-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TchdqSNM2ruSk4vLT+/pCclw8eH1W6+Mi8ZEnaCKtTlzMFerJupXXqFDTNRd+SEB 39XEEODtCjTUOXIv6E/E8g== 0000101640-96-000021.txt : 19960812 0000101640-96-000021.hdr.sgml : 19960812 ACCESSION NUMBER: 0000101640-96-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HOME CORP /DE/ CENTRAL INDEX KEY: 0000101640 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 210718930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05899 FILM NUMBER: 96606661 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 06/30/96 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, 1996 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, 1996 Common stock, $.01 par value 11,448,088 shares 2 U.S. HOME CORPORATION --------------------- INDEX ----- Page Number ------ Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets-- June 30, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Operations--Three and Six Months Ended June 30, 1996 and 1995 5 Consolidated Condensed Statements of Cash Flows--Six Months Ended June 30, 1996 and 1995 6 Notes to Consolidated Condensed Financial Statements 7 Review by Independent Public Accountants 10 Report of Independent Public Accountants 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Part II. Other Information Item 1. Legal Proceedings 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 18 3 PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements -------------------- U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Data) ASSETS ------ June 30, December 31, 1996 1995 ---------- ------------ (Unaudited) HOUSING: Cash (including restricted funds) ......... $ 9,019 $ 5,110 Receivables, net .......................... 53,588 33,454 Single-Family Housing Inventories ......... 689,066 632,035 Option Deposits on Real Estate ............ 68,161 63,375 Other Assets .............................. 50,431 43,437 -------- -------- 870,265 777,411 ======== ======== FINANCIAL SERVICES: Cash (including restricted funds) ......... 4,754 5,456 Residential Mortgage Loans ................ 49,432 43,292 Other Assets .............................. 15,211 15,925 69,397 64,673 -------- -------- $939,662 $842,084 ======== ======== The accompanying notes are an integral part of these balance sheets. 4 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1996 1995 ----------- ------------ (Unaudited) HOUSING: Accounts Payable $ 106,642 $ 88,234 Accrued Expenses and Other Current Liabilities 57,357 46,070 Revolving Credit Facility 8,000 24,000 Senior and Convertible Subordinated Debt and Notes Payable 367,016 300,599 --------- -------- 539,015 458,903 --------- -------- FINANCIAL SERVICES: Accrued Expenses and Other Current Liabilities 22,637 18,818 Revolving Credit Facility 29,288 35,371 --------- -------- 51,925 54,189 --------- -------- Total Liabilities 590,940 513,092 --------- -------- STOCKHOLDERS' EQUITY: Convertible Preferred Stock, $25 per share redemption value, authorized 207,206 and 403,597 shares at June 30, 1996 and December 31, 1995, outstanding 122,863 and 319,254 shares at June 30, 1996 and December 31, 1995 3,072 7,981 Common Stock, $.01 par value, authorized 50,000,000 shares, outstanding 11,447,920 and 11,243,147 shares at June 30, 1996 and December 31, 1995 114 112 Capital In Excess of Par Value 353,701 348,577 Retained Earnings (Deficit) (5,998) (25,367) Unearned Compensation on Restricted Stock (2,167) (2,311) -------- -------- Total Stockholders' Equity 348,722 328,992 -------- -------- $939,662 $842,084 ======== ======== 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 Six Months Ended June 30, June 30, ------------------- -------------------- 1996 1995 1996 1995 -------- -------- -------- -------- HOUSING: Operating Revenues ................... $288,428 $255,564 $556,335 $515,691 -------- -------- -------- -------- Operating Costs and Expenses - Cost of products sold .............. 242,961 215,664 467,935 434,010 Selling, general and administrative. 31,112 28,250 60,523 57,392 -------- -------- -------- -------- 274,073 243,914 528,458 491,402 -------- -------- -------- -------- Housing Operating Income ............. 14,355 11,650 27,877 24,289 -------- -------- -------- -------- FINANCIAL SERVICES: Operating Revenues ................... 4,808 3,714 9,663 6,789 -------- -------- -------- -------- Operating Costs and Expenses - General and administrative ......... 2,973 2,761 6,213 5,385 Interest ........................... 364 100 825 166 -------- -------- -------- -------- 3,337 2,861 7,038 5,551 -------- -------- -------- -------- Financial Services Operating Income ............................. 1,471 853 2,625 1,238 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES ............. 15,826 12,503 30,502 25,527 PROVISION FOR INCOME TAXES ............. 5,776 4,689 11,133 9,573 -------- -------- -------- -------- NET INCOME ............................. $ 10,050 $ 7,814 $ 19,369 $ 15,954 ======== ======== ======== ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Primary ............................ $ .84 $ .67 $ 1.61 $ 1.37 ======== ======== ======== ======== Fully diluted ...................... $ .75 $ .59 $ 1.44 $ 1.20 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. 6 U.S. HOME CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Six Months Ended June 30, ---------------- 1996 1995 --------- --------- Net Cash Used by Operating Activities .......... $(39,188) $(41,875) -------- -------- Net Cash Flows From Investing Activities: Purchase of property, plant and equipment, net of disposals ........................... (985) (1,480) Proceeds from investments in mortgages ....... 1,055 390 Decrease (increase) in restricted cash ....... (474) 125 Other ........................................ (414) (437) -------- -------- Net cash used by investing activities ........ (818) (1,402) -------- -------- Net Cash Flows From Financing Activities: Repayment of revolving credit facilities, net of proceeds ............................ (22,083) 47,757 Net proceeds from sale of 7.95% senior notes . 73,406 -- Repayment of notes and mortgage notes payables (8,583) (3,970) -------- -------- Net cash provided by financing activities .... 42,740 43,787 -------- -------- Net Increase in Cash ........................... 2,734 510 Cash At Beginning of Period .................... 6,228 2,050 -------- -------- Cash At End of Period .......................... $ 8,962 $ 2,560 ======== ======== Supplemental Disclosure: Interest paid, before amount capitalized - Housing .................................... $ 14,339 $ 15,599 -------- -------- Financial Services ......................... 802 150 -------- -------- $ 15,141 $ 15,749 ======== ======== Income taxes paid ............................ $ 5,179 $ 890 ======== ======== The accompanying notes are an integral part of these statements. 7 U.S. HOME CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 1996 (Dollars in Thousands) (Unaudited) (1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying consolidated condensed balance sheet as of December 31, 1995, which has been derived from audited financial statements, and the accompanying unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. Although the Company believes that the disclosures made are adequate to ensure that the information presented is not misleading, it is suggested that these consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. The preparation of consolidated condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Management's estimates and assumptions are reflective of, among other things, prevailing market conditions, expected market conditions based on published economic forecasts, current operating strategies and the availability of capital which are all subject to change. Changes to the aforementioned or other conditions could in turn cause changes to such estimates and assumptions and, as a result, actual results could differ from the original estimates. 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, 1996 and December 31, 1995 and its results of operations for the three and six month periods ended June 30, 1996 and 1995 and cash flows for the six month periods ended June 30, 1996 and 1995. Because of the seasonal nature of the Company's business, the results of operations for the three and six month periods ended June 30, 1996 and 1995 are not necessarily indicative of the results for the full year. 8 (2) INVENTORIES The components of single-family housing inventories are as follows: June 30, December 31, 1996 1995 ---------- ------------ Housing completed and under construction $276,663 $238,508 Models 65,433 63,475 Finished lots 130,472 129,260 Land under development 65,507 50,714 Land held for development or sale 150,991 150,078 -------- -------- $689,066 $632,035 ======== ======== (3) REVOLVING CREDIT FACILITIES, SENIOR AND CONVERTIBLE SUBORDINATED DEBT AND NOTES PAYABLE Housing - Revolving credit facility, senior and convertible subordinated debt and notes payable consist of the following: June 30, December 31, 1996 1995 Revolving credit facility $ 8,000 $ 24,000 --------- ----------- 7.95% Senior notes due 2001 75,000 - 9.75% Senior notes due 2003 200,000 200,000 4.875% Convertible subordinated debentures due 2005 80,000 80,000 Notes and mortgage notes payable 12,016 20,599 --------- ----------- 367,016 300,599 --------- ----------- $ 375,016 $ 324,599 ========= =========== The Company has a three-year unsecured revolving credit facility (the "Credit Facility") with a group of banks. The Credit Facility provides up to a maximum of $130,000 of which up to $20,000 may be used for letter of credit obligations, subject to a borrowing base limitation. The amount available for borrowing under the Credit Facility is based on housing inventories, finished lots and closing proceeds receivable less the outstanding senior debt, including amounts outstanding under the Credit Facility; as the amount invested in these categories changes, the amount of available borrowings will increase or decrease. At June 30, 1996, $79,782 of the Credit Facility was available for 9 borrowing. Borrowings bear interest at a premium over the Eurodollar rate or a bank corporate base rate announced by the agent bank. The Credit Facility expires on September 29, 1998, but may be extended annually for successive one-year periods with the consent of the banks and contains numerous real estate and financial covenants, including restrictions on incurring additional debt, creation of liens and the levels of land and housing inventories maintained by the Company and a prohibition on the payment of dividends, other than stock dividends. On February 16, 1996, the Company completed the sale of $75,000 principal amount of its 7.95% senior notes ("Senior Notes") due March 1, 2001. Interest on the Senior Notes is payable on March 1 and September 1 of each year, commencing on September 1, 1996. The indenture relating to the Senior Notes contains certain covenants, including a minimum tangible net worth requirement and a limitation on the incurrence of additional debt. Financial Services - Financial Services revolving credit facility consists of an agreement with a financial institution whereby the Company's mortgage banking subsidiary, U.S. Home Mortgage Corporation ("Mortgage"), may borrow up to $45,000 under a revolving line of credit (the "Mortgage Credit Facility") secured by residential mortgage loans and mortgage notes receivable. The Mortgage Credit Facility is not guaranteed by the Company, matures on August 31, 1996 and bears interest at a premium over the London Interbank Offered Rate. The Mortgage Credit Facility has been in place since 1992 and has been renewed on various terms and conditions on an annual basis and the Company expects it to be extended or replaced by a credit facility similar to its present terms and conditions. However, there can be no assurance that the Mortgage Credit Facility will be extended or replaced. 10 (4) HOUSING INTEREST A summary of housing interest for the three and six month periods ended June 30, 1996 and 1995 follows: Three Month Period ------------------- 1996 1995 -------- -------- Capitalized at beginning of period $ 61,184 $ 56,749 Capitalized 8,388 7,958 Included in cost of sales (7,427) (6,709) Included in other 20 (360) -------- -------- Capitalized at end of period $ 62,165 $ 57,638 ======== ======== Six Month Period -------------------- 1996 1995 -------- -------- Capitalized at beginning of period $ 59,898 $ 56,082 Capitalized 16,327 15,797 Included in cost of sales (14,056) (13,731) Included in other (4) (510) -------- -------- Capitalized at end of period $ 62,165 $ 57,638 ======== ======== (5) 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, 1996 and 1995: Three Month Period Six Month Period ----------------------- ------------------------ 1996 1995 1996 1995 ---------- --------- ---------- ---------- Primary 12,009,926 11,616,415 12,067,432 11,603,862 Fully diluted 14,263,447 14,129,263 14,320,953 14,122,072 The weighted average number of common and common equivalent shares outstanding for primary income per share includes the dilutive effect of the convertible redeemable preferred stock and Class B warrants and the assumed exercise of stock options. Fully diluted income per share includes the assumed conversion of the convertible subordinated debentures. 11 REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP, independent public accountants, have performed a review of the consolidated condensed balance sheet as of June 30, 1996 and the related consolidated condensed statements of operations for the three and six month periods ended June 30, 1996 and 1995 and cash flows for the six month periods ended June 30, 1996 and 1995 included in this report. Such review was made in accordance with standards established by the American Institute of Certified Public Accountants. 12 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, 1996, and the related consolidated condensed statements of operations for the three and six month periods ended June 30, 1996 and 1995 and cash flows for the six month periods ended June 30, 1996 and 1995. 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, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein), and in our report dated February 1, 1996, we expressed an unqualified opinion on those statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 1995, 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 July 23, 1996 13 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, -------------------- ------------------- 1996 1995 1996 1995 -------- -------- -------- ------- Revenues - Single-family homes ....... $285,833 $251,406 $550,558 $507,779 Land and other ............ 2,595 4,158 5,777 7,912 -------- -------- -------- -------- Total ................... $288,428 $255,564 $556,335 $515,691 ======== ======== ======== ======== Single-family homes - Gross margin amount ....... $ 45,279 $ 39,699 $ 87,771 $ 80,945 Gross margin percentage ... 15.8% 15.8% 15.9% 15.9% Units delivered ........... 1,722 1,599 3,365 3,248 Average sales price ....... $166,000 $157,200 $163,600 $156,300 New orders taken .......... 1,779 1,868 4,478 4,145 Backlog at end of period .. 3,844 3,448 Selling, general and administrative expenses as a percentage of housing revenues .................. 10.8% 11.1% 10.9% 11.1% Interest expense - Paid and accrued .......... $ 8,388 $ 7,958 $ 16,327 $ 15,797 Capitalized ............... $ 8,388 $ 7,958 $ 16,327 $ 15,797 Percent capitalized ....... 100.0% 100.0% 100.0% 100.0% Capitalized interest included in cost of products sold .. $ 7,427 $ 6,709 $ 14,056 $ 13,731 Revenues - Revenues from sales of single-family homes for the three and six month periods ended June 30, 1996 increased 14% and 8% compared to the three and six month periods ended June 30, 1995. The increase resulted from 8% and 4% increases in the number of housing units delivered and 6% and 5% increases in the average sales price. The increase in the average sales prices in 1996 was primarily due to price increases. 14 New orders taken for the three month period ended June 30, 1996 decreased 5% compared to the same period in 1995, while new orders taken for the six month period ended June 30, 1996 increased 8% compared to the same period in 1995. The Company believes the decline in new orders in the second quarter of 1996 was primarily due to the increase in mortgage interest rates which began during the first quarter of 1996. Because of the current interest rate environment and the uncertainty with respect to future interest rates, the comparative performance of new orders taken for the remainder of 1996 may be less than the same period in 1995. If the decline in new orders continues, the backlog level at December 31, 1996 could be less than the backlog level at December 31, 1995. If the decline in new orders continues in 1997, deliveries in 1997 could be lower than deliveries in 1996. See Part II, "Item 5 - Other Information" on page 16 for a table of unit activity by state for the three and six month periods ended June 30, 1996 and 1995. 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, ----------------- --------------- 1996 1995 1996 1995 ------- ------- ------- ------ U.S. Home Mortgage Corporation and Subsidiary $ 3,993 $ 2,882 $ 7,827 5,154 Other financial services operations 815 832 1,836 1,635 ------- ------- ------- ------ $ 4,808 $ 3,714 $ 9,663 $6,789 ======= ======= ======= ====== The increases in U.S. Home Mortgage Corporation and subsidiary's ("Mortgage") revenues for the three and six month periods ended June 30, 1996 when compared to the three and six month periods ended June 30, 1995 were primarily due to an increase in mortgage loan originations and income from the sale of mortgage loans and servicing rights. Financial Condition and Liquidity Housing ------- The Company's most significant needs for capital resources are land and finished lot purchases, land development and housing construction. The Company's ability to generate cash adequate to meet these needs is principally achieved from the sale of homes and the margins thereon, the utilization of Company-owned lots and borrowings under its financing facilities. 15 Access to quality land and lot locations is an integral part of the Company's success. Typically, in order to secure the rights to quality locations and provide sufficient lead time for development, the Company must acquire land rights well in advance of when orders for housing units are expected to occur. The Company attempts to minimize its exposure to the cyclical nature of the housing market and its use of working capital by employing rolling lot options, which enable the Company to initially pay a small portion of the total lot cost and then purchase the lots on a scheduled basis. The increase in land inventories in 1996 from 1995 was primarily the result of increased activities, including increase in the Company's retirement and active-adult communities. In February 1996, the Company sold $75 million principal amount of its 7.95% senior notes due 2001. The net proceeds thereof were used to repay the outstanding balance under the Credit Facility and for working capital and general corporate purposes. See Note 3 of Notes to Consolidated Condensed Financial Statements. The Company has financed, and expects to continue to finance, its working capital needs from operations and borrowings, including those made under the Company's unsecured revolving credit facility ("Credit Facility"). The Credit Facility (and previous credit facilities) have enabled the Company to meet peak operating needs. See Note 3 of Notes to Consolidated Condensed Financial Statements. 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, 1996 and 1995 is summarized below (dollars in thousands): 1996 1995 -------- -------- Net cash provided (used) by: Operating activities $(39,655) $(32,514) Investing activities (1,956) (1,473) Financing activities 48,823 33,142 Net increase (decrease) in cash $ 7,212 $ (845) Housing operations 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 for 1996 used more cash than in 1995 primarily due to an increase in housing proceeds receivable and housing construction and land asset activities offset in part by increased profitability and the timing of payments related to these activities. Cash flow from housing financing activities for 1996 provided cash reflecting the sale of the Company's 7.95% senior notes, partially offset by the repayment of the outstanding amount under the Credit Facility, while 1995 provided cash reflecting primarily net borrowings under the Company's previous revolving credit facility. The Company's federal income tax returns for the years ended December 31, 1993 and 1992 are currently being examined by the Internal Revenue Service. 16 The Company believes that cash flow from operations and amounts available under the Credit Facility will be sufficient to meet its working capital obligations and other needs. However, should the Company require capital in excess of that which is currently available there can be no assurance that it will be available. Financial Services ------------------ Mortgage's activities represent a substantial portion of the financial services segment's activities. As loan originations by Mortgage are primarily from housing units delivered by the Company's home building operations, Mortgage's financial condition and liquidity are to a significant extent dependent upon the financial condition of the Company. Financial services operating activities are affected primarily by Mortgage's loan originations which result in the sale of mortgage loans and related servicing rights to third party investors. Cash flows from financial services operating activities are also affected by the timing of the sales of loans and servicing rights which generally are sold to investors within 30 days after homes are delivered. In this regard, cash flows from financial services operating activities for 1996 used less cash compared to 1995 primarily because the increase in residential mortgage loan receivables in 1996 was less than the increase in residential mortgage loan receivables in 1995. The Company finances its financial services operations primarily from internally generated funds, such as from the origination and sale of residential mortgage loans and related servicing rights, and short-term debt. As more fully discussed in Note 3 of Notes to Consolidated Condensed Financial Statements, the short-term debt consists of a $45 million secured revolving line of credit (the "Mortgage Credit Facility") which matures on August 31, 1996. While the Mortgage Credit Facility contains numerous covenants, including a debt to tangible net worth ratio and a minimum tangible net worth requirement, these covenants are not anticipated to significantly limit Mortgage's operations. The Company has no obligation to provide funding to its financial services operations, nor does it guarantee any of its financial services subsidiaries' debt. The Company believes that the internally generated funds and the Mortgage Credit Facility will be sufficient to provide for Mortgage's working capital needs. Part II. OTHER INFORMATION Item 1. Legal Proceedings On June 21, 1993, the Company and 46 of its affiliates (the "USH Debtors") emerged from Chapter 11 pursuant to their First Amended Consolidated Plan of Reorganization and seven other affiliates of the Company (consisting of the Company's discontinued manufactured housing and building supply operations (the "Liquidating Debtors")) commenced liquidation pursuant to their First Amended Joint Plan of Reorganization. On June 5, 1996, the United States Bankruptcy Court for the Southern District of New York entered orders which closed the Chapter 11 cases of all of the USH Debtors (other than the Company) and the Liquidating Debtors. 17 Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of stockholders of the Company was held on April 24, 1996. The following persons were re-elected to the Company's Board of Directors to hold office until the annual meeting of stockholders in 1997 and until their respective successors are duly elected and qualified: Director In Favor Withheld ---------------------- ------------ ----------- Glen Adams 8,744,996 54,169 Steven G. Gerard 8,745,876 53,289 Kenneth J. Hanau, Jr. 8,744,952 54,213 Isaac Heimbinder 8,745,692 53,473 Malcolm T. Hopkins 8,744,584 54,581 Jack L. McDonald 8,744,478 54,687 Charles A. McKee 8,743,209 55,956 George A. Poole, Jr. 8,745,632 53,533 Herve Repault 8,745,787 53,378 James W. Sight 8,744,975 54,190 Robert J. Strudler 8,745,118 54,047 Additional items voted upon by the Company's stockholders at the meeting were: (a) the Company's 1996 Employees' Stock Option Plan; and (b) the ratification of the appointment of Arthur Andersen LLP, independent public accountants, to examine the Company's financial statements for 1996. The votes of the Company's stockholders on these items were as follows: Broker Item In Favor Opposed Abstained Non-Vote ----- --------- -------- --------- -------- (a) 8,268,632 463,845 25,438 42,250 (b) 8,755,674 33,325 10,166 - 18 Item 5. Other Information Additional Operating Data - The following table provides information (expressed in number of housing units) with respect to new orders taken, deliveries to purchasers of single-family homes and backlog by state for the three and six month periods ended June 30, 1996 and 1995: States New Orders Deliveries ------ ---------- ---------- 1996 1995 1996 1995 ---- ---- ---- ---- Three Month Period - Arizona 224 257 243 207 California 157 147 119 131 Colorado 207 273 294 286 Florida 481 541 493 535 Indiana/Ohio 48 49 28 9 Maryland/Virginia 129 114 80 82 Minnesota 88 133 81 67 Nevada 103 111 109 64 New Jersey 100 69 111 43 Texas 242 174 164 175 ----- ----- ----- ----- 1,779 1,868 1,722 1,599 ===== ===== ===== ===== States New Orders Deliveries Backlog ------ ---------- ---------- ------- 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- Six Month Period - Arizona 494 543 516 394 363 412 California 317 326 231 232 197 180 Colorado 817 698 556 541 723 547 Florida 1,328 1,326 1,062 1,205 1,252 1,267 Indiana/Ohio 125 64 60 16 127 58 Maryland/Virginia 237 225 153 154 197 153 Minnesota 191 203 145 127 165 163 Nevada 238 188 187 128 170 150 New Jersey 271 139 171 122 283 186 Texas 460 433 284 329 367 332 ----- ----- ----- ----- ----- ----- 4,478 4,145 3,365 3,248 3,844 3,448 ===== ===== ===== ===== ===== ===== 19 Cautionary Disclosure Regarding Forward-Looking Statements - The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this disclosure in order to do so. Certain statements in the Company's press releases, oral communications and filings with the Securities and Exchange Commission that are not historical facts are, or may be considered to be, forward-looking statements. Given the risks, uncertainties and contingencies of the Company's business, the actual results may differ materially from those expressed or implied by such forward-looking statements. Further, certain forward-looking statements are based on assumptions concerning future events which may not prove to be accurate. Forward-looking statements by the Company regarding results of operations and, ultimately, financial condition, are subject to numerous risks and assumptions, including the following: General economic and business conditions, the level and direction of interest rates and the level of consumer confidence have significant impact on the willingness and ability of purchasers to enter into contracts for homes and to consummate purchases of such homes under contract (backlog), as well as on the performance of Mortgage, the Company's principal subsidiary. The development of many of the Company's communities, particularly its retirement and active adult communities, result from a lengthy, complex series of events involving land purchase, regulatory compliance, capital availability, marketing and sales, any of which can materially affect the financial results for a community. The Company is in a highly competitive and fragmented industry, which places constant pressure on price (including the ability of the Company to respond to increases in prices from its suppliers), quality and marketing and particularly challenges the Company upon any entry into new geographic markets. The Company faces numerous regulatory hurdles in its development efforts, such as laws and regulations regarding zoning, environmental protection, building design and construction, density and rate of development. The Company's access to capital sufficient to fund its development activities is affected by the Company's financial leverage and by the willingness of the capital markets and banks to absorb equity or debt of the Company. The Company may encounter other contingencies, including labor shortages, work stoppages, product liability, litigation, natural risks such as floods or hurricanes and other factors over which the Company has little or no control. 20 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 11 - Computation of Income Per Common Share Exhibit 15 - Letter with respect to unaudited interim 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 April, May or June 1996. 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. U.S. HOME CORPORATION Date: August 8, 1996 /s/ Isaac Heimbinder ---------------------------- Isaac Heimbinder President, Co-Chief Executive Officer and Chief Operating Officer Date: August 8, 1996 /s/ Chester P. Sadowski ---------------------------- Chester P. Sadowski Vice President, Controller and Chief Accounting Officer 22 INDEX OF EXHIBITS Sequential Exhibit Numbered Number Page 11 Computation of Income Per Common Share 23 15 Letter with respect to unaudited interim financial information 25 27 Financial Data Schedule 26 EX-11 2 EXHIBIT 11 INCOME PER COMMON SHARE 23 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, ------------------------ ------------------------- 1996 1995 1996 1995 ----------- ----------- ------------ ----------- Income Per Common And Common Equivalent Share - Net income $ 10,050 $ 7,814 $ 19,369 $ 15,954 =========== =========== =========== =========== Weighted average common shares outstanding 11,588,063 11,595,298 11,582,034 11,588,003 Effect of assumed exercise of dilutive stock options and warrants 421,863 21,117 485,398 15,859 ---------- ----------- ----------- ----------- Total common and common equivalent shares 12,009,926 11,616,415 12,067,432 11,603,862 =========== =========== =========== =========== Income per common and common equivalent share $ .84 $ .67 $ 1.61 $ 1.37 =========== =========== =========== =========== 24 Three Months Ended Six Months Ended June 30, June 30, ------------------------ ------------------------- 1996 1995 1996 1995 ----------- ----------- ------------ ----------- Income Per Common Share, Assuming Full Dilution - Net income $ 10,050 $ 7,814 $ 19,369 $ 15,954 Add interest applicable to 4.875% convertible subordinated debentures, net of income tax effect 614 480 1,227 961 ----------- ----------- ----------- ----------- Income per common share, assuming full dilution $ 10,664 $ 8,294 $ 20,596 $ 16,915 =========== =========== =========== =========== Total common and common equivalent shares 12,009,926 11,616,415 12,067,432 11,603,862 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 - 259,327 - 264,689 Assumed conversion of 4.875% convertible subordinated debentures at $35.50 per share at date of issuance 2,253,521 2,253,521 2,253,521 2,253,521 ----------- ----------- ----------- ----------- Total common shares, assuming full dilution 14,263,447 14,129,263 14,320,953 14,122,072 =========== =========== =========== =========== Income per common share, assuming full dilution $ .75 $ .59 $ 1.44 $ 1.20 =========== =========== =========== =========== Note: See Note 5 of Notes to Consolidated Condensed Financial Statements. EX-15 3 AUDITORS LETTER 25 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, 33-52993, 33-00583 and 33-02775 its Form 10-Q for the quarter ended June 30, 1996, which includes our report dated July 23, 1996 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 August 8, 1996 EX-27 4 FINANCIAL SCHEDULE FOR PERIOD ENDING 6-30-96
5 This Schedule Contains Summary Financial Information Extracted From The Consolidated Condensed Financial Statements As Of June 30, 1996 And For The Six Months Then Ended And Is Qualified In Its Entirety By Reference To Such Financial Statements. 1000 6-MOS DEC-31-1996 JUN-30-1996 13,773 0 103,020 0 689,066 0 0 0 939,662 0 404,303 0 3,072 114 345,536 939,662 0 565,998 467,935 534,671 0 0 825 30,502 11,133 19,369 0 0 0 19,369 1.61 1.44
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