<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
======== ========
<PAGE> 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
======== ========
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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
====== ====== ====== ======
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
===== ===== ===== =====
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 22
EXHIBIT 10
U.S. HOME CORPORATION
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 31
EXHIBIT 11
(Unaudited)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
____________________ ___________________
1994 1993 1994 1993
_________ __________ ___________ __________
<S> <C> <C> <C> <C>
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
========== ========== ========== ==========
</TABLE>
Note: See Note 6 of Notes to Consolidated Condensed Financial Statements.
<PAGE> 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 6,473
<SECURITIES> 0
<RECEIVABLES> 53,228
<ALLOWANCES> 0
<INVENTORY> 582,953
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 756,360
<CURRENT-LIABILITIES> 172,160
<BONDS> 302,949
<COMMON> 105
0
22,276
<OTHER-SE> 258,870
<TOTAL-LIABILITY-AND-EQUITY> 756,360
<SALES> 0
<TOTAL-REVENUES> 722,226
<CGS> 597,402
<TOTAL-COSTS> 684,258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 428
<INCOME-PRETAX> 37,540
<INCOME-TAX> 14,077
<INCOME-CONTINUING> 23,463
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,463
<EPS-PRIMARY> 2.05
<EPS-DILUTED> 1.77
</TABLE>
