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Stratus Properties Inc – ‘10-Q’ for 6/30/99

On: Thursday, 8/12/99 · For: 6/30/99 · Accession #: 885508-99-4 · File #: 0-19989

  As Of                Filer                Filing    For·On·As Docs:Size

 8/12/99  Stratus Properties Inc            10-Q        6/30/99    3:61K

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      20    108K 
 2: EX-15       Letter re: Unaudited Interim Financial Information     1      5K 
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     1      8K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Annexation/Circle C MUD Reimbursement Suit Capital Resources and Liquidity Exhibits and Reports on Form 8-K Financial Statements Investment in Unconsolidated Affiliates Legal Proceedings Legislative Matters Management's Discussion and Analysis of Financial Condition and Results of Operations Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Financial Statements
9	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Investment in Unconsolidated Affiliates
11	Capital Resources and Liquidity
14	Item 1. Legal Proceedings
"	Annexation/Circle C MUD Reimbursement Suit
15	Legislative Matters
"	Item 4. Submission of Matters to a Vote of Security Holders
16	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 20 TOC ↑Top Previous Next ↓Bottom Just 1st
 
    SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549

   FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   SECURITIES EXCHANGE ACT OF 1934

    For the Quarter Ended  June 30, 1999

    Commission File Number:  0-19989

   Stratus Properties Inc.

Incorporated in Delaware                     72-1211572       
                                       (IRS Employer Identification No.)

   98 San Jacinto Blvd., Suite 220, Austin, Texas  78701

    Registrant's telephone number, including area code: (512) 478-5788

         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. YesX  No _               

  On June 30, 1999, there were issued and outstanding 14,288,270
shares of the registrant's Common Stock, par value $0.01 per
share.                                                      

STRATUS PROPERTIES INC.       
TABLE OF CONTENTS       

                                                      Page

Part I.  Financial Information                    

Financial Statements:                         

       Condensed Balance Sheets                        3

       Statements of Operations                        4

       Statements of Cash Flow                         5

       Notes to Financial Statements                   6

     Remarks                                           8

     Report of Independent Public Accountants          9

Management's Discussion and Analysis          
of Financial Condition and Results of     
       Operations                                     10

   Part II.  Other Information                        15

   Signature                                          18

   Exhibit Index                                     E-1

10-Q 2nd Page of 20 TOC 1st Previous Next ↓Bottom Just 2nd

STRATUS PROPERTIES INC.               
Part I.  FINANCIAL INFORMATION                

Item 1. Financial Statements.                                                   
---------------------                                           

                                                                [Download Table]

                     STRATUS PROPERTIES INC.                         
              CONDENSED BALANCE SHEETS (Unaudited)                   

                                            June 30,     December 31,
                                              1999          1998     
                                            ---------     ---------  
                                                 (In Thousands)      
                                                                     
ASSETS                                                               
Current assets:                                                      
Cash and cash equivalents                   $   4,179     $   5,169  
Accounts receivable:                                                 
   Property sales                                 590           525  
   Other                                        1,376           408  
Prepaid expenses                                  288           361  
                                            ---------     ---------  
  Total current assets                          6,433         6,463  
Real estate and facilities, net                97,782        96,556  
Investment in and advances to                                        
 unconsolidated affiliates                      2,421         2,468  
Other assets                                    5,698         6,342  
                                            ---------     ---------  
Total assets                                $ 112,334     $ 111,829  
                                            =========     =========  

LIABILITIES AND STOCKHOLDERS' EQUITY                                 
Accounts payable and accrued liabilities    $     710     $     583  
Accrued interest, property taxes and other        690         1,861  
Current portion of long-term debt              13,118            -   
                                            ---------     ---------  
  Total current liabilities                    14,518         2,444  
Long-term debt                                 17,414        29,178  
Other liabilities                               6,377         6,238  
Mandatorily redeemable preferred stock         10,000        10,000  
Stockholders' equity                           64,025        63,969  
                                            ---------     ---------  
Total liabilities and stockholders' equity  $ 112,334     $ 111,829  
                                            =========     =========  

The accompanying notes are an integral part of these financial                  
statements.                                                                     

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                                                                [Download Table]

                  STRATUS PROPERTIES INC.                                 
              STATEMENTS OF OPERATIONS (Unaudited)                        

                                   Three Months Ended   Six Months Ended  
                                        June 30,            June 30,      
                                   ------------------   ----------------- 
                                     1999      1998      1999      1998   
                                   --------   -------   -------   ------- 
                                  (In Thousands, Except Per Share Amounts)

                                                                          
Revenues                           $  2,744   $ 3,408   $ 4,330   $ 6,063 
Costs and expenses:                                                       
Cost of sales                         1,007     3,005     2,077     4,653 
General and administrative                                                
 expenses                             1,004     1,107     1,738     2,499 
                                   --------   -------   -------   ------- 
  Total costs and expenses            2,011     4,112     3,815     7,152 
                                   --------   -------   -------   ------- 
Operating income (loss)                 733      (704)      515    (1,089)
Interest expense, net                  (233)     (478)     (502)     (985)
Other income, net                       133        22       104        31 
                                   --------   -------   -------   ------- 
Income (loss) before income                                               
 taxes and equity in affiliates         633    (1,160)      117    (2,043)
Income tax provision                     -         -        (14)       -  
Equity in unconsolidated affiliates     (98)       -        (47)       -  
                                   --------   -------   -------   ------- 
Net income (loss)                  $    535   $(1,160)  $    56   $(2,043)
                                   ========   =======   =======   ======= 
Net income (loss) per share:                                              
  Basic                               $0.04    $(0.08)      $-     $(0.14)
                                      =====    ======       ===    ====== 
  Diluted                             $0.03    $(0.08)      $-     $(0.14)
                                      =====    ======       ===    ====== 
Average shares outstanding:                                               
  Basic                              14,288    14,288    14,288    14,288 
                                     ======    ======    ======    ====== 
  Diluted                            16,254    14,288    16,235    14,288 
                                     ======    ======    ======    ====== 


The accompanying notes are an integral part of these financial                  
statements.                                                                     

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                                                                [Download Table]


                     STRATUS PROPERTIES INC.                              
               STATEMENTS OF CASH FLOW (Unaudited)                        

                                                       Six Months Ended   
                                                           June 30,       
                                                     -------------------- 
                                                       1999        1998   
                                                     -------     -------- 
                                                        (In Thousands)    
                                                                          
Cash flow from operating activities:                                      
Net income (loss)                                    $    56     $ (2,043)
Adjustments to reconcile net income (loss)                                
 to net cash provided by operating activities:                            
  Depreciation and amortization                           42           36 
  Cost of real estate sold                             3,072        4,939 
  Equity in unconsolidated affiliates losses              47           -  
  (Increase) decrease in working capital:                                 
   Accounts receivable and other                          30          263 
   Accounts payable and accrued liabilities             (919)        (370)
  Other                                                 (208)      (2,687)
                                                     -------     -------- 
Net cash provided by operating activities              2,120          138 
                                                     -------     -------- 
Cash flow from investing activities:                                      
Real estate and facilities                            (4,110)      (3,111)
                                                     -------     -------- 
Net cash used in investing activities                 (4,110)      (3,111)
                                                     -------     -------- 
Cash flow from financing activities:                                      
Proceeds from preferred stock issuance                    -        10,000 
Borrowings (repayment) of debt, net                    1,000       (6,000)
                                                     -------     -------- 
Net cash provided by financing activities              1,000        4,000 
                                                     -------     -------- 
Net increase (decrease) in cash and cash equivalents    (990)       1,027 
Cash and cash equivalents at beginning of year         5,169          873 
                                                     -------     -------- 
Cash and cash equivalents at end of period           $ 4,179     $  1,900 
                                                     =======     ======== 

The accompanying notes are an integral part of these financial                  
statements.                                                                     

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STRATUS PROPERTIES INC.               
NOTES TO FINANCIAL STATEMENTS               

1.  EARNINGS PER SHARE                                                          
Basic and diluted net income (loss) per share of common stock was               
calculated by dividing net income (loss) applicable to common                   
stock by the weighted-average number of common shares outstanding               
during each period presented. Stratus Properties Inc. (STRS) had                
outstanding options to purchase a total of approximately 254,000                
and 235,000 shares of common stock for the second quarter and six               
months ended June 30, 1999, respectively, that were included in                 
the computation of diluted net income per share.  Additionally,                 
the diluted net income per share calculations for the 1999                      
periods assume the redemption of STRS' approximate 1.7 million                  
shares of outstanding mandatorily redeemable preferred stock for                
approximately 1.7 million shares of common stock. STRS'                         
outstanding convertible debt, which is convertible into                         
approximately 300,000 shares of common stock, was excluded  from                
the diluted net income per share calculation because of its anti-               
dilutive effect. Interest accrued on the convertible debt                       
outstanding totaled approximately $63,000 and $125,000 during the               
second quarter and six months ended June 30, 1999, respectively,                
and there have been no dividends accrued to date on the                         
mandatorily redeemable preferred stock. During the second quarter               
and six month periods of 1998 STRS had outstanding options                      
representing 320,000 and 345,000 shares of common stock,                        
respectively, that would otherwise be included in the calculation               
of diluted net loss per share but were excluded because of the                  
anti-dilutive effect their inclusion would have on the                          
calculation, considering the losses reported during the periods.                
The diluted loss per share excluded the assumed redemption of                 
the outstanding mandatorily redeemable preferred stock during the               
second quarter and six months ended June 30, 1998. There was no                 
outstanding convertible debt as of June 30, 1998.                               

Outstanding options to purchase approximately 295,000 and               
514,000 shares of common stock at average exercise prices of                    
$6.14 and $5.78 per share for the second quarter of 1999 and                    
1998, respectively, and outstanding options to purchase 295,000                 
and 289,000 shares of common stock at average exercise prices of                
$6.14 and $6.19 per share for the six months ended June 30, 1999                
and 1998, respectively, were excluded from the computation of                   
diluted earnings per share because their exercise prices were                   
greater than the average market price for the periods presented.                

2.  LONG-TERM DEBT                                                              
STRS has a $35.0 million revolving credit facility with                         
individual borrowings bearing interest at rates based on the lead               
lender's prime rate or LIBOR, at STRS' option.  The aggregate                   
commitment decreased to $35.0 million on January 1, 1999.  It                   
will be reduced further to  $15.0 million on January 1, 2000 and                
will terminate on January 1, 2001.  During 1999 STRS will                       
classify any borrowings on this credit facility in excess of $15                
million as current maturities of long-term debt.  As of June 30,                
1999, credit facility borrowings totaled $28.1 million.  IMC                    
Global Inc. (IGL) has guaranteed amounts borrowed under the                     
facility in exchange for an annual fee, payable quarterly, equal                
to the difference between STRS' cost of LIBOR-funded borrowings                 
before the assumption of the guarantee by IGL and the current                   
rate on the LIBOR-funded loans under the facility. STRS cannot                  
amend the facility without IGL's consent.  For further discussion               
of this credit facility, see Note 5 of "Notes to Financial                      
Statements" in STRS' 1998 Annual Report on Form 10-K.  STRS had                 
$2.2 million of additional long-term debt outstanding on June 30,               
1999 resulting from borrowings on its convertible debt facility                 
(see Note 3 below) and $0.2 million outstanding on the Lantana                  
Corporate Center project loan (see Note 4 below).                               

STRS believes its near-term capital resource needs can be               
met adequately during 1999 from operating cash flows and                        
additional borrowings under its existing debt facilities.                       
However, the debt reduction required under its revolving credit                 
facility (see above) will require new financing by no later than                
January 1, 2000.  Accordingly, STRS is currently exploring                      
capital raising alternatives, including various forms of debt                   
and/or equity financing.  STRS continues to pursue financing for                
the development of individual projects through both commercial                  
bank facilities and in accordance with its alliance with Olympus                
(see Note 3 below).  While there can be no assurance that STRS                  
will have the necessary funds, management believes that STRS has                
the ability to effectively address its capital resource needs and               
debt reduction requirements.                                                    

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3. OLYMPUS RELATIONSHIP                                                         
In May 1998, STRS and Olympus Real Estate Corporation (Olympus),                
an affiliate of Hicks, Muse, Tate & Furst Incorporated, formed a                
strategic alliance to develop certain of STRS' existing                         
properties and to pursue new real estate acquisition and                        
development opportunities.  Under the terms of the agreement,                   
Olympus made a $10 million investment in STRS' mandatorily                      
redeemable preferred stock, provided a $10 million convertible                  
debt financing facility to STRS and agreed to make available up                 
to $50 million of additional capital representing its share of                  
direct investments in joint STRS/Olympus projects.                              

The $10 million convertible debt facility is available to             
STRS in whole or in part until May 22, 2004 and is intended to                  
fund STRS' equity investments in new STRS/Olympus joint venture                 
opportunities involving properties not currently owned by STRS.                 
Interest under this facility accrues at 12 percent and is payable               
quarterly or added to principal at Olympus' option.  As of June                 
30, 1999, Olympus had elected to add all interest to the                        
outstanding principal ($2.0 million, see Note 5 below), resulting               
in an outstanding amount of $2.2 million.                                       

Through May 22, 2001, Olympus agreed to make available up to          
$50 million for its share of capital for direct investments in                  
STRS/Olympus joint acquisition and development activities.  In                  
return, STRS has provided Olympus with a right of first refusal                 
to participate for no less than a 50 percent interest in all new                
acquisition and development projects on properties not currently                
owned by STRS, as well as development opportunities on existing                 
properties in which STRS seeks third-party equity participation.                
As of June 30, 1999, Olympus had invested approximately $3.6                  
million of such funds in STRS/Olympus joint ventures. For further               
discussion of  STRS' alliance and its subsequent formation of                   
joint ventures with Olympus see Note 5 below and Notes 2, 3 and 4               
of "Notes to Financial Statements" included in STRS' 1998 Annual                
Report on Form 10-K.                                                            

4.   PROJECT LOAN FACILITY                                                      
In April 1999, STRS and a wholly owned subsidiary finalized a                 
$6.6 million project development loan facility with a commercial                
bank for the development of the 70,000 square foot first phase of               
the 140,000 square foot  Lantana Corporate Center (7000 West).                  
STRS is guarantor of the completion of the project and is                       
responsible for any unpaid interest and certain other limited                   
obligations. The 18-month, variable-rate, non-recourse loan is                  
secured by approximately 11 acres of land at 7000 West, the                     
related improvements and approximately $2.0 million of                          
reimbursements due from the City of Austin for the Lantana water                
pump station. Interest is payable monthly and accrues at either                 
the lending bank's prime rate or LIBOR plus 250 basis points at                 
STRS' option. At June 30, 1999, outstanding borrowings on this                  
project loan facility totaled $229,000.                                         

5.    INVESTMENT IN UNCONSOLIDATED AFFILIATES                                   
On September 30, 1998, STRS entered into two separate                           
transactions with Olympus.  The first provided for the                          
development of a 75 residential lot project at the Barton Creek                 
ABC West Phase I subdivision known as Wimberly Lane.  In this                   
transaction STRS sold the land to the Oly Stratus ABC West I                    
Joint Venture (ABC Joint Venture) for approximately $3.3 million,               
of which $1.65 million attributable to its 50 percent equity                    
interest was deferred for financial accounting purposes, and                    
invested approximately $0.5 million in the now fully developed                  
project. The other transaction involved approximately 700                       
developed lots and 80 acres of platted but undeveloped real                     
estate at the Walden on Lake Houston project.  Olympus originally               
purchased this project in April 1998 when it contained 930                      
developed lots and 80 acres of undeveloped property. STRS has                   
served as manager of this project since Olympus' purchase. STRS                 
acquired its 50 percent interest in the  Oly Walden Partnership                 
(Walden Partnership) borrowing $2.0 million of funds available                  
under  its convertible debt facility with Olympus (see Note 3                   
above). STRS accounts for its investment in both of these                       
affiliated entities using the equity method.                                    

The Walden Partnership and the ABC Joint Venture each have            
existing project development loan facilities with the same                      
commercial bank. These facilities, totaling $8.2 million for the                
Walden Partnership and $3.9 million for the ABC Joint Venture,                  
are non-recourse to the partners and secured by the assets of the               
respective projects. At June 30, 1999, borrowings of $5.2 million               
and $1.0 million were outstanding on these respective facilities.               
Additionally, these facilities required that a wholly owned                     
subsidiary of STRS deposit a total of $3.0 million of restricted                
cash with the bank as additional collateral for the loan. The                   
loan agreement for the Walden Partnership permits a $0.30                       
reduction of this restricted cash deposit for every $1.00 of                    
principal repaid on the Walden Partnership loan. However, the                   
restriction on the $0.5 million deposited as collateral for the                 
ABC Joint Venture loan will not be removed until the entire loan                
is repaid.  At June 30, 1999, STRS had approximately $2.5 million               

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of restricted cash pursuant to these projects' development loan                 
facilities agreements.                                                          

For a detailed discussion of the joint venture and                    
partnership transactions with Olympus see Note 4 "Investment in                 
Unconsolidated Affiliates" and "Transactions With Olympus Real                  
Estate Corporation" and "Capital Resources and Liquidity"                       
included in Items 7 and 7A "Management's Discussion and Analysis                
of Financial Condition and Results of Operations and Disclosures                
of Market Risks" included in STRS' 1998 Annual Report on Form 10-K.             

There have been no dividends received from either                       
unconsolidated affiliate since their inception through June 30,                 
1999. The summarized unaudited financial information of STRS'                   
unconsolidated affiliates is shown below (in thousands):                        

                                                                [Download Table]

                                       ABC          Walden              
                                  Joint Venture   Partnership    Total  
                                  -------------   -----------   ------- 
                                                                        
Earnings data for the quarter                                           
  ended June 30, 1999:                                                  
Revenues                            $   495       $   600       $ 1,095 
Operating income (loss)                   4          (213)         (209)
Net income (loss)                         4          (199)         (195)
STRS' equity in net income (loss)         2          (100)          (98)

Earnings data for the six months                                        
  ended June 30, 1999:                                                  
Revenues                            $ 1,269       $   990       $ 2,259 
Operating income (loss)                 252          (346)          (94)
Net income (loss)                       252          (345)          (93)
STRS' equity in net income (loss)       126          (173)          (47)


5.  LITIGATION                                                                  
STRS is involved in pending litigation involving the City of                    
Austin and others, which may affect its property development                    
entitlements and its ability to secure reimbursement of                         
approximately $22 million, of which STRS' portion is estimated to               
be approximately $18 million, exclusive of penalties and                        
interest, relating to development of its Circle C property. Refer               
to Item 3 "Legal Proceedings" and Note 6 "Real Estate" in the                   
STRS Annual Report on Form 10-K for the year ended December 31,                 
1998 for a detailed discussion of such litigation matters. For                  
discussion of litigation events subsequent to the Annual Report                 
on Form 10-K refer to "Capital Resources and Liquidity" and Part                
II - Other Information, "Legal Proceedings" included elsewhere in               
this interim report on Form 10-Q.                                               

--------------------                
Remarks               

The information furnished herein should be read in conjunction                  
with STRS' financial statements contained in its 1998 Annual                    
Report to stockholders included in its Annual Report on Form 10-                
K.  The information furnished herein reflects all adjustments                   
which are, in the opinion of management, necessary for a fair                   
statement of the results for the periods.  All such adjustments                 
are, in the opinion of management, of a normal recurring nature.                

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                

To the Board of Directors and Stockholders                                      
of Stratus Properties Inc.:                                               

We have reviewed the accompanying condensed balance sheet of                    
Stratus Properties Inc. (a Delaware Corporation), as of June 30,                
1999, the related statements of operations for the three and six-               
month periods ended June 30, 1999 and 1998 and the statements of                
cash flow for the six month periods ended June 30, 1999 and 1998.               
These financial statements are the responsibility of the                        
Company's management.                                                           

We conducted our reviews in accordance with standards established               
by the American Institute of Certified Public Accountants.  A                   
review of interim financial information consists principally of                 
applying analytical procedures to financial data and making                     
inquiries of persons responsible for financial and accounting                   
matters.  It is substantially less in scope than an audit                       
conducted in accordance with generally accepted auditing                        
standards, the objective of which is the expression of an opinion               
regarding the financial statements taken as a whole.                            
Accordingly, we do not express such an opinion.                                 

Based on our reviews, we are not aware of any material                          
modifications that should be made to the financial statements                   
referred to above for them to be in conformity with generally                   
accepted accounting principles.                                                 

We have previously audited, in accordance with generally accepted               
auditing standards, the balance sheet of Stratus Properties Inc.                
as of December 31, 1998, and the related statements of                          
operations, stockholders' equity and cash flow for the year then                
ended (not presented herein), and in our report dated January 19,               
1999, based on our audit, we expressed an unqualified opinion on                
those financial statements. In our opinion, the information set                 
forth in the accompanying condensed balance sheet as of December                
31, 1998, is fairly stated, in all material respects, in relation               
to the balance sheet from which it has been derived.                            

         /s/ ARTHUR ANDERSEN LLP

Austin, Texas                                                                   
July 20, 1999                                                                   

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Item 2. Management's  Discussion  and  Analysis  of  Financial                  
Condition and Results of Operations.                            
------------------------------------                            

OVERVIEW                

Stratus Properties Inc. (STRS)  is engaged in the                       
acquisition, development and sale of commercial and residential                 
real estate.  STRS' principal real estate holdings are in the                   
Austin, Texas area and consist of approximately 2,450 acres of                  
undeveloped residential, multi-family and commercial property                   
within the Barton Creek development, approximately 1,300 acres of               
undeveloped commercial and multi-family property within the                     
Circle C Ranch development, and approximately 500 acres of                      
undeveloped residential, multi-family and commercial property                   
known as the Lantana tract, south of and adjacent to the Barton                 
Creek development.                                                              

At June 30, 1999, STRS also owned 44 developed lots, 136              
acres of undeveloped residential property and 75 acres of                       
undeveloped commercial and multi-family property located in                     
Dallas, Houston and San Antonio, Texas which are being actively                 
marketed. These real estate interests are managed by unaffiliated               
professional real estate developers who have been retained to                   
provide master planning, zoning, permitting, development,                       
construction and marketing services for the properties.                         

INVESTMENT IN UNCONSOLIDATED AFFILIATES               

On September 30, 1998, STRS and Olympus Real Estate                   
Corporation (Olympus) agreed to enter into two separate 50                      
percent owned joint real estate transactions, pursuant to a                     
strategic alliance formed in May 1998 (see Notes 3 and 5 above).                

During the first quarter of 1999, STRS, as developer,                 
completed the development of 75 residential lots at the Oly                     
Stratus ABC West I Joint Venture (ABC Joint Venture).  STRS, as                 
manager,  has closed on the sale of 13 lots as of June 30, 1999                 
resulting in revenues of $1.3 million to the joint venture.  The                
net proceeds from these sales were used to reduce outstanding                   
borrowings under the ABC Joint Venture development project  loan                
facility, which at June 30, 1999, totaled $1.0 million.  STRS                   
will continue its marketing efforts and anticipates substantial                 
sales during the remainder of 1999 and into early 2000.  All                    
sales proceeds will initially be used to repay the outstanding                  
project loan prior to any distributions to STRS and Olympus.                    
STRS will have access to $0.5 million, which it funded in a                     
restricted account as additional collateral for the loan                        
facility, upon the ABC Joint Venture's full repayment of the                    
project loan, which is anticipated by early 2000.                               

STRS is continuing to manage and market the assets of the           
Oly Walden Partnership, which currently includes approximately                  
660 developed lots and 80 acres of platted but undeveloped real                 
estate.  STRS receives management fees and commissions for its                  
services.  STRS has negotiated agreements providing for the sale                
of approximately 90 percent of the developed lots.   These                      
agreements require the purchasers to close on the lots pursuant                 
to a specific schedule, which STRS anticipates will result in the               
sale of all the lots over a period not to exceed four years or by               
2002.  Approximately 270 lots have already closed and funded                    
under these agreements.                                                         

DEVELOPMENT ACTIVITIES                

Development  is progressing at several sections of the                
Barton Creek project, including the completion of utility                       
infrastructure that will serve a significant portion of the 2,450               
acres of undeveloped property at Barton Creek, and preliminary                  
development of approximately 200 new single-family homesites                    
surrounding a new Tom Fazio-designed golf course, which is                      
expected to open by the fourth quarter of 1999. STRS expects                    
these homesites to be available for sale by late 2000.                          
Permitting and entitlement issues now being litigated make the                  
timing of completion of the projects at Barton Creek uncertain.                 

STRS' has completed site work for the 140,000 square foot             
Lantana Corporate Center (7000 West) project, and construction                  
on the first 7000 West building is proceeding as scheduled with a               
completion date anticipated in the fourth quarter of 1999.  STRS                
is actively pre-leasing the building. Financing for the 70,000                  
square foot first phase is provided by a $6.6 million project                   
loan facility, which was finalized in April 1999 (see "Capital                  
Resources and Liquidity" below).                                                

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STRS has received final plat approval from the City of                
Austin (the City) for a subdivision of 54 estate lots on                        
approximately 240 acres in the southern portion of its Barton                   
Creek development.  All of these lots have scenic hill country                  
settings and some overlook the new Fazio golf course.                           
Construction is scheduled to commence in September 1999 and pre-                
marketing of the estate lots is expected to begin in the fourth                 
quarter of 1999.                                                                

STRS has finalized plans for the development of portions of           
its 46 acre Bee Cave tract, which is outside the City's                         
jurisdictional area.  Additionally, STRS has contracted to sell                 
approximately 11 acres of this tract.                                           

RESULTS OF OPERATIONS               

                                                                [Download Table]


    STRS' summary operating results follow (in thousands):            

                                Second Quarter         Six Months     
                               -----------------    ----------------- 
                                 1999     1998       1999      1998   
                               -------   -------    -------   ------- 
                                                                      
Revenues:                                                             
  Developed properties         $ 1,527   $ 3,408    $ 2,679   $ 5,793 
  Undeveloped properties           962        -       1,117       270 
  Commissions, management fees                                        
     and other                     255        -         534        -  
                               -------   -------    -------   ------- 
Total revenues                   2,744     3,408      4,330     6,063 

Operating income (loss)            733      (704)       515    (1,089)

Net income (loss)                  535    (1,160)        56    (2,043)


Revenues from developed properties represented the sale of              
33 and 54 single family homesites during the second quarter and                 
six month periods of 1999, respectively, compared with the sale                 
of 64 and 108 single family homesites, respectively, during the                 
1998 periods.  Undeveloped property revenues during the second                  
quarter and six months of 1999 include the sale of 28 acres of                  
undeveloped residential property in Houston, Texas. Additionally,               
revenues from undeveloped properties reflect STRS' recognition of               
previously deferred revenues from the sale of five and 13 lots                  
during the second quarter and six months ended June 30, 1999,                   
respectively. These lot sales to unrelated parties permitted STRS               
to recognize $89,000 and $244,000 during the second quarter and                 
six months ended June 30, 1999, respectively, of the $1,647,500                 
in previously deferred revenue, and $33,000 and $89,000,                        
respectively, of related profit associated with STRS' initial                   
sale of the 28 acres of undeveloped property to the ABC Joint                   
Venture. STRS' commissions, management fees and other revenue                   
reflect its increasing involvement in that aspect of the real                   
estate business and its managerial role in the joint ventures                   
with Olympus, as well as its management of the 2,200 acre Lakeway               
project near Austin.                                                            

Cost of sales decreased to $1.0 million and $2.1 million for            
the second quarter and six months ended June 30, 1999 compared                  
with $3.0 million and $4.7 million for the same periods last                    
year.  Reimbursement of certain infrastructure costs, which were                
previously charged to expense or related to properties previously               
sold, reduced cost of sales by approximately $2.0 and $2.8                      
million during the second quarter and six months ended June 30,                 
1999, respectively, and $0.8 million for the six month period in                
1998.  Additionally, the cost of sales during the 1999 periods                  
reflect the substantial reduction in sales.                                     

General and administrative expenses decreased during the                
second quarter and six months ended June 30, 1999, to $1.0                      
million and $1.7 million, respectively, compared with $1.1                      
million and $2.5 million during the comparable periods last year.               
The decrease resulted primarily from reduced legal costs in                   
connection with STRS' ongoing efforts to resolve through                        
litigation attempts by the City and others to restrict STRS'                    
development entitlements and to secure reimbursement of                         
approximately $22 million relating to infrastructure costs                      
incurred in the development of the Circle C property.  STRS'                    
share of these costs, currently estimated at approximately $18                  
million, exclusive of penalties and interest, are not recorded as               
an asset in STRS' balance sheet. In December 1998, the Texas                    
Supreme Court heard oral argument on a legal brief that may                     
resolve various issues between STRS and the City. A ruling is                   
anticipated during 1999.  Lower legal costs during the 1999                     
periods reflect the reduced activity associated with the timing                 
of the Texas Supreme Court's ruling.  See Part II, Item 1 "Legal                
Proceedings" for further discussion of legal matters concerning                 
STRS, including favorable legislative developments during the                   

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second quarter of 1999.  Legal expenses for the second quarter                  
and six months ended June 30, 1999 totaled approximately $0.1 million           
and $0.3 million, respectively, compared with $0.4 million and                  
$1.0 million during the same periods last year.                                 

During 1995, legislation was enacted which enabled STRS to              
create a series of municipal utility districts (MUDs) to serve                  
the Barton Creek development.  Once established, the MUDs issue                 
bonds, the proceeds of which are used to reimburse STRS for costs               
related to the installation of major utility, drainage and water                
quality infrastructure.  During the second quarter and six months               
ended June 30, 1999, STRS received approximately $2.0 million and               
$3.1 million in partial reimbursement of infrastructure costs                   
relating to the Barton Creek development, which included $2.0                   
million and $2.8 million, respectively, related to costs                        
previously expensed (see discussion above). During the second                   
quarter and six months ended June 30, 1998, STRS received $1.8                  
million and $2.8 million, respectively, reflecting the receipt of               
$1.8 million in partial Circle C MUD reimbursements in the second               
quarter and $1.0 million in partial Barton Creek MUD                            
reimbursements during the first quarter of 1998, which included                 
$0.8 million related to costs previously expensed. The proceeds                 
were used in part to fund current development expenditures and to               
repay debt. STRS expects to receive additional reimbursements for               
previously incurred infrastructure costs related to the Barton                  
Creek development from the proceeds of MUD bonds issued in the                  
future.  However, the timing and the amount of future Barton                    
Creek MUD reimbursements are uncertain.  For information                        
concerning Circle C MUD reimbursements currently being litigated,               
see Part II, Item 1, "Legal Proceedings."                                       

Net interest expense totaled $233,000 and $502,000 for the              
second quarter and six months ended June 30, 1999, respectively,                
compared to $478,000 and $985,000 during the same periods one                   
year ago. The decrease reflects lower average debt outstanding in               
the current year and an increase in capitalized interest.                       

CAPITAL RESOURCES AND LIQUIDITY               

Net cash provided by operating activities totaled $2.1                
million during the six months ended June 30, 1999 compared with                 
$0.1 million during the six months ended June 30, 1998.  The                    
increase reflects the receipt of $2.8 million in MUD                            
reimbursements for previously expensed infrastructure costs,                    
offset in part by the reduction of sales revenues and a reduction               
in outstanding accounts payable and accrued liabilities                         
subsequent to December 31, 1998. Cash used in investing                         
activities totaled $4.1 million during the six months ended June                
30, 1999 compared with $3.1 million during the same period in                   
1998, reflecting STRS' net real estate and facilities                           
expenditures. Financing activities provided cash of $1.0 million                
from increased borrowings during the six months ended June 30,                  
1999 compared with $4.0 million during the six months ended June                
30, 1998, which reflected the issuance of $10 million of                        
mandatorily redeemable preferred stock associated with the                      
Olympus transaction (see Note 3) offset in part by net repayment                
of debt. STRS used the net borrowings on its credit facilities                  
(see below) to fund real estate development expenditures and fund               
operations during the six months ended June 30, 1999.                           

STRS' development expenditures during the six months ended            
June 30, 1999 were funded largely from borrowings under its                     
credit facility, which provides aggregate available credit of $35               
million through December 31, 1999 and $15 million through                       
December 31, 2000 (see Note 2).  At June 30, 1999, outstanding                  
debt on this credit facility totaled $28.1 million. Anticipated                 
capital expenditures for the remainder of 1999 are expected to be               
funded by operating cash flow and additional borrowings, with the               
level of capital expenditures subject to change based on the                    
resolution of ownership of certain reimbursements of previously                 
incurred infrastructure costs and other legal and regulatory                    
issues, as further discussed in Part II, Item 1, "Legal                         
Proceedings."                                                                   

In April 1999, STRS and a wholly owned subsidiary finalized           
a $6.6 million project development loan facility with a                         
commercial bank for the development of the 70,000 square foot                   
first phase of the 7000 West project at Lantana.  STRS is                       
guarantor of the completion of the project and is responsible for               
any unpaid interest and certain other limited obligations.  The                 
18-month, variable-rate, non-recourse loan is secured by the                    
approximate 11 acres of land at 7000 West, the related                          
improvements and approximately $2.0 million of reimbursements due               
from the City for the Lantana water pump station.  Interest is                  
payable monthly and accrues at the bank's prime rate or LIBOR                   
plus 250 basis points, at STRS' option.  STRS anticipates                       
refinancing this loan upon the completion of the pre-leasing                    
activities that are currently underway.  At June 30, 1999                       
outstanding borrowings on this credit facility totaled $229,000.                

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STRS' future operating cash flows and, ultimately, its                
ability to develop its properties and expand its business will be               
largely dependent on the level of its real estate sales.  In                    
turn, these sales will be significantly affected by future real                 
estate values, regulatory issues, development costs, interest                   
rate levels and the ability of STRS to continue to protect its                  
land use and development entitlements. Significant development                  
expenditures remain to be incurred for STRS' Austin-area                        
properties prior to their eventual sale. STRS' anticipated 1999                 
capital expenditures are being limited to essential levels as                   
STRS works to preserve its land use and related rights in various               
disputes with the City and others, as more fully explained in                   
Part II Item 1, "Legal Proceedings."  As a result, property sales               
during the remainder of 1999 are expected to be lower than in                   
previous years.                                                                 

STRS believes its near-term capital resource needs can be             
met adequately during 1999 from operating cash flows and                        
additional borrowings under its debt facilities. However, the                   
debt reduction required under its revolving credit facility will                
require new financing by no later than January 1, 2000.  STRS                   
therefore is considering other capital raising alternatives,                    
including various forms of debt and/or equity financing and other               
means. STRS is able to obtain up to $50 million in capital from                 
Olympus for the development of existing properties in which it                  
desires third-party equity participation, and also believes it                  
can obtain bank financing at a reasonable cost for refinancing                  
its existing credit facility. However, while financing for                      
development of STRS' existing properties is available (see                      
discussion above), obtaining land acquisition financing is                      
generally expensive and uncertain.  While there can be no                       
assurance that STRS will generate sufficient cash flow or obtain                
sufficient funds to make the required debt reduction to $15                     
million by January 1, 2000 under its existing revolving credit                  
facility, STRS believes it can meet the capital resource needs                  
discussed above.  Resolving its entitlement and reimbursement                   
disputes with the City and establishing a long-term capital                     
structure remain STRS' primary objectives for the remainder of                  
1999.                                                                           

IMPACT OF YEAR 2000 COMPLIANCE              

The Year 2000 (Y2K) issue is the result of computerized systems                 
being written to store and process the year portion of dates                    
using two digits rather than four.  Date-aware systems (i.e. any                
system or component that performs calculations, comparisons,                    
sequencing or other operations involving dates) may fail or                     
produce erroneous results on or before January 1, 2000 because                  
the year 2000 will be interpreted as the year 1900.                             

STRS' State of Readiness. STRS has been pursuing a strategy to                  
ensure all its significant computer systems will be Y2K                         
compliant, i.e., able to process dates from and after January 1,                
2000, including leap years, without critical systems failure (Y2K               
Compliant or Y2K Compliance).  Certain computerized business                    
systems and related services are provided under contract by a                   
services company of which STRS owns 10 percent (the Services                    
Company) which is responsible for ensuring Y2K Compliance for the               
systems it manages.  The Services Company has separately prepared               
a plan for its Y2K Compliance.  Progress of the Y2K plan is being               
monitored by STRS' executive management and reported to the Audit               
Committee of the STRS Board of Directors.  In addition, the                     
independent accounting firm functioning as STRS' internal                       
auditors is assisting management in monitoring the progress of                  
the Y2K plan. Critical components of the plan are complete with                 
the remaining activities focused on contingency planning.  Like                 
other companies, STRS cannot, however, make Y2K Compliance                      
certifications because the ability of any organization's systems                
to operate reliably after midnight on December 31, 1999 is                      
dependent upon factors that may be outside the control of, or                   
unknown to, the organization.                                                   

Information Technology (IT) Systems.  With the exception of                     
testing interfaces to computerized disbursement systems provided                
by its primary bank, STRS and the Services Company have completed               
Y2K remediation and testing work for critical business and office               
automation systems. Testing of the banking interfaces is in                     
process with completion expected during the third quarter of                    
1999.                                                                           

Non-IT Systems.  With a few minor exceptions involving water                    
quality and other environmental monitoring and associated                       
laboratory analysis systems, STRS does not rely upon process                    
control, engineering, or other "Non-IT" systems in its business.                
STRS completed an assessment of this area and does not believe                  
overall risk is significant.                                                    

Third Party Risks.  STRS computer systems are not widely                        
integrated with the systems of its suppliers or customers.  The                 

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primary potential risk attributable to third parties would be                   
from a temporary disruption of STRS operations due to a failure                 
by a supplier to meet its contractual obligations for services                  
and/or materials (rather than a failure associated with                         
integrated computer systems).  An assessment of third party risk                
has been completed.  Based on this assessment, STRS does not                    
believe overall risk from third parties is significant.                         

The Costs to Address STRS' Y2K Issues.  Expenditures for the                    
necessary Y2K related modifications will largely be funded by                   
routine software and hardware maintenance fees paid by STRS or                  
the Services Company to the related software providers.  Based on               
current information, STRS believes that the incremental cost of                 
Y2K Compliance not covered by routine software and hardware                     
maintenance fees will be less than $0.1 million, most of which is               
expected to be incurred in 1999.  If the software modifications                 
and conversions referred to above are not made, or are delayed,                 
the Y2K issue could have a material impact on STRS' operations.                 
Additionally, current estimates are based on management's best                  
estimates, which are derived using numerous assumptions of future               
events including the continued availability of certain resources,               
third party modification plans and other factors.  There also can               
be no assurance that the systems of other companies will be                     
converted on a timely basis or that failure to convert will not                 
have a material adverse effect on STRS.                                         

The Risks of STRS Y2K Issues.   Based on its detailed risk                      
assessment work conducted thus far, STRS believes the most likely               
Y2K-related failures would probably be temporary disruption in                  
certain materials and services provided by third parties, which                 
would not be expected to have a material adverse effect on STRS'                
financial condition or results of operations.                                   

STRS' Contingency Plans.  Although STRS believes the likelihood                 
of any or all of the above risks occurring to be low, specific                  
contingency plans are being developed to address certain risk                   
areas.  Initial contingency plans have been developed and will                  
continue be updated based on changing business requirements.                    
While there can be no assurances that STRS will not be materially               
adversely affected by Y2K problems, it is committed to ensuring                 
that it is fully Y2K ready and believes its plans adequately                    
address the above-mentioned risks.                                              

CAUTIONARY STATEMENT                

Management's discussion and analysis of financial condition             
and results of operations contains forward-looking statements                   
regarding future reimbursement for infrastructure costs, future                 
events related to financing and the IMC Global Inc. guarantee, the              
anticipated outcome of litigation and regulatory matters, the                   
expected results of STRS' business strategy, Y2K Compliance and                 
other plans and objectives of management for future operations                  
and activities.  Important factors that could cause actual                      
results to differ materially from STRS' expectations include                    
economic and business conditions, business opportunities that may               
be presented to and pursued by STRS, changes in laws or                         
regulations and other factors, many of which are beyond the                     
control of STRS and other factors that are described in more                    
detail under the heading "Cautionary Statements" in STRS' Form                  
10-K for the year ended December 31, 1998.                                      

----------------------------                
The results of operations reported  and summarized above are  not               
necessarily indicative of future operating results.                             

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PART II. - OTHER INFORMATION                

Item 1. Legal Proceedings.                                                      
--------------------                                                

STRS is involved in various regulatory matters and                    
litigation involving entitlement and/or development of its Austin               
properties.  For a detailed discussion on these matters see Item                
3, "Legal Proceedings" and Note 6, "Real Estate" included in                    
STRS' 1998 Annual Report on Form 10-K.                                          

Below is a summary of  the cases in which STRS is currently           
involved.  The current status is summarized and should be read in               
conjunction with the above referenced sections of the STRS 1998                 
Annual Report on Form 10-K.                                                     

The City's WQPZ Action: The City of Austin, Texas v. Horse Thief                
Hollow Ranch, Ltd., et al., Cause No. 98-00248 (Travis County                   
345th Judicial District Court, Texas filed 1/9/98).  On January 9, 1998,        
the City filed suit in Travis County District Court against                     
14 Water Quality Protection Zones ("WQPZ") and their owners, including          
the Barton Creek  WQPZ, challenging the constitutionality of the                
legislation authorizing the creation of water quality zones.  The               
Attorney General of Texas intervened in this suit and the Circle                
C WQPZ litigation, described below, to defend the legislation.                  
The City filed a motion for partial summary judgment against one                
defendant and against the State of Texas.  All defendant parties                
filed motions with regard to summary judgment.  A summary                       
judgment hearing was conducted in the Travis County District                    
Court on July 9, 1998.  The District Court entered an order                     
granting the City's motion for summary judgment motion and                      
declaring the WQPZ legislation unconstitutional.  All parties                   
agreed to the form of an order which permitted an expedited                     
appeal directly to the Texas Supreme Court.  STRS and other                     
defendants filed appeals.  The Texas Supreme Court noted probable               
jurisdiction and set an expedited briefing and hearing schedule.                
Oral argument was presented to the Texas Supreme Court on                     
December 9, 1998.  A ruling is expected in 1999.                                

Circle C WQPZ Litigation: L.S. Ranch, Ltd. And Circle C Land Corp., v.          
The City of Austin, Texas, Cause No. 97-1048 (Hays County 207th                 
Judicial District Court, Texas filed 10/31/97).                                 
Circle C Land Corp., a wholly owned subsidiary of STRS, filed a                 
WQPZ (Circle C WQPZ) covering all of its 553 acres in the Circle                
C development located outside the boundaries of any MUD.  In                    
November 1997, STRS sought a declaratory judgment in the Hays                   
County District Court to confirm the validity of the Circle C                   
WQPZ. On September 4, 1998, after numerous attempts by the City                 
to transfer venue, deny  jurisdiction or to stay the proceedings,               
the Hays County District Court ruled that the WQPZ enabling                     
legislation was constitutional and that the Circle C WQPZ was                   
validly created. The City filed a petition for writ of injunction               
with the Texas Supreme Court requesting a stay of the District                  
Court's ruling.  On October 22, 1998, the Texas Supreme Court                   
granted a temporary stay.  The City has appealed the Hays County                
District Court's ruling to the Texas Third Court of Appeals.  The               
appellate court set the case for submission, without oral                       
argument, on April 30, 1999.  Both parties submitted briefs and                 
filed motions for oral argument.  On April 30, 1999, the Third                  
Court of Appeals granted the motions for oral argument and the                  
case has been set for submission and oral argument on September                 
15, 1999.  The principal issue involved in this case, the                       
constitutionality of the enabling legislation authorizing the                   
creation of WQPZs, is already pending before the Texas Supreme                  
Court in the City's WQPZ action described above and is expected                 
to be resolved in connection with that case.  Assuming the                      
enabling legislation is determined to be constitutional, certain                
important collateral issues will be addressed by the Third Court                
of Appeals.  Those issues, which involve the application of the                 
WQPZ enabling legislation to Circle C, are expected to be                       
resolved in STRS' favor.                                                        

Annexation/Circle C MUD Reimbursement Suit:  Circle C Land Corp.                
v. The City of Austin, Texas, Cause No. 97-13994 (Travis County                 
53rd Judicial District Court, Texas filed 12/19/97).  On December               
19, 1997, the City annexed all land formerly lying within the                   
Circle C project. If the City's annexation is valid, STRS'                      
property located within Circle C's municipal utility districts                  
(MUD) and annexed by the City is subject to the City's zoning and               
development regulations.  Additionally, the City is required to                 
assume all MUD debt and reimburse STRS for a significant portion                
of the costs incurred for water, wastewater and drainage                        
infrastructure.  Because the City failed to pay these costs upon                
annexation, as required by statute, STRS sued the City. The                     
City's total reimbursement obligation to the Circle C developers                
is currently estimated at $22 million, of which STRS' share is                  
currently estimated at approximately $18 million, exclusive of                  
penalties and interest.  These proceeds are also subject to the                 
Phoenix litigation described below.  The City's and STRS'                       
engineers and accountants are reviewing financial and engineering               
materials in an effort to reach agreement on the proper amount of               

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STRS' reimbursement claim.  Both parties have filed motions for                 
summary judgment.  The hearing set for May 18, 1999 and the                     
trial, previously scheduled for May 24, 1999, have both been                    
temporarily continued. During the 1999 legislative session two                  
laws were enacted enhancing STRS' MUD reimbursement claim against               
the City, as described in "Legislative Matters" below.  When these              
laws become effective, on September 1, 1999, STRS will be                       
entitled to collect penalties and interest on the delinquent                    
Circle C MUD reimbursements.  The penalties and interest are                    
accruing at a rate of 1 percent per month and currently total                   
approximately $3.3 million. A trial on the merits is expected to                
be set for hearing for the fourth quarter of 1999. STRS will                    
continue to pursue this action vigorously.                                      

Phoenix Litigation: Circle C Land Corp. v. Phoenix Holdings,                    
Ltd., Cause No. 97-10388 (Travis County 261st Judicial District                 
Court, Texas filed 2/5/97).  In February 1997, Circle C filed a                 
petition for declaratory judgment against Phoenix, which                        
purchased the residential portion of Circle C's lands, seeking a                
declaration that Circle C is entitled to most of the MUD                        
reimbursements for infrastructure cost incurred at Circle C.                    
Phoenix filed a counterclaim in June 1997.  In February 1998, the               
District Court granted Circle C's summary judgment motion on the                
primary case and Phoenix dismissed its counterclaim with                        
prejudice, but reserved the right to appeal the summary judgment                
of the primary case.  On April 10, 1998, Phoenix appealed.  In                  
March 1999, the Texas Third Court of Appeals upheld the District                
Court's ruling in favor of Circle C.  On March 18, 1999, Phoenix                
filed a motion for rehearing with the Texas Third Court of                      
Appeals, which was denied on April 29, 1999.  As a final effort,                
Phoenix filed a writ with the Texas Supreme Court on June 2,                    
1999, which is expected to be denied.  See "Annexation/Circle C                 
MUD Reimbursement Suit" above for the estimated amount of MUD                   
reimbursement currently due to STRS.                                            

Legislative Matters.  In the 1997 Texas State legislative                       
session, a bill to reorganize a state governmental agency                       
inadvertently repealed the provisions of law (H.B. 4 and S.B.                   
1704), which established the grandfathered rights for previously                
permitted lands.  In response to the legislature's inadvertent                  
repeal, the City enacted an ordinance establishing regulations on               
land development that effectively eliminated the grandfathered                  
rights.  The City has attempted to apply these regulations to                   
portions of STRS' Circle C property and Lantana.  In response,                  
STRS undertook to assert and defend its grandfathered                           
entitlements vigorously.  In April 1999, the Texas State House of               
Representatives and Senate overwhelmingly approved H.B. 1704,                   
which reinstated the grandfathered rights previously                            
inadvertently appealed.  This bill became law effective on May                  
11, 1999.  Additionally, three other laws were enacted during the               
second quarter of 1999, which are expected to have a positive                   
impact on STRS' development rights for its Austin-area properties               
and strengthen its position in collecting the approximate $18                   
million in Circle C MUD reimbursements, exclusive of penalties                  
and interest, currently being litigated (see "Annexation/Circle C               
MUD Reimbursements Suit" above).  The laws enacted include: S.B.                
262, which requires a municipality that annexed property in a MUD               
to pay penalties and interest on utility infrastructure                         
reimbursements associated with the annexed properties that are                  
not timely paid by the municipality; S.B. 1165, which validates                 
the creation of existing water quality protection zones; and S.B.               
89, which requires a municipality to pay developers for utility                 
infrastructure within a MUD taken by a municipality in                          
conjunction with an annexation, regardless of whether or not the                
municipality's annexation is ultimately validated.                              

Item 4. Submission of Matters to a Vote of Security Holders.                    
----------------------------------------------------            

(a)  The Annual Meeting of Stockholders of STRS was held May          
13, 1999 (the Annual Meeting).  Proxies were solicited pursuant                 
to Regulation 14A under the Securities Exchange Act of 1934, as                 
amended.                                                                        

(b)  At the Annual Meeting, Robert L. Adair III and Michael           
D. Madden were elected to serve until the 2002 Annual Meeting of                
Stockholders.  In addition to the directors elected at the Annual               
Meeting, the terms of the following directors continued after the               
Annual Meeting: William H. Armstrong III and James C. Leslie.                   

(c)  At the Annual Meeting, holders of STRS' Stock elected            
two directors with the number of votes cast for or withheld from                
the nominee as follows:                                                         

Name                             For            Withheld                        
-----                         ----------       ---------                        
Robert L. Adair III           13,106,128          74,096                        

Michael D. Madden             13,104,558          75,666                        

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With respect to the election of directors, there were no                        
abstentions or broker non-votes.                                                

At the Annual Meeting, the stockholders voted on and                  
approved a proposal to ratify the appointment of Arthur Andersen                
LLP to act as the independent auditors to audit the financial                   
statements of STRS and its subsidiaries for the year 1999.                      
Holders of 13,144,843 shares voted for, holders of 20,547 shares                
voted against and holders of 14,834 shares abstained from voting                
on, such proposal.  There were no broker non-votes with respect                 
to such proposal.                                                               

Item 6. Exhibits and Reports on Form 8-K.                                       
----------------------------------                              

(a)  The exhibits to this report  are listed in the  Exhibit          
Index appearing on page E-1 hereof.                         

(b)  The registrant  filed no  Current Reports  on Form  8-K          
during the period covered  by this Quarterly Report  on     
Form 10-Q.                                                  

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SIGNATURE               

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.                        

STRATUS PROPERTIES INC.               

 By: /s/ C. Donald Whitmire, Jr.
    ----------------------------
     C. Donald Whitmire, Jr.
     Vice President & Controller
   (authorized signatory and
     Principal Accounting Officer)

Date:   August 12, 1999                                                         

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STRATUS PROPERTIES INC.             
EXHIBIT INDEX               

Exhibit                                                                       
Number                                                                        

3.1          Amended and Restated Certificate of Incorporation              
of STRS.  Incorporated by reference to STRS' Exhibit        
3.1 to 1998 Form 10-K.                                      

3.2          By-laws of STRS, as amended as of February 11,                 
1999. Incorporated by Reference to Exhibit 3.2 to STRS'     
1998 Form 10-K.                                             

4.1          STRS' Certificate of Designations of Series A                  
Participating Cumulative Preferred Stock.  Incorporated     
by reference to Exhibit 4.1 to STRS' 1992 Form 10-K.        

4.2          Rights Agreement dated as of May 28, 1992 between              
STRS and Mellon Securities Trust Company, as Rights         
Agent.  Incorporated by reference to Exhibit 4.2 to         
STRS' 1992 Form 10-K.                                       

4.3          Amendment No. 1 to Rights Agreement dated as of                
April 21, 1997 between STRS and the Rights Agent.           
Incorporated by reference to Exhibit 4 to STRS' Current     
Report on Form 8-K dated April 21, 1997.                    

4.4          Amended, Restated and Consolidated Credit                      
Agreement dated as of December 15, 1997 among the           
Partnership, Circle C Land Corp., certain banks, and        
The Chase Manhattan Bank, as Administrative Agent and       
Document Agent.  Incorporated by reference to Exhibit       
4.4 to STRS' 1997 Form 10-K.                                

4.5          Certificate of Designations of the Series B                    
Participating Preferred Stock of Stratus Properties         
Inc.  Incorporated by reference to Exhibit 4.1 to STRS'     
Current Report on Form 8-K dated June 3, 1998.              

4.6          Investor Rights Agreement, dated as of May 22,                 
1998, by and between Stratus Properties Inc. and            
Oly/Stratus Equities, L.P. Incorporated by reference to     
Exhibit 4.2 to STRS' Current Report on Form 8-K dated       
June 3, 1998.                                               

4.7          Loan Agreement, dated as of May 22, 1998, by and               
among Stratus Ventures I Borrower L.L.C., Oly Lender        
Stratus, L.P. and Stratus Properties Inc. Incorporated      
by reference to Exhibit 4.3 to STRS' Current Report on      
Form 8-K dated June 3, 1998.                                

10.1         Amended and Restated Services Agreement, dated as of             
December 23, 1997 between FM Services Company and STRS.     
Incorporated by reference to Exhibit 10.2 to STRS' 1997     
Form 10-K.                                                  

10.2         Joint Venture Agreement between Freeport-McMoRan                 
Resource Partners, Limited Partnership and the              
Partnership, dated June 11, 1992.  Incorporated by          
reference to Exhibit 10.3 to STRS' 1992 Form 10-K.          

10.3         Development and Management Agreement dated and                   
effective as of June 1, 1991 by and between Longhorn        
Development Company and Precept Properties, Inc. (the       
"Precept Properties Agreement"). Incorporated by            
reference to Exhibit 10.8 to STRS' 1992 Form 10-K.          

10.4         Assignment dated June 11, 1992 of the Precept                    
Properties Agreement by and among FTX (successor by         
merger to FMI Credit Corporation, as successor by           
merger to Longhorn Development Company), the                
Partnership and Precept Properties, Inc. Incorporated       
by reference to Exhibit 10.9 to STRS' 1992 Form 10-K.       

10.5        STRS Guarantee Agreement dated as of December 15, 1997            
by STRS.  Incorporated by reference to Exhibit 10.6 to      
STRS' 1997 Form 10-K.                                       

10.6        Amended and Restated IGL Guarantee Agreement dated as             
of December 22, 1997 by IMC Global Inc.  Incorporated       
by reference to Exhibit 10.7 to STRS' 1997 Form 10-K.       

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10.7       Master Agreement, dated as of May 22, 1998, by and                 
among Oly Fund II GP Investments, L.P., Oly Lender          
Stratus, L.P., Oly/Stratus Equities, L.P., Stratus          
Properties Inc. and Stratus Ventures I Borrower L.L.C.      
Incorporated by reference to Exhibit 99.1 to STRS'          
Current Report on Form 8-K dated June 3, 1998.              

10.8        Securities Purchase Agreement, dated as of May 22,                
1998, by and between Oly/Stratus Equities, L.P. and         
Stratus Properties Inc. Incorporated by reference to        
Exhibit 99.2 to STRS' Current Report on Form 8-K dated      
June 3, 1998.                                               

10.9        Oly Stratus ABC West I Joint Venture Agreement between            
Oly ABC West I, L.P. and Stratus West I.L.P. dated          
September 30, 1998. Incorporated by reference to            
Exhibit 10.10 to the Quarterly Report on Form 10-Q of       
STRS for the Quarter ended September 30, 1998 ("the         
STRS Third Quarter 10-Q")                                   

10.10        Amendment No. 1 to the Oly Stratus ABC West I                      
Joint Venture Agreement dated November 9, 1998.             
Incorporated by reference to Exhibit 10.11 to the STRS      
Third Quarter 10-Q.                                         

10.11        Management Agreement between Oly Stratus ABC West                  
I Joint Venture and Stratus Management L.L.C. dated         
September 30, 1998. Incorporated by reference to            
Exhibit 10.12 to the STRS Third Quarter 10-Q.               

10.12        Loan Agreement dated September 30, 1998 between                    
Oly Stratus ABC West I Joint Venture and Oly Lender         
Stratus, L.P. Incorporated by reference to Exhibit          
10.13 to the STRS Third Quarter 10-Q.                       

10.13        General Partnership Agreement dated April 8, 1998                  
by and between Oly/Houston Walden, L.P. and Oly/FM          
Walden, L.P. Incorporated by reference to Exhibit 10.14     
to the STRS Third Quarter 10-Q.                             

10.14        Amendment No. 1 to the General Partnership                         
Agreement dated September 30, 1998 by and among             
Oly/Houston Walden, L.P., Oly/FM Walden, L.P. and           
Stratus Ventures I Walden, L.P.  Incorporated by            
reference to Exhibit 10.15 to the STRS Third Quarter        
10-Q.                                                       

10.15        Development Loan Agreement dated September 30,                     
1998 by and between Oly Walden General Partnership and      
Bank One, Texas, N.A. Incorporated by reference to          
Exhibit 10.16 to the STRS Third Quarter 10-Q.               

10.16        Guaranty Agreement dated September 30, 1998 by and                 
between Oly Walden General Partnership and Bank One,        
Texas, N.A. Incorporated by reference to Exhibit 10.17      
to the STRS Third Quarter 10-Q.                             

10.17        Management Agreement dated April 9, 1998 by and                    
between Oly/FM Walden, L.P. and Stratus Management,         
L.L.C. Incorporated by reference to Exhibit 10.18 to        
the STRS Third Quarter 10-Q.                                

Executive Compensation Plans and Arrangements (Exhibits     
10.18 through 10.21)                                        

10.18        STRS' Performance Incentive Awards Program, as                     
amended effective February 11, 1999. Incorporated by        
reference to Exhibit 10.18 to STRS' 1998 Form 10-K.         

10.19        STRS Stock Option Plan, as amended.  Incorporated                  
by reference to Exhibit 10.9 to STRS's 1997 Form 10-K.      

10.20        STRS 1996 Stock Option Plan for Non-Employee                       
Directors, as amended. Incorporated by reference to Exhibit 
10.10 to STRS' 1997 Form 10-K.                              

10.21        Stratus Properties Inc. 1998 Stock Option Plan as                  
amended effective February 11, 1999. Incorporated by        
reference to Exhibit 10.21 to STRS' 1998 Form 10-K.         

15.1      Letter dated April 20, 1999 from Arthur Andersen LLP                  
regarding unaudited interim financial statements.           

27.1      Financial Data Schedule.                                              

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	5/22/04	6
	5/22/01	6
	1/1/01	5
	12/31/00	11		10-K
	1/1/00	5	12
	12/31/99	11	12	10-K405
	9/15/99	14
	9/1/99	15
Filed on:	8/12/99	17
	7/20/99	8
For Period End:	6/30/99	1	11
	6/2/99	15
	5/24/99	15
	5/18/99	15
	5/13/99	15		DEF 14A
	5/11/99	15
	4/30/99	14
	4/29/99	15
	4/20/99	19
	3/18/99	15
	2/11/99	18	19
	1/19/99	8
	1/1/99	5
	12/31/98	7	13	10-K405
	12/9/98	14
	11/9/98	19
	10/22/98	14
	9/30/98	6	19	10-Q
	9/4/98	14
	7/9/98	14
	6/30/98	5	11	10-Q
	6/3/98	18	19	8-K
	5/22/98	18	19
	4/10/98	15
	4/9/98	19
	4/8/98	19
	1/9/98	14
	12/23/97	18
	12/22/97	18
	12/19/97	14
	12/15/97	18
	4/21/97	18
	6/11/92	18
	5/28/92	18
				List all Filings

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Filing Submission 0000885508-99-000004 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Stratus Properties Inc – ‘10-Q’ for 6/30/99

On: Thursday, 8/12/99 · For: 6/30/99 · Accession #: 885508-99-4 · File #: 0-19989

Previous ‘10-Q’: ‘10-Q’ on 5/14/99 for 3/31/99 · Next: ‘10-Q’ on 11/12/99 for 9/30/99 · Latest: ‘10-Q’ on 11/14/23 for 9/30/23

Quarterly Report — Form 10-QFiling Table of Contents

10-Q — Quarterly ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

10-Q — Quarterly Report
Document Table of Contents