================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM 10-K

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________

COMMISSION FILE NUMBER 0-12659

U.S. SHELTER CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 57-0769881
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

201 LAVINIA AVENUE
GREENVILLE, SC 29601
(Address of principal executive office)(Zip code)

(864) 242-6631
(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1 par value

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the last sale price as reported on the over-the-counter
bulletin board on May 5, 1998 was $1,798,901. The registrant had 9,629,793
shares of Common Stock outstanding as of May 11, 1998.

DOCUMENTS INCORPORATED BY REFERENCE

None
================================================================================
2

PART I

ITEM 1. BUSINESS

U.S. Shelter Corporation (the "Company") was founded in 1972 to acquire and
manage apartment properties for long-term investment purposes. The Company
operated under private ownership from 1972 until 1979, when it became a publicly
owned and traded company.

During the latter part of the 1980's, the Company incurred losses in excess
of $68,500,000 related to real estate partnerships, real estate development
activities and the need to establish reserves for Malibu Savings Bank
("Malibu"), its savings and loan subsidiary. As a result, the Company had a
negative net worth of approximately $38,800,000 at September 30, 1990 and was in
default on all of its secured debt. In an effort to avoid the possible
bankruptcy of the Company and the complete loss of each stockholder's investment
in the Company, on July 23, 1990, the Company entered into a Management
Agreement (the "Management Agreement") with Insignia Financial Group, Inc.
("Insignia"), and the Company, certain of its subsidiaries and Insignia entered
into an Asset Purchase Option Agreement (the "Asset Agreement") on the same
date. Under the Management Agreement, Insignia had the sole and exclusive
authority to negotiate settlement and restructuring agreements with the
Company's creditors pending Insignia's determination whether to exercise its
option under the Asset Agreement to acquire substantially all of the Company's
assets and assume specified liabilities of the Company. On December 31, 1990,
the Company obtained stockholder approval and the Company completed the sale of
substantially all its assets to Insignia. On January 11, 1991, the Office of
Thrift Supervision ("OTS") declared Malibu insolvent, placed it in receivership,
created a new Federal Mutual Savings Association to receive Malibu's assets, and
appointed the Resolution Trust Company as conservator. The OTS indicated that
Malibu was in an "unsafe and unsound condition" because of its negative tangible
capital position and that "there was no prospect for replenishment of such
capital without Federal assistance." On March 14, 1995 the Company was finally
notified that it was relieved of any liability associated with Malibu.

In approving the Asset Agreement, the stockholders approved the dissolution
and liquidation of the Company. On November 27, 1991 a Certificate of
Dissolution was filed with the Delaware Secretary of State. Although formally
dissolved on this date, the Company continued to exist pursuant to the Delaware
General Corporation Law for a period of three years to wind up its affairs.
During this three-year winding up period, a number of claims were made against
the Company. Because these matters could not be resolved during the three-year
period, the Company has received from the Delaware Chancery Court extensions of
the Company's existence. The Company is currently operating under the authority
of an extension from the Chancery Court.

ITEM 2. PROPERTIES

The Company does not own any material physical properties.

ITEM 3. LEGAL PROCEEDINGS

The Company has failed to file certain periodic reports required to be
filed by it pursuant to applicable federal securities laws. The Company has
notified the Division of Enforcement (the "Staff") of the Securities and
Exchange Commission of this matter and is currently in settlement discussions
with the Staff.

Metropolitan Life Insurance Company v. Masonite Corporation, et al.

The Company is one of several defendants named by Metropolitan Life
Insurance Company ("MetLife") in an action instituted in July 1996 in the 15th
Judicial Circuit, Palm Beach County, Florida. In the action, MetLife seeks
unspecified damages for siding installed on apartment buildings it owns in West
Palm Beach, Florida. According to the complaint, MetLife purchased the property
from the Company in 1989 and alleges breach of warranty against the Company
based on allegedly defective work and improper materials. The action is
currently in the discovery stage. The Company has denied the allegations of the
complaint and is contesting the matter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

1
3

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded only sporadically in the
over-the-counter market under the symbol "USSS." Transactions in the
over-the-counter market generally reflect inter-dealer prices, without retail
mark-ups, mark-downs or commissions and may not represent actual transactions.
The following table sets forth the best available information of the range of
high and low bid prices of the Company's Common Stock by quarter during 1996 and
1997. Because the Company's Common Stock is traded in the over-the-counter
market, reliable trading information is difficult to obtain.

YEAR ENDED DECEMBER 31: HIGH LOW
----------------------- ---- ----

1996
First Quarter.......................................... 1/32 1/32
Second Quarter......................................... 1/16 1/32
Third Quarter.......................................... 1/16 1/32
Fourth Quarter......................................... 1/16 1/32
1997
First Quarter.......................................... 1/8 1/32
Second Quarter......................................... N/A
Third Quarter.......................................... 1/32 1/32
Fourth Quarter......................................... 1/8 1/32

As of April 15, 1998 there were approximately 2,185 holders of record of
the Company's Common Stock.

The Company has not made any distributions to stockholders within the last
two fiscal years. The Company does not intend to make any distributions to
stockholders until the known claims against the Company are resolved or
quantified insofar as the Company's maximum exposure is concerned.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following information is qualified in its entirety by the consolidated
financial statements of the Company. The following selected consolidated
financial data as of the dates and for the periods indicated were derived from
the audited consolidated financial statements of the Company contained elsewhere
in this Form 10-K. The following selected consolidated financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
of the Company and the related notes thereto, appearing elsewhere in this Form
10-K.

YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------

Statements of Net Assets Data:
Total Assets....................................... $11,223,818 $11,319,406 $10,134,370
Total Liabilities.................................. 1,237,062 1,554,030 2,144,048
Net Assets......................................... 9,986,756 9,765,376 7,990,322
Statements of Changes in Net Assets Data:
Realized and Unrealized Gains on Sales of Common
stock of Insignia Financial Group, Inc........... $ 221,380 $ 1,668,498 $ 4,878,751
Other Income....................................... 0 106,556 19,309
Changes in Net Assets.............................. 221,380 1,775,054 4,898,060

Information prior to the year ended December 31, 1995 has been omitted from the
above table of selected consolidated financial data as it has not been compiled
by the Company. Prior to March 14, 1995, the Company was uncertain as to whether
it would be relieved of liability in connection with the placement of Malibu
into receivership by the OTS. See "Business."

2
4

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto.

As previously discussed, the Company sold substantially all of its assets
to Insignia on December 31, 1990, and on November 27, 1991 filed a Certificate
of Dissolution with the Delaware Secretary of State. As a result, the Company
changed its basis of accounting from a going-concern basis to a liquidation
basis. During the period ended December 31, 1997, the Company's activities have
been limited to continuing its winding up and liquidation.

RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

The Company's net assets in liquidation were $9,986,756 at December 31,
1997 compared to $9,765,376 at December 31, 1996, representing an increase in
net assets of $221,380. This increase is primarily attributable to unrealized
gains on Class A Common Stock of Insignia (the "Insignia Stock") held by the
Company during 1997.

Realized and unrealized gains and losses on investment securities are
included in determining net assets under the liquidation basis of accounting.
The Company's principal asset is Insignia Stock, of which the Company owned
471,864 shares at December 31, 1997 and 494,864 shares at December 31, 1996. The
closing price per share of the Insignia Stock at December 31, 1997 and December
31, 1996 was $23 and $22.50, respectively. The Company recorded an unrealized
gain on the Insignia Stock of $235,932 for the year ended December 31, 1997
compared to $1,608,308 for the year ended December 31, 1996. For financial
reporting purposes, the Company adjusts its investment in Insignia Stock to
market value at the end of each financial reporting period.

The Company provided for estimated costs to liquidate effective beginning
fiscal year 1991, when the Company changed its basis of accounting from a
going-concern basis to the liquidation basis. Accordingly, estimated costs
through the liquidation period were provided at that time and all costs since
then have been charged against such liability.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

The Company's net assets in liquidation were $9,765,376 at December 31,
1996 compared to $7,990,322 at December 31, 1995, representing an increase in
net assets of $1,775,054. This increase is primarily attributable to unrealized
gains on Insignia Stock held by the Company during 1996.

The Company owned 494,864 shares of Insignia Stock at December 31, 1996 and
522,664 shares (adjusted to reflect a 2-for-1 stock split of Insignia Stock in
January 1996) of Insignia Stock at December 31, 1995, and the closing price per
share on such dates was $22.50 and $19.25, respectively (adjusted at December
31, 1995 to reflect the 2-for-1 stock split). The Company recorded an unrealized
gain on the Insignia Stock of $1,608,308 for the year ended December 31, 1996
compared to $4,801,976 for the year ended December 31, 1995. For financial
reporting purposes, the Company adjusts its investment in Insignia Stock to
market value at the end of each financial reporting period.

As previously discussed, the Company provided for estimated costs to
liquidate effective beginning fiscal year 1991, when the Company changed its
basis of accounting from a going-concern basis to the liquidation basis.
Accordingly, estimated costs through the liquidation period were provided at
that time and all costs since then have been charged against such liability.

LIQUIDITY AND CAPITAL RESOURCES

The Company has no short-term or long-term debt facilities available. Cash
used to pay the costs of winding up and liquidation comes primarily from
proceeds on the sale of Insignia Stock held by the Company. A claim

3
5

against the Company is pending and another could be asserted against the
Company. See "Legal Proceedings." No assurance can be given that such claims
will be resolved in a manner favorable to the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not invest in derivative financial instruments.

ITEM 8. FINANCIAL STATEMENTS

See pages F-1 through F-7 annexed hereto.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

William D. Richardson, age 58, is the sole director and President of the
Company and has served the Company in these capacities since 1991. Mr.
Richardson is an attorney in private practice and has been so for more than the
past five years.

ITEM 11. EXECUTIVE COMPENSATION

William D. Richardson, the sole director and President of the Company,
received $60,000 from the Company during the year ended December 31, 1997 as
compensation for his services and for the use of his business office by the
Company.

4
6

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 31, 1998, certain information
with respect to (i) the persons known by the Company to own beneficially more
than five percent of the outstanding shares of the Company's Common Stock and
(ii) the number of shares owned by the sole director and President of the
Company. Except as otherwise indicated, the stockholders listed in the table
below have sole voting and investment powers with respect to the Company's
Common Stock owned by them and beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission.

NAME AND ADDRESS OF TOTAL NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
------------------- ---------------------- ----------

N. Barton Tuck, Jr........................................ 1,000,135 10.4%
237 Providence Square
Greenville, SC 29615
Edmund B. Cronin, Jr...................................... 607,807 6.3%
3040 Williams Drive
Fairfax, VA 22031
Charles C. Mickel Custodian,.............................. 523,123 5.4%
Charles Clark Mickel, Jr.
714 Crescent Avenue
Greenville, SC 29601
William D. Richardson..................................... 10,000 *
201 Lavinia Avenue
Greenville, SC 29601

- ---------------

* Less than 1%

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (2) List of Financial Statements.

See Table of Contents to Financial Statements set forth herein at page
F-1.

(a)(3) List of Exhibits.

21 Subsidiaries of the Registrant.

27 Financial Data Schedule.

5
7

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on June 26, 1998.
U.S. SHELTER CORPORATION

/s/ WILLIAM D. RICHARDSON
--------------------------------------
William D. Richardson
Sole Director and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ WILLIAM D. RICHARDSON Sole Director and President* June 26, 1998
- -----------------------------------------------------
William D. Richardson

* There are no officers of the registrant other than the President.

6
8

U.S. SHELTER CORPORATION AND SUBSIDIARY

TABLE OF CONTENTS

PAGE
----

INDEPENDENT AUDITORS' REPORT................................ F-2

CONSOLIDATED FINANCIAL STATEMENTS (Liquidation Basis):
Consolidated Statements of Net Assets in Liquidation as of
December 31, 1997 and 1996............................. F-3
Consolidated Statements of Changes in Net Assets in
Liquidation for the Years Ended December 31, 1997, 1996
and 1995............................................... F-4
Notes to Consolidated Financial Statements................ F-5

F-1
9

INDEPENDENT AUDITORS' REPORT

To the Director and Shareholders of
U.S. Shelter Corporation:

We have audited the accompanying consolidated statements of net assets in
liquidation of U.S. Shelter Corporation and subsidiary (the "Company") as of
December 31, 1997 and 1996, and the related consolidated statements of changes
in net assets in liquidation for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company'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.

As discussed in Note 1 to the consolidated financial statements, the
shareholders of the Company approved a plan of liquidation which was executed by
the State of Delaware on November 27, 1991. As a result, the Company changed its
basis of accounting from the going-concern basis to the liquidation basis
effective November 27, 1991.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the net assets in liquidation of the Company as of
December 31, 1997 and 1996, and the changes in its net assets in liquidation for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles applied on the basis described in
the preceding paragraph.

As discussed in Notes 2 and 5 to the consolidated financial statements,
because of the inherent uncertainty of valuation when a company is in
liquidation, the amounts realizable from the disposition of the remaining assets
and the amounts that creditors agree to accept in settlement of the obligations
due them may differ materially from the amounts shown in the accompanying
consolidated financial statements.

Deloitte & Touche LLP
Greenville, South Carolina

May 28, 1998

F-2
10

U.S. SHELTER CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
DECEMBER 31, 1997 AND 1996

1997 1996
----------- -----------

ASSETS
INVESTMENT IN COMMON STOCK OF INSIGNIA FINANCIAL GROUP, INC.
(NOTE 3).................................................. $10,852,872 $11,134,440
CASH........................................................ 370,946 159,733
PROPERTY HELD FOR SALE (NOTE 4)............................. -- 25,233
----------- -----------

TOTAL ASSETS................................................ 11,223,818 11,319,406
----------- -----------

LIABILITIES
ESTIMATED COSTS DURING PERIOD OF LIQUIDATION AND ACCRUED
LIABILITIES (NOTE 5)...................................... 937,062 1,254,030
TAXES PAYABLE (NOTE 6)...................................... 300,000 300,000
----------- -----------

TOTAL LIABILITIES........................................... 1,237,062 1,554,030
----------- -----------

CONTINGENCIES AND LITIGATION (NOTE 7)

NET ASSETS IN LIQUIDATION................................... $ 9,986,756 $ 9,765,376
=========== ===========

See notes to consolidated financial statements.

F-3
11

U.S. SHELTER CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1997 1996 1995
---------- ---------- ----------

NET ASSETS IN LIQUIDATION AS OF JANUARY 1.............. $9,765,376 $7,990,322 $3,092,262
---------- ---------- ----------

CHANGES DURING THE YEAR:
Realized gain (loss) on sale of common stock of
Insignia Financial Group, Inc..................... (14,552) 60,190 76,775
Unrealized gain on common stock of Insignia Financial
Group, Inc........................................ 235,932 1,608,308 4,801,976
Other income......................................... -- 106,556 19,309
---------- ---------- ----------
Net changes during the year..................... 221,380 1,775,054 4,898,060
---------- ---------- ----------

NET ASSETS IN LIQUIDATION AS OF DECEMBER 31............ $9,986,756 $9,765,376 $7,990,322
========== ========== ==========

See notes to consolidated financial statements.

F-4
12

U.S. SHELTER CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1. OPERATIONS PRIOR TO PLAN OF LIQUIDATION AND THE COMPANY'S PLAN OF LIQUIDATION

Prior to the sale of substantially all of the Company's operating assets
and the plan of liquidation, the Company operated in three segments: property
management and leasing, mortgage banking, and real estate interests. The
property management and leasing segment managed apartment complexes and managed
and leased commercial properties. The mortgage banking segment originated loans
on commercial properties. The real estate interests segment sold real estate
owned by the Company, held mortgage loans issued in connection with sales of
properties, and served as a general partner in partnerships organized by the
Company.

On December 31, 1990, the Company obtained shareholder approval and the
Company completed the sale of substantially all of its assets (except Malibu
Savings Bank, a wholly-owned subsidiary of the Company) to Insignia Financial
Group, Inc. ("Insignia"). On November 27, 1991, the Company filed a certificate
of dissolution with the Secretary of the State of Delaware. The Delaware
Chancery Court ordered the Company's existence to continue for the sole purpose
of winding up its affairs, including the prosecution and defense of suits by or
against it, the discharge of its liabilities and the distribution to its
shareholders of any remaining assets.

On January 11, 1991, the Office of Thrift Supervision declared Malibu
Savings Bank insolvent, placed it into receivership, and appointed the
Resolution Trust Company ("RTC") as conservator. Accordingly, Malibu Savings
Bank ceased to exist as a subsidiary of the Company.

Subsequent to commencement of dissolution, the Company's activities have
involved winding up the Company's affairs, including the defense and settlement
of various claims against the Company. The Company commenced liquidation
activities in 1991 and management will attempt to implement a partial
distribution to shareholders subject to the following conditions being met, and
subject to the approval of the Delaware Chancery Court. These conditions are:
(1) the contingent liability, if any, for the MetLife matter (see Note 7) can be
quantified and the amount of such contingent liability, if any, is approved by
the Court; (2) resolution with the Securities and Exchange Commission ("SEC")
occurs (see Note 7); (3) resolution of certain other liabilities, including
certain state and local taxes payable, occurs (see Note 6); and (4) any other
matters required to be accomplished by the Delaware Chancery Court prior to the
partial distribution. Upon approval by the Delaware Chancery Court, all
additional assets, if any, will be distributed to shareholders. There were no
distributions to shareholders under the plan of liquidation in the three years
ended December 31, 1997.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -- The consolidated financial statements
include the accounts of U.S. Shelter Corporation and its wholly-owned
subsidiary, Tandem Development, Inc. All significant intercompany balances and
transactions have been eliminated.

Basis of Presentation and Use of Estimates -- As a result of the
dissolution of the Company commenced on November 27, 1991, the Company changed
its basis of accounting from a going-concern basis to the liquidation basis of
accounting. Under the liquidation basis of accounting, assets and liabilities
are stated at their estimated net realizable value and estimated costs through
the liquidation are provided to the extent reasonably determinable. All costs
incurred in the three years ended December 31, 1997 have been charged to the
liability account, Estimated Costs During Period of Liquidation, that was
established upon adoption of the liquidation basis of accounting. Estimated
future costs to be incurred until liquidation will also be charged to this
liability account.

As a result of the change in the Company's basis of accounting from the
going-concern basis to the liquidation basis, assets in all years have been
valued at estimated net realizable value, and liabilities in all years have been
reflected at their estimated settlement amounts including estimated costs to be
incurred during the
F-5
13
U.S. SHELTER CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(LIQUIDATION BASIS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

period of liquidation. The valuation of assets and liabilities is based on
management's estimates and assumptions as of the date of the financial
statements; actual realization of the assets and settlement of liabilities could
be higher or lower than the amounts indicated. There are a number of important
factors which could cause actual results to differ from the estimates, including
the settlement amount of claims and other liabilities to be paid in the
liquidation, the amounts to be received for assets which have not yet been sold,
and the time period and actual costs necessary to complete the plan of
liquidation.

3. INVESTMENT IN COMMON STOCK OF INSIGNIA FINANCIAL GROUP, INC.

The Company's investment in the class A common stock of Insignia is carried
at its estimated market value determined based on closing market prices as
reported by the New York Stock Exchange.

The Company owned 471,864 shares and 494,864 shares of Insignia common
stock at December 31, 1997 and 1996, respectively. The closing market price of
the Insignia common stock was $23 per share and $22.50 per share at December 31,
1997 and 1996, respectively.

Realized and unrealized gains and losses are included in the accompanying
consolidated statements of changes in net assets in liquidation. No dividends
were paid or declared by Insignia during the three years ended December 31,
1997.

4. PROPERTY HELD FOR SALE

Property held for sale represented six vacant lots in Summerville, South
Carolina which were sold in 1997. The property was accounted for at its net
realizable value.

5. ESTIMATED COSTS DURING PERIOD OF LIQUIDATION AND ACCRUED LIABILITIES

The Company commenced liquidation activities in 1991 and provided an
estimate of the costs to liquidate the Company at that time. The remaining
estimated costs to liquidate at December 31, 1997 represent known liabilities
and legal, accounting, and other fees necessary to liquidate and distribute the
remaining assets, if any, of the Company. The actual amount of this liability
may vary significantly depending on the length of time required to complete the
plan of liquidation and complexities which may arise in disposing of the
remaining assets and settling certain legal matters (see Note 7).

6. TAXES PAYABLE

Taxes payable provided prior to 1995 consist of the following at December
31, 1997 and 1996:

Federal income taxes payable................................ $200,000
State and local taxes payable............................... 100,000
--------
Total.................................................. $300,000
========

The Federal income taxes payable, as described below, represent estimated
alternative minimum income taxes payable upon the sale of the Company's
investment in the common stock of Insignia.

The state and local taxes payable represent the Company's estimate of state
and local taxes claimed in prior years by various state and local taxing
authorities.

No other provisions have been made for Federal and state income tax
purposes due to the availability of net operating loss carryforwards of
approximately $15.8 million for Federal purposes and $14.9 million for state
purposes at December 31, 1997. These net operating loss carryforwards are
available to offset future income, with

F-6
14
U.S. SHELTER CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(LIQUIDATION BASIS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

certain limitations, and begin to expire in 2003. Alternative minimum income
taxes are expected to be payable under the alternative minimum income tax
provisions of the Internal Revenue Code because only a portion of the Federal
net operating loss carryforwards can be utilized to offset alternative minimum
taxable income. Although the payment of Federal alternative minimum income tax
usually gives rise to a credit against future regular Federal income tax
liabilities, the liquidation position of the Company makes it unlikely that any
deferred tax asset created by the payment of the alternative minimum income tax
will ever be realized. Therefore, the Company has not recorded a deferred tax
asset related to the payment of Federal alternative minimum tax.

7. CONTINGENCIES AND LITIGATION

The Company is one of several defendants in a lawsuit filed by Metropolitan
Life Insurance Company ("MetLife"). In the action, MetLife seeks damages for
siding installed on apartment buildings it owns in West Palm Beach, Florida.
According to the complaint, MetLife purchased the property from the Company in
1989 and claims breach of warranty against the Company based on allegedly
defective work and improper materials. The action was filed in July 1996 and is
in the early stages of discovery. The Company has denied the allegations of the
complaint and is contesting the matter. The Company is not able to determine the
ultimate outcome of this litigation and, accordingly, no amounts have been
provided in the accompanying financial statements for this matter.

The Company has failed to file periodic reports required to be filed with
the SEC by Section 13(a) of the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder. On March 3, 1998, the Company notified
the SEC's Division of Enforcement regarding its failure to file required
periodic reports, explaining the reasons therefor and seeking relief from any
actions that may be brought by the SEC against the Company. The Company is in
settlement discussions with the SEC and is unable to determine what action, if
any, the SEC will take against the Company.

8. COMMON STOCK OF THE COMPANY

As described in Note 1, the Company has adopted the liquidation basis of
accounting. Accordingly, the presentation of per share data in the accompanying
consolidated statements of changes in net assets in liquidation has been
omitted.

For all periods presented, the Company had 20,000,000 authorized shares of
common stock, $1 par value and 9,629,793 shares of common stock issued and
outstanding.

F-7
15

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
------- -----------

21 Subsidiaries of the Registrant.
27 Financial Data Schedule.