-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kZCajawIXo5BNPWQZBbI7NmfFS94y+4OnWQHfTyrTXaSB//5THM08unCM/QKt6wD 0FziijzComcFt9tT+mm0ZA== 0000101640-94-000014.txt : 19940817 0000101640-94-000014.hdr.sgml : 19940817 ACCESSION NUMBER: 0000101640-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HOME CORP /DE/ CENTRAL INDEX KEY: 0000101640 STANDARD INDUSTRIAL CLASSIFICATION: 1531 IRS NUMBER: 210718930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05899 FILM NUMBER: 94542436 BUSINESS ADDRESS: STREET 1: 1800 WEST LOOP SOUTH CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138772311 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 FORM 10-Q PERIOD ENDING 6-30-94 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 June 30, 1994 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.) 1800 West Loop South, Houston, Texas 77027 (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 by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. 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 July 31, 1994 Common Stock, $.01 par value 10,325,747 shares 2 U.S. HOME CORPORATION INDEX Page Number Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets--June 30, 1994 and December 31, 1993 3 Consolidated Condensed Statements of Operations-- Three and Six Months Ended June 30, 1994 and 1993 5 Consolidated Condensed Statements of Cash Flows-- Six Months Ended June 30, 1994 and 1993 7 Notes to Consolidated Condensed Financial Statements 8 Review by Independent Public Accountants 12 Report of Independent Public Accountants 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Part II. Other Information Item 2. Changes in Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 21 3 PART I. FINANCIAL INFORMATION Item l. Financial Statements U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) ASSETS June 30, December 31, 1994 1993 ____________ _____________ (Unaudited) HOUSING: Cash (including restricted funds) $ 1,364 $ 15,192 Receivables, net 31,881 14,027 Single-family housing inventories 544,760 491,620 Option deposits on real estate 41,827 34,618 Deferred tax asset 24,406 33,527 Other assets 38,953 33,019 _________ _________ 683,191 622,003 _________ _________ FINANCIAL SERVICES: Cash (including restricted funds) 5,153 5,738 Residential mortgage loans 24,894 38,412 Other assets 10,526 12,693 _________ _________ 40,573 56,843 _________ _________ $ 723,764 $ 678,846 ========= ========= 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) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1994 1993 ____________ _____________ (Unaudited) HOUSING: Current Liabilities - Short-term debt $ 19,046 $ - Current maturities of long-term debt 8,414 8,093 Accounts payable 66,002 47,997 Accrued expenses and other current liabilities 39,683 30,701 _________ _________ 133,145 86,791 Long-Term Debt 303,259 303,844 _________ _________ 436,404 390,635 _________ _________ FINANCIAL SERVICES: Current Liabilities - Short-term debt 7,240 20,566 Accrued expenses and other current liabilities 7,012 9,504 _________ _________ 14,252 30,070 Long-Term Debt 1,082 1,102 _________ _________ 15,334 31,172 _________ _________ Total Liabilities 451,738 421,807 _________ _________ STOCKHOLDERS' EQUITY: Convertible Preferred Stock, $25 per share redemption value, authorized 1,441,254 and 2,037,968 shares at June 30, 1994 and December 31, 1993, outstanding 1,358,016 and 1,954,730 shares at June 30, 1994 and December 31, 1993 33,950 48,868 Common Stock, $.01 par value, authorized 50,000,000 shares, outstanding 10,015,947 and 9,389,116 shares at June 30, 1994 and December 31, 1993 100 94 Capital In Excess of Par Value 318,859 303,193 Retained Earnings (Deficit) (80,883) (95,116) Total Stockholders' Equity _________ _________ 272,026 257,039 _________ _________ $ 723,764 $ 678,846 ========= ========= 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 June 30, __________________ 1994 1993 ________ ________ HOUSING: Operating Revenues $238,143 $192,328 ________ ________ Operating Costs and Expenses - Cost of products sold 200,001 161,059 Selling, general and administrative 26,430 22,260 Interest, net - 85 ________ ________ 226,431 183,404 ________ ________ Housing Operating Income 11,712 8,924 ________ ________ FINANCIAL SERVICES: Operating Revenues 2,943 3,356 ________ ________ Operating Costs and Expenses - General and administrative 2,786 2,373 Interest 113 352 ________ ________ 2,899 2,725 ________ ________ Financial Services Operating Income 44 631 ________ ________ INCOME BEFORE REORGANIZATION ITEMS AND INCOME TAXES 11,756 9,555 REORGANIZATION ITEMS, NET - 4,025 ________ ________ INCOME BEFORE INCOME TAXES 11,756 5,530 PROVISION FOR INCOME TAXES 4,584 279 ________ ________ NET INCOME $ 7,172 $ 5,251 ======== ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Primary $ .63 $ .46 ======== ======== Fully diluted $ .55 $ .46 ======== ======== The accompanying notes are an integral part of these statements. 6 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) (Unaudited) Six Months Ended June 30, ________ ________ 1994 1993 ________ ________ HOUSING: Operating Revenues $460,143 $356,792 ________ ________ Operating Costs and Expenses - Cost of products sold 385,805 297,452 Selling, general and administrative 51,477 42,440 Interest, net - 197 ________ ________ 437,282 340,089 ________ ________ Housing Operating Income 22,861 16,703 ________ ________ FINANCIAL SERVICES: Operating Revenues 6,243 5,946 ________ ________ Operating Costs and Expenses - General and administrative 5,452 4,369 Interest 320 544 ________ ________ 5,772 4,913 ________ ________ Financial Services Operating Income 471 1,033 ________ ________ INCOME BEFORE REORGANIZATION ITEMS AND INCOME TAXES 23,332 17,736 REORGANIZATION ITEMS, NET - 6,915 ________ ________ INCOME BEFORE INCOME TAXES 23,332 10,821 PROVISION FOR INCOME TAXES 9,099 541 ________ ________ NET INCOME $ 14,233 $ 10,280 ======== ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Primary $ 1.23 $ .91 ======== ======== Fully diluted $ 1.07 $ .91 ======== ======== The accompanying notes are an integral part of these statements. 7 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, _________________ 1994 1993 ________ ________ Net Cash Used by Operating Activities $(17,309) $(48,295) ________ ________ Net Cash Flows From Investing Activities: Proceeds from investments in mortgages, net of purchases 866 308 Purchase of property, plant and equipment, net of proceeds (789) (373) Increase in restricted cash (30) (4,773) Other (279) (277) ________ _______ Net cash used by investing activities (232) (5,115) ________ _______ Net Cash Flows From Financing Activities: Proceeds from short-term debt, net of repayments 5,720 31,536 Long-term debt assumed 1,037 - Repayment of long-term debt (3,659) (12,974) Proceeds from sale of 9.75% senior notes - 194,000 Payment of liabilities subject to compromise - (164,704) ________ ________ Net cash provided by financing activities 3,098 47,858 ________ ________ Net Decrease in Cash (14,443) (5,552) Cash At Beginning Of Period 15,829 8,222 ________ ________ Cash At End of Period $ 1,386 $ 2,670 ======== ======== Supplemental Disclosure: Interest paid, before amount capitalized - Housing $ 14,650 $ 16,514 Financial Services 372 484 ________ ________ $ 15,022 $ 16,998 ======== ======== The accompanying notes are an integral part of these statements. 8 U.S. HOME CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JUNE 30, 1994 (Unaudited) (1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying consolidated condensed balance sheet as of December 31, 1993, 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 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. 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 June 30, 1994 and December 31, 1993 and its results of operations for the three and six month periods ended June 30, 1994 and 1993 and cash flows for the six month periods ended June 30, 1994 and 1993. Because of the seasonal nature of the Company's business, the results of operations for the three and six month periods ended June 30, 1994 and 1993 are not necessarily indicative of the results for the full year. (2) INVENTORIES The components of single-family housing inventories are as follows: June 30, December 31, 1994 1993 __________ ___________ (Dollars in Thousands) Housing completed and under construction $216,185 $193,827 Models 39,539 34,366 Finished lots 102,387 83,140 Land under development 73,209 58,824 Raw land held for development or sale 113,440 121,463 ________ ________ $544,760 $491,620 ======== ======== 9 (3) HOUSING SHORT-TERM DEBT Housing short-term debt consists of the following: June 30, December 31, 1994 1993 _________ ___________ (Dollars in Thousands) Revolving working capital facility $ 18,017 $ - Land acquisition financing 1,029 - _________ __________ $ 19,046 $ - ========= ========== The revolving working capital facility, as amended (the "Working Capital Facility"), consists of a four-year, $95,000,000 secured financing agreement with General Electric Capital Corporation ("GECC"), of which $25,000,000 may be used for letter of credit obligations. The Working Capital Facility bears interest at a premium over the GECC composite commercial paper rate and matures on June 20, 1997. In accordance with the Working Capital Facility, the Company has provided GECC liens on its cash, personal property and certain finished lots and single-family housing units, including models, with a cost of approximately $133,439,000 at June 30, 1994. This collateral has provided the Company with an available borrowing base capacity of approximately $46,986,000 at June 30, 1994, of which $18,017,000 was outstanding. The Working Capital Facility contains numerous real estate and financial covenants, including an inventory-to-backlog ratio and restrictions on the incurring of additional debt, creation of liens and the purchases of land. (4) LONG-TERM DEBT Long-term debt consists of the following: June 30, December 31, 1994 1993 ________ ____________ (Dollars in Thousands) Notes and mortgage notes payable $ 31,673 $ 31,937 9.75% Senior notes due 2003 200,000 200,000 4.875% Convertible subordinated debentures due 2005 80,000 80,000 ________ ________ 311,673 311,937 Less - current maturities (8,414) (8,093) ________ ________ 303,259 303,844 Financial Services 1,082 1,102 ________ ________ Total long-term debt $304,341 $304,946 ======== ======== 10 (5) HOUSING INTEREST A summary of housing interest for the three and six month periods ended June 30, 1994 and 1993 follows (dollars in thousands): Three Month Period ____________________ 1994 1993 ________ ________ Capitalized at beginning of period $ 54,884 $ 55,640 ________ ________ Paid and accrued 7,673 3,541 Expensed - (85) ________ ________ Capitalized 7,673 3,456 Included in cost of sales (7,337) (4,715) Included in other (16) (996) ________ ________ Capitalized at end of period $ 55,204 $ 53,385 ======== ======== Six Month Period _____________________ 1994 1993 _________ _________ Capitalized at beginning of period $ 55,580 $ 58,708 ________ ________ Paid and accrued 15,272 5,875 Expensed - (197) ________ ________ Capitalized 15,272 5,678 Included in cost of sales (14,196) (9,349) Included in other (1,452) (1,652) ________ ________ Capitalized at end of period $ 55,204 $ 53,385 ======== ======== (6) INCOME PER SHARE The following weighted average number of common and common equivalent shares were used to compute income per share for the three and six month periods ended June 30, 1994 and 1993: Three Month Period Six Month Period _______________________ _______________________ 1994 1993 1994 1993 __________ __________ __________ __________ Primary 11,373,960 11,298,731 11,568,389 11,291,846 Fully diluted 13,627,481 11,298,731 13,821,910 11,291,846 11 Primary income per share has been computed on the weighted average number of common and common equivalent shares outstanding, after the dilutive effect of the convertible redeemable preferred stock and Class B warrants and the assumed exercise of stock options for the periods subsequent to June 21, 1993. No effect was given to the shares that would be issuable on exercise of the warrants and stock options in the three month period ended June 30, 1994 and issuable on exercise of stock options in the six month period ended June 30, 1994, since they were antidilutive. Fully diluted income per share includes the assumed conversion of the convertible subordinated debentures. (7) INCOME TAXES Income tax provisions for interim periods are estimated based on projections of the annual effective tax rates. The effective tax rate (5%) for the three and six month periods ended June 30, 1993, reflects estimated federal and state alternative minimum taxes, net of expected net operating loss ("NOL") utilization. As a result of the Company's recognition of a deferred tax asset attributable to its NOL in the third quarter of 1993, the effective tax rate used for the three and six month periods ended June 30, 1994 is 39%. 12 REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen & Co., independent public accountants, has performed a review of the consolidated condensed balance sheet as of June 30, 1994 and the related consolidated condensed statements of operations for the three and six month periods ended June 30, 1994 and 1993 and cash flows for the six month periods ended June 30, 1994 and 1993 included in this report. Such review was made in accordance with standards established by the American Institute of Certified Public Accountants. 13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO U.S. HOME CORPORATION: We have reviewed the accompanying consolidated condensed balance sheet of U.S. Home Corporation (a Delaware corporation) and subsidiaries as of June 30, 1994, and the related consolidated condensed statements of operations for the three and six month periods ended June 30, 1994 and 1993 and cash flows for the six month periods ended June 30, 1994 and 1993. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet at December 31, 1993, and the related consolidated statements of operations and cash flows for the year then ended (not presented separately herein), and in our report dated February 9, 1994, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 1993 is fairly stated in all material respects in relation to the consolidated balance sheet from which it was derived. /s/ Arthur Andersen & Co. ARTHUR ANDERSEN & CO. Houston, Texas July 21, 1994 14 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 Six Months Ended June 30, June 30, ____________________ ____________________ 1994 1993 1994 1993 _________ _________ ________ _________ Revenues - Single-family homes $229,554 $190,055 $448,094 $352,291 Land and other 8,589 2,273 12,049 4,501 ________ ________ ________ ________ Total $238,143 $192,328 $460,143 $356,792 ======== ======== ======== ======== Single-family homes - Gross margin amount $ 37,168 $ 30,636 $ 72,610 $ 58,104 Gross margin percentage 16.2% 16.1% 16.2% 16.5% Units delivered 1,511 1,378 2,991 2,549 Average sales price $151,900 $137,900 $149,800 $138,200 New orders taken 1,571 1,647 3,911 3,810 Backlog at end of period 3,624 3,133 Selling, general and administrative expenses as a percentage of housing revenues 11.1% 11.6% 11.2% 11.9% Interest expense - Paid and accrued $ 7,673 $ 3,541 $ 15,272 $ 5,875 Capitalized $ 7,673 $ 3,456 $ 15,272 $ 5,678 Percent capitalized 100.0% 97.6% 100.0% 96.7% Capitalized interest included in cost of products sold $ 7,337 $ 4,715 $ 14,196 $ 9,349 15 Revenues - ________ Revenues from sales of single-family homes for the three and six month periods ended June 30, 1994 increased 20.8% and 27.2% compared to the three and six month periods ended June 30, 1993. The increases resulted from 9.7% and 17.3% increases in the number of housing units delivered and 10.2% and 8.4% increases in average sales prices. The increase in units delivered in 1994 was primarily attributable to improved backlog levels at March 31, 1994 and December 31, 1993 when compared to the backlog levels at March 31, 1993 and December 31, 1992. The increase in the average sales prices in 1994 was primarily due to price increases to offset cost increases. New orders taken for the three month period ended June 30, 1994 decreased 4.6% compared to the same period in 1993, while new orders taken for the six month period ended June 30, 1994 increased 2.7% compared to the same period in 1993. See Part II, "Item 5 - Other Information" on page 19 for a table of unit activity by region for the three and six month periods ended June 30, 1994 and 1993. The decline in new orders in the second quarter of 1994 was primarily due to the increase in mortgage interest rates during the first half of 1994. Due to the backlog level at June 30, 1994, housing operations for the remainder of 1994 should not be affected by the decline in new orders in the second quarter of 1994. If the decline in new orders continues, the backlog level at December 31, 1994 could be less than the backlog level at December 31, 1993. If the decline in new orders continues in 1995, deliveries in 1995 could be lower than deliveries in 1994. Selling, General and Administrative Expenses - ____________________________________________ As a percentage of housing revenues, selling, general and administrative expenses were 11.1% and 11.2% for the three and six month periods ended June 30, 1994 compared to 11.6% and 11.9% for the three and six month periods ended June 30, 1993. Actual selling, general and administrative expenses for the three and six month periods ended June 30, 1994 increased by $4.2 million and $9.0 million compared to 1993. These increases were attributable to increases in volume-related expenses resulting from the increase in deliveries in 1994 when compared to 1993 and increases in other selling, general and administrative expenses resulting from increased activities. Interest Expense - ________________ While interest paid and accrued for the three and six month periods ended June 30, 1994 increased approximately 116.7% and 160.0% compared to the same periods in 1993, it was approximately the same as interest paid and accrued for the last quarter of 1993 and the first quarter of 1994. The increase in interest paid and accrued in the last quarter of 1993 and the first two quarters of 1994 was primarily due to the sale of the 9.75% senior notes in June 1993 and 4.875% convertible subordinated debentures in November 1993. Interest paid and accrued during the first two quarters of 1993 was less than the last quarter of 1993 and the first two quarters of 1994 primarily due to interest on a majority of the Company's debt being stayed during the Company's Chapter 11 reorganization. 16 Financial Services __________________ Revenues - ________ Revenues for the financial services segment for the periods indicated were as follows (dollars in thousands): Three Months Six Months Ended Ended June 30, June 30, _______________ ________________ 1994 1993 1994 1993 _______ ______ _______ _______ U.S. Home Mortgage Corporation and subsidiaries $ 2,073 $2,677 $4,662 $4,588 Other financial services operations 870 679 1,581 1,358 _______ ______ ______ ______ $ 2,943 $3,356 $6,243 $5,946 ======= ====== ====== ====== The decrease in U.S. Home Mortgage Corporation and subsidiaries' ("Mortgage") revenues for the three month period ended June 30, 1994 when compared to the same period in 1993 was primarily due to a decrease in marketing income, as a result of the sharp increase in interest rates, volatility in the secondary mortgage markets and extreme pricing competition in 1994 along with a decrease in origination fees due, primarily, to a decline in refinancing activities. General and Administrative Expenses - ___________________________________ General and administrative expenses for the three and six month periods ended June 30, 1994 increased by $.4 million and $1.1 million compared to the same periods in 1993. The increases in 1994 were primarily due to the opening of additional branch and satellite offices in the last half of 1993 and early 1994 and an increase in Mortgage's staffing in the last half of 1993 and first quarter of 1994 as a result of the increased loan origination volume in these periods. Based on the decline in refinancing and other loan origination activities, Mortgage reduced its staffing in the second quarter of 1994 in order to bring these expenses in line with the currently expected volume of activities for the last half of 1994. 17 Financial Condition and Liquidity - _________________________________ Housing _______ The Company's ability to generate cash adequate to meet its housing needs is principally achieved from the sale of homes and the margins thereon, the utilization of Company-owned lots and periodic borrowings under its financing facilities. The Company expects, on a long-term basis, that operations will generate cash to meet substantially all of its housing cash flow needs and that a financing facility, such as the $95 million secured revolving working capital facility (the "Working Capital Facility") with General Electric Capital Corporation, would be utilized to meet peak operating needs. The Company does not anticipate that the borrowing base requirements of its Working Capital Facility will restrict the Company's ability to borrow under such Facility. See Note 3 of Notes to Consolidated Condensed Financial Statements. Over recent years, the Company has implemented various operational guidelines to conserve cash, increase its financial flexibility and reduce its risk by limiting the amount of land owned directly by the Company. The Company intends to continue to use Company-owned lots to generate additional cash flow and to continue to emphasize land acquisitions using rolling lot options, which enable the Company to initially pay a small fraction of total lot cost and then purchase the lots for a fixed price on a scheduled or "as needed" basis. The Company believes that these steps increase cash flows, reduce carrying costs and limit its exposure to market changes and direct land investments. The increase in the land asset inventories at June 30, 1994 when compared to December 31, 1993 was primarily due to increased activities. The net cash provided or used by the operating, investing and financing activities of the housing operations for the six month periods ended June 30, 1994 and 1993 is summarized below (dollars in thousands): 1994 1993 ________ ________ Net cash provided (used) by: Operating activities $(38,359) $(29,029) Investing activities (936) (4,817) Financing activities 16,444 33,053 ________ ________ Net decrease in cash $(22,851) $ (793) ======== ======== Housing operating activities are, at any time, affected by a number of factors, including the number of housing units under construction and housing units delivered. Housing operating activities used more cash during the first half of 1994 compared to 1993 primarily due to an increase in construction and land asset activities offset in part by an increase in the number of housing units delivered. 18 Cash flow provided by housing financing activities for the six months ended June 30, 1994 decreased from the same period in 1993 primarily due to 1994 included net borrowings under the Working Capital Facility while 1993 included the net proceeds from the sale of the Company's 9.75% senior notes in addition to net borrowings under the Working Capital Facility, offset in part by the payment of reorganization debt and liabilities. The Company anticipates that amounts available under the Working Capital Facility and cash flow from operations will be sufficient to meet its working capital obligations. Financial Services __________________ Mortgage's activities represent substantially all of the financial services segment's activities. As loan originations by Mortgage are primarily from housing units delivered by the Company's homebuilding operations, Mortgage's financial condition and liquidity are to a significant extent dependent upon the financial condition of the Company. The Company finances its financial services operations primarily through short-term debt and from internally generated funds, such as the origination and sale of residential mortgage loans and related servicing rights. The short-term debt consists of a $40 million secured revolving line of credit entered into by Mortgage in April 1992, as amended (the "Mortgage Credit Facility"). At June 30, 1994, $7.2 million was outstanding under the Mortgage Credit Facility. The Company has no obligation to provide funding to its financial services operations, nor does it guarantee any of the debt of its financial services subsidiaries. The Company believes that the Mortgage Credit Facility, together with internally generated funds, such as from the sale of residential mortgage loans and related servicing rights, will be sufficient to provide for Mortgage's working capital needs. The Mortgage Credit Facility bears interest at a premium over the London Interbank Offered Rate and matures on August 31, 1995. Certain residential mortgage loans have been pledged as collateral to secure Mortgage's obligations under the Mortgage Credit Facility. 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. 19 Part II. OTHER INFORMATION _________________ Item 2. Changes in Securities _____________________ An amendment to the Company's Second Restated Certificate of Incorporation to eliminate a prohibition against the issuance of non-voting equity securities was approved by the stockholders on April 20, 1994. A Certificate of Amendment deleting such prohibition was filed with the State of Delaware on May 13, 1994. Item 4. Submission of Matters to a Vote of Security Holders ___________________________________________________ For information with respect to matters voted upon and action taken at the Company's annual meeting of stockholders held on April 6, 1994 and as adjourned to April 20, 1994, reference is made to Item 4 of Part II of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1994. Item 5. Other Information _________________ 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 market for the three and six month periods ended June 30, 1994 and 1993. Market New Orders Deliveries __________________ ____________ ____________ 1994 1993 1994 1993 ______ _____ ______ _____ Three Month Period - Florida 472 503 410 428 Mountain- Arizona 210 232 251 195 Colorado 199 158 209 200 Nevada 105 76 71 53 Northeast/Midwest- Minnesota 103 147 106 100 Maryland/Virginia 86 99 80 58 New Jersey 75 59 53 34 California 135 192 174 170 Texas 186 181 157 140 _____ _____ _____ _____ 1,571 1,647 1,511 1,378 ===== ===== ===== ===== 20 New Orders Deliveries Backlog ____________ ____________ ____________ 1994 1993 1994 1993 1994 1993 _____ _____ _____ _____ _____ _____ Six Month Period - Florida 1,408 1,203 840 835 1,535 1,061 Mountain - Arizona 518 494 506 342 400 338 Colorado 493 466 412 332 557 443 Nevada 196 146 138 86 139 98 Northeast/Midwest - Minnesota 235 326 197 176 182 258 Maryland/Virginia 184 195 177 145 138 148 New Jersey 117 106 95 77 111 83 California 360 408 326 290 171 225 Texas 400 466 300 266 391 479 _____ _____ _____ _____ _____ _____ 3,911 3,810 2,991 2,549 3,624 3,133 ===== ===== ===== ===== ===== ===== 21 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 3.1 - Certificate of Amendment of Second Restated Certificate of Incorporation as filed with the State of Delaware on May 13, 1994. See Part II, "Item 2. Changes in Securities" Exhibit 10.1 - Fifth Amendment to Amended and Restated Loan Agreement, dated as of June 30, 1994, between U.S. Home Corporation and General Electric Capital Corporation Exhibit 10.2 - Seventh Amendment to Warehousing Credit and Security Agreement (single-family mortgage loans), dated as of July 1, 1994, between U.S. Home Mortgage Corporation and Residential Funding Corporation Exhibit 11 - Computation of Income Per Common Share Exhibit 15 - Letter with respect to unaudited financial information (b) Reports on Form 8-K No Current Report on Form 8-K was filed by the Company during April, May and June 1994. 22 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: August 8, 1994 /s/ Isaac Heimbinder Isaac Heimbinder President and Chief Operating Officer Date: August 8, 1994 /s/ Chester P. Sadowski Chester P. Sadowski Vice President, Controller and Chief Accounting Officer 23 INDEX TO EXHIBITS Sequential Exhibit Numbered Number Page 3.1 Certificate of Amendment of Second Restated Certificate of Incorporation as filed with the Secretary of State of Delaware on may 13, 1994. 24 10.1 Fifth Amendment to Amended and Restated Loan Agreement, dated as of June 30, 1994, between U.S. Home Corporation and General Electric Capital Corporation 25 10.2 Seventh Amendment to Warehousing Credit and Security Agreement (single-family mortgage loans), dated as of July 1, 1994, between U.S. Home Mortgage Corporation and Residential Funding Corporation 31 11 Computation of Income Per Common Share 39 15 Letter with respect to unaudited interim financial information 41 EX-3.1 2 AMENDMENT CERTIFICATE OF INCORPORATION EXHIBIT 3.1 CERTIFICATE OF AMENDMENT OF SECOND RESTATED CERTIFICATE OF INCORPORATION OF U.S. HOME CORPORATION U.S. HOME CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of the Corporation, resolutions were duly adopted setting forth a proposed amendment of the Corporation's Second Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on June 18, 1993, declaring said amendment to be advisable and calling a meeting of stockholders of the Corporation for consideration thereof. The text of such proposed amendment as approved by the Board of Directors of the Corporation is as follows: The Second Restated Certificate of Incorporation of the Corporation is amended by changing the Article thereof numbered "FOURTH" to delete the second full paragraph of Section A thereof. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of the Corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by Robert J. Strudler, its Chairman and Chief Executive Officer, and Richard G. Slaughter, its Secretary, this 13th day of May, 1994. By: /s/ Robert J. Strudler Robert J. Strudler Chairman and Chief Executive Officer ATTEST: /s/ Richard G. Slaughter Richard G. Slaughter Secretary EX-10.1 3 AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.1 FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Fifth Amendment"), dated as of June 30, 1994, between U.S. HOME CORPORATION, a Delaware corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender"). R E C I T A L S: A. Borrower and Lender have previously entered into that certain Amended and Restated Loan Agreement, dated as of June 21, 1993, that certain First Amendment to Amended and Restated Loan Agreement, dated as of September 7, 1993, that certain Second Amendment to Amended and Restated Loan Agreement, dated as of September 15, 1993, that certain Third Amendment to Amended and Restated Loan Agreement, dated as of October 22, 1993, and that certain Fourth Amendment to Amended and Restated Loan Agreement, dated effective as of December 31, 1994 (as previously and hereafter amended from time to time, the "Loan Agreement"). B. The parties hereto desire to further amend the Loan Agreement. C. GENEL Company, Inc., an Oregon corporation, which is licensed as a mortgage banker in Arizona (Arizona Mortgage Banker Number BK 8284), has been engaged by Lender to, and did negotiate the terms of this Fifth Amendment as such terms relate to Arizona matters. NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows: 1. DEFINITIONS In addition to the terms defined herein, capitalized terms used in this Fifth Amendment shall have the respective meanings ascribed thereto in the Loan Agreement. 2. FIFTH AMENDMENT TO LOAN AGREEMENT The Loan Agreement is, effective as of the date hereof, amended as follows: 26 2.1 Section 1 of the Loan Agreement is amended by adding or amending and restating, as the case may be, the definitions set forth below: "'Consolidated Land Acquisition Expenditures' shall mean, for any period, the aggregate amount of all expenditures made and costs incurred by Borrower or any of its subsidiaries during such period for the acquisition of land including, without limitation, raw land or land under development; provided, however, that such amount shall not include any expenditures made or costs incurred by Borrower or any of its Subsidiaries in connection with the acquisition of land in the Greenbriar Project or the Stoneybrook Project." "'Fifth Amendment' shall mean that certain Fifth Amendment to Amended and Restated Loan Agreement, dated as of June 30, 1994, between Borrower and Lender." "'Greenbriar Project' shall mean the adult, retirement/second home community called "Greenbriar at Whittingham" located in Middlesex County, New Jersey." "'Land Account Balance' shall mean, on any date, the net aggregate sum of book cost (net of reserves) of (i) Land Held for Investment or in the Process of Development owned by Borrower or Guarantors on such date; (ii) Development Costs incurred by Borrower or Guarantors on such date; (iii) the amount, if any, by which the USH Book Cost of all Finished Building Lots owned by Borrower or any Guarantor on such date exceeds $110,000,000; (iv) Option Deposits made by Borrower or Guarantors (including refundable Option Deposits) on such date; and (v) Advance Costs incurred by Borrower or Guarantors on such date." "'Stoneybrook Project' shall mean the adult, retirement/second home community called "Stoneybrook Golf and Country Club" located in Sarasota County, Florida." 2.2 Section 5.1 of the Loan Agreement is hereby amended by adding a new subsection (l) thereto to read as follows: "(l) No later than 10 days before an investment is made in accordance with Sections 7.1 or 7.2(a) hereof, a statement in reasonable detail setting forth a description of each such proposed investment, including, without limitation, a description of the location and nature of the real estate project and Borrower's proposed investment in such corporation, partnership or joint venture." 27 2.3 Section 5.1 of the Loan Agreement is hereby amended by adding a new subsection (m) thereto to read as follows: "(m) Within 45 days after the end of each fiscal quarter, a statement describing each investment made in accordance with Sections 7.1 and 7.2(a) hereof, consisting of a detailed accounting of each such investment, setting forth on a entity by entity basis the total amount invested by Borrower in each such entity both through the end of each such fiscal quarter and during each such fiscal quarter, the ownership percentage held by the Borrower in each such entity associated with each such investment, and, if such entity owns or is developing more than one residential real estate project, the total amount invested by such entity on a project by project basis through the end of each such fiscal quarter, which statements shall be prepared in accordance with GAAP. 2.4 Section 7.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "7.1 Mergers, Etc. Except as provided in the proviso of clause (i) of Section 6.1 hereof, neither Borrower, any Guarantor nor any Subsidiary of Borrower shall directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with, any Person nor form any Subsidiary; provided, that Borrower may invest in corporations, partnerships or other joint ventures (other than Unrestricted Subsidiaries) formed to own and develop residential real estate, but only (i) to the extent that the aggregate amounts invested, without duplication with the aggregate amounts invested pursuant to the proviso in Section 7.2(a) hereof, do not exceed the lesser of (x) the sum of $10,000,000 plus 50% of Adjusted Consolidated Net Income cumulated since the Funding Date (or, if such cumulative Adjusted Consolidated Net Income is a deficit, minus 100% of such cumulative deficit) or (y) $20,000,000, (ii) if Borrower shall promptly grant a perfected, first priority Lien to Lender on the stock, notes, instruments or other interests held by Borrower in such corporation, partnership or joint venture, and (iii) unless a bona fide, third party non-Affiliate holds more than an immaterial interest in any such corporation, partnership or joint venture, if any such corporation, partnership or venture shall become a Guarantor and shall execute and deliver a counterpart of the Guaranty and any of the applicable Collateral Documents." 28 2.5 Section 7.2(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "(a) Borrower shall not, and shall not permit any Guarantor to, make investments in, or make or accrue loans or advances of money through the direct or indirect holding of securities or otherwise to (i) an Unrestricted Subsidiary or (ii) any other Person; provided, that Borrower may invest in any Guarantor and any corporations, partnerships or other joint ventures (other than Unrestricted Subsidiaries) formed to own and develop residential real estate, but only (i) subject to the provisions of subsection (b) of this Section 7.2, to the extent that the aggregate amounts invested, without duplication with the aggregate amounts invested pursuant to the proviso in Section 7.1 hereof, do not exceed the lesser of (x) the sum of $10,000,000 plus 50% of Adjusted Consolidated Net Income cumulated since the Funding Date (or, if such cumulative Adjusted Consolidated Net Income is a deficit, minus 100% of such cumulative deficit), or (y) $20,000,000, (ii) if Borrower shall promptly grant a perfected, first priority Lien to Lender on the Stock, notes, instruments or other interest held by Borrower in such corporation, partnership or venture and (iii) unless a bona fide, third party non-Affiliate holds more than an immaterial interest in any such corporation, partnership or joint venture, if any such corporation, partnership or venture shall become a Guarantor and shall execute and deliver to Lender a counterpart of the Guaranty and any of the applicable Collateral Documents." 2.6 Section 7.10(b) of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "(b) Consolidated Land Acquisition Expenditures. Borrower shall not and shall not permit its Subsidiaries to make Consolidated Land Acquisition Expenditures that, in the aggregate, exceed $55,000,000 when calculated on the basis of a rolling 12-month period." 3. REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to Lender that: (a) All the representations and warranties of the Loan Parties contained in the Loan Agreement or in any of the Loan Documents are true and correct on, and as if made on, the date of this Fifth Amendment, except to the extent that any such representation or warranty expressly relates to an earlier date and for changes therein permitted or contemplated by the Loan Agreement. 29 (b) After giving effect to this Fifth Amendment, no event has occurred and is continuing, or would result from the execution of this Fifth Amendment, which constitutes or would constitute a Default or an Event of Default. (c) The execution, delivery and performance of this Fifth Amendment have been duly authorized by all necessary corporate action, and this Fifth Amendment is the legal and binding obligation of Borrower, enforceable in accordance with its terms. (d) Borrower's execution, delivery and performance of this Fifth Amendment does not contravene, violate or conflict with any provision of any laws, statutes, rules, regulations or any order or any decree of any court to which Borrower or any of its Subsidiaries are subject or any contract, agreement, or understanding to which Borrower or any of its Subsidiaries is a party. 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS 4.1 upon the effectiveness of this Fifth Amendment, from and after the date hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to "the Loan Agreement," "thereunder," "thereof" or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement, as amended hereby. 4.2 Except as specifically amended above, the Loan Agreement, and all other Loan Documents are and shall continue to be in full force and effect and are hereby ratified and confirmed in all respects. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of Borrower and its Subsidiaries under the Loan Agreement, as amended hereby, and other Loan Documents. 4.3 Except as provided herein, the execution, delivery and effectiveness of this Fifth Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. 30 5. MISCELLANEOUS 5.1 This Fifth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. 5.2 In all respects, including all matters of construction, validity and performance, this Fifth Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. 5.3 THIS FIFTH AMENDMENT, THE LOAN AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, this Fifth Amendment has been duly executed and is effective as of the date first above written. U.S. HOME CORPORATION By: /s/ Thomas A. Napoli Thomas A. Napoli Vice President-Finance and Chief Financial Officer GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Mark T. LaCourse Mark T. LaCourse Attorney-in-Fact EX-10.2 4 WAREHOUSING AGREEMENT US HOME MORTGAGE EX-11 5 EXHIBIT 11 ENDING 6-30-94 39 EXHIBIT 11 (Unaudited) U.S. HOME CORPORATION AND SUBSIDIARIES COMPUTATION OF INCOME PER COMMON SHARE (Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended June 30, June 30, ________________________ ______________________ 1994 1993 1994 1993 ____________ __________ __________ __________ Income Per Common And Common Equivalent Share - Net income $ 7,172 $ 5,251 $ 14,233 $ 10,280 =========== ========== =========== ========== Weighted average common shares outstanding 11,373,960 11,191,253 11,359,210 11,184,368 Effect of assumed exercise of dilutive stock options and warrants - 107,478 209,179 107,478 ___________ __________ ___________ __________ Total common and common equivalent shares 11,373,960 11,298,731 11,568,389 11,291,846 =========== ========== =========== ========== Income per common and common equivalent share $ .63 $ .46 $ 1.23 $ .91 =========== =========== =========== ==========
40
Three Months Ended Six Months Ended June 30, June 30, ________________________ ______________________ 1994 1993 1994 1993 ____________ __________ __________ __________ Income Per Common Share, Assuming Full Dilution - Net income $ 7,172 $ 5,251 $ 14,233 $ 10,280 Add interest applicable to 4.875% convertible subordinated debentures, net of income tax effect 260 - 520 - ___________ ___________ ___________ ___________ Income per common share, assuming full dilution $ 7,432 $ 5,251 $ 14,753 $ 10,280 =========== =========== =========== =========== Total common and common equivalent shares 11,373,960 11,298,731 11,568,389 11,291,846 Assumed additional common shares from exercise of dilutive stock options and warrants resulting from use of market price of common stock at end of period - - - - Assumed conversion of 4.875% convertible subordinated debentures at $35.50 per share at date of issuance 2,253,521 - 2,253,521 - ___________ ___________ ___________ ___________ Total common shares, assuming full dilution 13,627,481 11,298,731 13,821,910 11,291,846 =========== =========== =========== =========== Income per common share, assuming full dilution $ .55 $ .46 $ 1.07 $ .91 =========== =========== =========== ===========
Note: See Note 6 of Notes to Consolidated Condensed Financial Statements. EX-15 6 EXHIBIT 15 ENDING 6-30-94 41 Exhibit 15 To U.S. HOME CORPORATION: We are aware that U.S. Home Corporation has incorporated by reference in its Registration Statements Nos. 33-64712 and 33-52993 its Form 10-Q for the quarter ended June 30, 1994, which includes our report dated July 22, 1994 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered a part of the registration statements prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. /s/ Arthur Andersen & Co. ARTHUR ANDERSEN & CO. Houston, Texas August 8, 1994 -----END PRIVACY-ENHANCED MESSAGE-----