-----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, MvGmiPoh01YTtJs1EqmVnkswmyRwPtjAvSJ19gyxVicLcU5UJIgAfnBvndz5qxN8 ZGaUpGFyBtE4hIa655wq5A== 0000950164-96-000041.txt : 19960605 0000950164-96-000041.hdr.sgml : 19960605 ACCESSION NUMBER: 0000950164-96-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960604 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WASHINGTON HOMES INC CENTRAL INDEX KEY: 0000104834 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 520818872 STATE OF INCORPORATION: MD FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07643 FILM NUMBER: 96576648 BUSINESS ADDRESS: STREET 1: 1802 BRIGHTSEAT RD STREET 2: 6TH FLOOR CITY: LANDOVER STATE: MD ZIP: 20785 BUSINESS PHONE: 3017728900 MAIL ADDRESS: STREET 1: 1802 BRIGHTSEAT RD STREET 2: 6TH FLOOR CITY: LANDOVER STATE: MD ZIP: 20785 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: April 30, 1996. or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-7643 WASHINGTON HOMES, INC. (Exact name of registrant as specified in its charter) MARYLAND 52-0818872 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 1802 Brightseat Road, Landover, Maryland 20785-4235 (Address of principal executive offices) (Zip Code) (301) 772-8900 (Registrant's telephone number including area code) 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 ------- ------- Number of shares of each of the registrant's classes of common stock outstanding at May 31, 1996: Class Number of Shares ----- ---------------- Common Stock (voting), $.01 par value 7,000,000 Common Stock (non-voting), $.01 par value 942,763 WASHINGTON HOMES, INC. FORM 10-Q TABLE OF CONTENTS
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets - April 30, 1996 and July 31, 1995 (Unaudited) 3 Condensed Consolidated Statements of Net Earnings - Three Months and Nine Months Ended April 30, 1996 and 1995 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended April 30, 1996 and 1995 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
2 PART 1. ITEM 1. Financial Statements WASHINGTON HOMES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
April 30, July 31, ASSETS 1996 1995 ---- ---- (in thousands) Cash and cash equivalents $8,943 $ 15,111 Residential inventories 127,096 119,652 Excess of costs over net assets acquired, net 16,681 17,064 Investment in joint venture 2,675 2,276 Other 12,000 9,960 ------ ----- Total Assets $167,395 $164,063 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Notes and loans payable $80,413 $ 72,608 Trade accounts payable 12,757 16,934 Income taxes payable 578 705 Deferred income taxes 4,391 5,211 Other 3,525 4,583 ----- ----- Total Liabilities 101,664 100,041 Shareholders' Equity Common Stock 15,000,000 shares voting common stock authorized; 7,000,000 shares issued and outstanding, 70 70 1,100,000 shares non-voting common stock authorized; 942,763 shares issued and outstanding, 9 9 Additional paid - in capital 35,147 35,147 Retained earnings 30,505 28,796 ------ ------ Total Shareholders' Equity 65,731 64,022 ------ ------ Total Liabilities and Shareholders' Equity $167,395 $164,063 ======== ========
See accompanying Notes. 3 WASHINGTON HOMES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (Unaudited) (in thousands except per share amounts)
Three Months Ended Nine Months Ended April 30, April 30, ------------------ ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- Revenues Homebuilding $36,908 $36,961 $108,483 $112,684 Land sales 1,714 2,326 2,074 5,225 Other income 782 343 1,556 928 --- --- ----- --- Total revenues 39,404 39,630 112,113 118,837 Expenses Cost of sales - homebuilding 29,329 29,487 86,373 90,474 Cost of sales - land sales 1,515 1,126 1,850 3,767 Selling, general and administrative 6,073 5,499 16,827 16,138 Interest 999 951 2,853 2,721 Financing fees 200 152 599 556 Amortization and depreciation expense 199 214 564 589 -------- -------- -------- -------- Total expenses 38,315 37,429 109,066 114,245 Earnings before income taxes 1,089 2,201 3,047 4,592 Income tax expense 475 908 1,338 1,941 Net earnings $614 $1,293 $1,709 $2,651 ==== ====== ====== ====== Earnings per common share, based on 7,942,763 shares outstanding $0.08 $0.16 $0.22 $0.33 ========= ======= ===== =====
See accompanying Notes. 4 WASHINGTON HOMES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended April 30, ----------------- 1996 1995 ---- ---- (in thousands) Cash flows from operating activities: Net earnings $1,709 $2,651 Adjustments to reconcile net earnings to net cash used in operating activities: Amortization and depreciation 564 589 Deferred income taxes (820) (1,481) Changes in assets and liabilities: Residential inventories (7,445) (17,420) Other assets (1,951) (2,018) Trade accounts payable (4,178) (1,506) Income taxes payable (126) (244) Other liabilities (1,057) (2,245) ------- ------- Net cash used in operating activities (13,304) (21,674) Cash flows from investing activities: Purchases of property and equipment, net of disposals (266) 5 Investment in joint venture (399) -- Proceeds from joint venture -- 6,847 ------- ------- Net cash provided by (used in) investing activities (665) 6,852 Cash flows from financing activities: Proceeds from notes and loans payable 80,773 60,386 Repayments of notes and loans payable (72,972) (54,352) Dividends -- (397) ------- ------- Net cash provided by financing activities 7,801 5,637 ------- ------- Net decrease in cash and cash equivalents (6,168) (9,185) Cash and cash equivalents, beginning of period 15,111 20,076 ------- ------- Cash and cash equivalents, end of period $8,943 $10,891 ======= =======
See accompanying Notes. 5 WASHINGTON HOMES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Washington Homes, Inc. and its wholly-owned subsidiaries (the "Company"). The Company is principally engaged in the business of the construction and sale of residential housing. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and SEC regulations. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto in the Company's Annual Report for the year ended July 31, 1995. Operating results for the three and nine months ended April 30, 1996 are not necessarily indicative of the results that may be expected for the year ending July 31, 1996. 2. Shareholders' Equity Common Stock. The Company has 15,000,000 shares of Common Stock (voting) authorized of which 7,000,000 shares were outstanding at April 30, 1996. Such shares entitle the holder to one vote for each share of Common Stock held. Non-voting Common Stock. The Company has 1,100,000 shares of non-voting common stock authorized of which 942,763 shares were outstanding at April 30, 1996. Except for voting rights, the non-voting common stock is substantially the same as the Company's voting common stock. The non-voting common stock can be converted into voting common stock on a share-for-share basis. 3. Earnings Per Share Earnings per common share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. 4. Notes and Loans Payable Notes and loans payable consist of the following: April 30, July 31, 1996 1995 ---- ---- (dollars in thousands) Senior Notes $43,000 $43,000 Revolving Credit Facilities 29,378 18,607 Land Acquisition and Other 8,035 11,001 ------ ------- $80,413 $72,608 ======= ======= Senior Notes. In April 1994, the Company issued $43,000,000 principal amount of Senior Notes 6 due October 2000. Two series of Senior Notes were issued: $30,000,000 with a fixed rate of 8.61% per annum, with interest payable semi-annually beginning in October 1994 and $13,000,000 with a floating rate of LIBOR plus 2.4% (8.03% at April 30, 1996), with interest payable July 1994 and either quarterly or semi-annually thereafter at the option of the Company. Principal repayments are due in three equal annual installments commencing in October 1998. Revolving Credit Facilities. Revolving Credit Facilities at April 30, 1996, consist of three secured seasonal revolving loan commitments totaling $51,200,000 to fund acquisition of finished building lots, home construction and model homes. In addition, the Revolving Credit Facilities provide aggregate letters of credit in the amount of $8,000,000 principally for finished building lot contract deposits and bonding to municipalities for land development. The facilities are due in October 1996, June 1997 and July 1997. Borrowings under the facilities bear interest at prime (8.25% at April 30, 1996), prime plus 1% or LIBOR (30 day LIBOR at April 30, 1996 was 5.438) plus 1.90% to 2.50% depending upon the composition of collateral, and are collateralized by inventory. Land Acquisition Loans. The Company has loans with various land sellers and lenders for the acquisition of land which bear interest at fixed rates ranging from 8.0% to 10% or variable rates of prime to prime plus 1% and are collateralized by the related land under development. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Annual Operating Cycle The homebuilding industry in general and the operations of the Company are seasonal in nature. The number of new orders signed is generally higher in the period from February through May compared to the balance of the year. Deliveries peak in the fiscal quarter ending July 31 as a substantial portion of homes for which contracts are written during the fiscal quarter ending April 30 are delivered. Delivery volume is relatively constant during the remainder of the year. Backlog is the number of homes under contract but not delivered at the end of the period. Revenue is recognized upon the delivery of finished homes. The following table, which sets forth the quarterly operating results for the Company during the last five fiscal quarters illustrates this cycle:
Three Months Ended -------------------------------------------------------------------- April 30, July 31, October 31, January 31, April 30, 1995 1995 1995 1996 1996 ---- ---- ---- ---- ---- (dollars in thousands) Selected Operating Data - ----------------------- Revenues-homebuilding $36,961 $63,925 $37,397 $34,178 $36,908 Number of net new orders 436 263 251 218 410 Number of homes delivered 244 423 246 219 245 Number of homes in backlog 721 561 566 565 730 Sales value of backlog $114,928 $91,062 $92,700 $92,119 $119,188
7 Geographic Breakdown of Operations Set forth below is information for the Company's operations by geographic markets: Three Months Ended Nine Months Ended April 30, April 30, --------- --------- Net New Orders 1996 1995 1996 1995 - -------------- ---- ---- ---- ---- Washington/Baltimore 255 314 521 594 North Carolina 142 118 332 253 Nashville 4 0 4 0 Pittsburgh 9 4 22 14 --- --- --- --- 410 436 879 861 === === === === Three Months Ended Nine Months Ended April 30, April 30, --------- --------- Homes Delivered 1996 1995 1996 1995 - --------------- ---- ---- ---- ---- Washington/Baltimore 163 182 447 567 North Carolina 79 58 248 163 Pittsburgh 3 4 15 14 --- --- --- --- 245 244 710 744 === === === === April 30, --------- Backlog of Sold Homes 1996 1995 - --------------------- ---- ---- Washington/Baltimore 498 558 North Carolina 208 147 Nashville 4 0 Pittsburgh 20 16 --- --- 730 721 === === Results of Operations Three Months Ended April 30, 1996 Compared to Three Months Ended April 30, 1995 Total revenues from homes delivered was not significantly different at $36.9 million during the three months ended April 30, 1996 than the $37.0 million in revenues during the same three month period ended April 30, 1995 as the number of homes delivered narrowly increased to 245 homes in the third quarter of fiscal 1996 from 244 homes in the third quarter of fiscal 1995. Results for the third quarter of fiscal 1996 were negatively impacted by winter weather conditions early in the quarter which extended production schedules. During this period 8 the average sales price of homes delivered decreased to $150,600 in fiscal 1996 from $151,500 in the fiscal 1995 period. Changes in the average selling price of homes delivered may vary from period to period based on product mix and pricing of specific communities. Revenues and gross profit from land sales were $1.7 million and $199,000 for the three months ended April 30, 1996 as compared to $2.3 million and $1.2 million during the same three month period in fiscal 1995. Gross profit as a percentage of revenues from homes delivered increased to 20.5% during the three months ended April 30, 1996 compared to 20.2% during the same three month period in fiscal 1995. The increase in gross margins resulted from the proportionate increase in deliveries in North Carolina where there have been higher margins and a modest increase in the Company's Washington operations. Selling, general and administrative expenses increased $600,000 to $6.1 million during the three month period ended April 30, 1996 as compared to $5.5 million in the same three month period in fiscal 1995, primarily due to costs associated with the expansion into new markets. In addition, selling, general and administrative expenses increased as a percentage of homebuilding revenues to 16.5% in the three months ended April 30, 1996 compared to 14.9% for the same period in fiscal 1995. Operating income (earnings before interest, financing fees and taxes) decreased to $2.3 million in the three months ended April 30, 1996 as compared to $3.3 million for the same period in fiscal 1995 primarily due to the decrease of 1.0 million in gross profit from land sales and decreased as a percentage of homebuilding revenues to 6.2% from 8.9% for the same period in fiscal 1995. Interest and financing fees increased slightly to $1.2 million during the three months ended April 30, 1996 as compared to $1.1 million in the same three month period in fiscal 1995. Nine Months Ended April 30, 1996 Compared to Nine Months Ended April 30, 1995 Total revenues from homes delivered decreased $4.2 million (3.7%) to $108.5 million during the nine months ended April 30, 1996 as compared to $112.7 million during the same nine month period ended April 30, 1995. The number of homes delivered decreased 4.6% to 710 homes in the nine month period of fiscal 1996 from 744 homes in the nine month period of fiscal 1995. During this period the average sales price of homes delivered increased to $152,800 in fiscal 1996 from $151,500 in the fiscal 1995 period. Changes in the average selling price of homes delivered may vary from period to period based on product mix and pricing of specific communities. Revenues and gross profit from land sales were $2.1 million and $224,000 for the nine months ended April 30, 1996 as compared to $5.2 million and $1.5 million during the same nine month period in fiscal 1995. Gross profit as a percentage of revenues from homes delivered increased to 20.4% during the nine months ended April 30, 1996 compared to 19.7% during the same nine month period in fiscal 1995. The increase in gross margins resulted from the proportional increase in deliveries in North Carolina where there have been higher margins and a modest increase in the Company's Washington operations. Selling, general and administrative expenses increased $700,000 to $16.8 million during the nine month period ended April 30, 1996 as compared to $16.1 million for the same nine month period in fiscal 1995. In addition, selling, general and administrative expenses increased as a percentage of homebuilding revenues to 15.5% in the nine months ended April 30, 1996 compared to 14.3% for the same period in fiscal 1995 due to the lower volume of deliveries. Operating income (earnings before interest, financing fees and taxes) decreased to $6.5 million in 9 the nine months ended April 30, 1996 as compared to $7.9 million for the same period in fiscal 1995 and decreased as a percentage of homebuilding revenues to 6.0% from 7.0% for the same period in fiscal 1995. Interest and financing fees increased slightly to $3.4 million during the nine months ended April 30, 1996 compared to $3.3 million in the nine month period ended April 30, 1995. Capital Resources and Liquidity Funding for the Company's residential building and land development activities is provided principally by cash flows from operations and borrowings from banks and other financial institutions. The Company's capital needs depend upon its sales volume, asset turnover, land purchases and inventory levels. At April 30, 1996, the Company had cash and cash equivalents of $8.9 million of which $700,000 was restricted to collateralize bank letters of credit, customer deposits and other escrows. The remaining $8.2 million was available to the Company. The Company had $102.2 million in borrowing availability from various lending institutions and land sellers of which $80.4 million was outstanding at April 30, 1996. The Company believes that it will be able to fund its activities through fiscal 1996 through a combination of operating cash flow, existing cash balances and borrowings from banks and other lending institutions. Except for ordinary expenditures for the construction of homes and acquisition and development of land, the Company does not have any material commitments for capital expenditures at the present time. 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K The registrant did not file any reports on Form 8-K during the quarter ended April 30, 1996. 11 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. WASHINGTON HOMES, INC. (Registrant) Date: June 4, 1996 By:/s/ GEATON A. DECESARIS, JR. ------------------------------- Geaton A. DeCesaris, Jr. President and Chief Executive Officer Date: June 4, 1996 By:/s/ CLAYTON W. MILLER ------------------------ Clayton W. Miller Principal Accounting Officer 12 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLID- ATED STATEMENT OF NET EARNINGS AT AND FOR THE PERIOD ENDED APRIL 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000104834 WASHINGTON HOMES, INC. 3-MOS JUL-31-1996 APR-30-1996 8,943,000 0 0 0 127,096,000 0 0 0 167,395,000 0 0 0 0 79,000 65,652,000 167,395,000 38,622,000 39,404,000 30,844,000 37,116,000 0 0 1,199,000 1,089,000 475,000 614,000 0 0 0 614,000 .08 .08
-----END PRIVACY-ENHANCED MESSAGE-----