<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
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)
<TABLE>
<S> <C>
DELAWARE 21-0718930
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
1800 WEST LOOP SOUTH, HOUSTON, TEXAS 77027
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 877-2311
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE OF WHICH REGISTERED
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<S> <C>
Common Stock, $.01 par value per share New York Stock Exchange
Convertible Redeemable Preferred Stock, $.10 par value per share New York Stock Exchange
Class B Warrants to acquire Common Stock New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
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 / /
As of February 10, 1994, the number of shares outstanding of Registrant's
voting stock was 11,344,065 and the aggregate market value of the Registrant's
voting stock held by non-affiliates was $240,105,410.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF 10-K
WHERE INCORPORATED
------------------
<S> <C>
Proxy Statement dated March 3, 1994 for the Annual Meeting of Stockholders
to be held on April 6, 1994............................................. III
</TABLE>
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<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
U.S. Home Corporation ("U.S. Home" or the "Company"), organized in 1954 and
incorporated in the State of Delaware in 1959, is one of the largest
single-family home builders in the United States based on homes delivered. The
Company currently builds and sells homes in more than 185 new home communities
in 27 metropolitan areas in ten states. Since its formation, the Company has
delivered more than 246,000 homes. The Company conducts substantially all of its
home building business through U.S. Home, the parent company.
The Company offers a wide variety of moderately-priced homes that are
designed to appeal to the affordable, move-up and retirement/second home buyers.
In each of its markets, the Company's primary strategy is to build quality
homes, utilizing its Zero Defects Program, which the Company believes offers
prospective home buyers a very high level of new home value. The Company
believes that many home purchasers compare homes on the basis of location,
perceived quality and dollars of purchase price per square foot of living area.
As a result, the Company attempts to purchase land and lots in popular growth
corridors, maintain high quality standards and design homes to maximize living
space.
In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
As discussed in "Homebuilding Operations -- The Company's Reorganization
Proceedings" below, the Company emerged from bankruptcy on June 21, 1993.
OPERATIONS
The Company is engaged in two related industry segments: home building and
financial services. The revenues, operating profits or losses and identifiable
assets attributable to the Company's industry segments are separately disclosed
in the Consolidated Financial Statements.
HOME BUILDING OPERATIONS
The Company's primary industry segment is the on-site development of
single-family residential communities. Currently the Company builds in 27
metropolitan areas in ten states. During 1993, the Company's product mix
consisted of sales of approximately 31% affordable homes, 54% move-up homes and
15% retirement/second homes. Because America is aging, U.S. Home is paying
increasing attention to the older adult who is in the market for a second home
or is nearing retirement.
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MARKETS
U.S. Home's building operations are currently conducted in the following
market areas:
<TABLE>
<CAPTION>
MARKETS METROPOLITAN AREAS
- ------------------------------------- ------------------------------------------------------
<S> <C>
Florida.............................. Tampa, Clearwater/Palm Harbor, Fort Myers, Naples,
Orlando, Spring Hill/New Port Richey,
Sarasota/Bradenton and Key Largo
Mountain --
Colorado........................... Denver, Colorado Springs and Fort
Collins/Greeley/Loveland
Arizona............................ Phoenix and Tucson
Nevada............................. Las Vegas
Northeast/Midwest --
Maryland/Virginia.................. Annapolis and Washington, D.C. area
Minnesota.......................... Minneapolis/St. Paul
New Jersey......................... Dover/Jackson/Marlboro, and Sewell/East Hampton/the
New Jersey suburbs of Philadelphia
California........................... Bakersfield, Fresno, Sacramento and Palmdale/Lancaster
Texas................................ McAllen/Harlingen/Brownsville, Dallas/Fort Worth, San
Antonio and Houston
</TABLE>
The Company seeks to maintain geographic diversity and thus reduce the
potential risk of economic volatility in any given market.
The Company's homebuilding and marketing activities are conducted under the
name of U.S. Home in each of its markets except in Minneapolis/St. Paul where
the Company markets its homes under the name of Orrin Thompson Homes and in
Florida and Texas where homes are marketed under the name of Rutenberg Homes as
well as U.S. Home.
Set forth below are revenues for the Company from the sale of single-family
homes by market for each of the last three fiscal years:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
MARKETS 1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Florida............................................ $243,130 $202,859 $161,291
Mountain --
Colorado......................................... 103,769 89,240 57,537
Arizona.......................................... 85,784 65,210 28,549
Nevada........................................... 28,946 19,475 20,995
Northeast/Midwest --
Maryland/Virginia................................ 49,913 53,042 34,079
Minnesota........................................ 64,645 45,375 29,250
New Jersey....................................... 31,810 18,887 16,690
California......................................... 104,416 108,426 58,134
Texas.............................................. 77,061 67,179 61,827
Other.............................................. -- -- 948
-------- -------- --------
$789,474 $669,693 $469,300
-------- -------- --------
-------- -------- --------
</TABLE>
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Set forth below are tables providing information (expressed in number of
housing units) with respect to new orders taken, deliveries to purchasers and
backlog of single-family homes by market for each of the last three fiscal
years:
NEW ORDERS TAKEN
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 1,979 1,654 1,245
Mountain --
Colorado.................................................. 841 676 500
Arizona................................................... 931 650 344
Nevada.................................................... 249 136 134
Northeast/Midwest --
Maryland/Virginia......................................... 334 369 225
Minnesota................................................. 493 323 298
New Jersey................................................ 210 179 161
California.................................................. 722 643 441
Texas....................................................... 659 644 625
Other....................................................... -- -- 2
----- ----- -----
6,418 5,274 3,975
----- ----- -----
----- ----- -----
</TABLE>
DELIVERIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1993 1992 1991
------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 1,705 1,491 1,206
Mountain --
Colorado.................................................. 674 617 427
Arizona................................................... 729 600 241
Nevada.................................................... 206 137 156
Northeast/Midwest --
Maryland/Virginia......................................... 301 324 210
Minnesota................................................. 457 327 231
New Jersey................................................ 175 173 146
California.................................................. 692 722 368
Texas....................................................... 647 624 609
Other....................................................... -- -- 5
----- ----- -----
5,586 5,015 3,599
----- ----- -----
----- ----- -----
</TABLE>
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BACKLOG (1)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1993 1992 1991
------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 967 693 531
Mountain --
Colorado.................................................. 476 309 250
Arizona................................................... 388 186 136
Nevada.................................................... 81 38 39
Northeast/Midwest --
Maryland/Virginia......................................... 131 98 53
Minnesota................................................. 144 108 112
New Jersey................................................ 89 54 48
California.................................................. 137 107 186
Texas....................................................... 291 279 259
----- ----- -----
2,704 1,872 1,614
----- ----- -----
----- ----- -----
</TABLE>
- ------------
(1) Homes under contract for sale but not delivered at end of year.
The Company anticipates that substantially all of its backlog units, net of
cancellations, as of December 31, 1993 will be completed and delivered during
1994. While operations in certain market areas are affected by seasonal factors
which limit on-site building and sales activities, the Company's ability to
build and deliver its backlog is not considered to be seriously affected by such
factors.
SALES AND MARKETING
The Company employs sales consultants for the sale of single-family homes,
although sales by independent real estate brokers are also encouraged. Specific
sales training programs are provided which inform sales consultants about sales
techniques and methods as well as information about their local market, realtors
and products. The sales programs focus on the Company's Zero Defect Program as a
marketing tool because the sales force is the first contact with the customer.
The Zero Defect Program is a quality assurance program with major emphasis on
construction.
The Company advertises primarily in magazines and local newspapers.
Additionally, homes are marketed by means of model homes, pictorial brochures
and on-site displays. The Company's general marketing strategy seeks to generate
one-third of housing sales through advertisements, one-third through customer
referrals and one-third through realtor contacts.
The Company markets homes in "model home parks" featuring one or more model
homes, attractively furnished and decorated and staffed by the Company's sales
consultants who provide information regarding floor plans, the various
elevations available, decorating options, as well as assisting with mortgage
financing information. The model may include a variety of options and upgrades
which the customer may request at an additional cost. Such upgrades may include
items such as pools, fireplaces and decks. The Company constantly studies both
aesthetic design and architectural trends, as well as quality construction and
engineering trends, in order to provide customers with high quality, design and
value. The Company has received numerous awards in various markets for
outstanding housing design.
Selling prices are set in each area based on local market conditions and
competitive factors. The Company's gross margins vary from area to area based on
competitive factors in each market.
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The Company's product lines include both single-family detached and
attached homes. During 1993, 1992 and 1991, approximately 85%, 85% and 81%,
respectively, of the homes delivered were single-family detached. The number of
units and average sales prices of single-family homes delivered in 1993, 1992
and 1991 were as follows:
<TABLE>
<CAPTION>
SINGLE-FAMILY DETACHED SINGLE-FAMILY ATTACHED
---------------------- ----------------------
NUMBER AVERAGE NUMBER AVERAGE
OF UNITS SALES PRICE OF UNITS SALES PRICE
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
1993............................................. 4,773 $ 145,000 813 $ 119,500
1992............................................. 4,211 137,400 729 125,000
1991............................................. 2,877 137,200 664 112,400
</TABLE>
The increase in the average sales prices of single-family detached homes in
1993 was primarily due to price increases. The decrease in the average sales
prices of single-family attached homes in 1993 was primarily due to an increase
in the deliveries in lower priced markets while the increase in 1992 was
primarily due to a shift in deliveries to higher priced markets.
In 1993, the national average sales prices of new single-family homes (both
detached and attached) as reported on a preliminary basis by the U.S. Census
Bureau was $147,700 compared with an average sales price of $141,300 for the
Company.
Variations in the general product and customer mix may exist from year to
year based on shifts in local market demand or product availability. The table
below sets forth the mix of the Company's sales for the affordable, move-up and
retirement/second home products during the last three years:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Affordable....................................................... 31% 28% 29%
Move-up.......................................................... 54% 56% 49%
Retirement/second home........................................... 15% 16% 22%
</TABLE>
Many purchasers finance a large portion of the purchase price of a home
through conventional or government insured/guaranteed mortgages from lending
institutions. The Company generally assists purchasers in obtaining mortgages.
Approximately 86% of the homes delivered in 1993, 86% delivered in 1992 and 82%
delivered in 1991, were purchased using mortgage financing.
The Company takes steps to qualify certain of its homes under Veterans
Administration ("VA") and Federal Housing Administration ("FHA") mortgage
financing programs, which provide mortgage financing sources. During 1993, 1992
and 1991, approximately 25% of the Company's homes delivered were financed under
VA and FHA mortgage programs.
CONSTRUCTION
The Company's investment in direct employee labor costs, equipment and
facilities is kept to a minimum because all construction of single-family homes
is performed by independent subcontractors. At all stages of construction,
however, on-site Company managers supervise and coordinate the activities of
these subcontractors and subject their work to quality and cost control
standards. The Company's Director of Quality Control and National Purchasing
provides centralized management of quality standards, both with respect to the
construction of homes and the purchase of certain major components used in the
construction of homes. Company employees are rated and compensation incentives
are affected by a measure of quality standards. The Company's commitment to
quality and its use in the Company's sales efforts are best illustrated by its
Zero Defect Program. Under the Zero Defect Program, the home buyer meets with
the construction supervisor prior to the commencement of, and during,
construction in order to ensure that the home buyer (i) is aware of all quality
features of the house, including those which are not readily apparent in the
finished house, (ii) agrees that the design features, including appliances,
match those ordered and (iii) is satisfied with
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the finished product. The Company considers a completed house to have "zero
defects" if, upon final inspection by the home buyer, only a few minor
appearance items remain to be corrected. In 1992, the Company received the
Diamond Builder Award presented by Home Buyers Warranty Corporation, a provider
of insured home warranties, for the Company's commitment to quality
construction, outstanding customer service and comprehensive warranty
protection.
Construction subcontractors are selected on the basis of competitive bids
and a written agreement governs their relationship with the Company. All bids
are based on detailed specifications and complete blueprints to ensure
commitment to the Company's expectation for high quality workmanship.
The Company purchases the majority of its construction materials on a
decentralized basis with a "just in time" delivery schedule to each individual
job site. Materials are regularly purchased on a competitive bid basis to ensure
both competitive pricing and high quality. In addition to local purchasing, the
Company has entered into a number of national purchasing agreements in order to
maximize purchasing power. Agreements with each vendor are negotiated on an
annual basis by the Company's Director of National Purchasing.
In order to minimize the risk associated with completed but unsold
inventory, the Company generally does not commence construction of a house prior
to receipt of an executed purchase contract and preliminary mortgage approval
based on the purchaser's mortgage application. At December 31, 1993, the Company
had 191 completed and unsold units (excluding model homes) located throughout
its 185 housing communities.
REGULATION
The Company and its subcontractors must comply with various federal, state
and local zoning, building, pollution, environmental, advertising and consumer
credit statutes, rules and regulations, as well as other regulations and
requirements in connection with its construction and sales activities, including
regulations relating to specific building materials to be used, building design
and minimum elevations of properties. All of these regulations have increased
the time and cost required to market the Company's products by extending the
time between the initial acquisition of land and the commencement of
construction. The Company's operations, like those of other home builders, have
been periodically subject to moratoriums on development activities caused by
insufficient water, sewage and energy-related facilities. Moratoriums in local
areas have not had a material adverse effect on its overall activities because
of the geographic diversification of the Company's operations.
COMPETITION
The single-family residential housing industry is highly competitive. U.S.
Home competes in each of its markets, with respect to the location, design and
price of its products, with numerous firms engaged in the on-site development of
single-family residential housing, ranging from regional and national firms to
small local companies. The Company is one of the largest on-site builders of
single-family homes in the United States, ranking among the ten largest
single-family on-site home builders in the United States for each of the last 19
years. However, because there are so many firms engaged in the single-family
home building industry, the Company accounts for less than 1% of all new on-site
single-family housing sales in the United States.
RAW MATERIALS AND SUBCONTRACTORS
The Company uses numerous suppliers of raw materials and services in its
business and such materials and services have been and continue to be available.
Where appropriate, the Company has adopted national programs for products to
maximize price discounts through volume purchases. The Company also utilizes
numerous independent subcontractors representing all building trades in
connection with the construction of its homes.
COMMUNITY DEVELOPMENT
A significant portion of the Company's land and lot needs are currently
satisfied through rolling lot options (option contracts which permit the Company
to acquire lots on a scheduled or on an "as needed"
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basis). For example, during 1993, 55% of the Company's unit sales were from lots
owned by the Company and 45% were from lots acquired by the exercise of rolling
lot options.
The Company's policy is that land cannot be purchased or sold without prior
approval of the Company's Asset Management Committee. Asset Management Committee
approval requires submission of data relating to sales forecasts, a timing
schedule (e.g., estimated dates on start of land development, housing
construction, model opening and sales) and a projection of income and internal
rate of return. All development expenditures are reviewed by the respective
President of Operations prior to the commencement of development. In addition,
the Company's amended and restated by-laws require approval by the Company's
Board of Directors of any material acquisition of unimproved real property or
acreage by the Company in any single transaction or series of related
transactions involving an expenditure in excess of $5 million and any other
material capital expenditures and other commitments by the Company in excess of
$5 million per transaction (excluding transactions involving housing).
The Presidents of Operations and the Division Presidents are responsible
for maintaining continuity of housing sales through awareness of trends in
housing demand in each market area. Feasibility studies and market research
studies are generally required before approval of the purchase of land. These
studies examine the demographics of an area including population trends, income
trends, employment trends, housing stock and housing demand. Products are
matched to customer profile, determined in part by the market studies and the
experience of the local manager in each market.
Housing communities are generally built in or near major metropolitan areas
and are normally located in growing markets for such areas. At December 31,
1993, the Company's land and finished lot inventories totaled $263.4 million,
excluding option deposits. See Note 1 of Notes to Consolidated Financial
Statements. Substantially all are zoned for their intended use and serviced by
utilities. As of December 31, 1993, the Company had deposits totaling $34.6
million for options to purchase undeveloped land and finished lots for home
building operations for a total purchase price on exercise of approximately
$237.1 million.
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The following table sets forth as of December 31, 1993, by market, the cost
of certain of the Company's land inventories and the estimated number of lots
controlled through direct ownership and under option which are being used or
that will be used in the Company's homebuilding operations (dollars in
thousands):
<TABLE>
<CAPTION>
ESTIMATED NUMBER OF
HOUSING
UNITS THAT COULD BE
CONSTRUCTED ON LAND
CONTROLLED
BOOK AS OF DECEMBER 31, 1993(1)
COST --------------------------
OF LAND UNDER
MARKETS OWNED OWNED OPTION TOTAL
------------------------------------------------- -------- ------ ------ ------
<S> <C> <C> <C> <C>
Florida.......................................... $ 86,946 8,533 4,031 12,564
Mountain --
Colorado....................................... 38,858 4,073 1,213 5,286
Arizona........................................ 6,564 580 1,229 1,809
Nevada......................................... 21,883 729 865 1,594
Northeast/Midwest --
Maryland/Virginia.............................. 20,350 600 734 1,334
Minnesota...................................... 9,916 553 577 1,130
New Jersey..................................... 19,571 1,377 485 1,862
California....................................... 11,306 266 864 1,130
Texas............................................ 28,457 2,406 345 2,751
-------- ------ ------ ------
$243,851 19,117 10,343 29,460
-------- ------ ------ ------
-------- ------ ------ ------
</TABLE>
- ------------
(1) Based upon current management estimates, which are subject to change. This
table does not include commercial property and other properties which the
Company has no current plans to use, with an aggregate cost of $19.6 million
(including $12.3 million relating to land under contract for sale and for
exchange). In view of the various stages of development of the land owned by
the Company as of December 31, 1993 (i.e., finished, under development and
development not started), any per lot cost derived by dividing the book cost
by the estimated number of units would not be meaningful.
In 1993, revenues from the sale of developed and undeveloped land by the
Company amounted to $8.5 million, as compared to revenues of $6.6 million in
1992 and $9.3 million in 1991. In addition, the Company, in 1993 and 1992,
completed several exchanges of land assets with third parties in which the
Company received land suitable for development of single-family detached homes,
which could be more readily developed and sold, in return for land zoned
primarily for commercial use and single-family attached homes which the Company
had no near-term plans to utilize.
THE COMPANY'S REORGANIZATION PROCEEDINGS
The Company and certain of its affiliates commenced proceedings (the
"Cases") under Chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code") on April 15, 1991 (the "Filing Date"), in order to restructure their
indebtedness and other liabilities. On May 25, 1993, the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court")
entered an order confirming the first amended consolidated plan of
reorganization of the Company and certain of its affiliates (as modified, the
"Plan"). Such order became final on June 5, 1993, and the Plan became effective
on June 21, 1993 (the "Effective Date"). On the Effective Date, the Company also
completed a public offering of $200 million principal amount of 9.75% senior
notes due 2003, the net proceeds from which were utilized to pay a portion of
the claims of certain unsecured creditors of the Company under the Plan and to
repay outstanding amounts under the Company's debtor-in-possession financing
facility.
The Plan effected a recapitalization of the Company and did not result in a
reduction in the scope or other major restructuring of the Company's operations.
During the pendency of the Cases, the Company continued its home building
operations in the ordinary course in its housing markets and improved its market
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share in a majority of such markets. The Company was able to retain its senior
management and believes that it maintained customer, subcontractor and supplier
goodwill and the confidence of its employees.
As part of the Plan, creditors received 4,873,650 shares of common stock,
$.01 par value per share, and 2,816,762 shares of convertible redeemable
preferred stock, $.10 par value per share, and the pre-Effective Date
stockholders received 3,510,818 shares of common stock and Class B warrants to
acquire common stock (exercisable at $20 per share), which, if fully exercised,
would result in the pre-Effective Date stockholders receiving an additional
1,904,757 shares of common stock (a total of 5,415,575 shares).
FINANCIAL SERVICES OPERATIONS
The Company's second industry segment consists primarily of its mortgage
banking activities. U.S. Home Mortgage Corporation ("Mortgage"), a wholly-owned
subsidiary of the Company, commenced operations in 1971 and serves an important
role in the Company's sale of its homes by arranging financing for customers.
Mortgage is a Federal National Mortgage Association/Government National
Mortgage Association/ Federal Home Loan Mortgage Corporation approved
seller-servicer, headquartered in Clearwater, Florida with branch offices in the
metropolitan areas of Phoenix and Tucson, Arizona; Bakersfield and Sacramento,
California; Denver, Colorado; Washington, D.C.; Clearwater, Fort Myers and
Orlando, Florida; Minneapolis, Minnesota; Las Vegas, Nevada; and Dallas and
Houston, Texas. The Company offers a wide variety of conventional, FHA and VA
financing programs through Mortgage, thereby providing prospective buyers the
benefits of both conventional and government assisted loan programs. As a
mortgage banker, Mortgage originates and funds mortgage loans and sells the
loans and the related servicing rights directly to investors. Loans and
servicing rights are generally sold by Mortgage to investors within 45 days
after home delivery. To limit its risk of interest rate fluctuations, Mortgage
generally sells the mortgage loans into a secondary market after an interest
rate commitment is sold, subject to market conditions. Mortgage has a secured
revolving line of credit to fund the mortgage loans on an interim basis until
purchased by investors.
The following table summarizes certain mortgage banking operating
information (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Residential mortgage loans
Number of loans originated........................... 3,050 2,502 1,275
Average amount of loan originated.................... $ 114 $ 114 $ 114
Total amount of loans originated:
Funded by Mortgage................................ $317,000 $250,000 $117,000
Brokered by Mortgage.............................. 30,000 35,000 28,000
-------- -------- --------
Total................................................ $347,000 $285,000 $145,000
-------- -------- --------
-------- -------- --------
Company's homes delivered financed by Mortgage as a
percentage of Company's homes delivered which were
financed............................................. 51% 47% 40%
Company's homes delivered financed by Mortgage as a
percentage of Mortgage's total originations.......... 83% 82% 92%
</TABLE>
While the Company continues to focus its attention primarily upon the
expansion of Mortgage's operations within the Company's own customer base,
Mortgage also offers its services to realtors, unaffiliated builders and
refinance customers.
Among the factors affecting Mortgage's operations are general economic
conditions, federal, state and local regulatory constraints, consumer confidence
and interest rate volatility. These factors, together with the number of homes
delivered by the Company, affect the volume of loan originations which in turn
impact the resulting volume of mortgage loans and mortgage servicing rights
available for sale.
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ADDITIONAL INFORMATION
FINANCING OF HOUSING OPERATIONS
The Company finances its housing operations through internally generated
funds, unsecured public debt and a four year $95 million secured working capital
credit facility and certain other secured acquisition and development financing
facilities. See Notes 3 and 5 of Notes to Consolidated Financial Statements.
FINANCING OF FINANCIAL SERVICES OPERATIONS
The Company finances its financial services operations primarily through
short-term debt and from internally generated funds (i.e., origination and sale
of residential mortgage loans and related servicing rights). The short-term debt
consists of a $35 million secured revolving line of credit. See Note 4 of Notes
to Consolidated Financial Statements. This debt is not guaranteed by the Company
nor does the Company have any obligation to provide funding to its financial
services operations.
EMPLOYEES
At December 31, 1993, the Company had 1,152 employees, of whom 937 were
employed in home building operations and 215 were employed in financial services
operations. None of the Company's employees are represented by a union. The
Company considers its relations with its employees to be good. The Company's
single-family housing and community development operations are conducted
primarily through independent subcontractors, thereby limiting the number of
direct employees required.
ITEM 2. PROPERTIES
The Company leases its executive offices, located at 1800 West Loop South,
Houston, Texas 77027, pursuant to a lease scheduled to expire on February 28,
1999. The Company does not believe that its executive offices or its other
facilities, consisting of sales and administrative offices located in or near
each of the Company's areas of operations and generally held under leases with
terms not exceeding five years, are material to its operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation arising from the normal course of
business, none of which, in the opinion of the Company, will have a material
adverse effect on the financial position or results of operations of the
Company. As of June 21, 1993, pending and threatened litigation arising from
pre-Filing Date claims against the Company, its subsidiaries and other
affiliates which were debtors in the Cases were satisfied and discharged as
provided in the Plan. Claims arising during the Cases were not material to the
Company.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
11
<PAGE> 12
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers during 1993 and their respective ages and
positions are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
- ------------------------- --- ---------------------------------------------------
<S> <C> <C>
Robert J. Strudler....... 51 Chairman and Chief Executive Officer
Isaac Heimbinder......... 50 President and Chief Operating Officer
Gary L. Frueh............ 53 Vice President -- Tax and Audit
Tim W. Humphrey.......... 63 Vice President
Craig M. Johnson......... 40 Vice President -- Community Development
Thomas A. Napoli......... 52 Vice President -- Finance and Chief Financial
Officer
Chester P. Sadowski...... 47 Vice President -- Controller and Chief
Accounting Officer
Richard G. Slaughter..... 49 Vice President -- Planning and Secretary
Kelly F. Somoza.......... 40 Vice President
</TABLE>
No family relationship exists among any of the executive officers of the
Company.
Each of the foregoing officers has been elected to serve in the office
indicated until the first meeting of the Board of Directors following the next
annual meeting of stockholders of U.S. Home and until his or her successor is
elected and qualified or until his or her death, resignation or removal.
Mr. Strudler has served as Chairman and Chief Executive Officer of the
Company since May 12, 1986.
Mr. Heimbinder has served as President and Chief Operating Officer of the
Company since May 12, 1986.
Mr. Frueh has been Vice President -- Tax and Audit since February 5, 1992;
prior thereto, he had been Vice President, Tax, since December 18, 1986.
Mr. Humphrey retired on January 1, 1994. He had been Vice President since
February 13, 1986 and was responsible for the Company's risk management,
insurance and audit activities.
Mr. Johnson was elected Vice President -- Community Development on June 11,
1992; prior thereto, he had been Executive Vice President, Community Development
since October 14, 1988.
Mr. Napoli was elected Vice President -- Finance and Chief Financial
Officer on April 21, 1989; prior thereto, he had been President of U.S. Home
Acceptance Corporation, a wholly-owned subsidiary of U.S. Home, since June 1,
1983.
Mr. Sadowski has been Vice President -- Controller and Chief Accounting
Officer since December 17, 1987.
Mr. Slaughter was elected Vice President -- Planning on December 18, 1986;
prior thereto, he had been Secretary since June 26, 1986.
Ms. Somoza was elected Vice President on June 11, 1992; prior thereto, she
had been Director, Investor Relations since December 31, 1981. Ms. Somoza is
responsible for the Company's public and investor relations, and is the
administrator of the Company's profit sharing and employees' savings programs.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of February 10, 1994, there were 7,578 holders of record of the
Company's common stock, $.01 par value per share. The principal market on which
the common stock is traded is the New York Stock Exchange.
The information set forth below is solely for historical purposes. The
Company believes that the stock price information through June 21, 1993 is of
limited use and relevance in the view of the significant changes in ownership of
the Company's capital stock and the Company's capital structure which occurred
under the
12
<PAGE> 13
Plan. The following tables set forth the high and low sale prices of the
Company's common stock, $.10 par value per share, outstanding prior to
effectiveness of the Plan and the common stock (issued pursuant to the Plan) for
the periods indicated as reported on the New York Stock Exchange Composite Tape:
OLD COMMON STOCK
<TABLE>
<CAPTION>
1992 HIGH LOW
------ ------
<S> <C> <C>
First Quarter.................................................... $ 1.63 $ .34
Second Quarter................................................... 1.50 1.00
Third Quarter.................................................... 1.38 .50
Fourth Quarter................................................... 1.00 .50
1993
First Quarter.................................................... $ 1.50 $ .69
Second Quarter through June 21, 1993............................. 2.38 1.00
NEW COMMON STOCK
Second Quarter subsequent to June 21, 1993....................... 22.13 19.00
Third Quarter.................................................... 26.38 19.38
Fourth Quarter................................................... 29.00 24.88
</TABLE>
Immediately prior to the Effective Date, the Company had 45,312,526 shares
of common stock, $.10 par value per share, outstanding. Pursuant to the Plan,
all pre-Effective Date capital stock was cancelled and common stock, $.01 par
value per share, and other securities were issued.
No dividends were paid by the Company during 1992 or 1993. The Company's
working capital facility (the most restrictive of the Company's borrowing
agreements) prohibits the Company from paying dividends on its capital stock.
The senior note indenture and the Company's second restated certificate of
incorporation also contain restrictions on the payment of dividends.
13
<PAGE> 14
ITEM 6. SELECTED FINANCIAL DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
HOUSING:
Operating revenues................. $798,950 $679,215 $485,346 $ 610,601 $643,167
Operating income (loss)............ 41,830 28,418 (5,486) (84,155) (6,834)
FINANCIAL SERVICES:
Operating revenues................. $ 13,127 $ 10,685 $ 9,771 $ 22,577 $ 31,563
Operating income (loss)............ 2,810 931 654 (3,715) (1,990)
CONSOLIDATED:
Operating income (loss)............ $ 44,640 $ 29,349 $ (4,832) $ (87,870) $ (8,824)
Reorganization items............... 6,915 50,703 3,978 -- --
Income taxes....................... (33,966) -- -- -- 212
-------- -------- -------- --------- --------
Income (loss) before discontinued
operations and extraordinary
item............................ 71,691 (21,354) (8,810) (87,870) (9,036)
Loss from discontinued
operations...................... -- -- -- (15,654) (4,491)
Extraordinary item................. -- -- -- 1,880 14,866
-------- -------- -------- --------- --------
Net income (loss).................. $ 71,691 $(21,354) $ (8,810) $(101,644) $ 1,339
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE (1):
PRIMARY --
Income (loss) before discontinued
operations and extraordinary
item............................ $ 6.16(2) $ (1.89) $ (.78) $ (7.79) $ (.80)
Loss from discontinued
operations...................... $ -- $ -- -- $ (1.39) $ (.40)
Extraordinary item................. $ -- $ -- $ -- $ .17 $ 1.32
Net income (loss).................. $ 6.16(2) $ (1.89) $ (.78) $ (9.01) $ .12
FULLY DILUTED --
Income (loss) before discontinued
operations and extraordinary
item............................ $ 5.93(2) $ (1.89) $ (.78) $ (7.79) $ (.80)
Loss from discontinued
operations...................... $ -- $ -- $ -- $ (1.39) $ (.40)
Extraordinary item................. $ -- $ -- $ -- $ .17 $ 1.32
Net income (loss).................. $ 5.93(2) $ (1.89) $ (.78) $ (9.01) $ .12
DIVIDENDS PER COMMON SHARE........... $ -- $ -- $ -- $ -- $ --
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
TOTAL ASSETS --
Housing............................ $622,003 $495,159 $563,202 $ 504,867 $569,335
Financial services................. 56,843 48,312 46,602 115,742 232,535
-------- -------- -------- --------- --------
$678,846 $543,471 $609,804 $ 620,609 $801,870
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
TOTAL SHORT-TERM DEBT --
Housing (3)........................ $ -- $179,493 $205,554 $ 219,288 $198,460
Financial services................. 20,566 14,079 672 12,710 17,010
-------- -------- -------- --------- --------
$ 20,566 $193,572 $206,226 $ 231,998 $215,470
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
TOTAL LONG-TERM DEBT --
Housing (3)........................ $311,937 $154,616 $190,563 $ 138,079 $164,618
Financial services................. 1,102 1,797 9,262 70,409 141,659
-------- -------- -------- --------- --------
$313,039 $156,413 $199,825 $ 208,488 $306,277
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
</TABLE>
- ------------
(1) Income (loss) per common and common equivalent share has been computed using
the weighted average number of common and common equivalent shares
outstanding, assuming the new capital structure had been effective as of
the beginning of all periods presented. This differs from historical
primary and fully diluted income (loss) per common and common equivalent
share previously reported (based on the Company's former capital structure)
for the years ended December 31, 1992, 1991, 1990 and 1989 of $(.47),
$(.20), $(2.27) and $.03, respectively. The Company believes that prior
year earnings per common share information is of limited use and relevance
in view of the significant changes in ownership of the Company's capital
stock and the Company's capital structure which occurred under the Plan.
(2) Includes $3.87 primary income per share and $3.72 fully diluted income per
share in 1993 due to the decrease in the deferred tax asset valuation
allowance. See Note 6 of Notes to Consolidated Financial Statements.
(3) Includes unsecured debt of $266,635,000 at December 31, 1992 which was
exchanged for a combination of cash and equity securities and secured debt
of $5,213,000 at December 31, 1992 which was either reinstated or the
property securing the debt was deeded to the lenders in full satisfaction
of the debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The first amended consolidated plan of reorganization of the Company and
certain of its affiliates (as modified, the "Plan") became effective on June 21,
1993 (the "Effective Date") and the Company sold its $200,000,000 9.75% senior
notes and $80,000,000 4.875% convertible subordinated debentures in June 1993
and November 1993, respectively. As such, the Company's results of operations
for the year ended December 31, 1993 do not reflect the full impact of the
implementation of the Plan and the sale of the senior notes and convertible
subordinated debentures. The historical financial statements include certain
expenses and write-offs related to the Cases and the Plan and do not include
certain interest charges on the Company's unsecured debt.
15
<PAGE> 16
HOUSING
The following table sets forth certain financial information for the
Company's housing segment for the periods indicated (dollars in thousands,
except average sales price):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues --
Single-family homes.............................. $789,474 $669,693 $469,300
Land and other................................... 9,476 9,522 16,046
-------- -------- --------
Total.................................... $798,950 $679,215 $485,346
-------- -------- --------
-------- -------- --------
Single-family homes --
Gross margin amount.............................. $129,304 $110,954 $ 72,198
Gross margin percentage.......................... 16.4% 16.7% 15.3%
Units delivered.................................. 5,586 4,940(1) 3,541(1)
Average sales price.............................. $141,300 $135,600 $132,500
New orders taken................................. 6,418 5,189(1) 3,911(1)
Backlog at end of year........................... 2,704 1,845(1) 1,597(1)
Selling, general and administrative expenses as a
percentage of housing revenues................... 11.2% 12.4% 15.0%
Interest expense --
Paid or accrued.................................. $ 22,105 $ 14,462 $ 28,155
Capitalized...................................... $ 21,920 $ 13,210 $ 21,737
Percentage capitalized........................... 99.2% 91.3% 77.2%
Capitalized interest included in cost of sales..... $ 22,342 $ 23,338 $ 24,734
</TABLE>
- ------------
(1) Excludes certain joint venture activity.
GENERAL
In connection with implementing the Plan, the Company recorded a $42.4
million provision in the fourth quarter of 1992 to reflect the impact of the
Plan on land utilization and its estimated net realizable value which amount has
been included in "Reorganization Items" in the Consolidated Statements of
Operations.
REVENUES AND GROSS MARGIN
Revenues from sales of single-family homes for 1993 increased 17.9% from
1992. The increase resulted from a 13.1% increase in the number of housing units
delivered and a 4.2% increase in the average sales price. Revenues from sales of
single-family homes for 1992 increased 42.7% from 1991, resulting primarily from
a 39.5% increase in the number of housing units delivered.
The increase in units delivered in 1993 was primarily attributed to a
continuation of the generally improved industry conditions, as well as increases
in the Company's market share in many of its housing markets. The increase in
units delivered in 1992 was primarily due to a significant increase in new
orders taken in the last quarter of 1991 and the first half of 1992. Such
increase was attributable to generally improved industry conditions, as well as
increases in the Company's market share in many of its housing markets. The
increase in the average sales prices in 1993 was primarily due to price
increases, while the increase in 1992 was primarily due to a shift in deliveries
to higher priced markets.
New orders taken in 1993 increased 23.7% from 1992. The increase in new
orders in 1993 as compared to 1992 was primarily attributable to a continuation
of generally improved industry conditions. New orders taken in 1992 increased
32.7% from 1991 due primarily to the continuing effect of an improved national
housing market as well as increases in the market share in many of the Company's
housing markets.
16
<PAGE> 17
The gross margin percentage in 1993 was essentially unchanged from 1992
primarily due to the Company being able to increase sales prices to offset cost
increases. The increase in the gross margin percentage in 1992 from 1991 was
primarily attributable to cost decreases primarily due to the suspension of
interest accruals on unsecured debt.
With the significant increase in construction activities in many of its
housing markets, the Company expects that certain building trades and materials
necessary for the construction of single-family homes may at times be in short
supply, which could put pressure on costs and the time it takes to construct
homes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
As a percentage of housing revenues, selling, general and administrative
expenses decreased to 11.2% in 1993 as compared to 12.4% in 1992 and 15% in 1991
reflecting the Company's continued effort to reduce overhead and improve
operating efficiencies. Actual selling, general and administrative expense for
1993 increased $6.3 million compared to 1992. This increase was attributable to
increases in volume-related expenses ($1.4 million) resulting from the increase
in deliveries in 1993 when compared to 1992 and increases in other selling,
general and administrative expenses resulting from increased activities and
earnings. Similarly, selling, general and administrative expenses increased by
$10.7 million in 1992 compared to 1991, due primarily to increases in
volume-related expenses ($9.3 million) resulting from increases in deliveries in
1992 when compared to 1991.
INTEREST EXPENSE
Interest paid and accrued for 1993, 1992 and 1991 was less than that which
will be incurred in future periods as interest on a majority of Company's debt
was stayed during the pendency of the Cases. Interest paid and accrued for 1993
increased approximately 52.8% compared to 1992 and decreased approximately 48.6%
in 1992 compared to 1991. The increase in 1993 was primarily due to the sale of
the 9.75% senior notes in June 1993 and 4.875% convertible subordinated
debentures in November 1993, while the decrease in 1992 was due primarily to a
reduction in secured borrowings and to the suspension of interest accruals on
pre-Filing Date unsecured debt during the pendency of the Cases. The increase in
the percentage of interest capitalized for 1993 was primarily due to an increase
in the amounts of assets qualifying for interest capitalization, and the
increase in the percentage of interest capitalized in 1992 was due primarily to
the suspension of interest accruals on prepetition unsecured debt as of April
15, 1991.
REORGANIZATION ITEMS, NET
Reorganization items represent expenses (primarily professional and other
fees) incurred by the Company resulting from the Cases and are specific to the
reorganization process. The amounts are presented separately because of their
significant non-operating nature. Pursuant to the Plan, the Company issued
140,000 shares of common stock on June 21, 1993 to corporate officers and
certain other key employees for services rendered in connection with the
reorganization of the Company. The Company has reflected the issuance as an
increase in stockholders' equity and an offsetting charge to earnings of $2.9
million based upon the prevailing market price of the common stock on June 21,
1993.
17
<PAGE> 18
FINANCIAL SERVICES
REVENUES
Revenues for the financial services segment for the periods indicated were
as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
U.S. Home Mortgage Corporation and Subsidiaries.......... $10,303 $ 7,828 $6,465
Other financial services subsidiaries.................... 2,824 2,857 3,306
------- ------- ------
$13,127 $10,685 $9,771
------- ------- ------
------- ------- ------
</TABLE>
Mortgage provides financing primarily to purchasers of homes sold by the
Company's housing operations through origination of residential mortgage loans
and engages in the sale of such mortgages and related servicing rights to
unaffiliated investors. Mortgage's operations are affected, among other things,
by general economic conditions, consumer confidence and interest rate
volatility. These factors, together with the number of homes delivered by the
Company, affect the volume of loan originations which in turn impact the
resulting volume of mortgages for sale.
GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expenses in 1993 increased $.5 million from 1992
which had increased $1.8 million from 1991. The increases in 1993 and 1992 were
primarily due to an increase in Mortgage's staffing as a result of increased
volume of activities. The increase in 1992 was also due to opening additional
branch offices.
INTEREST EXPENSE
Interest expense in 1993 was approximately the same as 1992 which had
decreased approximately 48.6% from 1991. The decrease in 1992 was due to a
reduction in long-term borrowings offset in part by an increase in short-term
borrowings.
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 Working Capital Facility (as defined below),
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. Over recent years,
the Company has implemented various operational guidelines to conserve cash,
increase its financial flexibility and reduce its risk by limiting the amount of
land owned directly by the Company. The Company intends to continue to use
Company-owned lots to generate additional cash flow and to continue to emphasize
land acquisitions using rolling lot options, which enable the Company to
initially pay a small fraction of total lot cost and then purchase the lots for
a fixed price on a scheduled or "as needed" basis. The Company believes that
these steps will result in increased cash flows, reduced carrying costs and
limit exposure to market changes and direct land investments.
On the Effective Date, the Company entered into a four-year, $95 million
secured revolving working capital facility (the "Working Capital Facility") with
General Electric Capital Corporation ("GECC"), which replaced the postpetition
credit facility with GECC. At December 31, 1993, nothing was outstanding under
the Working Capital Facility. The Company anticipates that during 1994 it will
periodically reborrow
18
<PAGE> 19
and will have outstanding balances under the Working Capital Facility. See Note
3 of Notes to Consolidated Financial Statements.
On the Effective Date, the Company sold $200 million principal amount of
its 9.75% senior notes due 2003. Approximately $165 million of the net proceeds
thereof were used to pay a portion of the claims of certain unsecured creditors
of the Company and its affiliates under the Plan, and the remainder was used to
repay a portion of amounts outstanding under the postpetition credit facility
with GECC. In November 1993, the Company sold $80 million principal amount of
its 4.875% convertible subordinated debentures due 2005. A portion of the net
proceeds thereof was used to repay the outstanding balance under the Working
Capital Facility and certain other short-term and long-term secured
indebtedness. The remaining net proceeds were used for working capital and
general corporate purposes. See Note 5 of Notes to Consolidated Financial
Statements.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the years ended December 31, 1993, 1992
and 1991 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net cash provided (used by):
Operating activities............................... $(61,613) $ 46,951 $ 27,008
Investing activities............................... 1,520 973 (2,974)
Financing activities............................... 70,262 (48,759) (26,628)
-------- -------- --------
Net increase (decrease) in cash...................... $ 10,169 $ (835) $ (2,594)
-------- -------- --------
-------- -------- --------
</TABLE>
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 cash during 1993 compared to
providing cash in 1992 primarily due to an increase in the number of housing
units under construction, land and finished lot option deposit payments and
reorganization expense payments, offset in part by an increase in the number of
housing units delivered. Cash flows from housing operating activities for the
year ended December 31, 1992 increased as compared to 1991 primarily due to an
increase in the number of housing units delivered, offset in part by an increase
in reorganization expense payments and interest expense payments related to
certain pre-Filing Date secured obligations and borrowings under the
postpetition credit facility with GECC.
Cash flow from housing financing activities for 1993 provided cash compared
to using cash in 1992 primarily due to the net proceeds from the sale of the
Company's 9.75% senior notes and 4.875% convertible subordinated debentures,
offset by the payment of pre-Filing Date liabilities subject to compromise and
the repayment of the postpetition credit facility with GECC. Cash flow used by
housing financing activities for 1992 increased as compared to 1991 primarily
due to repayment of outstanding amounts under the postpetition credit facility
with GECC and repayment of pre-Filing Date secured debt.
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 homes
sold 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.
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. As more fully
discussed in Note 4 of Notes to Consolidated Financial Statements, the
short-term debt
19
<PAGE> 20
consists of a $35 million secured revolving line of credit entered into by
Mortgage on April 15, 1992, as amended (the "Mortgage Credit Facility"). At
December 31, 1993, $20.6 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 its financial services
subsidiaries' debt. The Company believes that the Mortgage Credit Facility,
together with internally generated funds, such as from the sale of residential
mortgage loans and related servicing rights, will be sufficient to provide for
Mortgage's working capital needs.
The Mortgage Credit Facility bears interest at the prime rate and matures
on August 31, 1994. 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 convenants, 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.
OTHER
Impact of Inflation
Inflation not only affects interest rates on funds borrowed by the Company,
but also affects the affordability of permanent mortgage financing available to
prospective customers. Increased construction costs associated with rising
interest rates, as well as increased material costs, compress gross margins in
the short-term, but may be recovered in the long-term through increases in sales
prices, although such increases may reduce sales volume. In recent years,
inflation has not had a significant adverse effect on the Company.
Net Operating Loss Carryforwards and SAFS No. 109
When the Company adopted Statement of Financial Accounting Standards No.
109 in 1992, a valuation allowance was provided for the total amount of deferred
tax assets attributable to its temporary differences and net operating loss
carryforward ("NOL") because the Company was precluded from recognizing the tax
benefit of the NOL during the pendency of the Cases. The Company emerged from
the Cases in June 1993. Thereafter, the Company concluded that it would, more
likely than not, be able to realize substantially all of the benefit associated
with the deferred tax asset based on the Company's historical and current pretax
earnings (adjusted for reorganization items) and business plans. Accordingly,
during the six months ended December 31, 1993, the Company reduced its valuation
allowance by $45 million, which resulted in a reduction of the Company's
provision for income taxes and recognition of a deferred tax asset of $45
million (based on an estimated effective tax rate of 39%) which amount has been
reduced to approximately $33.5 million at December 31, 1993 as a result of
pretax income generated during the last six months of 1993. Pretax income of
approximately $88 million will have to be generated during the NOL carryforward
period for the Company to fully utilize the deferred tax asset as of December
31, 1993. As such recognition is based in part upon current economic conditions
and business plans, future adjustments to the valuation allowance may be
required if circumstances change. The Company provided income taxes for the last
six months of 1993 and will provide income taxes in future periods at its
estimated effective tax rate (39% for the last six months of 1993). The decrease
in the deferred tax asset valuation allowance increased primary income per share
in 1993 by $3.87 per share.
20
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements:
Report of Independent Public Accountants............................................. 22
Consolidated Balance Sheets -- December 31, 1993 and 1992............................ 23
Consolidated Statements of Operations -- For the Years Ended December 31, 1993,
1992 and 1991..................................................................... 24
Consolidated Statements of Cash Flows -- For the Years Ended December 31, 1993,
1992 and 1991..................................................................... 25
Consolidated Statements of Stockholders' Equity -- For the Years Ended December 31,
1993, 1992 and 1991............................................................... 26
Notes to Consolidated Financial Statements........................................... 27
Schedule Included -- For the Years Ended December 31, 1993, 1992 and 1991:
II -- Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees
other than Related Parties..................................................... 39
</TABLE>
21
<PAGE> 22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of U.S. Home Corporation:
We have audited the accompanying consolidated balance sheets of U. S. Home
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1993. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of U.S. Home
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule II is presented
for the purpose of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. The supplemental schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Houston, Texas
February 9, 1994
22
<PAGE> 23
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
-------- ---------
<S> <C> <C>
HOUSING:
Cash (including restricted funds of $698 and $3,856).......................... $ 15,192 $ 8,582
Receivables, net.............................................................. 14,027 13,930
Single-family housing inventories............................................. 491,620 428,932
Option deposits on real estate................................................ 34,618 15,485
Deferred tax asset............................................................ 33,527 --
Other assets.................................................................. 33,019 28,230
-------- ---------
622,003 495,159
-------- ---------
FINANCIAL SERVICES:
Cash (including restricted funds of $4,403 and $5,343)........................ 5,738 8,839
Residential mortgage loans.................................................... 38,412 25,031
Other assets.................................................................. 12,693 14,442
-------- ---------
56,843 48,312
-------- ---------
$678,846 $ 543,471
-------- ---------
-------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
HOUSING:
Current Liabilities --
Short-term debt............................................................. $ -- $ 21,651
Current maturities of long-term debt........................................ 8,093 29,635
Accounts payable............................................................ 47,997 56,044
Accrued expenses and other current liabilities.............................. 30,701 39,422
-------- ---------
86,791 146,752
Long-Term Debt................................................................ 303,844 10,976
-------- ---------
390,635 157,728
Liabilities Subject to Compromise............................................. -- 305,970
-------- ---------
390,635 463,698
-------- ---------
FINANCIAL SERVICES:
Current Liabilities --
Short-term debt and current maturities of long-term debt.................... 20,566 14,085
Accrued expenses and other current liabilities.............................. 9,504 9,851
-------- ---------
30,070 23,936
Long-Term Debt................................................................ 1,102 1,791
-------- ---------
31,172 25,727
-------- ---------
Total Liabilities...................................................... 421,807 489,425
-------- ---------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share redemption value, 1,954,730 shares
outstanding at December 31, 1993............................................ 48,868 --
Common Stock, 9,389,116 shares outstanding at December 31, 1993............... 94 --
Common Stock, 45,312,526 shares outstanding at December 31, 1992.............. -- 4,531
Capital in Excess of Par Value................................................ 303,193 216,322
Retained Earnings (Deficit)................................................... (95,116) (166,807)
-------- ---------
Total Stockholders' Equity............................................. 257,039 54,046
-------- ---------
$678,846 $ 543,471
-------- ---------
-------- ---------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
23
<PAGE> 24
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
HOUSING:
Operating Revenues....................................... $798,950 $679,215 $485,346
-------- -------- --------
Operating Costs and Expenses --
Cost of products sold................................. 667,303 565,867 410,944
Selling, general and administrative................... 89,632 83,303 72,598
Debt restructuring/housing market withdrawal.......... -- 375 872
Interest, net (excluding contractual interest of
$1,300, $5,900 and $4,900 for 1993, 1992 and 1991
related to unsecured debt subject to compromise).... 185 1,252 6,418
-------- -------- --------
757,120 650,797 490,832
-------- -------- --------
Housing Operating Income (Loss).......................... 41,830 28,418 (5,486)
-------- -------- --------
FINANCIAL SERVICES:
Operating Revenues....................................... 13,127 10,685 9,771
-------- -------- --------
Operating Costs and Expenses --
General and administrative............................ 9,049 8,523 6,724
Interest.............................................. 1,268 1,231 2,393
-------- -------- --------
10,317 9,754 9,117
-------- -------- --------
Financial Services Operating Income...................... 2,810 931 654
-------- -------- --------
INCOME (LOSS) BEFORE REORGANIZATION ITEMS AND INCOME
TAXES.................................................... 44,640 29,349 (4,832)
-------- -------- --------
REORGANIZATION ITEMS:
Impact of Plan on Land Utilization, net.................. -- 42,368 --
Other.................................................... 6,915 8,335 3,978
-------- -------- --------
6,915 50,703 3,978
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES.......................... 37,725 (21,354) (8,810)
-------- -------- --------
PROVISION FOR INCOME TAXES --
Federal and State Income Taxes........................... 11,034 -- --
Decrease in Deferred Tax Asset Valuation Allowance....... (45,000) -- --
-------- -------- --------
(33,966) -- --
-------- -------- --------
NET INCOME (LOSS).......................................... $ 71,691 $(21,354) $ (8,810)
-------- -------- --------
-------- -------- --------
INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE:
Primary.................................................. $ 6.16 $ (1.89) $ (.78)
-------- -------- --------
-------- -------- --------
Fully Diluted............................................ $ 5.93 $ (1.89) $ (.78)
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
24
<PAGE> 25
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)........................................... $ 71,691 $(21,354) $ (8,810)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Decrease in deferred tax asset valuation allowance....... (45,000) -- --
Noncash reorganization items............................. 2,940 42,368 --
Other, net (principally depreciation and amortization)... 9,060 11,519 7,380
Changes in assets and liabilities --
Decrease (increase) in receivables, inventories and
other assets........................................ (98,926) (944) 498
Increase (decrease) in accounts payable and
accrued liabilities................................. (11,308) 12,105 27,438
--------- -------- --------
Net cash provided (used) by operating activities............ (71,543) 43,694 26,506
--------- -------- --------
Cash Flows From Investing Activities:
Decrease (increase) in restricted cash...................... 4,098 2,347 (6,437)
Proceeds from investments in mortgages...................... 1,015 4,810 62,746
Other....................................................... (2,626) (68) 1,263
--------- -------- --------
Net cash provided by investing activities................... 2,487 7,089 57,572
--------- -------- --------
Cash Flows from Financing Activities:
Repayment of short-term debt, net of proceeds............... (12,095) (11,755) (10,942)
Net proceeds from sale of senior notes and convertible
subordinated debentures.................................. 271,800 -- --
Repayment of long-term debt................................. (17,022) (31,340) (88,925)
Payment of liabilities subject to compromise................ (166,020) -- --
--------- -------- --------
Net cash provided (used) by financing activities............ 76,663 (43,095) (99,867)
--------- -------- --------
Net Increase (Decrease) In Cash............................... 7,607 7,688 (15,789)
Cash At Beginning Of Year..................................... 8,222 534 16,323
--------- -------- --------
Cash At End Of Year........................................... $ 15,829 $ 8,222 $ 534
--------- -------- --------
--------- -------- --------
Supplemental Disclosure:
Interest paid, before amount capitalized --
Housing.................................................. $ 30,384 $ 19,070 $ 11,322
Financial Services....................................... 1,302 1,260 3,390
--------- -------- --------
$ 31,686 $ 20,330 $ 14,712
--------- -------- --------
--------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE> 26
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK CONVERTIBLE CAPITAL IN RETAINED
--------------------- PREFERRED EXCESS OF EARNINGS
$.10 PAR $.01 PAR STOCK PAR VALUE (DEFICIT)
-------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1990........... $ 4,531 $ -- $ -- $ 216,322 $(136,643)
Net loss for the year.................. -- -- -- -- (8,810)
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1991........... 4,531 -- -- 216,322 (145,453)
Net loss for the year.................. -- -- -- -- (21,354)
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1992........... 4,531 -- -- 216,322 (166,807)
Common and convertible redeemable
preferred stock issued to unsecured
creditors (4,873,650 shares and
2,816,762 shares, respectively)...... -- 49 70,419 57,842 --
Common stock issued to pre-Effective
Date stockholders (3,510,818
shares).............................. (4,531) 35 -- 4,496 --
Common stock issued to corporate
officers and certain key employees
(140,000 shares)..................... -- 1 -- 2,939 --
Conversion of convertible redeemable
preferred stock to common stock
(862,032 shares)..................... -- 9 (21,551) 21,542 --
Exercise of Class B warrants into
common stock (2,606 shares).......... -- -- -- 52 --
Net income for the year................ -- -- -- -- 71,691
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1993........... $ -- $ 94 $ 48,868 $ 303,193 $ (95,116)
-------- -------- ----------- ---------- ---------
-------- -------- ----------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE> 27
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and all wholly-owned subsidiaries after elimination of all
significant intercompany balances and transactions.
The Company is engaged in two related industry segments, the on-site
development of single-family residential communities and financial services.
Identifiable assets and the results of operations of the Company's segments are
reported in the consolidated balance sheets and statements of operations.
Capital expenditures, depreciation and amortization expense for the years ended
December 31, 1993, 1992 and 1991 were insignificant.
Income (Loss) Per Share
Income (loss) per common and common equivalent share has been computed
using the weighted average number of common and common equivalent shares
outstanding, assuming the new capital structure (see Note 7) had been effective
as of the beginning of all periods presented. This differs from historical
income (loss) per common and common equivalent share for 1992 and 1991 of $(.47)
and $(.20), previously reported (based on the Company's former capital structure
and 45,312,508 and 45,312,469 shares of common stock, $.10 par value per share,
outstanding at December 31, 1992 and 1991, respectively). In management's
opinion, prior year income (loss) per share information is of limited use or
relevance given the significant changes in ownership and the Company's capital
structure which occurred as a result of the Company's reorganization pursuant to
the Plan (see Note 2). The weighted average number of common and common
equivalent shares outstanding for primary income per share include the dilutive
effect of the convertible redeemable preferred stock and Class B warrants for
all periods presented and stock options for periods subsequent to June 21, 1993
(based on the average stock price for the periods). Fully diluted income per
share includes the dilutive effect of the Class B warrants and stock options
(based on the higher year-end stock price) and the assumed conversion of the
convertible subordinated debentures. The following weighted average number of
common and common equivalent shares were used to compute income (loss) per
share:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Primary........................................ 11,631,071 11,284,885 11,284,885
Fully diluted.................................. 12,110,237 11,284,885 11,284,885
</TABLE>
Cash Equivalents
The Company considers all short-term investments with an initial maturity
of less than 90 days to be cash equivalents.
Financial Instruments
Where the Company believes that other than insignificant differences may
exist between the fair value and recorded value of financial instruments, as
defined by Statement of Financial Accounting Standards ("SFAS") No. 107,
estimates of fair value have been provided along with key assumptions integral
to the Company's assessment. For items such as trade receivables and payables,
cash and cash equivalents, short-term debt and option deposits (all of which are
considered financial instruments by SFAS No. 107), the Company believes that
fair value approximates recorded value because of the typically liquid,
short-term nature, market rate terms and lack of specific concentration of these
instruments.
27
<PAGE> 28
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
HOUSING
Sales and Profit Recognition
Profit is recognized from the sale of real estate at time of closing, i.e.,
when sufficient down payment has been made; any financing has been arranged;
title, possession and other attributes of ownership have been transferred to the
buyer; and the Company is not obligated to perform additional significant
activities after the sale.
Inventories and Valuation
The components of single-family housing inventories are as follows (dollars
in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Housing completed and under construction....................... $193,827 $142,720
Models......................................................... 34,366 30,160
Finished lots.................................................. 83,140 83,430
Land under development......................................... 58,824 48,105
Raw land held for development or sale.......................... 121,463 124,517
-------- --------
$491,620 $428,932
-------- --------
-------- --------
</TABLE>
The costs of acquiring and developing land and constructing certain
applicable amenities are allocated to the related parcels. The Company records
land inventories held for sale or investment at the lower of cost or net
realizable value. Net realizable value differs from market value in that, among
other things, market value assumes a cash sale under current market conditions,
considers a potential purchaser's requirement for future profit and discounts
the timing of estimated future cash receipts, whereas net realizable value is
the price obtainable in the future based on the current intended use of the
land, net of disposal and holding costs, without provision for future profits or
discounting future cash flow to present value. Housing inventories are recorded
using the specific identification method at the lower of cost or net realizable
value. Excluding the $42,368,000 provision recorded in the fourth quarter of
1992 (see Note 2), provisions to reduce land and housing inventories to the
lower of cost or net realizable value for 1993, 1992 and 1991 were not
significant. Total land and housing reserves were $48,362,000, $59,777,000 and
$50,226,000 at December 31, 1993, 1992 and 1991, respectively.
During 1993 and 1992, the Company completed several exchanges of land
assets with third parties totalling approximately $5,697,000 and $22,300,000,
respectively, in which the Company received land suitable for single-family
detached homes, which can be more readily developed and sold, in return for land
zoned primarily for commercial use and single-family attached homes for which
the Company had no near-term plans to utilize. The exchanges are treated as
non-cash transactions for purposes of the consolidated statements of cash flow.
Capitalization Period
Interest is capitalized on land, finished building lots and single-family
residential housing construction costs during the development and construction
period. Interest is capitalized to eligible assets using an allocation method
based on the Company's actual interest costs. A summary of interest for 1993,
1992 and
28
<PAGE> 29
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1991 (adjusted in 1992 to reflect the impact of interest included in
reorganization items and asset write-downs and other provisions) follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Capitalized at beginning of year --
U.S. Home........................................ $ 57,474 $ 92,898 $ 78,470
Joint ventures consolidated...................... 1,234 -- 17,425
-------- -------- --------
58,708 92,898 95,895
-------- -------- --------
Paid and accrued................................... 22,105 14,462 28,155
Expensed........................................... (185) (1,252) (6,418)
-------- -------- --------
Capitalized........................................ 21,920 13,210 21,737
Included in cost of sales.......................... (22,342) (23,338) (24,734)
Included in reorganization items, asset write-downs
and other........................................ (2,706) (25,296) --
-------- -------- --------
Capitalized at end of year......................... $ 55,580 $ 57,474 $ 92,898
-------- -------- --------
-------- -------- --------
</TABLE>
Under Chapter 11 ("Chapter 11") of title 11 of the United States Code (the
"Code"), interest on a majority of the Company's debt was stayed. Had the
accrual of interest not been stayed, paid and accrued interest for 1993, 1992
and 1991 would have been increased by approximately $12,000,000, $26,400,000 and
$21,600,000, respectively, and interest expense for 1993, 1992 and 1991 would
have been increased by approximately $1,300,000, $5,900,000 and $4,900,000,
respectively.
FINANCIAL SERVICES
Revenue Recognition
Commitment fees collected or paid by the Company with respect to loans held
for sale are recognized as revenue or expense when the loans are sold to
investors or when it becomes evident the commitment will not be used.
The sale of loans and loan servicing rights is recognized when the Company
enters into a contractual agreement with an investor to sell residential
mortgage loans and the related servicing rights in which substantially all of
the risks and rewards of ownership are transferred to the purchaser. During the
years ended December 31, 1993, 1992 and 1991, revenues included net gains
(losses) from the sale of loans of $(262,000), $(655,000) and $967,000,
respectively, and net gains from the sale of servicing of $3,829,000, $3,189,000
and $1,678,000, respectively.
Residential Mortgage Loans
Residential mortgage loans held for sale ($6,660,000 at December 31, 1993)
are included in the accompanying consolidated balance sheets at the lower of
cost or market on an aggregate basis. The Company estimates the fair value of
residential mortgage loans held at December 31, 1993 approximated recorded value
based on quoted market prices (at December 31, 1993) for similar loans sold
either on a whole loan basis or pooled and sold as collateral for
mortgage-backed securities.
Hedging Contracts
The Company's mortgage banking subsidiary, U.S. Home Mortgage Corporation
("Mortgage"), manages its interest rate risk through hedging techniques and
regularly enters into mandatory forward delivery contracts ("hedging contracts")
to sell mortgage backed securities to securities dealers at a future date at a
29
<PAGE> 30
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
fixed yield. Changes in the market value of hedging contracts applicable to
residential mortgage loans held for sale are recognized in income when the
changes occur.
(2) REORGANIZATION AND EMERGENCE FROM CHAPTER 11
On June 21, 1993 (the "Effective Date"), the Company and 46 of its
affiliates emerged from Chapter 11 pursuant to their First Amended Consolidated
Plan of Reorganization (as modified, the "Plan"). Seven other affiliates
(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 (the "Liquidating Plan").
None of the financial services subsidiaries were a party to the Company's
reorganization.
The following table summarizes the impact of the Plan on the various
classes of creditors as of December 31, 1993 (dollars in thousands):
<TABLE>
<CAPTION>
CLAIMS SATISFIED BY
---------------------------------------
STOCK
ALLOWED -----------------
CLAIMS CASH (1) OTHER PREFERRED COMMON
-------- -------- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Unsecured --
Senior debt......................... $209,950 $137,516 $ -- $68,113 $ 4,321
Subordinated debt................... 69,328 17,500 -- -- 51,828
Other............................... 14,123 9,720(2) 355(2) 2,306 1,742
-------- -------- ---- ------- -------
293,401 164,736 355 70,419 57,891
Secured creditors..................... 1,284 1,284 -- -- --
-------- -------- ---- ------- -------
$294,685 $166,020 $355 $70,419 $57,891
-------- -------- ---- ------- -------
-------- -------- ---- ------- -------
</TABLE>
- ------------
(1) Cash payments were from the net proceeds from the sale of the Company's
9.75% senior notes due 2003 (see Note 5).
(2) Includes claims of $1,491 which were settled for cash payments of $1,167.
The Company has reflected the gain on the settlement of these claims ($324)
in "reorganization items, net" in the accompanying consolidated statements
of operations.
Under the Plan, creditors received 4,873,650 shares of common stock and
2,816,762 shares of convertible redeemable preferred stock and pre-Effective
Date stockholders received 3,510,818 shares of common stock and warrants
(exercisable at $20 per share), which, if fully exercised, would result in the
stockholders receiving an additional 1,904,757 shares of the Company's common
stock.
In connection with the Plan negotiations, the Company reached accords to
restructure certain secured nonrecourse debt agreements with several lenders.
Under the terms of the agreements, the Company retained land assets valued at
approximately $25,600,000 and $13,700,000 in 1993 and 1992, respectively, that
secured such nonrecourse debt and a total of approximately $2,300,000 and
$27,300,000 in 1993 and 1992, respectively, of debt was forgiven. The Company
has reflected the gain on debt extinguishment and associated offsetting
write-down of land assets net in "reorganization items, net" in the accompanying
consolidated statements of operations given that the restructuring was integral
to the Plan and the lack of any real economic impact on the Company due to the
nonrecourse nature of the debt.
In connection with preparing to implement the Plan, the Company recorded
provisions totaling $69,668,000 in 1992 to reflect the impact of the Plan on
land utilization ($42,368,000) and certain nonrecourse debt restructuring
($27,300,000) and recorded a gain from nonrecourse debt forgiven in connection
with the Plan ($27,300,000). The resulting net amount ($42,368,000) was included
in "reorganization items, net" in the accompanying consolidated statement of
operations for 1992. The primary
30
<PAGE> 31
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
component of the charge was a change in the intended use and reduced holding
period for certain land assets necessitated by increased debt amortization and
service requirements of certain indebtedness originally planned to be issued
under the Plan.
Also in connection with the Plan, the Company issued 140,000 shares of
common stock to corporate officers and certain other key employees for services
rendered in connection with the reorganization of the Company. The Company has
reflected the issuance as an increase in stockholders' equity and an offsetting
charge to earnings (which charge has been included in the accompanying
consolidated statement of operations for 1993 as "reorganization items, net") of
$2,940,000 based upon the prevailing market price of the Company's common stock
at the Effective Date.
The Liquidating Plan provided, among other things, that the proceeds from
the liquidation of the assets of each Liquidating Debtor, if any, after payment
of that Liquidating Debtor's administrative and priority claims, would be
distributed to that Liquidating Debtor's secured and unsecured creditors.
(3) HOUSING SHORT-TERM DEBT
Short-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Revolving working capital facility......................... $ -- $ --
Postpetition credit facility............................... -- 16,688
Credit agreement financing................................. -- 155,685
Model home, acquisition and development and other
short-term debt.......................................... -- 7,120
Less pre-Filing Date claims included in liabilities subject
to compromise............................................ -- (157,842)
--------- ---------
$ -- $ 21,651
--------- ---------
--------- ---------
</TABLE>
In June 1993, the Company entered into a four year, $95,000,000 secured
revolving working capital agreement (the "Working Capital Facility") with
General Electric Capital Corporation ("GECC") which, as amended, replaced the
postpetition credit facility with GECC. Borrowings under the Working Capital
Facility are generally being used to provide working capital. However, funds
from the Working Capital Facility have also been used to pay certain allowed
claims pursuant to the Plan and to refinance certain indebtedness. In addition,
the Company may use up to $25,000,000 under the Working Capital Facility for
letter of credit obligations. The Working Capital Facility bears interest at a
premium over the higher of the prime rate and the rate applicable to 90 day
commercial paper and matures on June 21, 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
$122,200,000 at December 31, 1993. This collateral has provided the Company with
an available borrowing base capacity of approximately $50,400,000 at December
31, 1993, all of which was unused. 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.
The maximum amounts of short-term borrowings from banks and other financial
institutions (excluding short-term debt subject to compromise in 1993, 1992 and
1991) outstanding at any time during 1993, 1992 and 1991 were $60,900,000,
$59,400,000 and $54,600,000, respectively. The average amounts of short-term
debt outstanding from banks and other financial institutions (excluding
short-term debt subject to compro-
31
<PAGE> 32
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
mise in 1993, 1992 and 1991) during 1993, 1992 and 1991 were $34,900,000,
$47,500,000 and $48,500,000, respectively, and the weighted average interest
rates, without giving effect to commitment fees, were 8.3%, 9.0% and 12.6%,
respectively. Computations of such rates were made based upon the weighted
average of outstanding loan balances during the respective years.
(4) FINANCIAL SERVICES SHORT-TERM DEBT
Financial services short-term debt ($20,566,000 and $14,079,000 outstanding
at December 31, 1993 and 1992, respectively) consists of an agreement with a
financial institution which, as amended, provides Mortgage with a $35,000,000
secured revolving line of credit (the "Mortgage Credit Facility"). The Mortgage
Credit Facility, which is not guaranteed by the Company, matures on August 31,
1994 and bears interest at the prime rate. Certain residential mortgage loans
have been pledged as collateral to secure Mortgage's obligations under the
Mortgage Credit Facility. The Company expects the Mortgage Credit Facility to be
extended or, if replaced, will be replaced by a credit facility similar to the
terms and conditions to its present credit facility.
The maximum amounts of financial services' short-term borrowings from banks
and other financial institutions outstanding at any time during 1993, 1992 and
1991 were $32,600,000, $22,800,000 and $6,600,000, respectively. The average
amounts of short-term debt outstanding from banks and other financial
institutions during 1993, 1992 and 1991 were $16,200,000, $11,100,000 and
$2,400,000, respectively, and the weighted average interest rates, without
giving effect to balance deficiency fees, were 6.6%, 7.5% and 8.9%,
respectively. Computations of such rates were made based upon the weighted
average of outstanding loan balances during the respective years.
(5) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
-------- ---------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Housing --
Notes and mortgage notes payable........................... $ 31,937 $ 45,565
9.75% Senior notes 2003.................................... 200,000 --
4.875% Convertible subordinated debentures due 2005........ 80,000 --
13.25% -- 17.5% Senior debt, due 1994 through 2000......... -- 42,735
5.5% -- 12.375% Subordinated debt, due 1994 through 1996... -- 66,316
-------- ---------
311,937 154,616
Less: Current maturities................................... (8,093) (29,635)
Pre-Filing Date claims included in
liabilities subject to compromise.................. -- (114,005)
-------- ---------
303,844 10,976
Financial Services........................................... 1,102 1,791
-------- ---------
Total long-term debt......................................... $304,946 $ 12,767
-------- ---------
-------- ---------
</TABLE>
Housing notes and mortgage notes payable are primarily for the acquisition
and development of land, with interest rates ranging from 6.7% to 9.0%. Assets
pledged as collateral under these agreements totaled approximately $76,400,000
at December 31, 1993.
On the Effective Date, the Company completed the sale of $200,000,000
principal amount of its 9.75% senior notes due June 15, 2003. Interest is
payable semi-annually. On or after June 15, 1998, the senior notes
32
<PAGE> 33
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
may be redeemed at the option of the Company, in whole or in part, at prices
ranging from 103.656% (during the 12 month period ended June 14, 1999) to 100%
(on and after June 15, 2001) of the principal amount thereof, together with
accrued and unpaid interest. The indenture relating to the senior notes contains
numerous convenants, including a minimum tangible net worth requirement and a
limitation on the incurring of additional debt.
In November 1993, the Company completed the sale of $80,000,000 principal
amount of its 4.875% convertible subordinated debentures due November 1, 2005.
Interest is payable semi-annually. The debentures are convertible at any time at
the option of the holder into common stock at a conversion price of $35.50 per
share, subject to adjustment under certain conditions. On or after November 1,
1996, the debentures may be redeemed at the option of the Company, in whole or
in part, at prices ranging from 103.25% (during the 12 month period ending
October 31, 1997) to 100% (on or after November 1, 2004) of the principal amount
thereof, together with accrued and unpaid interest.
Upon a change of control of the Company, holders of the senior notes and
the debentures will have the right to require the Company to redeem the senior
notes and debentures at a price of 101% of the principal amount of the senior
notes and 100% of the principal amount of the debentures, together with accrued
and unpaid interest. There can be no assurance that sufficient funds will be
available at the time of a change of control to make the required repurchases.
In addition, the Working Capital Facility prohibits the Company from
repurchasing the senior notes and debentures prior to the termination of the
Working Capital Facility.
At December 31, 1993, housing long-term debt matures as follows: $8,093,000
in 1994, $10,428,000 in 1995, $8,551,000 in 1996, $4,718,000 in 1997, $147,000
in 1998, $200,000,000 in 2003 and $80,000,000 in 2005.
(6) INCOME TAXES
The Company and its subsidiaries file consolidated federal income tax
returns.
The components of the provision for income taxes consisted of the
following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1993 1992 1991
-------- ---- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current --
Federal................................................ $ 555 $ 33 $ 413
State.................................................. 345 2 22
-------- ---- -----
900 35 435
-------- ---- -----
Deferred --
Federal................................................ 9,078 (33) (413)
State.................................................. 1,056 (2) (22)
-------- ---- -----
10,134 (35) (435)
-------- ---- -----
Decrease in valuation allowance.......................... (45,000) -- --
-------- ---- -----
Total provision................................ $(33,966) $ -- $ --
-------- ---- -----
-------- ---- -----
</TABLE>
Deferred income taxes provided under Statement of Financial Accounting
Standards No. 109 ("SFAS No. 109") are determined based upon the difference
between the financial statements and the tax basis of assets and liabilities.
The net deferred tax assets at December 31, 1993, consisted of deferred tax
assets of $54,800,000, which included deferred tax assets of $21,700,000
relating to land and housing reserves which were expensed for financial
reporting purposes while being deferred for federal income tax reporting
purposes and $19,100,000 relating to the Company's net operating loss
carryforward ("NOL"), and deferred tax liabilities of $15,700,000, which
included deferred tax liabilities of $11,700,000 relating to interest expense
33
<PAGE> 34
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
which was capitalized for financial reporting purposes while being expensed for
federal income tax reporting purposes. At December 31, 1992, deferred tax assets
and deferred tax liabilities were $98,900,000 and $34,900,000, respectively, and
were primarily attributable to the same items as noted above.
The Company has available an NOL of approximately $49,000,000, which
expires in the years 1999 through 2006. In addition, the Company has a credit
for alternative minimum tax ("AMT") paid ($1,800,000 at December 31, 1993) which
can be carried forward and be used to reduce regular taxes payable in excess of
AMT in future years.
When the Company adopted SFAS No. 109 in 1992, a valuation allowance was
provided for the total amount of deferred tax assets attributable to the NOL
because the Company was precluded from recognizing the tax benefit of the NOL
during the pendency of the Cases. The Company emerged from the Cases in June
1993. Thereafter, the Company concluded that it would, more likely than not, be
able to realize substantially all of the benefit associated with deferred tax
assets based on the Company's historical and current pretax earnings (adjusted
for reorganization items) and business plans. Accordingly, during the six months
ended December 31, 1993, the Company reduced its valuation allowance by
$45,000,000, resulting in a reduction of the Company's provision for income
taxes and recognition of a deferred tax asset in the same amount (based on an
estimated effective tax rate of 39%) which amount has been reduced to
approximately $33,500,000 at December 31, 1993 as a result of pretax income
generated during the last six months of 1993. Pretax income of approximately
$88,000,000 will have to be generated during the NOL carryforward period for the
Company to fully utilize the deferred tax asset as of December 31, 1993. As such
recognition is based in part upon current economic conditions and business
plans, future adjustments to the valuation allowance may be required if
circumstances change. The deferred tax benefit attributable to the remaining NOL
will reduce taxable income when realized unless the valuation allowance is
reduced at an earlier date. The decrease in the deferred tax asset valuation
allowance increased primary income per share in 1993 by $3.87 per share.
As a result of the Company's recognition of the deferred tax asset
attributable to its NOL, effective July 1, 1993 (and for all future periods),
the Company provided income taxes based on its effective tax rate. Excluding the
decrease in deferred tax asset valuation allowance in 1993, the following table
reconciles the statutory federal income tax rate to the effective income tax
rate for:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1992 1991
---- ----- -----
<S> <C> <C> <C>
Tax provision (benefit) at statutory rate..................... 35.0% (34.0)% (34.0)%
Increases (decreases) in taxes resulting from --
State and local income taxes, net of federal income tax
provision................................................ 4.0 (4.0) (4.0)
Utilization of net operating loss carryforward in first half
of 1993.................................................. (9.8) -- --
Benefit of net operating loss carryforward not currently
recognized............................................... -- 37.8 37.5
Other, net.................................................. -- .2 .5
---- ----- -----
Effective rate................................................ 29.2% --% --%
---- ----- -----
---- ----- -----
</TABLE>
(7) STOCKHOLDERS' EQUITY
As of December 31, 1993, the Company's capital structure consisted of the
following:
COMMON STOCK -- Authorized 50,000,000 shares, par value $.01 per share,
outstanding 9,389,116 shares.
<TABLE>
<S> <C>
Shares reserved for issuance --
Convertible subordinated debentures..................................... 2,253,521
Convertible redeemable preferred stock.................................. 2,037,968
Class B warrants........................................................ 1,902,151
Stock options........................................................... 600,000
Employee stock payment plan............................................. 250,000
---------
7,043,640
---------
---------
</TABLE>
34
<PAGE> 35
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PREFERRED STOCK -- Authorized 10,000,000 shares, par value $.10 per share,
including 2,037,968 convertible redeemable shares and 7,962,032 undesignated as
to series shares.
(a) Convertible redeemable -- $25 per share liquidation preference and
redemption value, outstanding 1,954,730 shares. The shares may be redeemed
at the option of the Company at any time at an amount equal to the
liquidation preference/redemption value ($25 per share) plus any declared
and unpaid dividends. Each share of convertible redeemable preferred stock
is convertible, subject to adjustments, into one share of common stock at
the option of the holder and at any time prior to its redemption by the
Company. During 1993, 862,032 shares of convertible redeemable preferred
stock were converted into an equal number of shares of common stock. If the
closing price of the common stock is equal to or greater than $30 per share
for 20 consecutive trading days, the convertible redeemable preferred stock
will automatically convert into common stock. Any shares converted are
restored to the status of authorized and unissued preferred stock without
designation as to series. The holders of the convertible redeemable
preferred stock are entitled to one vote for each share of convertible
redeemable preferred stock held by them.
The holders of the convertible redeemable preferred stock vote together as
a single class with the holders of the common stock on all matters
requiring stockholder action.
(b) Undesignated as to series -- None outstanding. Shares may be issued in one
or more classes or series with preference, limitations and relative rights
as determined by the Board of Directors at time of issuance. Any shares
issued will rank, as to dividends and liquidation preference, junior to the
convertible redeemable preferred stock.
CLASS B WARRANTS -- In connection with the Plan, pre-Effective Date
stockholders received Class B warrants to acquire an aggregate of 1,904,757
shares of common stock for $20 per share, of which 2,606 warrants had been
exercised at December 31, 1993. The warrants expire in June 1998.
The Working Capital Facility, the senior note indenture and the Company's
second restated certificate of incorporation contain restrictions on the (i)
payment of dividends on the Company's common and convertible redeemable
preferred stock and (ii) purchase, redemption, retirement or other acquisition
of the Company's common and preferred stock, other than upon conversion of the
convertible redeemable preferred stock into common stock and upon exercise of
the Class B warrants and options to acquire common stock issued pursuant to
stock option and stock payment plans of the Company into common stock.
Prior to the Effective Date, the Company had 80,000,000 shares of common
stock, $.10 par value, authorized, of which 45,312,526 were outstanding and
2,500,000 shares of preferred stock authorized, of which none were outstanding.
Pursuant to the Plan, such common and preferred stocks were cancelled. As of the
Effective Date, convertible redeemable preferred stock, common stock and Class B
warrants were issued to creditors and the pre-Effective Date stockholders (see
Note 2).
(8) STOCK OPTION AND STOCK PAYMENT PLANS
STOCK OPTION PLANS
As of the Effective Date, the Company adopted a qualified and non-qualified
stock option plan for key employees (the "Employee Plan") to purchase a maximum
of 500,000 shares of the Company's common stock. On August 19, 1993, the Company
adopted, subject to stockholder approval, an additional stock option plan
whereby options may be granted to non-employee directors (the "Director Plan")
to purchase a maximum of 100,000 shares of the Company's common stock. Options
under the Director Plan will be granted annually in a fixed amount.
35
<PAGE> 36
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Options granted under the Employee Plan will be granted at not less than
the closing price of the common stock on date of grant. Options granted under
the Director Plan will be granted at not less than the average closing price of
the common stock for the ten consecutive trading days prior to the date of
grant; provided that the grant price will not be less than 95% of the average
closing price of the common stock for the 20 consecutive trading days prior to
the date of grant. The options are exercisable as specified in the stock options
agreements relating to the options and may not be exercised later than ten years
from the date of grant and, with respect to the Director Plan, no options may be
exercised prior to stockholder approval.
As of the Effective Date and subsequent thereto, options for 318,500 shares
were granted at exercise prices ranging from $23.29 to $26.50 per share to
certain key employees and non-employee directors, options for an aggregate of
10,000 shares were cancelled and no options were exercised.
At December 31, 1993, options for 308,500 shares were outstanding at
exercise prices ranging from $23.29 to $26.50 per share of which none were
exercisable. As of December 31, 1993, 291,500 shares were available for granting
of options, including 47,500 shares to non-employee directors.
All stock options outstanding prior to the Effective Date were cancelled.
STOCK PAYMENT PLAN
On December 10, 1993, the Company adopted, subject to stockholder approval,
an employee stock payment plan (the "Payment Plan") for key employees whereby up
to 25% of an employee's annual incentive pay (compensation other than base
salary) may be payable in shares of the Company's common stock as determined by
the Company's Board of Directors. The Payment Plan has a five-year term and
commences on January 1, 1994. As of December 31, 1993, 250,000 shares of the
Company's common stock were reserved for issuance under the Payment Plan.
Shares to be issued under the Payment Plan will be valued at the average
closing price of the common stock for a ten consecutive trading day period as
defined in the plan.
(9) PROFIT SHARING
The Company has a qualified profit sharing plan for the benefit of its
employees which may be terminated at any time at the option of the Company. The
annual contributions may be made in such amount as the Board of Directors of the
Company determines, limited to 15% of the total compensation (as defined) of all
participating employees. The aggregate amounts accrued for contribution to the
profit sharing plan for distribution to employees were $546,000 in 1993 and
$493,000 in 1992. There were no contributions to the profit sharing plan in
1991.
(10) COMMITMENTS AND CONTINGENCIES
As of December 31, 1993, the Company had refundable and non-refundable
deposits outstanding totaling $34,618,000 for options and contracts to purchase
undeveloped land and finished lots having a total purchase price of
approximately $237,104,000. These options expire at various dates through 1999.
The Company is involved in litigation arising from the normal course of
business, none of which, in the opinion of the Company, will have a material
adverse effect on the financial position or results of operations of the
Company.
Mortgage manages its interest rate risk through hedging techniques and
regularly enters into hedging contracts. At December 31, 1993, Mortgage had
$29,500,000 in hedging contracts outstanding. Mortgage's exposure to credit risk
in the event of nonperformance by the other party to the agreement would be
considerably less than the contract amount.
36
<PAGE> 37
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION
Summarized quarterly financial information for the years ended December 31,
1993 and 1992 is as follows (dollars in thousands, except per share data). See
Note 1 for discussion of the 1992 fourth quarter adjustment and the 1992
restatement of income (loss) per common and common equivalent share.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1993 1993 1993 1993
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues........................ $ 164,464 $192,328 $ 223,983 $218,175
Gross profit.............................. $ 28,311 $ 31,584 $ 36,881 $ 34,871
Operating income.......................... $ 7,779 $ 8,924 $ 12,709 $ 12,418
Financial Services --
Operating revenues........................ $ 2,590 $ 3,356 $ 3,490 $ 3,691
Operating income.......................... $ 402 $ 631 $ 1,125 $ 652
Reorganization Items........................ $ 2,890 $ 4,025 $ -- $ --
Net Income.................................. $ 5,029 $ 5,251 $ 53,438 $ 7,973
Income Per Common and Common Equivalent
Share --
Primary................................... $ .45 $ .46 $ 4.61 $ .67
Fully diluted............................. $ .45 $ .46 $ 4.55 $ .61
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1992 1992 1992 1992
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues........................ $ 140,400 $173,669 $ 179,460 $185,686
Gross profit.............................. $ 23,774 $ 29,205 $ 29,836 $ 30,533
Operating income.......................... $ 3,887 $ 7,665 $ 8,661 $ 8,205
Financial Services --
Operating revenues........................ $ 2,023 $ 2,971 $ 2,954 $ 2,737
Operating income (loss)................... $ 155 $ (130) $ 614 $ 292
Reorganization Items........................ $ 1,041 $ 1,963 $ 2,845 $ 44,854
Net Income (Loss)........................... $ 3,001 $ 5,572 $ 6,430 $(36,357)
Income (Loss) Per Common and Common
Equivalent Share --
Primary................................... $ .27 $ .49 $ .57 $ (3.22)
Fully diluted............................. $ .27 $ .49 $ .57 $ (3.22)
</TABLE>
(12) RECEIVABLES
The Company had housing and financial services receivables of approximately
$2,799,000 in 1993 and $2,050,000 in 1992 that were due after one year. The
balance due after one year in 1993 included notes and mortgage notes receivable
of $315,000 with interest rates ranging from 7.0% to 10.5%. A majority of the
balance matures within five years.
37
<PAGE> 38
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(13) ACCRUED EXPENSES
At December 31, 1993 and 1992, accrued expenses and other current
liabilities, excluding $31,361,000 in 1992 of housing accrued expenses and other
current liabilities included in "liabilities subject to compromise", consisted
of the following:
<TABLE>
<CAPTION>
1993 1992
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Housing --
Customer deposits.............................................. $14,750 $ 9,346
Salaries and other compensation................................ 6,701 6,069
Interest....................................................... 1,711 5,230
Taxes, other than income taxes................................. 3,647 5,403
Other.......................................................... 3,892 13,374
------- -------
$30,701 $39,422
------- -------
------- -------
Financial Services --
Accounts payable............................................... $ 4,706 $ 4,963
Other.......................................................... 4,798 4,888
------- -------
$ 9,504 $ 9,851
------- -------
------- -------
</TABLE>
(14) SUPPLEMENTARY INCOME STATEMENT INFORMATION
The following expenses are included in the consolidated statements of
operations for the years ended December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Depreciation and amortization of property, plant and
equipment, income properties, model furniture and
furnishings and other depreciable assets --
Housing................................................ $4,284 $3,870 $4,313
Financial services..................................... 102 90 116
------ ------ ------
$4,386 $3,960 $4,429
------ ------ ------
------ ------ ------
Advertising expense, Housing............................. $5,002 $5,648 $6,124
------ ------ ------
------ ------ ------
</TABLE>
38
<PAGE> 39
SCHEDULE II
U.S. HOME CORPORATION AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES,
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN E
COLUMN D -----------------
-----------------------
COLUMN B BALANCE AT END
---------- DEDUCTIONS OF PERIOD
COLUMN A BALANCE AT COLUMN C ----------------------- -----------------
- --------------------------------------- BEGINNING -------- AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN-OFF CURRENT CURRENT
- --------------------------------------- ---------- -------- --------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1991:
Accounts and notes receivable from
directors, officers and
employees --
Philip J. Walsh(1).............. $ 100,000 $ -- $ 47,000 $ -- $53,000 $ --
Year Ended December 31, 1992:
Accounts and notes receivable from
directors, officers and
employees --
Philip J. Walsh(1).............. $ 53,000 $ -- $ -- $ -- $53,000 $ --
Year Ended December 31, 1993:
Accounts and notes receivable from
directors, officers and
employees --
Philip J. Walsh(1).............. $ 53,000 $ -- $ 53,000 $ -- $ -- $ --
</TABLE>
- ---------------
(1) The note was collateralized by a continuing security interest in funds owed
the employee by the Company and bore interest at the average annual prime
interest rate. In connection with the implementation of the USH Plan in
1993, the amount due the Company was offset against the amount owed the
employee.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
39
<PAGE> 40
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the directors of the Company is incorporated by
reference from the Nominees for Directors Section, pages 3 through 7, of the
Company's Proxy Statement, dated March 3, 1994, for the Annual Meeting of
Stockholders to be held on April 6, 1994, filed pursuant to Section 14 of the
Exchange Act ("1993 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information is incorporated by reference from the Executive
Compensation Section, pages 7 through 9 of the 1993 Proxy Statement.
ITEM 12. COMMON STOCK
The information relating to the security ownership of certain beneficial
owners and management is incorporated by reference from the Security Ownership
of Management and Certain Beneficial Owners Section, pages 20 through 21 of the
1993 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. The following financial statements and financial statement
schedules are filed as part of this Report:
See Index to Financial Statements -- Item 8.
(a) 3. Exhibits
<TABLE>
<S> <C>
2.1 -- First Amended Consolidated Plan of Reorganization of U.S. Home
Corporation and certain of its affiliates dated April 1, 1993.
Incorporated by reference from exhibit 2.1 to U.S. Home Corporation's
Current Report on Form 8-K filed June 9, 1993.
2.2 -- Modification to "USH Debtors' First Amended Consolidated Plan of
Reorganization." Incorporated by reference from exhibit 2.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
2.3 -- First Amended Joint Plan of Reorganization of certain affiliates of
U.S. Home Corporation dated April 1, 1993. Incorporated by reference
from exhibit 2.3 to U.S. Home Corporation's Current Report on Form
8-K filed June 9, 1993.
2.4 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Consolidated Plan of Reorganization of U.S. Home Corporation
and certain of its affiliates. Incorporated by reference from exhibit
28.1 to U.S. Home Corporation's Current Report on Form 8-K filed June
9, 1993.
2.5 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Joint Plan of Reorganization of certain affiliates of U.S.
Home Corporation. Incorporated by reference from exhibit 28.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
</TABLE>
40
<PAGE> 41
<TABLE>
<S> <C>
3.1 -- Second Restated Certificate of Incorporation of U.S. Home Corporation
effective on June 21, 1993. Incorporated by reference from exhibit
3.1 to Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
3.2 -- Amended and Restated By-Laws of U.S. Home Corporation, Dated as of
June 21, 1993. Incorporated by reference from exhibit 3.2 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
4.1 -- Trust Indenture, dated as of November 3, 1993, by and between U.S.
Home Corporation and Marine Midland Bank, N.A., as trustee, relating
to U.S. Home Corporation's 4.875% Convertible Subordinated
Debentures. Incorporated by reference from exhibit 4.1 to U.S. Home
Corporation's Current Report on Form 8-K filed November 3, 1993.
10.1 -- Amended and Restated Loan Agreement, dated as of June 21, 1993,
between U.S. Home Corporation and General Electric Capital
Corporation. Incorporated by reference from exhibit 10.1 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1(i) -- First Amendment to Amended and Restated Loan Agreement, dated as of
September 7, 1993, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.1(i)
to Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1(ii) -- Second Amendment to Amended and Restated Loan Agreement, dated as of
September 15, 1993, between U.S. Home Corporation and General
Electric Capital Corporation. Incorporated by reference from exhibit
10.1(ii) to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.1(iii) -- Third Amendment to Amended and Restated Loan Agreement, dated as of
October 22, 1993, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.2(iii)
to Amendment No. 3 to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.1(iv) -- Fourth Amendment to Amended and Restated Loan Agreement, dated as of
December 31, 1993, between U.S. Home Corporation and General Electric
Capital Corporation.
10.2 -- Trust Indenture, dated as of June 21, 1993, by and between U.S. Home
Corporation and IBJ Schroder Bank & Trust Company, as trustee,
relating to U.S. Home Corporation's 9.75% Senior Notes due 2003.
Incorporated by reference from exhibit 10.2 to Registration Statement
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
10.3 -- Warrant Agreement, dated as of June 21, 1993, between U.S. Home
Corporation and The First National Bank of Boston relating to U.S.
Home Corporation's Class B Warrants. Incorporated by reference from
exhibit 10.3 to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.4 -- U.S. Home Corporation's 1993 Stock Option Plan. Incorporated by
reference from exhibit 4.1 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
10.5 -- U.S. Home Corporation's Non-Employee Directors' Stock Option Plan.
Incorporated by reference from exhibit 10.5 to Registration Statement
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
10.6 -- U.S. Home Corporation's Employee Stock Payment Plan. Incorporated by
reference from exhibit B to U.S. Home Corporation's 1993 Proxy
Statement dated March 3, 1994.
</TABLE>
41
<PAGE> 42
<TABLE>
<S> <C>
10.7 -- U.S. Home Corporation's 1993 Corporate Officers Incentive
Compensation Plan. Incorporated by reference from exhibit 10.4 to
Amendment No. 1 to Registration Statement on Form S-1 of U.S. Home
Corporation (Registration No. 33-60638).
10.8 -- U.S. Home Corporation's Key Employees' Separation Pay Plan.
Incorporated by reference from exhibit 10.5 to Amendment No. 1 to
Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
10.9 -- Employment and Consulting Agreement, dated May 12, 1986, between U.S.
Home Corporation and Robert J. Strudler. Incorporated by reference
from exhibit 10.1 to U.S. Home Corporation's Current Report on Form
8-K dated July 8, 1986.
10.9(i) -- First Amendment to Employment and Consulting Agreement, effective as
of February 8, 1990, between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.27(i) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1989.
10.9(ii) -- Second Amendment to Employment and Consulting Agreement, effective as
of December 6, 1990 between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.14(ii) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1990.
10.9(iii) -- Third Amendment to Employment and Consulting Agreement, effective as
of June 21, 1993, between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.8(iii) to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.10 -- Employment and Consulting Agreement, dated May 12, 1986, between U.S.
Home Corporation and Isaac Heimbinder. Incorporated by reference from
exhibit 10.2 to U.S. Home Corporation's Current Report on Form 8-K
dated July 8, 1986.
10.10(i) -- First Amendment to Employment and Consulting Agreement, effective as
of February 8, 1990, between U.S. Home Corporation and Isaac
Heimbinder. Incorporated by reference from exhibit 10.28(i) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1989.
10.10(ii) -- Second Amendment to Employment and Consulting Agreement, effective as
of December 6, 1990, between U.S. Home Corporation and Isaac
Heimbinder. Incorporated by reference from exhibit 15 to U.S. Home
Corporation's Annual Report on Form 10-K for the year ended December
31, 1990.
10.10(iii) -- Third Amendment to Employment and Consulting Agreement, effective as
of June 21, 1993, between U.S. Home Corporation and Isaac Heimbinder.
Incorporated by reference from exhibit 10.9(iii) to Registration
Statement on Form S-3 of U.S. Home Corporation (Registration No.
33-68966).
10.11 -- Registration Rights Agreement, dated as of June 21, 1993, between
U.S. Home Corporation and Loomis, Sayles & Company Incorporated, on
behalf of certain holders of the common stock of U.S. Home
Corporation. Incorporated by reference from exhibit 10.10 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.12 -- Trust Agreement, dated January 29, 1987, between U.S. Home
Corporation, as Grantor and Kenneth J. Hanau, Jr. and Charles A.
McKee, as Trustee, with respect to deferred compensation for certain
executives of U.S. Home Corporation. Incorporated by reference from
exhibit 10.24 to U.S. Home Corporation's Annual Report on Form 10-K
for the year ended December 31, 1986.
10.13 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Isaac Heimbinder. Incorporated by
reference from exhibit 10.25 to U.S. Home Corporation's Annual Report
on Form 10-K for the year ended December 31, 1986.
</TABLE>
42
<PAGE> 43
<TABLE>
<S> <C>
10.14 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Robert J. Strudler. Incorporated
by reference from exhibit 10.26 to U.S. Home Corporation's Annual
Report on Form 10-K for the year ended December 31, 1986.
10.15 -- Letter, dated as of March 20, 1990, between U.S. Home Corporation and
William E. Reichard, as Successor Trustee, with respect to Trust
Agreements dated December 18, 1986 between U.S. Home Corporation, as
Grantor, Kenneth J. Hanau, Jr., as Trustee, with respect to
retirement benefits for Robert J. Strudler and Isaac Heimbinder.
Incorporated by reference from exhibit 10.19 to U.S. Home
Corporation's Annual Report on Form 10-K for the year ended December
31, 1992.
10.16 -- Warehousing Credit and Security Agreement (single-family mortgage
loans), dated as of April 15, 1992, between U.S. Home Mortgage
Corporation and Residential Funding Corporation. Incorporated by
reference from exhibit 10.3 to U.S. Home Corporation's Quarterly
Report on Form 10-Q for the period ended March 31, 1992.
10.16(i) -- First Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 1, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.1 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1992.
10.16(ii) -- Second Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 11, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.2 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1992.
10.16(iii) -- Third Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of October 21, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.3 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended
September 30, 1992.
10.16(iv) -- Fourth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of May 28, 1993, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference to exhibit 10.13(iv) to Amendment No. 2 to
Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
10.16(v) -- Fifth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 15, 1993, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.1 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1993.
10.16(vi) -- Sixth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of September 15, 1993,
between U.S. Home Mortgage Corporation and Residential Funding
Corporation. Incorporated by reference from exhibit 10.15(vi) to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.17 -- U.S. Home Corporation's Amortizing Incentive Plan. Incorporated by
reference from exhibit 4.2 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
</TABLE>
43
<PAGE> 44
<TABLE>
<S> <C>
10.18 -- Form of Indemnification Agreement for directors and executive
officers. Incorporated by reference from exhibit 10.15 to amendment
No. 2 to Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
11 -- Computation of earnings per share.
22 -- Subsidiaries of U.S. Home Corporation.
24 -- Consent of Independent Public Accountants.
</TABLE>
(b) Report on Form 8-K
On November 3, 1993, under Item 5 "Other Events" of Form 8-K, the Company
filed a Current Report on Form 8-K reporting the signing of an Indenture, dated
as of November 3, 1993, between U.S. Home Corporation and Marine Midland Bank,
N.A., as trustee, relating to the public offering of the Company's 4.875%
Convertible Subordinated Debentures.
No other Current Report on Form 8-K was filed by the Company during
October, November or December 1993.
44
<PAGE> 45
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Date: February 22, 1994 U.S. HOME CORPORATION
By: /s/ ISAAC HEIMBINDER
Isaac Heimbinder
President and Chief Operating Officer
By: /s/ CHESTER P. SADOWSKI
Chester P. Sadowski
Vice President, Controller and Chief
Accounting Officer
(principal accounting officer)
By: /s/ THOMAS A. NAPOLI
Thomas A. Napoli
Vice President, Finance and Chief
Financial Officer
(principal financial officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ ROBERT J. STRUDLER Director, Chairman and Chief February 22, 1994
Robert J. Strudler Executive Officer
(principal executive
officer)
/s/ ISAAC HEIMBINDER Director, President and February 22, 1994
Isaac Heimbinder Chief Operating Officer
/s/ GLEN ADAMS Director February 22, 1994
Glen Adams
/s/ STEVEN L. GERARD Director February 22, 1994
Steven L. Gerard
/s/ KENNETH J. HANAU, JR. Director February 22, 1994
Kenneth J. Hanau, Jr.
/s/ JACK L. MCDONALD Director February 22, 1994
Jack L. McDonald
/s/ CHARLES A. MCKEE Director February 22, 1994
Charles A. McKee
/s/ GEORGE A. POOLE, JR. Director February 22, 1994
George A. Poole, Jr.
/s/ HERVE RIPAULT Director February 22, 1994
Herve Ripault
/s/ JAMES W. SIGHT Director February 22, 1994
James W. Sight
/s/ MALCOLM T. HOPKINS Director February 22, 1994
Malcolm T. Hopkins
</TABLE>
45
<PAGE> 46
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NUMBERED
NUMBER PAGE
- --------- -----------
<S> <C> <C>
10.1(IV) -- Fourth Amendment to Amended and Restated Loan Agreement, dated as of
December 31, 1993, between U.S. Home Corporation and General Electric
Capital Corporation................................................... 47
11 -- Computation of earnings per share..................................... 52
22 -- Subsidiaries of U.S. Home Corporation................................. 54
24 -- Consent of Independent Public Accountants............................. 56
</TABLE>
46
<PAGE> 1
EXHIBIT 10.1(IV)
47
<PAGE> 2
EXHIBIT 10.1(IV)
FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Fourth
Amendment"), dated effective as of December 31, 1993, between U.S. HOME
CORPORATION, a Delaware corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender").
RECITALS:
A. Borrower and Lender have previously entered into that certain Amended
and Restated Loan Agreement, dated as of June 21, 1993, that certain First
Amendment to Amended and Restated Loan Agreement, dated as of September 7, 1993,
that certain Second Amendment to Amended and Restated Loan Agreement, dated as
of September 15, 1993 and that certain Third Amendment to Amended and Restated
Loan Agreement, dated as of October 22, 1993 (as previously amended and as
hereafter amended from time to time, the "Loan Agreement").
B. The parties hereto desire to further amend the Loan Agreement.
C. GENEL Company, Inc., an Oregon corporation, which is licensed as a
mortgage banker in Arizona (Arizona Mortgage Banker Number BK 8284), has been
engaged by Lender to, and did, negotiate the terms of this Fourth Amendment as
such terms relate to Arizona matters.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS
In addition to the terms defined herein, capitalized terms used in this
Fourth Amendment shall have the respective meanings ascribed thereto in the Loan
Agreement.
2. FOURTH AMENDMENT TO LOAN AGREEMENT
The Loan Agreement is, effective as of December 31, 1993, amended as
follows:
2.1. Section 1 of the Loan Agreement is amended by adding or amending and
restating, as the case may be, the definitions set forth below:
" 'Average Interest Rate' shall mean, for any fiscal month, the
percentage obtained by (i) dividing the interest expense on GECC Composite
Commercial Paper for such fiscal month by the average daily principal
amount of GECC Composite Commercial Paper outstanding during such fiscal
month and (ii) dividing the quotient obtained in clause (i) by the actual
number of days in such fiscal month and (iii) multiplying the quotient
obtained in clause (ii) by the actual number of days in the calendar year
in which such fiscal month occurs."
" 'Commitment Default Percentage Rate' shall mean, on any date, the
applicable percentage specified below determined based upon the amount of
the Maximum Commitment in effect on such date:
<TABLE>
<CAPTION>
MAXIMUM APPLICABLE
COMMITMENT PERCENTAGE
--------------------------------------------------------------
<S> <C>
Up to $25MM......................................... 1.0%
$25MM and up to $50MM............................... 0.75%
$50MM and up to $75MM............................... 0.5%
$75MM and above..................................... 0.25%"
</TABLE>
48
<PAGE> 3
" 'Commitment Percentage Rate' shall mean, on any date, the applicable
percentage specified below determined based upon the amount of the Maximum
Commitment in effect on such date:
<TABLE>
<CAPTION>
MAXIMUM APPLICABLE
COMMITMENT PERCENTAGE
--------------------------------------------------------------
<S> <C>
Up to $25MM......................................... 0.5%
$25MM and up to $50MM............................... 0.375%
$50MM and up to $75MM............................... 0.25%
$75MM and above..................................... 0.125%"
</TABLE>
" 'Fourth Amendment' shall mean that certain Fourth Amendment to Amended
and Restated Loan Agreement, dated effective as of December 31, 1993, between
Borrower and Lender."
" 'GECC Composite Commercial Paper Rate' shall mean the Average Interest
Rate on the actual principal amount of all of the GECC Composite Commercial
Paper outstanding for the full fiscal month preceding the interest billing
month. The GECC Composite Commercial Paper Rate shall be determined by GE
Capital and certified to Borrower in writing by an authorized employee of
Lender."
" 'GECC Composite Commercial Paper' shall mean GE Capital's outstanding
commercial paper with maturities of twelve (12) months or less from sources
within the United States but excluding the current portion of GE Capital's long
term debt and GECC Financial Corporation's borrowing and interest expense."
" 'Land Account Balance' shall mean, on any date, the net aggregate sum of
book cost (net of reserves) of (i) Land Held for Investment or in the Process of
Development owned by Borrower or Guarantors on such date; (ii) Development Costs
incurred by Borrower or Guarantors on such date; (iii) the amount, if any, by
which the USH Book Cost of all Finished Building Lots owned by Borrower or any
Guarantor on such date exceeds $65,000,000; (iv) Option Deposits made by
Borrower or Guarantors (including refundable Option Deposits) on such date; and
(v) Advance Costs incurred by Borrower or Guarantors on such date."
2.2. The second sentence of Section 2.5 is hereby amended and restated in
its entirety to read as follows:
"Borrower shall also have the right at any time, upon 10 days prior written
notice to Lender, to reduce permanently the amount of the Maximum
Commitment in increments of $5,000,000."
2.3. Section 2.9(a) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"(a) Borrower shall pay interest to Lender monthly in arrears, on the
first day of each month (each, an 'Interest Payment Date'), in an amount
equal to the quotient of (i) an amount equal to (A) the sum of the daily
unpaid principal amounts of the Loan outstanding on each day during the
previous month multiplied by (B) a rate equal to the GECC Composite
Commercial Paper Rate for the previous month plus 4.4% (the 'Stated Rate'),
divided by (ii) 360."
2.4. Section 2.10 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"2.10 Availability and Administration Fees.
(a) Borrower shall pay to Lender on the first Business Day of each
calendar quarter prior to the Commitment Termination Date, an availability
fee (each, an 'Availability Fee') in an amount equal to the greater of (i)
$125,000 and (ii) the Commitment Percentage Rate multiplied by the Maximum
Commitment in effect on the date such fee becomes due, which amount shall
be prorated for any partial quarter during which this Agreement is in
effect. Upon the occurrence and during the continuation of an Event of
Default, the Availability Fee will increase to the greater of (i) $250,000
or (ii) the Commitment Default Percentage Rate multiplied by the Maximum
Commitment in effect on the date such fee becomes due. Borrower shall pay
the Availability Fee to Lender in immediately available funds; provided
that to the extent the conditions of Section 2.2 hereof are met, the
Availability Fee shall, at the option of Borrower, constitute a Revolving
Credit Advance.
49
<PAGE> 4
(b) As additional consideration for Lender's ongoing administrative
costs in making the Loan and other financial accommodations available to
Borrower, Borrower agrees to pay to Lender on January 1, 1994, and
thereafter on the first Business Day of each month prior to the Commitment
Termination Date, an administration fee in an amount equal to $25,000 per
month, which such amount shall be fully earned and non-refundable when due
(each such payment being an 'Administration Fee')."
2.5. Clause (A) of Section 5.1(a) of the Loan Agreement is hereby amended
and restated in its entirety to read "a statement in reasonable detail showing
the calculations used in determining the financial and real estate covenants
under Sections 7.3 and 7.10 (including, without limitation, the amount of each
component which is used in calculating the Land Account Balance), and".
2.6. Clause (A) of Section 5.1(b) of the Loan Agreement is hereby amended
and restated in its entirety to read "a statement in reasonable detail showing
the calculations used in determining the financial and real estate covenants
under Sections 6.3, 7.3 and 7.10 (including, without limitation, the amount of
each component which is used in calculating the Land Account Balance), and".
2.7. Clause (i) of Section 5.1(c) of the Loan Agreement is hereby amended
and restated in its entirety to read "a statement in reasonable detail showing
the calculations used in determining the financial and real estate covenants
under Sections 6.3, 7.3, 7.9 and 7.10 (including, without limitation, the amount
of each component which is used in calculating the Land Account Balance), and".
2.8. Subsection (b) of Section 7.10 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
"(b) Consolidated Land Acquisition Expenditures. Borrower shall not
and shall not permit its Subsidiaries to make Consolidated Land Acquisition
Expenditures (i) for the period from December 1, 1993 through December 31,
1994 that, in the aggregate, exceed $55,000,000 when calculated during such
period on the basis of a rolling twelve-month period and (ii) for all
periods from and after January 1, 1995 that, in the aggregate, exceed
$40,000,000 when calculated during such periods on the basis of a rolling
twelve-month period."
2.9. Subsection (c) of Section 7.10 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
"(c) Maximum Land Account Balance. Borrower shall not, at any time,
permit its Land Account Balance to exceed $260,000,000."
3. MODIFICATION FEE
In consideration of Lender's agreement to the amendments and modifications
set forth in this Fourth Amendment, Borrower agrees to pay, contemporaneously
with the execution and delivery by Borrower of this Fourth Amendment, a fee to
Lender in the amount of $118,750.
4. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to Lender that:
(a) All the representations and warranties of the Loan Parties
contained in the Loan Agreement or in any of the Loan Documents are true
and correct on, and as if made on, the date of this Fourth Amendment,
except to the extent that any such representation or warranty expressly
relates to an earlier date and for changes therein permitted or
contemplated by the Loan Agreement.
(b) After giving effect to this Fourth Amendment, no event has
occurred and is continuing, or would result from the execution of this
Fourth Amendment, which constitutes or would constitute a Default or an
Event of Default.
(c) The execution, delivery and performance of this Fourth Amendment
have been duly authorized by all necessary corporate action, and this
Fourth Amendment is the legal and binding obligation of Borrower,
enforceable in accordance with its terms.
50
<PAGE> 5
(d) Borrower's execution, delivery and performance of this Fourth
Amendment does not contravene, violate or conflict with any provision of
any laws, statutes, rules, regulations or any order or any decree of any
court to which Borrower or any of its Subsidiaries are subject or any
contract, agreement, or understanding to which Borrower or any of its
Subsidiaries is a party.
5. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS
5.1. Upon the effectiveness of this Fourth Amendment, from and after the
date hereof, each reference in the Loan Agreement to "this Agreement,"
"hereunder," "hereof," or words of like import referring to the Loan Agreement,
and each reference in the other Loan Documents to "the Loan Agreement,"
"thereunder," "thereof" or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement, as amended hereby.
5.2. Except as specifically amended above, the Loan Agreement, and all
other Loan Documents are and shall continue to be in full force and effect and
are hereby ratified and confirmed in all respects. Without limiting the
generality of the foregoing, the Collateral Documents and all of the Collateral
described therein do and shall continue to secure the payment of all Obligations
of Borrower and its Subsidiaries under the Loan Agreement, as amended hereby,
and other Loan Documents.
5.3. Except as provided herein, the execution, delivery and effectiveness
of this Fourth Amendment shall not operate as a waiver of any right, power or
remedy of Lender under the Loan Agreement or any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
6. MISCELLANEOUS
6.1. This Fourth Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute one
agreement.
6.2. In all respects, including all matters of construction, validity and
performance, this Fourth Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws, and any applicable laws of the United States
of America.
6.3. THIS FOURTH AMENDMENT, THE LOAN AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Fourth Amendment has been duly executed and is
effective as of the date first above written.
U.S. HOME CORPORATION
By: /s/ THOMAS A. NAPOLI
Thomas A. Napoli
Vice President -- Finance and
Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ MARK T. LACOURSE
Mark T. LaCourse
Attorney-in-Fact
51
<PAGE> 1
EXHIBIT 11
52
<PAGE> 2
EXHIBIT 11
U.S. HOME CORPORATION AND SUBSIDIARIES
INCOME (LOSS) PER COMMON SHARE FOR THE CONSOLIDATED STATEMENTS
OF OPERATIONS
INCOME (LOSS) HAS BEEN COMPUTED ON THE WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING AS FOLLOWS:
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Income (loss) per common and common
equivalent shares --
Net income (loss)................................. $ 71,691 $ (21,354) $ (8,810)
----------- ----------- -----------
----------- ----------- -----------
Weighted average common shares outstanding........ 11,259,262 11,284,885 11,284,885
Effect of assumed exercise of dilutive stock
options
and warrants................................... 371,809 -- --
----------- ----------- -----------
Total common and common equivalent shares......... 11,631,071 11,284,885 11,284,885
----------- ----------- -----------
----------- ----------- -----------
Income (loss) per common and common
equivalent shares................................. $ 6.16 $ (1.89) $ (.78)
----------- ----------- -----------
----------- ----------- -----------
Income (loss) per common share, assuming
full dilution --
Net income (loss)................................. $ 71,691 $ (21,354) $ (8,810)
Add interest applicable to 4.875% convertible
subordinated debentures........................ 174 -- --
----------- ----------- -----------
Income (loss) per common share, assuming full
dilution.......................................... $ 71,865 $ (21,354) $ (8,810)
----------- ----------- -----------
----------- ----------- -----------
Total common and common equivalent shares......... 11,631,071 11,284,885 11,284,885
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...................................... 102,550 -- --
Assumed conversion of 4.875% convertible
subordinated debentures at $35.50 per share at
date of issuance (see Note 5 of Notes to
Consolidated Financial Statements)............. 376,616 -- --
----------- ----------- -----------
Common shares, assuming full dilution............. 12,110,237 11,284,885 11,284,885
----------- ----------- -----------
----------- ----------- -----------
Income (loss) per common share, assuming
full dilution.................................. $ 5.93 $ (1.89) $ (.78)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ---------------
Note a -- See Note 1 of Notes to Consolidated Financial Statements
53
<PAGE> 1
EXHIBIT 22
54
<PAGE> 2
EXHIBIT 22
SUBSIDIARIES OF THE COMPANY
The following table sets forth the names of U.S. Home's subsidiaries and
the state in which incorporated. All subsidiaries are directly or indirectly
wholly-owned by U.S. Home. Certain insignificant subsidiaries are omitted.
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
---------------
<S> <C>
U.S. Home Acceptance Corporation................................. Delaware
U.S. Home Mortgage Corporation................................... Florida
USH II Corporation........................................... Delaware
U.S. Home Insurors, Inc.......................................... Florida
U.S.H. Indemnity Company, Ltd................................ Bermuda
San Felipe Indemnity Company, Ltd............................ Bermuda
Fidelity Guaranty and Acceptance Corporation..................... Delaware
</TABLE>
55
<PAGE> 1
EXHIBIT 24
56
<PAGE> 2
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 9, 1994 included in this Form 10-K, into the
Company's previously filed Registration Statement on Form S-8 (Registration
Statement No. 33-64712).
ARTHUR ANDERSEN & CO.
Houston, Texas
February 22, 1994
57
