Exhibit 99-1
HOME PROPERTIES
RETIREMENT SAVINGS PLAN
FINANCIAL REPORT
DECEMBER 31, 1998
TABLE OF CONTENTS
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits
With Fund Information - 1998 2 - 3
Statements of Net Assets Available for Benefits
With Fund Information - 1997 4 - 5
Statement of Changes in Net Assets Available for
Benefits with Fund Information - 1998 6 - 7
Notes to Financial Statements 8 - 13
________________________________________________
Independent Auditors' Report on the
Supplementary Information 14
Schedule of Assets Held for Investment
Purposes 15 - 17
Schedule of Reportable 5% Transactions 18
Schedule of Loans or Fixed Income
Obligations 19
INDEPENDENT AUDITORS' REPORT
To The Board of Trustees of
Home Properties
Retirement Savings Plan
Rochester, New York
We have audited the accompanying statements of net assets
available for benefits of Home Properties Retirement Savings Plan
as of December 31, 1998 and 1997, and the related statement of
changes in net assets available for benefits for the year ended
December 31, 1998. These financial statements are the
responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1998 and 1997,
and the change in net assets available for benefits for the year
ended December 31, 1998, in conformity with generally accepted
accounting principles.
Respectfully Submitted,
/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
April 23, 1999
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
1998
Growth With
All Reduced
ASSETS Stable Equity Volatility
Investments at Fair Value (Notes 2
and 3):
Money Market Funds $ 605 $ 28,752 $ 19,569
Common Trust Fund 337,355 - -
U.S. Government and Agency - - 198,036
Obligations
Corporate Obligations - - -
Common Stock - 453,953 90,111
Mutual Funds - 96,811 41,074
Participant Notes - - -
Total Investments at Fair Value 337,960 579,516 348,790
Receivables
Employer Contributions 30,103 71,310 45,506
Participant Contributions 6,961 13,006 10,722
Participant Loans 1,273 732 650
Accrued Income 1,620 323 2,695
Other 70 3,871 715
Total Receivables 40,027 89,242 60,288
Total Assets 377,987 668,758 409,078
LIABILITIES - - -
Net Assets Available for Benefits $377,987 $668,758 $409,078
See Notes to Financial Statements.
1998
Long-Term Company Participant Total
Growth Stock Notes 1998
$ 40,578 $ 56,991 $ - $ 146,495
- - - 337,355
446,315 - - 644,351
14,156 - - 14,156
472,460 236,437 - 1,252,961
148,557 - - 286,442
- - 130,247 130,247
1,122,066 293,428 130,247 2,812,007
118,689 51,478 - 317,086
24,957 11,222 - 66,868
1,172 907 - 4,734
5,785 616 - 11,039
4,157 2,200 - 11,013
154,760 66,423 - 410,740
1,276,826 359,851 130,247 3,222,747
- - - -
$ 1,276,826 $ 359,851 $ 130,247 $ 3,222,747
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
1997
- ----------------------------------------------------------------
Growth
With
All Reduced
ASSETS Stable Equity Volatility
Investments at Fair Value (Notes 2 and 3):
Money Market Funds $ - $31,494 $ 5,248
Common Trust Fund 207,971 - -
U.S. Government and Agency
Obligations - - 89,800
Common Stock - 229,651 81,951
Mutual Funds - 29,911 29,835
Participant Notes - - -
Total Investments at Fair Value 207,971 291,056 206,834
Receivables
Employer Contributions 18,039 46,843 24,480
Participant Contributions 2,794 7,200 4,143
Participant Loans 684 234 494
Accrued Interest 1,057 142 1,322
Total Receivables 22,574 54,419 30,439
Total Assets 230,545 345,475 237,273
LIABILITIES - - -
Net Assets Available for Benefits $230,545 $345,475 $237,273
See Notes to Financial Statements.
1997
-------------------------------------------------
Long-Term Company Participant Total
Growth Stock Notes 1997
$ 8,550 $ 14,010 $ - $ 59,302
- - - 207,971
149,516 - - 239,316
351,227 98,203 - 761,032
82,335 - - 142,081
- - 55,675 55,675
591,628 112,213 55,675 1,465,377
75,535 15,938 - 180,835
12,695 2,368 - 29,200
439 434 - 2,285
2,986 349 - 5,856
91,655 19,089 - 218,176
683,283 131,302 55,675 1,683,553
- - - -
$683,283 $131,302 $55,675 $1,683,553
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
| Participant Directed
Growth
With
All Reduced
INCREASES IN NET ASSETS Stable Equity Volatility
Investment Income:
Interest and Dividends $15,666 $11,561 $ 12,857
Net Appreciation (Depreciation)
in Fair Value of
Investments (Note 3) - (33,301) 2,825
Total Investment Income 15,666 (21,740) 15,682
Contributions
Employer 30,103 71,310 45,506
Employee 64,056 169,464 100,418
Rollover 70,324 124,493 39,029
Total Increases 180,149 343,527 200,635
DECREASES IN NET ASSETS
Benefits Paid to Participants 5,507 7,873 21,334
Administrative Expenses 2,596 4,259 4,100
Total Decreases 8,103 12,132 25,434
Net Increase Prior to Interfund
Transfers 172,046 331,395 175,201
Interfund Transfers (24,604) (8,112) (3,396)
Net Increase 147,442 323,283 171,805
Net Assets Available for Benefits -
Beginning 230,545 345,475 237,273
Net Assets Available for Benefits -
Ending $377,987 $668,758 $409,078
See Notes to Financial Statements.
1998
Participant Directed |
Long-Term Company Participant Total
Growth Stock Notes 1998
$ 36,929 $ 11,979 $ 8,364 $ 97,356
16,905 (6,932) - (20,503)
53,834 5,047 8,364 76,853
118,689 51,478 - 317,086
269,790 103,458 - 707,186
232,504 81,657 - 548,007
674,817 241,640 8,364 1,649,132
42,462 7,775 2,287 87,238
11,557 188 - 22,700
54,019 7,963 2,287 109,938
620,798 233,677 6,077 1,539,194
(27,255) (5,128) 68,495 -
593,543 228,549 74,572 1,539,194
683,283 131,302 55,675 1,683,553
$1,276,826 $359,851 $130,247 $3,222,747
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
Note 1 Description of Plan
The following description of the Home Properties
Retirement Savings Plan provides only general
information. Participants should refer to the Plan
agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan covering all
employees of Home Properties of New York, Inc. who are 21
years of age or older and who have completed one year of
service (including years of service with a company
acquired by Home Properties of New York, Inc.) It is
subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Trust
State Street Bank and Trust Co. (Exeter Trust) serves as
trustee of the Plan.
Contributions
Each year, the sponsor may contribute such amount as its
Board of Directors shall, at its discretion, determine.
Employees may contribute to the Plan a percentage of
their compensation or a fixed dollar amount each pay
period. In addition, the employer makes a matching
contribution based on participants' tax deferred
contributions.
Participant Accounts
Each participant's account is credited with an allocation
of: (1) his or her tax deferred contribution, (2) the
company's contributions, (3) Plan earnings, and (4)
forfeitures of terminated participants' non-vested
accounts. Allocations are based on participant earnings
or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be
provided from the participant's account.
Vesting
Each participant's interest in his/her employee
contribution account is fully vested at all times. The
Plan provides for vesting in the employer contribution
account of 20% after two years, 40% after three years,
60% after four years, 80% after five years, and 100%
after six years of service.
Investment Options
Effective January 1, 1997 and upon enrollment in the
Plan, a participant may direct contributions to the Plan
to any of five investment options.
1)Stable Income - This Option invests in a pooled
investment trust fund. The Fund is comprised of a
diversified portfolio of GIC's and/or other stable
value investments, such as certificates of deposits.
The objective of this option is to generate a
relatively high rate of interest while protecting
against declines in market value.
Note 1 Description of Plan - Continued
Investment Options - Continued
2)All Equity - This Portfolio consists of common stocks.
The objective is to generate capital growth over time.
3)Growth with Reduced Volatility - This Portfolio
consists of common stocks, bonds and cash equivalents
in an effort to generate a significant rate of capital
growth over time.
4)Long-Term Growth - This Portfolio consists of common
stocks, bonds and cash equivalents in an effort to
generate a significant rate of capital growth over
time.
5)Company Stock - Participants may invest in common stock
of Home Properties of New York, Inc.
Participant Notes Receivable
Participants may borrow from their accounts a minimum of
$1,000 to a maximum equal to the lessor of $50,000 or 50%
of their vested account balance. Loan transactions are
treated as a transfer to (from) the investment fund from
(to) the Participant Notes Fund. Loan terms range from
one to five years, or longer for the purchase of a
primary residence. The loans are collateralized by the
balance in the participant's account and bear interest at
the prime rate plus one percent (1%) in effect on the
first day of the month in which the loan is made.
Interest rates range from 8.75% to 9.75% for the current
outstanding notes. Principal and interest is paid
ratably through weekly or semi-monthly payroll
deductions.
Payment of Benefits
The Plan provides for normal retirement benefits upon
reaching age 65 and has provisions for early retirement,
disability, death and termination benefits for those
participants who are eligible to receive such benefits.
On termination of service, a participant may elect to
receive:
1)A lump sum amount equal to the value of his or her
account, or
2)Annual installments over a period of time not to exceed
15 years.
Plan Termination
Although the Company has not expressed an intent to do
so, the Company has the right under the Plan to
discontinue contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants will become 100%
vested in their accounts.
Note 1 Description of Plan - Continued
Tax Status
In October, 1993, the Company adopted a prototype plan
which received a favorable determination letter from the
Internal Revenue Service in April, 1993 stating that the
Plan qualifies under the applicable provisions of the
Internal Revenue Code, including Section 401(k). The
Plan has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's
tax counsel believe that the plan is currently designed
and being operated in compliance with the applicable
requirements of the Code. Therefore, they believe that
the Plan was qualified and the related trust was tax-
exempt as of the financial statement date.
Note 2 Significant Accounting Policies
Method of Accounting
The financial statements of the Plan are prepared under
the accrual method of accounting.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares
of registered investment companies are valued at quoted
market prices which represent the net asset value of
shares held by the Plan at year-end. The Company stock
is valued at its quoted market price. Participant notes
receivable are valued at cost which approximates fair
value.
Purchases and sales of securities are recorded on a
settlement-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the date
received.
Payment of Benefits
Benefits are recorded when paid.
Management Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the
date of the financial statements and revenues and
expenses during the reporting period. Actual results
could differ from those estimates.
Administrative Expenses
The Company absorbs legal and audit fees of the Plan.
The Plan pays investment fees and administrative fees.
Note 3 Investments
The Plan's investments are held by State Street Bank and
Trust Co. The following table represents the fair market
values of the investments. Investments representing 5%
or more of the Plan's net assets are separately
identified.
1998 1997
----------------------- ----------------------
Investments at Number of Number of
Fair Value as Shares or Shares or
Determined by Quoted Principal Fair Principal Fair
Market Price Amount Value Amount Value
Money Market Funds - $ 146,495 - $ 59,302
Common Trust Funds
State St. Principal Preservation
Fund 337,355 337,355 207,971 207,971
U.S. Government Securities
U.S. Treasury Bond, 7.25%,
Due 8/15/22 - - 95,000 109,725
Other Notes and Bonds - 644,351 - 129,591
644,351 239,316
Corporate Obligations - 14,156 - -
Common Stocks
Home Properties of New
York, Inc. 9,182 236,437 3,612 98,203
Other Common Stocks - 1,016,524 - 662,829
1,252,961 761,032
Mutual Funds - 286,442 - 142,081
Total Investments as Determined
by Quoted Market Price 2,681,760 1,409,702
Other Investments at Fair Value
Participant Notes - 130,247 - 55,675
Total Investments at Fair
Value $ 2,812,007 $1,465,377
Note 3 Investments - Continued
During 1998 and 1997, the Plan's investments (including
investments bought, sold and held during the year)
appreciated (depreciated) in value as follows:
1998 1997
Net Appreciation (Depreciation)
in Fair Value
U.S. Government and Agency
Obligations $20,218 $20,123
Corporate Obligations (10,844) -
Common Stock (30,932) 80,960
Mutual Funds 1,055 (11,423)
Net Appreciation (Depreciation)
in Fair Value $(20,503) $89,660
Note 4 Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available
for benefits per the financial statements to the Form
5500:
12 Months 12 Months
December 31, December 31,
1998 1997
Net assets available for
benefits per the financial
statements $3,222,747 $1,683,553
Amounts allocated to
withdrawing participants (14,120) -
Net assets available for
benefits per the Form 5500 $3,208,627 $1,683,553
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form
5500:
Benefits paid to participants per the
financial statements $ 87,238
Add: Amounts allocated to withdrawing
participants at December 31, 1998 14,120
Less: Amounts allocated to withdrawing
participants at December 31, 1997 -
Benefits paid to participants per the
Form 5500 $101,358
Note 5 Subsequent Events
Effective January, 1999, the plan was amended to activate
an automatic enrollment provision. Once an employee has
met the eligibility requirements, he/she is automatically
enrolled as a participant of the plan deferring 2% of
compensation. The employee may elect to defer 0% up to
15%.
INDEPENDENT AUDITORS' REPORT
ON THE SUPPLEMENTARY INFORMATION
To the Board of Trustees of
Home Properties
Retirement Savings Plan
Rochester, New York
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplementary
schedules of assets held for investment purposes, reportable 5%
transactions, and loans or fixed income obligations as of or for
the year ended December 31, 1998, are presented for the purpose
of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
Respectfully Submitted,
/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
April 23, 1999
EIN#: 16-1455130--PLAN #001
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
a b c d e
Shares or Description of Current
Face Value Identity of Issue Investment Cost Value
Money Market Funds
146,495 SSGA Funds - U.S. Treasury
MMF Interest-bearing cash $146,495 $146,495
Common Trust Funds
337,355 State St. Principal Preservation
Fund Interest-bearing cash 337,355 337,355
U.S. Government Securities
10,000 U.S. Treasury Notes 6.25%, Due 6/30/2002 10,082 10,494
10,000 U.S. Treasury Notes 5.875%, Due 9/30/2002 9,957 10,397
40,000 U.S. Treasury Notes 5.625%, Due 12/31/2002 40,031 41,312
50,000 U.S. Treasury Notes 5.500%, Due 3/31/2000 49,923 50,500
60,000 U.S. Treasury Notes 4.500%, Due 9/30/2000 59,945 59,888
20,000 U.S. Treasury Notes 5.625%, Due 11/30/2000 20,234 20,356
5,000 U.S. Treasury Notes 6.25%, Due 4/30/2001 4,927 5,176
10,000 U.S. Treasury Notes 6.625%, Due 7/31/2001 10,065 10,475
120,000 U.S. Treasury Notes 5.5%, Due 3/31/2003 119,273 123,600
120,000 U.S. Treasury Notes 4.25%, Due 11/15/2003 119,531 118,425
30,000 U.S. Treasury Notes 6.5%, Due 8/15/2005 31,847 32,963
75,000 U.S. Treasury Bonds 7.25%, Due 8/15/2022 75,614 93,492
40,000 U.S. Treasury Bonds 6.5%, Due 11/15/2026 37,400 46,550
20,000 Fed. Nat'l Mtg Assoc. 5.75%, Due 2/15/2008 20,788 20,723
609,617 644,351
Corporate Obligations
25,000 APP Finance VII Mauritius 3.500%, Due 4/30/2003 25,000 14,156
Corporate Stocks
300 American Home Prods Corp Common Equity 14,485 16,894
1,400 Aracruz Celulose Sa-Spon
ADR Common Equity 24,234 11,200
3,250 Asia Pulp & Paper Spons ADR Common Equity 29,364 26,609
1,050 Canadian National Railway Co. Common Equity 64,249 54,469
EIN#: 16-1455130--PLAN #001
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES -
CONTINUED
DECEMBER 31, 1998
a b c d e
Shares or Description of Current
Face Value Identity of Issue Investment Cost Value
Corporate Stocks - Continued
9,500 CDL Hotels International Common Equity 26,217 24,402
1,500 Celltech (UK) Common Equity 7,636 9,897
800 Corning Inc. Common Equity 30,669 36,000
3,075 De Beers Cons Mines ADR Common Equity 55,112 39,207
800 Eastman Kodak Co. Common Equity 57,260 57,600
200 Federal National Mtg Assn. Common Equity 13,491 14,800
300 Fort James Corp. Common Equity 12,951 12,000
16,200 Gulf CDA RES Ltd. Common Equity 46,190 47,588
9,182 Home Properties of NY, Inc. Common Equity 216,684 236,437
2,750 International Game
Technology Common Equity 65,022 66,860
175 Kimberly Clark Corp Common Equity 8,258 9,537
1,025 Koninkijke Phillips EL-NY Common Equity 67,838 69,379
1,650 Liz Claiborne Common Equity 70,299 52,077
600 Mattel, Inc. Common Equity 13,521 13,688
175 McDonalds Corp Common Equity 8,292 13,409
4,361 Medpartners Inc. New Common Equity 58,279 22,896
1,925 Millipore Corp Common Equity 63,818 54,742
775 Motorola Common Equity 46,095 47,323
875 National Data Corp Common Equity 32,867 42,602
4,875 Petrobas ADR Common Equity 80,486 55,278
800 Pharmacia & Upjohn Inc. Common Equity 28,830 45,300
900 Schlumborger, Ltd. Common Equity 39,743 41,512
1,300 Sigma Aldrich Corp Common Equity 36,675 38,187
650 Telebras ADR PFD Block Common Equity 50,648 47,247
800 Teva Pharmacuticles
Inds LTD ADR Common Equity 27,879 32,551
475 YPF Sociedad Anoima, Inc.
ADR Common Equity 12,171 13,270
1,309,263 1,252,961
EIN#: 16-1455130--PLAN #001
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES -
CONTINUED
DECEMBER 31, 1998
a b c d e
Shares or Description of Current
Face Value Identity of Issue Investment Cost Value
Mutual Funds
4086.79 M&N Fund Global Series A Mutual Fund 40,765 39,479
4269.20 M&N Fund International CL A Mutual Fund 55,903 66,472
4815.26 M&N Fund Small Cap Ser
CL A Mutual Fund 56,948 46,419
15680.91 M&N Fund World Opp. CL A Mutual Fund 135,830 134,072
289,446 286,442
Participant Loans
130,247 Participant Notes Interest ranging from
8.75% to 9.75%,
Due From January,
1999 Through October
2003. Collateralized by
remaining balance of
participant's account. - 130,247
Total Assets Held for Investment Purposes $2,717,176 $2,812,007
EIN#: 16-1455130--PLAN #001
LINE 27d - SCHEDULE OF REPORTABLE 5% TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
COMPUTED ON JANUARY 1, 1998 VALUE OF $1,683,553
a,b c d g i
Purchase Selling Gain (Loss)
Description Units Price Price Cost on Sale
Home Properties of
New York, Inc. 6,291 $ 162,893 $ - $ - $ -
Home Properties of
New York, Inc. 691 $ - $ 17,728 $ 15,003 $ 2,725
SSB Principal Preservation
Fd 178,778 $ 178,778 $ - $ - $ -
SSB Principal Preservation
Fd 49,394 $ - $ 49,394 $ 49,394 $ -
Exeter Fund World Opport
CL A 13,061 $ 105,895 $ - $ - $ -
U.S. Treasury Notes, 5.5%,
Due 3/31/2003 120,000 $ 119,273 $ - $ - $ -
U.S. Treasury Notes, 5.5%,
Due 3/31/2003 120,000 $ 119,531 $ - $ - $ -
Oracle Sys Corp 1,500 $ 38,528 $ - $ - $ -
Oracle Sys Corp 1,500 $ - $ 53,491 $ 38,528 $ 14,963
Koninklijke Phillips EL-NY 1,200 $ 84,463 $ - $ - $ -
Koninklijke Phillips EL-NY 175 $ - $ 14,470 $ 16,624 $(2,154)
United States Treas Nts.
5.625% Due 12/31/2002 85,000 $ 85,119 $ - $ - $ -
United States Treas Nts.
5.625% Due 12/31/2002 45,000 $ - $ 46,013 $ 45,088 $ 925
EIN#: 16-1455130--PLAN #001
LINE 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Amount Received
During
Reporting Year Amount Over Due
a,b c d e f g h i
Original Unpaid
Amount of Balance at Description of Loan and Other
Identity of Obligor Loan Principal Interest Year End Material Items Principal Interest
John Ellison, Jr.
###-##-#### $ 2,000 $ - $ - $ 2,000 Original Note Dated 6/9/ $ 1,921 $ 50
98, Interest at 8.75%,
Due January, 1999,
Collateralized by remaining
vested account balance
EXHIBIT 99-2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 to be filed by Home Properties of New York, Inc. with respect
to the Home Properties Retirement Savings Plan of our report dated April 23,
1999, with respect to the financial statements and schedules of the
Home Properties Retirement Savings Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1998.
Sincerely,
/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
June 28, 1999