-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJxSdxbO3RLRnL5TSFHx06nShRVF4mbPwnnwU4L/RqaHu+7vv9Cvz0pm7xOJe1vY VmzT3YM0jNTgSjcgRxJkMg== 0000101640-00-000009.txt : 20000516 0000101640-00-000009.hdr.sgml : 20000516 ACCESSION NUMBER: 0000101640-00-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HOME CORP /DE/ CENTRAL INDEX KEY: 0000101640 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 210718930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05899 FILM NUMBER: 635549 BUSINESS ADDRESS: STREET 1: 10707 CLAY ROAD STREET 2: P O BOX 2863 CITY: HOUSTON STATE: TX ZIP: 77252-2863 BUSINESS PHONE: (713) 877-2311 MAIL ADDRESS: STREET 1: PO BOX 2863 CITY: HOUSTON STATE: TX ZIP: 77252 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES HOME & DEVELOPMENT CORP DATE OF NAME CHANGE: 19710713 10-Q 1 FIRST QUARTER 10-Q FOR U S HOME CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 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 1-5899 U.S. HOME CORPORATION (Exact name of registrant as specified in its charter) Delaware 21-0718930 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10707 Clay Road, Houston, Texas 77041 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 877-2311 Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 2000 Common stock, $.01 par value 13,520,028 shares 2
U.S. HOME CORPORATION INDEX Page Number ------ Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets-- March 31, 2000 and December 31, 1999 3 Consolidated Condensed Statements of Operations--Three Months Ended March 31, 2000 and 1999 5 Consolidated condensed Statements of Cash Flow--Three Months Ended March 31, 2000 and 1999 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 16 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 19
3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Data) ASSETS March 31, December 31, 2000 1999 ---------- ----------- (Unaudited) HOUSING: Cash (including restricted funds) ......... $ 7,747 $ 6,170 Receivables, net .......................... 59,464 30,329 Single-Family Housing Inventories ......... 1,275,834 1,245,375 Option Deposits on Real Estate ............ 114,605 103,213 Other Assets .............................. 82,076 79,901 ---------- ---------- 1,539,726 1,464,988 ---------- ---------- FINANCIAL SERVICES: Cash (including restricted funds) ......... 7,365 6,596 Residential Mortgage Loans ................ 86,507 78,675 Other Assets .............................. 19,769 22,732 ---------- ---------- 113,641 108,003 ---------- ---------- CORPORATE: Cash and Other Assets ...................... 35,100 29,649 ---------- ---------- $1,688,467 $1,602,640 ========== ==========
The accompanying notes are an integral part of these balance sheets 4
U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 2000 1999 ------------ ------------ (Unaudited) CORPORATE AND HOUSING: Accounts Payable ........................... $ 155,537 $ 160,329 Accrued Expenses and Other Current Liabilities 127,808 117,411 Revolving Credit Facility .................. 158,000 97,000 Long-Term Debt ............................. 550,297 553,089 ----------- ----------- 991,642 927,829 ----------- ----------- FINANCIAL SERVICES: Accrued Expenses and Other Current Liabilities 12,921 12,677 Revolving Credit Facilities ................ 87,185 83,485 ----------- ----------- 100,106 96,162 ----------- ----------- 1,091,748 1,023,991 ----------- ----------- STOCKHOLDERS' EQUITY: Common Stock, $.01 par value, authorized 50,000,000 shares, outstanding 13,214,260 shares at March 31, 2000 and 13,289,088 shares at December 31, 1999 137 137 Capital In Excess of Par Value ............. 403,838 403,467 Retained Earnings .......................... 210,002 190,456 Unearned Compensation on Restricted Stock .. (3,640) (3,643) ----------- ----------- 610,337 590,417 Less Treasury Stock, at cost, 462,370 shares at March 31, 2000 and 387,542 shares at December 31, 1999 ........................ (13,618) (11,768) ----------- ----------- Total Stockholders' Equity ............... 596,719 578,649 ----------- ----------- $ 1,688,467 $ 1,602,640 =========== =========== The accompanying notes are an integral part of these balance sheets.
5
U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) (Unaudited) Three-months Ended March 31, ------------------- 2000 1999 -------- -------- HOUSING: Operating Revenues ............................. $467,108 $392,337 Operating Costs and Expenses - Cost of products sold ........................ 377,583 320,161 Selling, general and administrative .......... 45,109 38,153 Interest ..................................... 11,216 10,504 -------- -------- 433,908 368,818 -------- -------- Housing Operating Income ....................... 33,200 23,519 -------- -------- FINANCIAL SERVICES: Operating Revenues ............................. 10,083 8,311 General, Administrative and Other Expenses ..... 5,797 4,964 -------- -------- Financial Services Operating Income ............ 4,286 3,347 -------- -------- CORPORATE GENERAL AND ADMINISTRATIVE ............. 4,285 3,604 LENNAR MERGER EXPENSES ........................... 1,675 -- -------- -------- INCOME BEFORE INCOME TAXES ....................... 31,526 23,262 PROVISION FOR INCOME TAXES ....................... 11,980 8,723 -------- -------- NET INCOME ....................................... $ 19,546 $ 14,539 ======== ======== Basic Earnings Per Share ......................... $ 1.48 $ 1.09 Diluted Earnings Per Share ....................... $ 1.45 $ 1.06
The accompanying notes are an integral part of these statements. 6
U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three-months Ended March 31, ------------------------- 2000 1999 ---------- ----------- Net Cash Used in Operating Activities: $ (51,224) $ (46,281) ---------- ---------- Net Cash Flows Used in Investing Activities: Decrease (increase) in restricted cash (1,250) 1,456 Principal collections on investments in mortgage loans 382 98 Purchase of property, plant and equipment, net of disposals (3,181) (4,293) Other - (117) ---------- ---------- Net cash used in investing activities (4,049) (2,856) ---------- ---------- Net Cash Flows Provided by Financing Activities: Proceeds from revolving credit facilities, net of repayments 64,700 (62,599) Net proceeds from sale of senior subordinated notes - 122,113 Repayment of notes and mortgage notes payable (3,368) (4,137) Repurchase of common stock (1,835) (7,015) ---------- ----------- Net cash provided by financing activities 59,497 48,362 ---------- ----------- Net Increase (Decrease) in Cash 4,224 (775) Cash At Beginning of Period 6,099 7,285 ---------- ----------- Cash At End of Period $ 10,323 $ 6,510 ========== =========== Supplemental Disclosure: Interest paid, before amount capitalized - Housing $ 27,544 $ 20,418 Financial Services 452 243 ---------- ----------- $ 27,996 $ 20,661 ========== =========== Income taxes paid $ 1,903 $ 733 ========== ===========
The accompanying notes are an integral part of these statements. 7 U.S. HOME CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 2000 (Dollars in Thousands) (Unaudited) (1) ACQUISITION BY LENNAR CORPORATION In February 2000, U.S. Home Corporation ("U.S. Home" or the "Company") and Lennar Corporation ("Lennar") entered into a definitive agreement for Lennar to acquire the Company through a merger. At meetings held on April 28, 2000, the stockholders of the Company and Lennar approved the merger. Per the terms of the merger agreement as amended, U.S. Home completed the acquisition by Lennar on May 2, 2000 and the Company became a wholly-owned subsidiary of Lennar. Pursuant to a tender offer, Lennar completed the purchase for cash of substantially all of the Company's outstanding senior and senior subordinated indebtedness on May 3, 2000. Also Lennar repaid the balance outstanding under the Company's Credit Facility. (2) BASIS OF PRESENTATION AND SEGMENT INFORMATION Basis of Presentation - The accompanying consolidated condensed balance sheet as of December 31, 1999, which has been derived from audited financial statements, and the accompanying unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. Although the Company believes that the disclosures made are adequate to ensure that the information presented is not misleading, it is suggested that these consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. The preparation of consolidated condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Management's estimates and assumptions are reflective of, among other things, prevailing market conditions, expected market conditions based on published economic forecasts, current operating strategies and the availability of capital, which are all subject to change. Changes to the aforementioned or other conditions could in turn cause changes to such estimates and assumptions and, as a result, actual results could differ from the original estimates. 8 In the opinion of the Company, the accompanying consolidated condensed financial statements contain all adjustments (all of which were normal and recurring adjustments) necessary to present fairly the Company's financial position as of March 31, 2000 and December 31, 1999 and its results of operations and cash flows for the three-month periods ended March 31, 2000 and 1999. Because of the seasonal nature of the Company's business, the results of operations for the three-month periods ended March 31, 2000 and 1999 are not necessarily indicative of the results for the full year. Segment Information - The Company's financial reporting segments consist of home building, financial services and corporate. The Company's home building operations comprise the most substantial part of its business, with approximately 98% of consolidated revenues in the three-month periods ended March 31, 2000 and 1999 contributed by the home building operations. The Company is one of the largest single-family homebuilders in the United States based on homes delivered. The Company currently builds and sells homes in more than 240 new home communities in 33 market areas in 13 states. The Company offers a wide variety of moderately priced homes that are designed to appeal to the affordable, move-up and retirement and active adult buyers. The Company's financial services operations provide mortgage-banking services to the home building operations' customers. The Company originates, processes and sells mortgages to third party investors. The Company does not retain or service the mortgages that it originates but, rather, sells the mortgages and related servicing rights to investors. Corporate primarily includes the operations of the Company's corporate office whose primary purpose is to provide financing, cash management, risk management, capital allocations, management reporting and general administration of the home building and financial services segments. Assets, operating revenues and operating income of the Company's reportable segments are included in the consolidated condensed balance sheets and consolidated condensed statements of operations. Expenditures for long-lived assets and depreciation and amortization expenses were insignificant for the three-month periods ended March 31, 2000 and 1999. 9 (3) INVENTORIES The components of single-family housing inventories are as follows:
March 31, December 31, 2000 1999 ---------- ------------ Housing completed and under construction $ 506,346 $ 463,563 Models ................................. 103,957 102,512 Finished lots .......................... 205,272 209,827 Land under development ................. 323,309 328,683 Land held for development or sale ...... 136,950 140,790 ---------- ---------- $1,275,834 $1,245,375 ========== ==========
(4) REVOLVING CREDIT FACILITIES AND LONG-TERM DEBT Housing - The housing revolving credit facility and long-term debt consist of the following:
March 31, December 31, 2000 1999 --------- ------------ Revolving credit facility ............... $158,000 $ 97,000 -------- -------- 7.95% Senior notes due 2001 ............. 75,000 75,000 8.25% Senior notes due 2004 ............. 100,000 100,000 7.75% Senior notes due 2005 ............. 99,820 99,811 8.88% Senior subordinated notes due 2007 125,000 125,000 8.875% Senior subordinated notes due 2009 124,101 124,076 Notes and mortgage notes payable ........ 26,376 29,202 -------- -------- 550,297 553,089 -------- -------- $708,297 $650,089 ======== ========
The Company has an unsecured revolving credit agreement (the "Credit Facility") with a group of banks. The Credit Facility was amended and restated in February 2000 to provide for borrowings of up to $360,000, of which up to $35,000 may be used for letter of credit obligations, subject to a borrowing base limitation. The amount available for borrowing under the Credit Facility is based on housing inventories, land, finished lots and closing proceeds receivables less outstanding 10 senior debt borrowings (as defined), including amounts outstanding under the Credit Facility; as the amount invested in these categories changes, the amount of available borrowings will increase or decrease. At March 31, 2000, $188,389 of the Credit Facility commitment was available for borrowing. Borrowings bear interest at a premium over the London Interbank Offered Rate ("LIBOR") or the base rate announced by the agent bank. The Credit Facility, as amended, expires on May 31, 2002, but may be extended annually for successive one-year periods with the consent of the banks and contains numerous real estate and financial covenants, including restrictions on the incurrence of additional debt, creation of liens and the levels of land and housing inventories maintained by the Company and limits the payment of cash dividends in any fiscal quarter to fifty percent of the Company's consolidated net income (as defined in the credit agreement) for the preceding fiscal quarter. Housing notes and mortgage notes payable are primarily for the acquisition and development of land, with interest rates ranging from 8.0% to 10.0%. Assets pledged as collateral under these agreements totaled approximately $47,288 at March 31, 2000. Financial Services - The financial services credit facilities consist of the following:
March 31, December 31, 2000 1999 ---------- ------------ Mortgage Credit Facility $ 77,485 $ 76,185 Subsidiary Credit Agreement 9,700 7,300 ---------- ------------ $ 87,185 $ 83,485 ========== ============
The Company's mortgage banking subsidiary, U.S. Home Mortgage Corporation ("Mortgage"), may borrow up to $80,000 under a revolving line of credit (the "Mortgage Credit Facility"). The Mortgage Credit Facility is secured by residential mortgage loans, is not guaranteed by the Company, matures on September 30, 2001 and bears interest at a premium over the LIBOR rate. In 1999, a subsidiary of Mortgage (the "Subsidiary") entered into an unsecured revolving credit agreement (the "Subsidiary Credit Agreement") with two banks providing up to a maximum of $10,000 of borrowings subject to a borrowing base. The Subsidiary was organized to loan money to joint ventures in which the Company is a joint venture partner. The Subsidiary Credit Agreement is guaranteed by the Company and a joint venture partner, matures on May 31, 2001 and bears interest at a premium over the base rate announced by the agent bank or a premium over the LIBOR rate. 11 (5) INTEREST A summary of housing interest for the three-month periods ended March 31, 2000 and 1999 follows:
2000 1999 ---------- --------- Capitalized at beginning of period $ 84,878 $ 68,750 Capitalized 16,537 12,985 Previously capitalized interest included in interest expense (11,216) (10,504) Other (12) 9 --------- --------- Capitalized at end of period $ 90,187 $ 71,240 ========= =========
Financial services interest expense for the three-month periods ended March 31, 2000 and 1999, was $518 and $200, respectively, and is included in general, administrative and other expenses in the accompanying consolidated condensed statements of operations. (6) EARNINGS PER SHARE Basic earnings per share includes the weighted average number of common shares outstanding for the periods. Diluted earnings per share includes the assumed exercise of stock options. The following table summarizes the basic earnings and diluted earnings per share computations for the three-month periods ended March 31, 2000 and 1999:
2000 1999 ------------- ----------- Basic earnings per share: Net income $ 19,546 $ 14,539 Weighted average number of common shares 13,218,735 13,345,945 Earnings per share $ 1.48 $ 1.09 =========== =========== Diluted earnings per share: Net income, assuming dilution $ 19,546 $ 14,539 Weighted average number of common shares 13,218,735 13,345,945 Incremental shares from assumed conversions Contingent common shares 3,287 111,999 Stock options 237,525 315,693 ----------- ----------- Adjusted weighted average number of common shares 13,459,547 13,773,637 =========== =========== Earnings per share $ 1.45 $ 1.06 =========== ===========
12 (7) TREASURY STOCK As of March 31, 2000, the Company had remaining Board of Directors authorization to repurchase up to 669,400 shares of outstanding common stock, in the aggregate, from time to time in the open market and/or in private transactions. During the three-month period ended March 31, 2000, the Company repurchased 71,000 shares of common stock for an aggregate purchase price of $1,835. The cost of the repurchased shares has been included in "Treasury Stock" in the accompanying consolidated condensed balance sheets. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Housing The following table sets forth certain financial information for the periods indicated (dollars in thousands, except average sales price):
Three-Months Ended March 31, --------------------------------- 2000 1999 ---------- ---------- Revenues - Single-family homes $ 457,605 $ 388,237 Land and other 9,503 4,100 ---------- ---------- Total $ 467,108 $ 392,337 ========== ========== Single-family homes - Gross margin amount $ 86,475 $ 70,342 Gross margin percentage 18.9% 18.1% Units delivered 2,234 2,092 Average sales price $ 204,800 $ 185,600 New orders taken 3,272 2,962 Backlog at end of period: Aggregate sales amount $1,222,132 $1,029,452 Units 5,381 5,175 Selling, general and administrative expenses as a percentage of housing revenues 9.7% 9.7% Interest - Paid or accrued $ 16,537 $ 12,985 Percentage capitalized 100.0% 100.0% Previously capitalized interest included in interest expense $ 11,216 $ 10,504 Percentage of housing revenues 2.4% 2.7%
13 Revenues and Sales - Revenues from sales of single-family homes for the three-month period ended March 31, 2000 increased 17.9% compared to the three-month period ended March 31, 1999. The increase resulted primarily from a 6.8% increase in the number of housing units delivered and a 10.3% increase in the average sales price. The average sales price reflects price increases, product and geographical mix and higher revenue contributions from options and upgrades sold through the Company's design centers. New orders taken for the three-month period ended March 31, 2000 increased 10.5% compared to the same period in 1999. This increase in new orders taken reflects the continued strong demand for new single-family homes which the Company believes to be the result of several factors: an increase in the number of communities open, continued strength in the economy as evidenced by strong consumer confidence and high levels of employment, and an increase in family wealth. Gross Margins - The single-family homes gross margin percentage for the three-month period ended March 31, 2000 increased 80 basis points compared to the same period in 1999. The increase was primarily due to product and geographic mix and price increases. Backlog - The aggregate amount of sales backlog at March 31, 2000 increased 18.7% compared to March 31, 1999. The increase in the value of the backlog reflects the increase in the number of units under contract and the increase in the average sales price. Substantially all of the Company's backlog units at March 31, 2000, net of cancellations, are expected to result in revenues prior to March 31, 2001. Selling, General and Administrative Expenses - As a percentage of housing revenues, selling, general and administrative expenses for the three-month period ended March 31, 2000 remained the same as for the three-month period ended March 31, 1999. Actual selling, general and administrative expenses for the three-month period ended March 31, 2000 increased $6,956 million when compared to the same period in 1999. This increase was primarily due to increases in volume-related expenses ($2.5 million) resulting from increased deliveries in 2000 when compared to 1999 and increased compensation costs and marketing center expenses resulting from increased activities. 14 Interest - Interest paid or accrued for the three-month period ended March 31, 2000 increased approximately 27.4% compared to the same period in 1999. The increase in 2000 is primarily due to an increase in the average outstanding debt which was primarily incurred in connection with the increases in single-family housing inventories resulting from increased activities. The Company capitalizes interest cost into housing inventories and charges the previously capitalized interest to interest expense when the related inventories are delivered. The amount of interest capitalized and previously capitalized interest expensed in any period is a function of the amount of housing assets, land sales and the number of housing units delivered, average outstanding debt levels and average interest rates. Previously capitalized interest amounts charged to interest expense in the three-month period ended March 31, 2000 increased 6.8% compared to the three-month period ended March 31, 1999. The increase was attributable primarily to an increase in the number of housing units delivered and an increase in the average interest expense per housing unit delivered. 15 Financial Services Revenues - Revenues for the financial services segment for the periods indicated were as follows (dollars in thousands):
Three-Months Ended March 31, ------------------------ 2000 1999 -------- -------- U.S. Home Mortgage Corporation and Subsidiary $ 8,785 $ 7,097 Other financial services operations 1,298 1,214 -------- -------- $ 10,083 $ 8,311 ======== ========
The increase in U.S. Home Mortgage Corporation's ("Mortgage") revenues for the three-month period ended March 31, 2000 when compared to the three-month period ended March 31, 1999 was primarily due to the increase in mortgage loan originations and the increase in income from the sale of mortgage loans and servicing rights. Mortgage's "capture rate" for providing financing to buyers of homes delivered by the Company remained substantially constant at 80% for the three-month period ended March 31, 2000 compared to 83% for the same period in 1999. Since a certain percentage of buyers typically elect to use other sources of financing, the Company believes Mortgage's capture rate is near the maximum capture rate. Other Corporate General and Administrative - Corporate general and administrative includes the operations of the Company's corporate office. As a percentage of total revenues, such expenses were .9% for the three-month periods ended March 31, 2000 and 1999. Actual corporate general and administrative expenses for the three-month period ended March 31, 2000 were $4.3 million, compared to $3.6 million for the three-month period ended March 31, 1999. Merger Expenses - Merger expenses include investment banking, legal and other fees incurred in conjunction with the Company's acquisition by Lennar. 16 Financial Condition and Liquidity Housing The Company is significantly affected by the cyclical nature of the homebuilding industry, which is sensitive to fluctuations in economic activity and interest rates and the level of consumer confidence. Sale of new homes is also affected by market conditions for rental properties and by the condition of the resale market for used homes, including foreclosed homes. For example, an oversupply of resale units depresses prices and reduces the margins available on sales of new homes. The sale of new homes and profitability from sales are heavily influenced by the level and expected direction of interest rates. Increases in interest rates tend to have a depressing effect on the market for new homes in view of increased monthly mortgage costs to potential homebuyers. The Company's most significant needs for capital resources are land and finished lot purchases, land development and housing construction. The Company's ability to generate cash adequate to meet these needs is principally achieved from the sale of homes and the margins thereon, the utilization of Company-owned lots and borrowings under its financing facilities, including the Company's principal unsecured revolving credit agreement (the "Credit Facility"). Access to quality land and lot locations is an integral part of the Company's success. Typically, in order to secure the rights to quality locations and provide sufficient lead-time for development, the Company must acquire land rights well in advance of when orders for housing units are expected to occur. Primarily in its affordable and move-up home communities, the Company attempts to minimize its exposure to the cyclical nature of the housing market and its use of working capital by employing rolling lot options, which enable the Company to initially pay a small portion of the total lot cost and then purchase the lots on a scheduled basis. However, with the increase in the number of retirement and active adult communities, the use of rolling lot options as a percentage of the Company's total finished lot needs has and is expected to continue to decrease since the majority of the finished lots for these communities are developed on land owned by the Company. The retirement and active adult communities are generally long-term projects and require greater investments by the Company than are required for its affordable and move-up home communities. These communities generally include more units than the affordable and move-up communities and generally have more extensive amenities, including golf courses and clubhouses, which require substantial capital investment. The increases in land inventories in 2000 from 1999 were primarily the result of increased activities, including an increase in the Company's retirement and active adult community. The Company has historically financed its working capital needs from operations and borrowings. The Company expects to fund its future working capital needs from its operations and from Lennar. 17 Financial Services Mortgage's activities represent a substantial portion of the financial services activities. As loan originations by Mortgage are primarily from homes sold by the Company's home building operations, Mortgage's financial condition and liquidity are to a significant extent dependent upon the financial condition of the Company. Financial services operating activities are affected primarily by the volume of Mortgage's loan originations and the timing of the sale of mortgage loans and related servicing rights to third party investors. Loans and servicing rights are generally sold to investors within 30 days after homes are delivered. In this regard, cash flow from financial services operating activities for 2000 provided more cash compared to 1999 primarily due to increased profitability and the timing of payments related to Mortgage's origination activities. The Company finances its financial services operations primarily from short-term debt which is repaid with internally generated funds, such as from the origination and sale of residential mortgage loans and related servicing rights. As more fully discussed in Note 4 of Notes to Consolidated Condensed Financial Statements, the short-term debt consists of an $80 million secured revolving line of credit (the "Mortgage Credit Facility") which matures on September 30, 2001. While the Mortgage Credit Facility contains numerous covenants, including a debt to tangible net worth ratio and a minimum tangible net worth requirement, these covenants are not anticipated to significantly limit Mortgage's operations. The Company does not guarantee any of its financial services subsidiaries' debt, except with respect to an unsecured credit agreement of a subsidiary of Mortgage. See Note 4 of Notes to Consolidated Condensed Financial Statements. The Company believes that internally generated funds and the Mortgage Credit Facility will be sufficient to provide for Mortgage's working capital needs. Item 3. Quantitative and Qualitative Disclosures About Market Risk The information included under Item 7A. Quantitative and Qualitative Disclosures About Market Risks in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 is incorporated herein by reference. There have been no material changes in the Company's market risk during the three-months ended March 31, 2000. 18 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At a special meeting of stockholders of the Company, held on April 28, 2000, the stockholders approved the Plan and Agreement of Merger, as amended. The votes of the Company's stockholders was as follows:
Broker In Favor Opposed Abstained Non-vote ---------- ------- --------- -------- 9,280,151 19,666 11,440 -0-
Item 5. Other Information Additional Operating Data - The following table provides information (expressed in number of housing units) with respect to new orders taken, deliveries to purchasers of single-family homes and backlog by state for the three-month periods ended March 31, 2000 and 1999:
States New Orders Deliveries Backlog ------------------- -------------- ------------- ----------- 2000 1999 2000 1999 2000 1999 ------ ----- ----- ----- ----- ---- Arizona 433 365 264 293 600 665 California 299 240 162 244 420 417 Colorado 573 569 339 267 1,064 901 Florida 823 787 612 524 1,475 1,595 Maryland/Virginia 269 197 159 125 383 260 Minnesota 243 218 144 112 353 306 Nevada 73 64 48 69 111 102 New Jersey 172 103 137 116 324 125 Ohio 16 24 17 23 26 50 Texas 371 395 352 319 625 754 ------ ----- ----- ----- ----- ----- 3,272 2,962 2,234 2,092 5,381 5,175 Joint venture activity (1) 102 71 99 3 274 135 ------ ----- ----- ----- ----- ----- 3,374 3,033 2,333 2,095 5,655 5,310 ====== ===== ===== ===== ===== =====
(1) Includes communities owned by joint ventures in which the Company has a 50% interest. The table below sets forth the new orders taken, deliveries to customers and backlog of single-family homes of these joint ventures for the three-month periods ended March 31, 2000 and 1999: 19
2000 1999 ---------------------------------- ------------------------------ Retirement Affordable Total Retirement Affordable Total New Orders Taken 36 66 102 20 51 71 Deliveries 13 86 99 - 3 3 Backlog 101 173 274 55 80 135
Cautionary Disclosure Regarding Forward-Looking Statements - Certain statements contained herein, in the Company's press releases, oral communications and other filings with the Securities and Exchange Commission that are not historical facts are, or may be considered to be, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such matters involve risks and uncertainties, including general economic conditions, fluctuations in interest rates, the impact of competitive products and prices, the supply of raw materials and prices, levels of consumer confidence and other risks referred to under the caption "Item 7. Other Cautionary Disclosure Regarding Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 1999, and the disclosure set forth under such caption is incorporated herein by reference. 20 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10.01 - First Amendment to Second Amended and Restated Warehousing Credit and Security Agreement, dated as of March 23, 2000, by and between U.S. Home Corporation and Residential Funding Corporation. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K On February 28, 2000, under Item 5 of Form 8-K the Company filed a Current Report on Form 8-K which included documents attached as exhibits relating to the Plan and Agreement of Merger By and Among the Company, Lennar and Len Acquisition Corporation, dated February 16, 2000, a voting agreement by and among the Company and certain stockholders of Lennar and an amendment to the rights Agreement between the Company and First Chicago Trust Company of New York. On April 13, 2000, under Item 5 of Form 8-K, the Company filed a Current Report on Form 8-K which included a document attached as an exhibit relating to the Amendment to Merger Agreement dated March 17, 2000, amending a Plan dated as of February 16, 2000. No other Current Reports on Form 8-K was filed by the Company during January, February, March, or April 2000. 21 SIGNATURES 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. U.S. HOME CORPORATION Date: May 11, 2000 /s/ Isaac Heimbinder ------------------------------------- Isaac Heimbinder President, Co-Chief Executive Officer and Chief Operating Officer Date: May 11, 2000 /s/ Chester P. Sadowski ------------------------------------- Chester P. Sadowski Senior Vice President-Controller and Chief Accounting Officer 22 INDEX OF EXHIBITS Sequential Exhibit Numbered Number Page - ------ ----------- 10.01 First Amendment to Second Amended and Restated Warehousing Credit and Security Agreement dated as of March 23, 2000, by and between U.S. Home Corporation and Residential Funding Corporation. 23 27 Financial Data Schedule 27 EX-10 2 EXHIBIT 10.1 WAREHOUSING AGREE. USH MORTGAGE 23 EXHIBIT 10.1 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT (this "Amendment") is entered into as of this 9th day of March 2000, by and between U.S. HOME MORTGAGE CORPORATION, a Florida corporation (the "Company") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender"). WHEREAS, the Company and the Lender have entered into a single family revolving warehouse facility with a present Commitment Amount of $80,000,000, to finance the origination and acquisition of Mortgage Loans as evidenced by a Promissory Note in the principal sum of $80,000,000, dated October 1, 1999 (the "Note"), and by a Second Amended and Restated Warehousing Credit and Security Agreement dated October 1, 1999, as the same may have been amended or supplemented (the "Agreement"); WHEREAS, the Company has notified the Lender that the Parent has entered into an agreement pursuant to which the Parent will cease to exist and the Company will become a wholly owned, second tier subsidiary of Lennar Corporation (the "Acquisition"); and WHEREAS, without the prior written consent of the Lender, the Acquisition would result in an Event of Default under Section 8.1(n) of the Agreement; and WHEREAS, the Company has requested that the Lender consent to the Acquisition and waive any Event of Default that would otherwise occur under the Agreement; and WHEREAS, the Lender is willing to consent to the Acquisition and to waive any Event of Default that would otherwise occur under the Agreement, subject to the terms and conditions of this Amendment. NOW, THEREFORE, for and in consideration of the foregoing and of the mutual covenants, agreements and conditions hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. All capitalized terms used herein and not otherwise defined shall have their respective meanings set forth in the Agreement. 2. The effective date ("Effective Date") of this Amendment shall be as of the effective date and time of the Acquisition. 3. Section 1.1 of the Agreement is amended by adding the following definition in the appropriate alphabetical order: "Construction Subsidiary" means any corporation, association or other business entity engaged in the construction of improvements on residential real property and all of the capital stock of which is, directly or indirectly, owned by the Parent. 24 4. Section 1.1 of the Agreement is amended to delete the following definition in its entirety, replacing it with the following definition: "Construction/Perm Mortgage Loan" means a First Mortgage Loan in a principal amount not to exceed $600,000, made for financing the purchase of real property and the construction of improvements on such real property by a Construction Subsidiary, and which is converted to a Permanent Mortgage Loan at the completion of the improvements. "Parent" shall mean Lennar Corporation. 5. Section 2.2(c) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: 2.2(c) Before funding, the Lender shall have a reasonable time (1 Business Day under ordinary circumstances) to examine such Advance Request and the Collateral Documents to be delivered prior to such requested Advance, as set forth in the applicable Exhibit hereto, and may reject such of them as do not meet the requirements of this Agreement or of the related Purchase Commitment. The Lender shall have no obligation to make a Wet Settlement Advance directly to a Construction Subsidiary against a Mortgage Loan unless the Lender has received satisfactory evidence from the title company closing the Mortgage Loan that such Mortgage Loan is closed and funded. 6. Section 5.17(c) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: 5.17(c) Prior to each Construction Advance, the Company shall have received (1) a report of the stage of completion of the improvements as set forth in the construction accounting system of the Construction Subsidiary confirming completion of the work for which the Construction Advance is being requested and (2) a title insurance updated endorsement for such Construction Advance if the title insurance policy has a "pending disbursements clause" requiring an endorsement to the title insurance policy to insure each Construction Advance after the closing of the Construction/Perm Mortgage Loan. 7. Pursuant to Section 9 of the Agreement, the Company must provide Notice of consummation of the Acquisition to the Lender in a timely manner. 8. The Company must deliver to the Lender (a) an executed original of this Amendment; (b) an executed Certificate of Secretary with corporate resolutions; (c) the Notice required by Section 7 of this Amendment; and (d) a $350 document production fee. 25 9. The Company represents, warrants and agrees that (a) there exists no Default or Event of Default under the Loan Documents, (b) the Loan Documents continue to be the legal, valid and binding agreements and obligations of the Company enforceable in accordance with their terms, as modified herein, (c) the Lender is not in default under any of the Loan Documents and the Company has no offset or defense to its performance or obligations under any of the Loan Documents, (d) the representations contained in the Loan Documents remain true and accurate in all respects, and (e) there has been no material adverse change in the financial condition of the Company from the date of the Agreement to the date of this Amendment. 10. Except as hereby expressly modified, the Agreement is otherwise unchanged and remains in full force and effect, and the Company ratifies and reaffirms all of its obligations thereunder. 11. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment to be duly executed on their behalf by their duly authorized officers as of the day and year above written. U.S. HOME MORTGAGE CORPORATION, a Florida corporation By: /s/ Thomas A. Napoli ---------------------------- Thomas A. Napoli Its: Vice President RESIDENTIAL FUNDING CORPORATION, a Delaware corporation By: /s/ Jim Clapp --------------------------- Jim Clapp Its: Director 26 STATE OF TEXAS) ) ss COUNTY OF HARRIS) On March 28, 2000, before me, a Notary Public, personally appeared Thomas A. Napoli, the Vice President of U.S. HOME MORTGAGE CORPORATION, a Florida corporation, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. /s/ Donna Monroe ------------------------------ Donna Monroe Notary Public My Commission Expires: 3/26/03 STATE OF MARYLAND ) ) ss COUNTY OF MONTGOMERY) On April 3, 2000, before me, a Notary Public, personally appeared Jim Clapp , the Director of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. /s/ Stephanie von dem Hagen ---------------------------- Stephanie von dem Hagen Notary Public (SEAL) My Commission Expires: 10/15/01 EX-27 3 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 This Schedule Contains Summary Financial Information Extracted From The consolidated Condensed Financial Statements As Of March 31,2000 And For The Three-months Then Ended And Is Qualified In Its Entirety By Reference To Such Financial Statements. 1000 3-MOS DEC-31-2000 MAR-31-2000 19594 0 155653 0 1275834 0 0 0 1688467 0 505297 0 0 137 596582 1688467 0 477191 377583 432256 0 0 11734 33201 12616 20585 0 0 0 19546 1.48 1.45
-----END PRIVACY-ENHANCED MESSAGE-----