-----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, D5EXgwVxs3KtwsDQGXwNsQS8uKto4Xmiw0rPGMx0Thi001zp5orVYuWSzumwklKg /Cr6F4U7AJJHHy4PpxwA6A== 0000101640-94-000019.txt : 19941114 0000101640-94-000019.hdr.sgml : 19941114 ACCESSION NUMBER: 0000101640-94-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941102 SROS: NYSE 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: 94557297 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 9-30-94 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 September 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 September 30, 1994 Common stock, $.01 par value 10,482,593 shares 2 U.S. HOME CORPORATION _____________________ INDEX _____ Page Number Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets-- September 30, 1994 and December 31, 1993 3 Consolidated Condensed Statements of Operations--Three and Nine Months Ended September 30, 1994 and 1993 5 Consolidated Condensed Statements of Cash Flows --Nine Months Ended September 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 5. Other Information 18 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) ASSETS September 30, December 31, 1994 1993 _____________ ____________ (Unaudited) HOUSING: Cash (including restricted funds) $ 1,012 $ 15,192 Receivables, net 27,942 14,027 Single-family housing inventories 582,953 491,620 Option deposits on real estate 45,364 34,618 Deferred tax asset 19,418 33,527 Other assets 38,600 33,019 ________ ________ 715,289 622,003 ________ ________ FINANCIAL SERVICES: Cash (including restricted funds) 5,461 5,738 Residential mortgage loans 25,286 38,412 Other assets 10,324 12,693 ________ ________ 41,071 56,843 ________ ________ $756,360 $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 September 30, December 31, 1994 1993 _____________ ____________ (Unaudited) HOUSING: Current Liabilities - Short-term debt $ 19,016 $ - Current maturities of long-term debt 9,006 8,093 Accounts payable 79,898 47,997 Accrued expenses and other current liabilities 48,530 30,701 ________ ________ 156,450 86,791 Long-Term Debt 301,876 303,844 ________ ________ 458,326 390,635 ________ _________ FINANCIAL SERVICES: Current Liabilities - Short-term debt 7,981 20,566 Accrued expenses and other current liabilities 7,729 9,504 ________ ________ 15,710 30,070 Long-Term Debt 1,073 1,102 ________ ________ 16,783 31,172 ________ ________ Total Liabilities 475,109 421,807 ________ ________ STOCKHOLDERS' EQUITY: Convertible Preferred Stock, $25 per share redemption value, authorized 974,400 and 2,037,968 shares at September 30, 1994 and December 31, 1993, outstanding 891,039 and 1,954,730 shares at September 30, 1994 and December 31, 1993 22,276 48,868 Common Stock, $.01 par value, authorized 50,000,000 shares, outstanding 10,482,593 and 9,389,116 shares at September 30, 1994 and December 31, 1993 105 94 Capital In Excess of Par Value 330,523 303,193 Retained Earnings (Deficit) (71,653) (95,116) ________ ________ Total Stockholders' Equity 281,251 257,039 ________ ________ $756,360 $678,846 ======== ======== The accompanying notes are an integral part of these balance sheets. 5 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended September 30, _____________________ 1994 1993 ________ ________ HOUSING: Operating Revenues $252,553 $223,983 ________ ________ Operating Costs and Expenses - Cost of products sold 211,597 187,486 Selling, general and administrative 27,214 23,749 Interest, net - 39 ________ ________ 238,811 211,274 ________ ________ Housing Operating Income 13,742 12,709 ________ ________ FINANCIAL SERVICES: Operating Revenues 3,287 3,490 ________ ________ Operating Costs and Expenses - General and administrative 2,713 1,904 Interest 108 461 ________ ________ 2,821 2,365 ________ ________ Financial Services Operating Income 466 1,125 ________ ________ INCOME BEFORE INCOME TAXES 14,208 13,834 ________ ________ PROVISION FOR INCOME TAXES: Federal and state income taxes 4,978 5,396 Decrease in deferred tax asset valuation allowance - (45,000) ________ ________ 4,978 (39,604) ________ ________ NET INCOME $ 9,230 $ 53,438 ======== ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Primary $ .81 $ 4.61 ======== ======== Fully diluted $ .70 $ 4.55 ======== ======== 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) (Unaudited) Nine Months Ended September 30, ___________________ 1994 1993 ________ ________ HOUSING: Operating Revenues $712,696 $580,775 ________ ________ Operating costs and Expenses - Cost of products sold 597,402 484,938 Selling, general and administrative 78,691 66,189 Interest, net - 236 ________ ________ 676,093 551,363 ________ ________ Housing Operating Income 36,603 29,412 ________ ________ FINANCIAL SERVICES: Operating Revenues 9,530 9,436 ________ ________ Operating Costs and Expenses - General and administrative 8,165 6,273 Interest 428 1,005 ________ ________ 8,593 7,278 ________ ________ Financial Services Operating Income 937 2,158 ________ ________ INCOME BEFORE REORGANIZATION ITEMS AND INCOME TAXES 37,540 31,570 REORGANIZATION ITEMS, NET - 6,915 INCOME BEFORE INCOME TAXES 37,540 24,655 ________ ________ PROVISION FOR INCOME TAXES: Federal and state income taxes 14,077 5,937 Decrease in deferred tax asset valuation allowance - (45,000) _________ _______ 14,077 (39,063) _________ ________ NET INCOME $ 23,463 $ 63,718 ========= ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Primary $ 2.05 $ 5.55 ========= ======== Fully diluted $ 1.77 $ 5.47 ========= ======== 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) Nine Months Ended September 30, ______________________ 1994 1993 ________ ________ Net Cash Used by Operating Activities $(16,208) $(47,213) ________ ________ Net Cash Flows From Investing Activities: Proceeds from investments in mortgages, net of purchases 949 1,083 Purchase of property, plant and equipment, net of proceeds (1,221) (841) Decrease in restricted cash 244 3,852 Other (436) (253) ________ ________ Net cash used by investing activities (464) 3,841 ________ ________ Net Cash Flows From Financing Activities: Proceeds from short-term debt, net of repayments 6,431 28,936 Long-term debt assumed 1,037 - Repayment of long-term debt (5,009) (18,336) Proceeds from sale of 9.75% senior notes - 194,000 Payment of liabilities subject to compromise - (165,106) ________ ________ Net cash provided by financing activities 2,459 39,494 ________ ________ Net Decrease in Cash (14,213) (3,878) Cash At Beginning of Period 15,829 8,222 ________ ________ Cash At End of Period $ 1,616 $ 4,344 ======== ======== Supplemental Disclosure: Interest paid, before amount capitalized - Housing $ 16,761 $ 22,627 Financial Services 468 959 ________ ________ $ 17,229 $ 23,586 ======== ======== The accompanying notes are an integral part of these statements. 8 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED FINANCIAL STATEMENTS September 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 September 30, 1994 and December 31, 1993 and its results of operations for the three and nine month periods ended September 30, 1994 and 1993 and cash flows for the nine month periods ended September 30, 1994 and 1993. Because of the seasonal nature of the Company's business, the results of operations for the three and nine month periods ended September 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: September 30, December 31, 1994 1993 _____________ ____________ (Dollars in Thousands) Housing completed and under construction $241,312 $193,827 Models 42,950 34,366 Finished lots 92,259 83,140 Land under development 83,195 58,824 Raw land held for development or sale 123,237 121,463 ________ ________ $582,953 $491,620 ======== ======== 9 (3) HOUSING SHORT-TERM DEBT 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 $127,454,000 at September 30, 1994. This collateral has provided the Company with an available borrowing base capacity of approximately $50,367,000 at September 30, 1994, of which $18,206,000 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: September 30, December 31, 1994 1993 ____________ _____________ (Dollars in Thousands) Notes and mortgage notes payable $ 30,882 $ 31,937 9.75% Senior notes due 2003 200,000 200,000 4.875% Convertible subordinated debentures due 2005 80,000 80,000 ________ ________ 310,882 311,937 Less - current maturities (9,006) (8,093) ________ ________ 301,876 303,844 Financial Services 1,073 1,102 ________ ________ Total long-term debt $302,949 $304,946 ======== ======== 10 (5) HOUSING INTEREST A summary of housing interest for the three and nine month periods ended September 30, 1994 and 1993 follows (dollars in thousands): Three Month Period __________________ 1994 1993 ________ ________ Capitalized at beginning of period $ 55,204 $ 53,385 ________ ________ Paid and accrued 7,635 7,647 Expensed - (39) ________ ________ Capitalized 7,635 7,608 Included in cost of sales (7,439) (6,041) Included in other - (204) ________ ________ Capitalized at end of period $ 55,400 $ 54,748 ======== ======== Nine Month Period _____________________ 1994 1993 ________ ________ Capitalized at beginning of period $ 55,580 $ 58,708 Paid and accrued 22,907 13,522 Expensed - (236) ________ ________ Capitalized 22,907 13,286 Included in cost of sales (21,635) (15,390) Included in other (1,452) (1,856) ________ ________ Capitalized at end of period $ 55,400 $ 54,748 ======== ======== (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 nine month periods ended September 30, 1994 and 1993: Three Month Period Nine Month Period ____________________ _____________________ 1994 1993 1994 1993 __________ __________ __________ __________ Primary 11,373,744 11,598,368 11,430,981 11,489,666 Fully diluted 13,627,265 11,746,199 13,684,502 11,641,808 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 September 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 September 30, 1994 and issuable on exercise of stock options in the nine month period ended September 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 first six months of 1993 reflects estimated federal and state alternative minimum taxes, net of expected net operating loss ("NOL") utilization. As a result of the recognition of a deferred tax asset of $45,000,000 attributable to its NOL in the third quarter of 1993, the Company used a 39% effective tax rate for the period from July 1, 1993 to June 30, 1994. During the third quarter of 1994, the Company determined that the effective tax rate for 1994 would be approximately 38%. The year- to-date effect of this change reduced the Company's income tax provision for the three month period ended September 30, 1994 by $350,000. The recognition of the deferred tax asset in 1993 increased primary income per share in the three and nine month periods ended September 30, 1993 by $3.88 and $3.92 per share, respectively. 12 REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP, independent public accountants, has performed a review of the consolidated condensed balance sheet as of September 30, 1994 and the related consolidated condensed statements of operations for the three and nine month periods ended September 30, 1994 and 1993 and cash flows for the nine month periods ended September 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 September 30, 1994, and the related consolidated condensed statements of operations for the three-month and nine-month periods ended September 30, 1994 and 1993, and cash flows for the nine-month periods ended September 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 of U. S. Home Corporation and subsidiaries as of December 31, 1993, and the related consolidated statement of operations, stockholders' equity and cash flows for the year then ended (not presented herein), and in our report dated February 9, 1994, we issued an unqualified opinion on those 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 has been derived. /S/ ARTHUR ANDERSEN LLP _______________________ ARTHUR ANDERSEN LLP Houston, Texas October 24, 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 Nine Months Ended September 30, September 30, __________________ __________________ 1994 1993 1994 1993 ________ ________ ________ ________ Revenues - Single-family homes $249,691 $221,237 $697,785 $573,527 Land and other 2,862 2,746 14,911 7,248 ________ ________ ________ ________ Total $252,553 $223,983 $712,696 $580,775 ======== ======== ======== ======== Single-family homes - Gross margin amount $ 40,442 $ 35,607 $113,052 $ 93,711 Gross margin percentage 16.2% 16.1% 16.2% 16.3% Units delivered 1,663 1,544 4,654 4,093 Average sales price $150,100 $143,300 $149,900 $140,100 New orders taken 1,483 1,677 5,394 5,487 Backlog at end of period 3,444 3,266 Selling, general and administrative expenses as a percentage of housing revenues 10.8% 10.8% 11.0% 11.6% Interest expense - Paid and accrued $ 7,635 $ 7,647 $ 22,907 $ 13,522 Capitalized $ 7,635 $ 7,608 $ 22,907 $ 13,286 Percent capitalized 100.0% 99.5% 100.0% 98.3% Capitalized interest included in cost of products sold $ 7,439 $ 6,041 $ 21,635 $ 15,390 Revenues - Revenues from sales of single-family homes for the three and nine month periods ended September 30, 1994 increased 13% and 22% compared to the three and nine month periods ended September 30, 1993. The increases resulted from 8% and 14% increases in the number of housing units delivered and 5% and 7% increases in average sales prices. The increase in units delivered in 1994 was primarily attributable to improved backlog levels at June 30, 1994 and December 31, 1993 when compared to the backlog levels at the same periods in the preceding year. The increase in the average sales prices in 1994 was primarily due to price increases to offset cost increases. 15 New orders taken for the three and nine month periods ended September 30, 1994 decreased 12% and 2% compared to the same periods in 1993. See Part II, "Item 5 - Other Information" on page 18 for a table of unit activity by market for the three and nine month periods ended September 30, 1994 and 1993. The decline in new orders in 1994 was primarily due to the increase in mortgage interest rates during 1994. Due to the backlog level at September 30, 1994, housing operations for the remainder of 1994 should not be affected by the decline in new orders in 1994. If the decline in new orders continues for the remainder of 1994 and into 1995, deliveries in 1995 could be lower than deliveries in 1994 and results of operations could be impacted. Selling, General and Administrative Expenses - As a percentage of housing revenues, selling, general and administrative expenses were 11% for both the three and nine month periods ended September 30, 1994 compared to 11% and 12% for the three and nine month periods ended September 30, 1993. Actual selling, general and administrative expenses for the three and nine month periods ended September 30, 1994 increased by $3.5 million and $12.5 million compared to 1993. These increases were attributable to increases in volume- related expenses resulting from the increases in deliveries in 1994 when compared to 1993 and increases in other selling, general and administrative expenses resulting from increased activities. Interest Expense - Interest paid and accrued during the nine month period ended September 30, 1994 increased approximately 69% compared to the same period in 1993 primarily due to interest on a majority of the Company's debt in the first six months of 1993 being stayed during the Company's Chapter 11 reorganization. Financial Services Revenues - Revenues for the financial services segment for the periods indicated were as follows (dollars in thousands): Three Months Nine Months Ended Ended September 30, September 30, ______________ _______________ 1994 1993 1994 1993 ______ ______ ______ ______ U.S. Home Mortgage Corporation and Subsidiaries $2,499 $2,779 $7,161 $7,367 Other financial services operations 788 711 2,369 2,069 ______ ______ ______ ______ $3,287 $3,490 $9,530 $9,436 ====== ====== ====== ====== 16 The decrease in U.S. Home Mortgage Corporation and subsidiaries' ("Mortgage") revenues for the three and nine month periods ended September 30, 1994 when compared to the same periods in 1993 was primarily due to decreased marketing income as a result of volatility in the secondary mortgage markets and increased pricing competition and lower levels of loan origination activities as a result of higher mortgage interest rates. General and Administrative Expenses - General and administrative expenses for the three and nine month periods ended September 30, 1994 increased by $.8 million and $1.9 million compared to the same periods in 1993 which included nonrecurring transactions which reduced general administrative expense in 1993 by $ .5 million and $1.0 million, respectively. The balance of the increases in 1994 were primarily due to Mortgage opening 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 subsequent decline in refinancing and other loan origination activities, Mortgage reduced its staffing in the second and third quarters of 1994 in order to bring these expenses in line with the currently expected volume of activities for the last half of 1994. 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 increase its financial flexibility and reduce its risk by limiting the amount of land owned directly by the Company. The Company intends to continue, where possible, 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 September 30, 1994 when compared to December 31, 1993 was primarily due to increased activities, including expansion of the retirement and active-adult/second home communities. 17 The net cash provided or used by the operating, investing and financing activities of the housing operations for the nine month periods ended September 30, 1994 and 1993 is summarized below (dollars in thousands): 1994 1993 ________ ________ Net cash provided (used) by: Operating activities $(36,840) $(27,340) Investing activities (1,172) 2,767 Financing activities 15,073 31,848 ________ ________ Net increase (decrease) in cash $(22,939) $ 7,275 ======== ======== 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 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. Cash flow from housing financing activities for the nine months ended September 30, 1994 was provided primarily by net borrowings under the Working Capital Facility. Cash flow from housing financing activities in 1993 was provided by 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 September 30, 1994, $8.0 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. 18 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. Part II. OTHER INFORMATION 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 nine month periods ended September 30, 1994 and 1993. Market New Orders Deliveries _________________ ______________ _____________ 1994 1993 1994 1993 _____ _____ _____ _____ Three Month Period - Florida 453 518 536 453 Mountain - Arizona 220 281 227 190 Colorado 198 257 218 151 Nevada 54 46 89 64 Northeast/Midwest - Minnesota 65 119 114 161 Maryland/Virginia 103 69 97 92 New Jersey 108 55 55 47 Ohio 5 - - - California 164 201 165 195 Texas 113 131 162 191 _____ _____ _____ _____ 1,483 1,677 1,663 1,544 ===== ===== ===== ===== 19 New Orders Deliveries Backlog _____________ ______________ _____________ 1994 1993 1994 1993 1994 1993 Nine Month Period - Florida 1,861 1,721 1,376 1,288 1,452 1,126 Mountain - Arizona 738 775 733 532 393 429 Colorado 691 723 630 483 537 549 Nevada 250 192 227 150 104 80 Northeast/Midwest - Minnesota 300 445 311 337 133 216 Maryland/Virginia 287 264 274 237 144 125 New Jersey 225 161 150 124 164 91 Ohio 5 - - - 5 - California 524 609 491 485 170 231 Texas 513 597 462 457 342 419 _____ _____ _____ _____ _____ _____ 5,394 5,487 4,654 4,093 3,444 3,266 ===== ===== ===== ===== ===== ===== Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10 - U.S. Home Corporation Retirement Plan for Non-Employee Directors Exhibit 11 - Computation of Income Per Common Share Exhibit 15 - Letter with respect to unaudited financial information Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K No Current Report on Form 8-K was filed by the Company during July, August and September 1994. 20 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: October 31, 1994 /s/ Isaac Heimbinder ____________________ Isaac Heimbinder President and Chief Operating Officer Date: October 31, 1994 /s/ Chester P. Sadowski _______________________ Chester P. Sadowski Vice President, Controller and Chief Accounting Officer 21 INDEX OF EXHIBITS Sequential Exhibit Numbered Number Page 10 U.S. Home Corporation Retirement Plan for Non-Employee Directors 22 11 Computation of Income Per Common Share 31 15 Letter with respect to unaudited interim financial information 33 27 Financial Data Schedule 34 EX-10 2 RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS 22 EXHIBIT 10 U.S. HOME CORPORATION RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS 23 U.S. HOME CORPORATION RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS Table of Contents Page ARTICLE I PURPOSE 1 ARTICLE II DEFINITIONS 1 ARTICLE III EFFECTIVE DATE 4 ARTICLE IV RETIREMENT BENEFITS 4 ARTICLE V PAYMENT OF BENEFITS UPON DEATH, DISABILITY OR CHANGE IN CONTROL 5 ARTICLE VI PLAN BENEFITS UNFUNDED 7 ARTICLE VII PLAN ADMINISTRATION 8 ARTICLE VIII AMENDMENT AND TERMINATION 8 ARTICLE IX MISCELLANEOUS PROVISIONS 8 24 ARTICLE I PURPOSE The purpose of the Plan is to provide retirement benefits to Directors of the Company who meet the eligibility requirements of the Plan. ARTICLE II DEFINITIONS 2.1 "Base Retainer" means the regular annual active service retainer for service as a member of the Board of Directors in effect on the date of retirement, exclusive of any other fees for serving on committees of the Board of Directors, attending meetings of the Board of Directors or committees thereof or otherwise paid for services rendered to the Company by the Director during the period in question. 2.2 "Board of Directors" means the Board of Directors of the Company. 2.3 "Change of Control" means any of the following: (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company's assets as an entirety or substantially as an entirety to any person (including any individual or entity) or group of persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") in one or a series of transactions; provided that a transaction where the holders of all classes of common equity of the Company immediately prior to such transaction own, directly or indirectly, 50% or more of the aggregate voting power of all classes of common equity of such person or group immediately after such transaction will not be a Change of Control, (ii) the acquisition by the Company and/or any of its subsidiaries of 50% or more of the aggregate voting power of all classes of common equity of the Company in one transaction or a series of related transactions, (iii) the liquidation or dissolution of the Company; provided that a liquidation or dissolution of the Company which is part of a transaction or series of related transactions that does not constitute a Change of Control under the "provided" clause of clause (i) above will not constitute a Change of Control hereunder or (iv) any transaction or a series of related transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (a) any person, including, a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring "beneficial ownership" (as defined in Rule 13d-3 under the 25 Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of common equity of the Company or of any person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of common equity of the Company or (b) less than 50% (measured by the aggregate voting power of all classes) of the common equity of the Company being registered under Section 12(b) or 12(g) of the Exchange Act. 2.4 "Company" means U.S. Home Corporation, a Delaware corporation. 2.5 "Director" means a member of the Board of Directors. 2.6 "Early Retirement" means retirement from the Board of Directors prior to age 65. 2.7 "Eligible Director" means a Director with at least five years of Service and who is not an Employee of the Company, whether or not such Director is a Director upon retirement. 2.8 "Employee" means a person employed by the Company or its subsidiaries in any capacity other than as a Director. 2.9 "Nominating Committee" means the Nominating Committee of the Board of Directors. 2.10 "Normal Retirement" means retirement from the Board of Directors at or after age 65. 2.11 "Plan" means this Retirement Plan for Non-Employee Directors. 2.12 "Present Value" shall be determined by the Nominating Committee (whose determination shall be conclusive) using the discount rate of interest established by the Pension Benefit Guaranty Corporation as in effect on the date of determination. 2.13 "Service" means that period of service, counted in full calendar years (which need not be consecutive), a Director has been a member of the Board of Directors since January 1, 1985. Partial years of service shall be disregarded. 26 ARTICLE III EFFECTIVE DATE This Plan shall be effective as of October 13, 1994. ARTICLE IV RETIREMENT BENEFITS 4.1 Normal Retirement Benefit. An Eligible Director's annual "Normal Retirement Benefit" under this Plan shall equal 100% of such Eligible Director's Base Retainer payable in equal monthly installments and continuing for the number of full months of service as a non-Employee Director from January 1, 1985 to the month prior to retirement (whether or not after age 65), less - in the case of directors who received accrued retirement benefits in a lump sum payment upon termination as of December 31, 1988 of the Non-Employee Directors' Retirement Plan in effect as of January 1, 1985 - the number of months since January 1, 1985 required to amortize such lump sum payment at the actual rate per month of the Base Retainer in effect from time to time since January 1, 1985. 4.2 Early Retirement Benefit. An Eligible Director who elects Early Retirement may elect to receive an Early Retirement benefit commencing at age 55 in an amount equal to his Normal Retirement Benefit minus 5% for each year prior to age 65 that the Director elects early retirement, but not more than a 50% reduction in Normal Retirement Benefits. 4.3 Optional Lump Sum Payment. An Eligible Director may elect to receive a lump sum payment, in lieu of his Normal Retirement Benefit on Early Retirement benefit, payable at the time when his benefit payments would otherwise commence, in an amount equal to the Present Value of the benefit payments to be received. 4.4 Payments Rounded to Next Higher Dollar. Each monthly payment which is computed in accordance with this Plan will, if not in whole dollars, be increased to the next higher whole dollar. 4.5 Adjustment of Benefits for Increases in the Cost of Living. Upon commencement of periodic benefit payments hereunder, such payments shall be adjusted on January 1 of each year for increases in the cost of living in the preceding year, as measured by the Consumer Price Index - U.S. City Average, as published by the Bureau of Labor Statistics of the United States Department of Labor. 4.6 Commencement of Payments. Normal Retirement Benefit payments hereunder shall commence in the month following the Eligible Director's retirement or 65th birthday, whichever is later. Early Retirement benefit payments hereunder shall commence in the month following the Eligible Director's Early Retirement or 55th birthday, whichever is later. 27 ARTICLE V PAYMENT OF BENEFITS UPON DEATH, DISABILITY OR CHANGE IN CONTROL 5.1 Survivor Benefits After Payments Begin Under This Plan. If a Director dies while receiving periodic retirement benefits hereunder, the Company shall pay to the Director's named beneficiary or the Director's estate a lump sum payment equal to the Present Value of the remaining benefit payments which the Director would have received had he lived. 5.2 Survivor Benefits Before Payments Begin Under This Plan. If an Eligible Director (without regard to the length of service requirement) dies before payments commence under this Plan while still a Director or, if an Eligible Director dies after he has ceased to be a Director but before benefit payments commence, the Company shall pay to the Director's named beneficiary or the Director's estate an amount equal to the Present Value of the benefit payment which the Director would otherwise have received, calculated as if such Director had retired the month preceding his death. 5.3 Disability. If an Eligible Director (while still a Director, but without regard to the length of service requirement) becomes permanently and total disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) and resigns from the Board of Directors prior to commencement of benefit payments hereunder, payment of the Normal Retirement Benefit (calculated as if such Director had retired the month preceding his disability) in equal monthly installments shall commence the month following such disability and resignation. In lieu thereof, such Director may elect to receive a lump sum payment equal to the Present Value of the Normal Retirement Benefit to be received. 5.4 Payment of Benefits Upon Change in Control. If a Change of Control occurs, not later than the 90th day after such Change of Control, each (i) Director who is not an Employee shall receive a lump sum payment equal to the Present Value of such Director's Normal Retirement Benefit, calculated as if such Director had retired the month preceding such Change of Control, and (ii) non-Employee Director who has retired or has become disabled and is receiving retirement benefit payments hereunder shall receive a lump sum payment equal to the Present Value of the remaining benefit payments as of the month preceding such Change of Control. 28 ARTICLE VI PLAN BENEFITS UNFUNDED Benefits under this Plan shall not be funded in advance, but shall be paid by the Company as and when they become due as provided herein. No retirement benefit payable hereunder shall be considered segregated funds and all such amounts shall at all times prior to the payment of same be the property of the Company and available to satisfy the claims of the general creditors of the Company. Directors' interests in benefits under this Plan shall only be those of unsecured creditors of the Company. ARTICLE VII PLAN ADMINISTRATION The general administration of this Plan and the responsibility for carrying out the provisions hereof shall be vested in the Nominating Committee. The Nominating Committee may adopt such rules and regulations as it may deem necessary for the proper administration of this Plan, and its decision in all matters shall be final, conclusive and binding. No Director and no employee of the Company shall be liable for any action or omission hereunder, except in circumstances involving such Director's or employee's bad faith or willful misconduct. ARTICLE VIII AMENDMENT AND TERMINATION The Board of Directors reserves in its sole and exclusive discretion the right at any time and from time to time to amend this Plan in any respect or terminate this Plan without restriction and without the consent of any Director, provided, however, that no amendment or termination of this Plan shall impair the right of any Director to receive benefits accrued hereunder prior to such amendment or termination. ARTICLE IX MISCELLANEOUS PROVISIONS 9.1 This Plan does not in any way obligate the Company to continue to nominate or retain a Director on the Board of Directors, nor does this Plan limit the right of the Company to terminate a Director's service on the Board of Directors. Termination of a Director's service on the Board of Directors for any reason, whether by action of the Company, its stockholders or the Director, shall immediately terminate any further obligation of the Company, except as set forth herein. 29 9.2 Non-Alienation of Benefits. No retirement benefit payable hereunder may be assigned, pledged, mortgaged or hypothecated and, to the extent permitted by law, no such retirement benefit shall be subject to legal process or attachment for the payment of any claims against any person entitled to receive the same. 9.3 Payment to Incompetents. If a Director entitled to receive any retirement benefits hereunder is deemed by the Nominating Committee or is adjudged by a court of competent jurisdiction to be legally incapable of giving valid receipt and discharge for such retirement benefit, such payments shall be paid to such person or persons as the Nominating Committee shall designate or to the duly appointed guardian of such Director. Such payments shall, to the extent made, be deemed a complete discharge for such payments under this Plan. 9.4 Loss of Benefits. At the sole discretion of the Nominating Committee, and after written notice to the Director, rights to receive any retirement benefit under this Plan may be forfeited, suspended, reduced or terminated in cases of gross misconduct by the Director, or of any conduct, activity or competitive occupation which is reasonably deemed to be prejudicial to the interests of the Company or a subsidiary of the Company, including but not limited to the utilization or disclosure of confidential information for gain or otherwise. 9.5 Noncompetition. A Director shall forfeit any and all retirement benefits pursuant to this Plan if such Director, directly or indirectly, owns, manages, operates, joins or controls, or participates in the ownership, management, operation or control of, or becomes a director or an employee of, or a consultant to, any person or entity which competes with the Company; provided, however, that the provisions of this Section 9.5 shall not apply to investments by the Director in stock traded on a national securities exchange or on the national over-the-counter market which shall have an aggregate market value of less than 2% of the outstanding shares of such stock. 9.6 Withholding. Payments made by the Company under this Plan to any Director shall be subject to withholding as shall, at the time for such payment, be required under any income tax or other law. 9.7 Expenses. All expenses and costs in connection with the operation of this Plan and the expenses and costs of any Director in enforcing his rights hereunder shall be borne by the Company. 9.8 Governing Law. The provisions of this Plan will be construed according to the laws of the State of Delaware. 30 9.9 Gender and Number. The masculine pronoun wherever used herein shall include the feminine gender and the feminine the masculine, and the singular number as used herein shall include the plural and the plural the singular, unless the context clearly indicates a different meaning. 9.10 Titles and Headings. The titles to articles and headings of sections of this Plan are for convenience of reference only, and in case of any conflict, the text of the Plan, rather than such titles and headings, shall control. Adopted by the Board of Directors on October 13, 1994. EX-11 3 EXHIBIT 11 ENDING 9-30-94 31 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 Nine Months Ended September 30, September 30, __________________ _________________ 1994 1993 1994 1993 Income Per Common And Common Equivalent Share - Net income $ 9,230 $ 53,438 $ 23,463 $ 63,718 ========== ========== ========== ========== Weighted average common shares outstanding 11,373,744 11,325,168 11,364,108 11,231,817 Effect of assumed exercise of dilutive stock options and warrants - 273,200 66,873 257,849 Total common and common equivalent shares 11,373,744 11,598,368 11,430,981 11,489,666 Income per common and common equivalent share $ .81 $ 4.61 $ 2.05 $ 5.55
32
Three Months Ended Nine Months Ended September 30, September 30, ____________________ ___________________ 1994 1993 1994 1993 _________ __________ ___________ __________ Income Per Common Share, Assuming Full Dilution - Net income $ 9,230 $ 53,438 $ 23,463 $ 63,718 Add interest applicable to 4.875% convertible subordinated debentures, net of income tax effect 266 - 798 - _________ __________ __________ __________ Income per common share, assuming full dilution $ 9,496 $ 53,438 $ 24,261 $ 63,718 ========== ========== ========== ========== Total common and common equivalent shares 11,373,744 11,598,368 11,430,981 11,489,666 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 - 147,831 - 152,142 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 13,627,265 11,746,199 13,684,502 11,641,808 ========== ========== ========== ========== Income per common share, assuming full dilution $ .70 $ 4.55 $ 1.77 $ 5.47 ========== ========== ========== ==========
Note: See Note 6 of Notes to Consolidated Condensed Financial Statements. EX-15 4 EXHIBIT 15 ENDING 9-30-94 33 Exhibit 15 To U.S. HOME CORPORATION: We are aware that U.S. Home Corporation has incorporated by reference in its Registration Statements No. 33-64712 and 33-52993 its Form 10-Q for the quarter ended September 30, 1994, which includes our report dated October 24, 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 statement prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. /s/ ARTHUR ANDERSEN LLP _______________________ ARTHUR ANDERSEN LLP Houston, Texas October 31, 1994 EX-27 5 FINANCIAL DATA SCHEDULE ENDING 9-30-94
5 This Schedule Contains Summary Financial Information Extracted From The Consolidated Condensed Financial Statements As Of September 30, 1994 And For The Nine Months Then Ended As Is Qualified In Its Entirety By Reference To Such Financial Statements. 1000 QTR-3 DEC-31-1994 SEP-30-1994 6,473 0 53,228 0 582,953 0 0 0 756,360 172,160 302,949 105 0 22,276 258,870 756,360 0 722,226 597,402 684,258 0 0 428 37,540 14,077 23,463 0 0 0 23,463 2.05 1.77
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