolidated financial statements and
footnotes included thereto in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
8
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MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
-------------------------------------------------------------
OPERATIONS
----------
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------------
During the three months ended March 31, 1996 the Company had income from
operations of $2,050,000 as compared with $1,735,000 in 1995, and net income of
$1,168,000 or $.19 a share for the three months ended March 31, 1996 as compared
with $989,000 or $.16 a share for the similar period in 1995.
The increase in income was primarily attributable to Levitt Corporation's
operations.
Levitt's backlog of homes contracted for sale increased from $78,900,000 at
March 31, 1995 to $95,772,000 at March 31, 1996. Included in Levitt's sales
backlog is its 50% interests in joint ventures.
HRH Construction Corporation reported an increase in operating income,
offset by a rise in general and administrative expenses relating to the
Company's expansion in the interior construction field.
Mortgage and closing costs increased reflecting the expansion of Levitt's
mortgage banking operations.
Financial Condition and Capital Resources
The Company meets it short-term financing needs with cash generated from
operations and funds available under several unsecured credit agreements. On
January 31, 1996, Levitt satisfied a $14,400,000 unsecured credit facility
through a $4,400,000 payment from working captial and a $10,000,000 payment
from an unsecured term loan. The new loan requires semi-annual principal
payments of $1,000,000 and $1,500,000 in July and January, respectively,
through January 2000.
Housebuilding Operations
The Company generally meets its land acquisition, development and
construction needs through mortgage loans and unsecured revolving credit
facilities. During March 1996, the Company renewed and extended its $15,000,000
revolving unsecured credit agreement used to finance its Puerto Rico
homebuilding operation for an additional three years.
Mortgage Operations
During 1995 the Company entered into a credit agreement with a Puerto Rico
bank to provide an unsecured revolving line of credit of $3,000,000 to finance
the working capital needs of the expanding Puerto Rico mortgage banking
operation.
Development/Construction Management
During 1995 the Company entered into a credit agreement with a New York
bank to provide a $3,000,000 unsecured line of credit to finance development,
construction and other operating activities.
1996 Cash Flow
Net cash provided by operating activities comprised net income of
$1,168,000 and a decrease in inventories of $2,511,000, offset by an increase in
other assets of $2,748,000, net adjustments for non-cash items of $17,000, and a
net change in other operating assets and liabilities of $2,336,000.
The decrease in inventories is due to the timing of titling homes in Puerto
Rico and domestically. The increase in other assets is attributable to the
expansion of development projects.
Net cash provided by investing activities comprised distributions from
joint ventures of $2,810,000, offset by other net investing activities of
$538,000.
Net cash used in financing activities comprised net principal payments on
notes and mortgages payable of $6,955,000 plus dividends paid to stockholders of
$391,000.
Seasonality
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 activitiy 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 calender year.
Except as discussed above, management is not aware of any trends or events,
commitments or uncertainties that will impact liquidity in a material way.
9
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STARRETT CORPORATION
(Registrant)
s/ Paul Milstein
-------------------------------------
Paul Milstein - Chairman
s/ Lewis A. Weinfeld
--------------------------------------
Lewis A. Weinfeld - Executive Vice
President and Chief Financial Officer
DATE: May 15, 1996
10
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EXHIBIT A
STARRETT CORPORATION AND SUBSIDIARIES
-------------------------------------
EXHIBIT SETTING FORTH THE COMPUTATION OF PRIMARY
------------------------------------------------
EARNINGS PER SHARE INFORMATION
------------------------------
(In Thousands Except Per Share Amounts)
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1995
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<S> <C> <C>
Weighted average number of shares outstanding during
the period....................................................... 6,261 6,261
===== =====
Net Income........................................................ $1,168 $989
====== ====
Primary earnings per share:
Net Income................................................... $.19 $.16
==== ====
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EXHIBIT INDEX
Exhibit No. Description
- - ---------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,890,000
<SECURITIES> 48,000
<RECEIVABLES> 32,458,000
<ALLOWANCES> 476,000
<INVENTORY> 56,541,000
<CURRENT-ASSETS> 89,789,000
<PP&E> 11,816,000
<DEPRECIATION> 7,929,000
<TOTAL-ASSETS> 121,982,000
<CURRENT-LIABILITIES> 33,267,000
<BONDS> 0
0
0
<COMMON> 6,566,000
<OTHER-SE> 46,349,000
<TOTAL-LIABILITY-AND-EQUITY> 121,982,000
<SALES> 32,761,000
<TOTAL-REVENUES> 32,761,000
<CGS> 16,924,000
<TOTAL-COSTS> 16,924,000
<OTHER-EXPENSES> 13,715,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,000
<INCOME-PRETAX> 2,050,000
<INCOME-TAX> 882,000
<INCOME-CONTINUING> 1,168,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,168,000
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
