<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________.
Commission File Number 1-5899
U.S. HOME CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 21-0718930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 West Loop South, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-2311
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES X NO
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1994
Common Stock, $.01 par value 10,325,747 shares
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U.S. HOME CORPORATION
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--June 30,
1994 and December 31, 1993 3
Consolidated Condensed Statements of Operations--
Three and Six Months Ended June 30,
1994 and 1993 5
Consolidated Condensed Statements of Cash Flows--
Six Months Ended June 30, 1994 and 1993 7
Notes to Consolidated Condensed Financial Statements 8
Review by Independent Public Accountants 12
Report of Independent Public Accountants 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Part II. Other Information
Item 2. Changes in Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 21
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
ASSETS
June 30, December 31,
1994 1993
____________ _____________
(Unaudited)
HOUSING:
Cash (including restricted funds) $ 1,364 $ 15,192
Receivables, net 31,881 14,027
Single-family housing inventories 544,760 491,620
Option deposits on real estate 41,827 34,618
Deferred tax asset 24,406 33,527
Other assets 38,953 33,019
_________ _________
683,191 622,003
_________ _________
FINANCIAL SERVICES:
Cash (including restricted funds) 5,153 5,738
Residential mortgage loans 24,894 38,412
Other assets 10,526 12,693
_________ _________
40,573 56,843
_________ _________
$ 723,764 $ 678,846
========= =========
The accompanying notes are an integral part of these balance sheets.
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<PAGE> 4
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1994 1993
____________ _____________
(Unaudited)
HOUSING:
Current Liabilities -
Short-term debt $ 19,046 $ -
Current maturities of long-term debt 8,414 8,093
Accounts payable 66,002 47,997
Accrued expenses and other
current liabilities 39,683 30,701
_________ _________
133,145 86,791
Long-Term Debt 303,259 303,844
_________ _________
436,404 390,635
_________ _________
FINANCIAL SERVICES:
Current Liabilities -
Short-term debt 7,240 20,566
Accrued expenses and other
current liabilities 7,012 9,504
_________ _________
14,252 30,070
Long-Term Debt 1,082 1,102
_________ _________
15,334 31,172
_________ _________
Total Liabilities 451,738 421,807
_________ _________
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share
redemption value, authorized 1,441,254
and 2,037,968 shares at June 30, 1994
and December 31, 1993, outstanding
1,358,016 and 1,954,730 shares at
June 30, 1994 and December 31, 1993 33,950 48,868
Common Stock, $.01 par value, authorized
50,000,000 shares, outstanding 10,015,947
and 9,389,116 shares at June 30, 1994
and December 31, 1993 100 94
Capital In Excess of Par Value 318,859 303,193
Retained Earnings (Deficit) (80,883) (95,116)
Total Stockholders' Equity _________ _________
272,026 257,039
_________ _________
$ 723,764 $ 678,846
========= =========
The accompanying notes are an integral part of these balance sheets.
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U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended
June 30,
__________________
1994 1993
________ ________
HOUSING:
Operating Revenues $238,143 $192,328
________ ________
Operating Costs and Expenses -
Cost of products sold 200,001 161,059
Selling, general and administrative 26,430 22,260
Interest, net - 85
________ ________
226,431 183,404
________ ________
Housing Operating Income 11,712 8,924
________ ________
FINANCIAL SERVICES:
Operating Revenues 2,943 3,356
________ ________
Operating Costs and Expenses -
General and administrative 2,786 2,373
Interest 113 352
________ ________
2,899 2,725
________ ________
Financial Services Operating
Income 44 631
________ ________
INCOME BEFORE REORGANIZATION ITEMS AND
INCOME TAXES 11,756 9,555
REORGANIZATION ITEMS, NET - 4,025
________ ________
INCOME BEFORE INCOME TAXES 11,756 5,530
PROVISION FOR INCOME TAXES 4,584 279
________ ________
NET INCOME $ 7,172 $ 5,251
======== ========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary $ .63 $ .46
======== ========
Fully diluted $ .55 $ .46
======== ========
The accompanying notes are an integral part of these statements.
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<PAGE> 6
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Six Months Ended
June 30,
________ ________
1994 1993
________ ________
HOUSING:
Operating Revenues $460,143 $356,792
________ ________
Operating Costs and Expenses -
Cost of products sold 385,805 297,452
Selling, general and administrative 51,477 42,440
Interest, net - 197
________ ________
437,282 340,089
________ ________
Housing Operating Income 22,861 16,703
________ ________
FINANCIAL SERVICES:
Operating Revenues 6,243 5,946
________ ________
Operating Costs and Expenses -
General and administrative 5,452 4,369
Interest 320 544
________ ________
5,772 4,913
________ ________
Financial Services Operating
Income 471 1,033
________ ________
INCOME BEFORE REORGANIZATION ITEMS AND
INCOME TAXES 23,332 17,736
REORGANIZATION ITEMS, NET - 6,915
________ ________
INCOME BEFORE INCOME TAXES 23,332 10,821
PROVISION FOR INCOME TAXES 9,099 541
________ ________
NET INCOME $ 14,233 $ 10,280
======== ========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary $ 1.23 $ .91
======== ========
Fully diluted $ 1.07 $ .91
======== ========
The accompanying notes are an integral part of these statements.
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U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
_________________
1994 1993
________ ________
Net Cash Used by Operating Activities $(17,309) $(48,295)
________ ________
Net Cash Flows From Investing Activities:
Proceeds from investments in mortgages,
net of purchases 866 308
Purchase of property, plant and equipment,
net of proceeds (789) (373)
Increase in restricted cash (30) (4,773)
Other (279) (277)
________ _______
Net cash used by investing activities (232) (5,115)
________ _______
Net Cash Flows From Financing Activities:
Proceeds from short-term debt, net of
repayments 5,720 31,536
Long-term debt assumed 1,037 -
Repayment of long-term debt (3,659) (12,974)
Proceeds from sale of 9.75% senior notes - 194,000
Payment of liabilities subject to compromise - (164,704)
________ ________
Net cash provided by financing activities 3,098 47,858
________ ________
Net Decrease in Cash (14,443) (5,552)
Cash At Beginning Of Period 15,829 8,222
________ ________
Cash At End of Period $ 1,386 $ 2,670
======== ========
Supplemental Disclosure:
Interest paid, before amount capitalized -
Housing $ 14,650 $ 16,514
Financial Services 372 484
________ ________
$ 15,022 $ 16,998
======== ========
The accompanying notes are an integral part of these statements.
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U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1994
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated condensed balance sheet as of December
31, 1993, which has been derived from audited financial statements, and
the accompanying unaudited consolidated condensed financial statements
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note
disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations. Although
the Company believes that the disclosures made are adequate to ensure
that the information presented is not misleading, it is suggested that
these condensed financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
latest Annual Report on Form 10-K.
In the opinion of the Company, the accompanying consolidated condensed
financial statements contain all adjustments (all of which were normal
and recurring adjustments) necessary to present fairly the Company's
financial position as of June 30, 1994 and December 31, 1993 and its
results of operations for the three and six month periods ended June
30, 1994 and 1993 and cash flows for the six month periods ended June
30, 1994 and 1993.
Because of the seasonal nature of the Company's business, the results
of operations for the three and six month periods ended June 30, 1994
and 1993 are not necessarily indicative of the results for the full
year.
(2) INVENTORIES
The components of single-family housing inventories are as follows:
June 30, December 31,
1994 1993
__________ ___________
(Dollars in Thousands)
Housing completed and under construction $216,185 $193,827
Models 39,539 34,366
Finished lots 102,387 83,140
Land under development 73,209 58,824
Raw land held for development or sale 113,440 121,463
________ ________
$544,760 $491,620
======== ========
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(3) HOUSING SHORT-TERM DEBT
Housing short-term debt consists of the following:
June 30, December 31,
1994 1993
_________ ___________
(Dollars in Thousands)
Revolving working capital facility $ 18,017 $ -
Land acquisition financing 1,029 -
_________ __________
$ 19,046 $ -
========= ==========
The revolving working capital facility, as amended (the "Working
Capital Facility"), consists of a four-year, $95,000,000 secured
financing agreement with General Electric Capital Corporation ("GECC"),
of which $25,000,000 may be used for letter of credit obligations.
The Working Capital Facility bears interest at a premium over the GECC
composite commercial paper rate and matures on June 20, 1997.
In accordance with the Working Capital Facility, the Company has
provided GECC liens on its cash, personal property and certain finished
lots and single-family housing units, including models, with a cost of
approximately $133,439,000 at June 30, 1994. This collateral has
provided the Company with an available borrowing base capacity of
approximately $46,986,000 at June 30, 1994, of which $18,017,000 was
outstanding. The Working Capital Facility contains numerous real
estate and financial covenants, including an inventory-to-backlog ratio
and restrictions on the incurring of additional debt, creation of liens
and the purchases of land.
(4) LONG-TERM DEBT
Long-term debt consists of the following:
June 30, December 31,
1994 1993
________ ____________
(Dollars in Thousands)
Notes and mortgage notes payable $ 31,673 $ 31,937
9.75% Senior notes due 2003 200,000 200,000
4.875% Convertible subordinated
debentures due 2005 80,000 80,000
________ ________
311,673 311,937
Less - current maturities (8,414) (8,093)
________ ________
303,259 303,844
Financial Services 1,082 1,102
________ ________
Total long-term debt $304,341 $304,946
======== ========
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(5) HOUSING INTEREST
A summary of housing interest for the three and six month periods ended
June 30, 1994 and 1993 follows (dollars in thousands):
Three Month Period
____________________
1994 1993
________ ________
Capitalized at beginning of period $ 54,884 $ 55,640
________ ________
Paid and accrued 7,673 3,541
Expensed - (85)
________ ________
Capitalized 7,673 3,456
Included in cost of sales (7,337) (4,715)
Included in other (16) (996)
________ ________
Capitalized at end of period $ 55,204 $ 53,385
======== ========
Six Month Period
_____________________
1994 1993
_________ _________
Capitalized at beginning of period $ 55,580 $ 58,708
________ ________
Paid and accrued 15,272 5,875
Expensed - (197)
________ ________
Capitalized 15,272 5,678
Included in cost of sales (14,196) (9,349)
Included in other (1,452) (1,652)
________ ________
Capitalized at end of period $ 55,204 $ 53,385
======== ========
(6) INCOME PER SHARE
The following weighted average number of common and common equivalent
shares were used to compute income per share for the three and six
month periods ended June 30, 1994 and 1993:
Three Month Period Six Month Period
_______________________ _______________________
1994 1993 1994 1993
__________ __________ __________ __________
Primary 11,373,960 11,298,731 11,568,389 11,291,846
Fully diluted 13,627,481 11,298,731 13,821,910 11,291,846
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<PAGE> 11
Primary income per share has been computed on the weighted average
number of common and common equivalent shares outstanding, after the
dilutive effect of the convertible redeemable preferred stock and Class
B warrants and the assumed exercise of stock options for the periods
subsequent to June 21, 1993. No effect was given to the shares that
would be issuable on exercise of the warrants and stock options in the
three month period ended June 30, 1994 and issuable on exercise of
stock options in the six month period ended June 30, 1994, since they
were antidilutive. Fully diluted income per share includes the assumed
conversion of the convertible subordinated debentures.
(7) INCOME TAXES
Income tax provisions for interim periods are estimated based on
projections of the annual effective tax rates. The effective tax rate
(5%) for the three and six month periods ended June 30, 1993, reflects
estimated federal and state alternative minimum taxes, net of expected
net operating loss ("NOL") utilization. As a result of the Company's
recognition of a deferred tax asset attributable to its NOL in the
third quarter of 1993, the effective tax rate used for the three and
six month periods ended June 30, 1994 is 39%.
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REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co., independent public accountants, has performed a
review of the consolidated condensed balance sheet as of June 30, 1994 and
the related consolidated condensed statements of operations for the three and
six month periods ended June 30, 1994 and 1993 and cash flows for the six
month periods ended June 30, 1994 and 1993 included in this report. Such
review was made in accordance with standards established by the American
Institute of Certified Public Accountants.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO U.S. HOME CORPORATION:
We have reviewed the accompanying consolidated condensed balance sheet of
U.S. Home Corporation (a Delaware corporation) and subsidiaries as of June
30, 1994, and the related consolidated condensed statements of operations for
the three and six month periods ended June 30, 1994 and 1993 and cash flows
for the six month periods ended June 30, 1994 and 1993. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet at December 31, 1993, and the
related consolidated statements of operations and cash flows for the year
then ended (not presented separately herein), and in our report dated
February 9, 1994, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
consolidated condensed balance sheet as of December 31, 1993 is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it was derived.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Houston, Texas
July 21, 1994
<PAGE>
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
_____________________
Housing
_______
The following table sets forth certain financial information for the periods
indicated (dollars in thousands, except average sales price):
Three Months Ended Six Months Ended
June 30, June 30,
____________________ ____________________
1994 1993 1994 1993
_________ _________ ________ _________
Revenues -
Single-family homes $229,554 $190,055 $448,094 $352,291
Land and other 8,589 2,273 12,049 4,501
________ ________ ________ ________
Total $238,143 $192,328 $460,143 $356,792
======== ======== ======== ========
Single-family homes -
Gross margin amount $ 37,168 $ 30,636 $ 72,610 $ 58,104
Gross margin percentage 16.2% 16.1% 16.2% 16.5%
Units delivered 1,511 1,378 2,991 2,549
Average sales price $151,900 $137,900 $149,800 $138,200
New orders taken 1,571 1,647 3,911 3,810
Backlog at end of period 3,624 3,133
Selling, general and
administrative expenses as
a percentage of housing
revenues 11.1% 11.6% 11.2% 11.9%
Interest expense -
Paid and accrued $ 7,673 $ 3,541 $ 15,272 $ 5,875
Capitalized $ 7,673 $ 3,456 $ 15,272 $ 5,678
Percent capitalized 100.0% 97.6% 100.0% 96.7%
Capitalized interest included
in cost of products sold $ 7,337 $ 4,715 $ 14,196 $ 9,349
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Revenues -
________
Revenues from sales of single-family homes for the three and six month
periods ended June 30, 1994 increased 20.8% and 27.2% compared to the three
and six month periods ended June 30, 1993. The increases resulted from 9.7%
and 17.3% increases in the number of housing units delivered and 10.2% and
8.4% increases in average sales prices. The increase in units delivered in
1994 was primarily attributable to improved backlog levels at March 31, 1994
and December 31, 1993 when compared to the backlog levels at March 31, 1993
and December 31, 1992. The increase in the average sales prices in 1994 was
primarily due to price increases to offset cost increases.
New orders taken for the three month period ended June 30, 1994 decreased
4.6% compared to the same period in 1993, while new orders taken for the six
month period ended June 30, 1994 increased 2.7% compared to the same period
in 1993. See Part II, "Item 5 - Other Information" on page 19 for a table of
unit activity by region for the three and six month periods ended June 30,
1994 and 1993. The decline in new orders in the second quarter of 1994 was
primarily due to the increase in mortgage interest rates during the first
half of 1994.
Due to the backlog level at June 30, 1994, housing operations for the
remainder of 1994 should not be affected by the decline in new orders in
the second quarter of 1994. If the decline in new orders continues, the
backlog level at December 31, 1994 could be less than the backlog level
at December 31, 1993. If the decline in new orders continues in 1995,
deliveries in 1995 could be lower than deliveries in 1994.
Selling, General and Administrative Expenses -
____________________________________________
As a percentage of housing revenues, selling, general and administrative
expenses were 11.1% and 11.2% for the three and six month periods ended June
30, 1994 compared to 11.6% and 11.9% for the three and six month periods
ended June 30, 1993. Actual selling, general and administrative expenses for
the three and six month periods ended June 30, 1994 increased by $4.2 million
and $9.0 million compared to 1993. These increases were attributable to
increases in volume-related expenses resulting from the increase in
deliveries in 1994 when compared to 1993 and increases in other selling,
general and administrative expenses resulting from increased activities.
Interest Expense -
________________
While interest paid and accrued for the three and six month periods ended
June 30, 1994 increased approximately 116.7% and 160.0% compared to the same
periods in 1993, it was approximately the same as interest paid and accrued
for the last quarter of 1993 and the first quarter of 1994. The increase in
interest paid and accrued in the last quarter of 1993 and the first two
quarters of 1994 was primarily due to the sale of the 9.75% senior notes in
June 1993 and 4.875% convertible subordinated debentures in November 1993.
Interest paid and accrued during the first two quarters of 1993 was less than
the last quarter of 1993 and the first two quarters of 1994 primarily due to
interest on a majority of the Company's debt being stayed during the
Company's Chapter 11 reorganization.
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Financial Services
__________________
Revenues -
________
Revenues for the financial services segment for the periods indicated were as
follows (dollars in thousands):
Three Months Six Months
Ended Ended
June 30, June 30,
_______________ ________________
1994 1993 1994 1993
_______ ______ _______ _______
U.S. Home Mortgage Corporation and
subsidiaries $ 2,073 $2,677 $4,662 $4,588
Other financial services operations 870 679 1,581 1,358
_______ ______ ______ ______
$ 2,943 $3,356 $6,243 $5,946
======= ====== ====== ======
The decrease in U.S. Home Mortgage Corporation and subsidiaries' ("Mortgage")
revenues for the three month period ended June 30, 1994 when compared to the
same period in 1993 was primarily due to a decrease in marketing income, as a
result of the sharp increase in interest rates, volatility in the secondary
mortgage markets and extreme pricing competition in 1994 along with a
decrease in origination fees due, primarily, to a decline in refinancing
activities.
General and Administrative Expenses -
___________________________________
General and administrative expenses for the three and six month periods ended
June 30, 1994 increased by $.4 million and $1.1 million compared to the same
periods in 1993. The increases in 1994 were primarily due to the opening of
additional branch and satellite offices in the last half of 1993 and early
1994 and an increase in Mortgage's staffing in the last half of 1993 and
first quarter of 1994 as a result of the increased loan origination volume
in these periods. Based on the decline in refinancing and other loan
origination activities, Mortgage reduced its staffing in the second quarter
of 1994 in order to bring these expenses in line with the currently expected
volume of activities for the last half of 1994.
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<PAGE> 17
Financial Condition and Liquidity -
_________________________________
Housing
_______
The Company's ability to generate cash adequate to meet its housing needs is
principally achieved from the sale of homes and the margins thereon, the
utilization of Company-owned lots and periodic borrowings under its
financing facilities. The Company expects, on a long-term basis, that
operations will generate cash to meet substantially all of its housing cash
flow needs and that a financing facility, such as the $95 million secured
revolving working capital facility (the "Working Capital Facility") with
General Electric Capital Corporation, would be utilized to meet peak
operating needs. The Company does not anticipate that the borrowing base
requirements of its Working Capital Facility will restrict the Company's
ability to borrow under such Facility. See Note 3 of Notes to Consolidated
Condensed Financial Statements. Over recent years, the Company has
implemented various operational guidelines to 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 increase cash flows, reduce carrying
costs and limit its exposure to market changes and direct land investments.
The increase in the land asset inventories at June 30, 1994 when compared to
December 31, 1993 was primarily due to increased activities.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the six month periods ended June
30, 1994 and 1993 is summarized below (dollars in thousands):
1994 1993
________ ________
Net cash provided (used) by:
Operating activities $(38,359) $(29,029)
Investing activities (936) (4,817)
Financing activities 16,444 33,053
________ ________
Net decrease in cash $(22,851) $ (793)
======== ========
Housing operating activities are, at any time, affected by a number of
factors, including the number of housing units under construction and
housing units delivered. Housing operating activities used more cash during
the first half of 1994 compared to 1993 primarily due to an increase in
construction and land asset activities offset in part by an increase in the
number of housing units delivered.
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<PAGE> 18
Cash flow provided by housing financing activities for the six months ended
June 30, 1994 decreased from the same period in 1993 primarily due to 1994
included net borrowings under the Working Capital Facility while 1993
included the net proceeds from the sale of the Company's 9.75% senior notes
in addition to net borrowings under the Working Capital Facility, offset in
part by the payment of reorganization debt and liabilities.
The Company anticipates that amounts available under the Working Capital
Facility and cash flow from operations will be sufficient to meet its
working capital obligations.
Financial Services
__________________
Mortgage's activities represent substantially all of the financial services
segment's activities. As loan originations by Mortgage are primarily from
housing units delivered by the Company's homebuilding operations, Mortgage's
financial condition and liquidity are to a significant extent dependent upon
the financial condition of the Company.
The Company finances its financial services operations primarily through
short-term debt and from internally generated funds, such as the origination
and sale of residential mortgage loans and related servicing rights. The
short-term debt consists of a $40 million secured revolving line of credit
entered into by Mortgage in April 1992, as amended (the "Mortgage Credit
Facility"). At June 30, 1994, $7.2 million was outstanding under the
Mortgage Credit Facility. The Company has no obligation to provide funding
to its financial services operations, nor does it guarantee any of the debt
of its financial services subsidiaries. The Company believes that the
Mortgage Credit Facility, together with internally generated funds, such as
from the sale of residential mortgage loans and related servicing rights,
will be sufficient to provide for Mortgage's working capital needs.
The Mortgage Credit Facility bears interest at a premium over the London
Interbank Offered Rate and matures on August 31, 1995. Certain residential
mortgage loans have been pledged as collateral to secure Mortgage's
obligations under the Mortgage Credit Facility. While the Mortgage Credit
Facility contains numerous covenants, including a debt to tangible net worth
ratio and a minimum tangible net worth requirement, these covenants are not
anticipated to significantly limit Mortgage's operations.
<PAGE>
<PAGE> 19
Part II. OTHER INFORMATION
_________________
Item 2. Changes in Securities
_____________________
An amendment to the Company's Second Restated Certificate of
Incorporation to eliminate a prohibition against the issuance of
non-voting equity securities was approved by the stockholders on April
20, 1994. A Certificate of Amendment deleting such prohibition was
filed with the State of Delaware on May 13, 1994.
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
For information with respect to matters voted upon and action taken at
the Company's annual meeting of stockholders held on April 6, 1994 and
as adjourned to April 20, 1994, reference is made to Item 4 of Part II
of the Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1994.
Item 5. Other Information
_________________
The following table provides information (expressed in number of
housing units) with respect to new orders taken, deliveries to
purchasers of single-family homes and backlog by market for the three
and six month periods ended June 30, 1994 and 1993.
Market New Orders Deliveries
__________________ ____________ ____________
1994 1993 1994 1993
______ _____ ______ _____
Three Month Period -
Florida 472 503 410 428
Mountain-
Arizona 210 232 251 195
Colorado 199 158 209 200
Nevada 105 76 71 53
Northeast/Midwest-
Minnesota 103 147 106 100
Maryland/Virginia 86 99 80 58
New Jersey 75 59 53 34
California 135 192 174 170
Texas 186 181 157 140
_____ _____ _____ _____
1,571 1,647 1,511 1,378
===== ===== ===== =====
<PAGE>
<PAGE> 20
New Orders Deliveries Backlog
____________ ____________ ____________
1994 1993 1994 1993 1994 1993
_____ _____ _____ _____ _____ _____
Six Month Period -
Florida 1,408 1,203 840 835 1,535 1,061
Mountain -
Arizona 518 494 506 342 400 338
Colorado 493 466 412 332 557 443
Nevada 196 146 138 86 139 98
Northeast/Midwest -
Minnesota 235 326 197 176 182 258
Maryland/Virginia 184 195 177 145 138 148
New Jersey 117 106 95 77 111 83
California 360 408 326 290 171 225
Texas 400 466 300 266 391 479
_____ _____ _____ _____ _____ _____
3,911 3,810 2,991 2,549 3,624 3,133
===== ===== ===== ===== ===== =====
<PAGE>
<PAGE> 21
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3.1 - Certificate of Amendment of Second Restated
Certificate of Incorporation as filed with the
State of Delaware on May 13, 1994. See Part II,
"Item 2. Changes in Securities"
Exhibit 10.1 - Fifth Amendment to Amended and Restated Loan
Agreement, dated as of June 30, 1994, between U.S.
Home Corporation and General Electric Capital
Corporation
Exhibit 10.2 - Seventh Amendment to Warehousing Credit and
Security Agreement (single-family mortgage loans),
dated as of July 1, 1994, between U.S. Home
Mortgage Corporation and Residential Funding
Corporation
Exhibit 11 - Computation of Income Per Common Share
Exhibit 15 - Letter with respect to unaudited financial
information
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company during
April, May and June 1994.
<PAGE>
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. HOME CORPORATION
Date: August 8, 1994 /s/ Isaac Heimbinder
Isaac Heimbinder
President and Chief Operating
Officer
Date: August 8, 1994 /s/ Chester P. Sadowski
Chester P. Sadowski
Vice President, Controller
and Chief Accounting Officer
<PAGE>
<PAGE> 23
INDEX TO EXHIBITS
Sequential
Exhibit Numbered
Number Page
3.1 Certificate of Amendment of Second Restated Certificate
of Incorporation as filed with the Secretary of State of
Delaware on may 13, 1994. 24
10.1 Fifth Amendment to Amended and Restated Loan Agreement,
dated as of June 30, 1994, between U.S. Home
Corporation and General Electric Capital Corporation 25
10.2 Seventh Amendment to Warehousing Credit and
Security Agreement (single-family mortgage loans),
dated as of July 1, 1994, between U.S. Home
Mortgage Corporation and Residential Funding Corporation 31
11 Computation of Income Per Common Share 39
15 Letter with respect to unaudited interim financial
information 41
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
SECOND RESTATED CERTIFICATE OF INCORPORATION OF
U.S. HOME CORPORATION
U.S. HOME CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the
Corporation, resolutions were duly adopted setting forth a
proposed amendment of the Corporation's Second Restated
Certificate of Incorporation filed with the Secretary of State
of the State of Delaware on June 18, 1993, declaring said
amendment to be advisable and calling a meeting of stockholders
of the Corporation for consideration thereof. The text of such
proposed amendment as approved by the Board of Directors of the
Corporation is as follows:
The Second Restated Certificate of Incorporation of the
Corporation is amended by changing the Article thereof numbered
"FOURTH" to delete the second full paragraph of Section A
thereof.
SECOND: That thereafter, pursuant to resolution of its Board
of Directors, an annual meeting of the stockholders of the
Corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by Robert J. Strudler, its Chairman and
Chief Executive Officer, and Richard G. Slaughter, its Secretary,
this 13th day of May, 1994.
By: /s/ Robert J. Strudler
Robert J. Strudler
Chairman and Chief Executive Officer
ATTEST: /s/ Richard G. Slaughter
Richard G. Slaughter
Secretary
EXHIBIT 10.1
FIFTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
("Fifth Amendment"), dated as of June 30, 1994, between U.S. HOME
CORPORATION, a Delaware corporation ("Borrower"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender").
R E C I T A L S:
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, that certain Third Amendment to
Amended and Restated Loan Agreement, dated as of October 22,
1993, and that certain Fourth Amendment to Amended and Restated
Loan Agreement, dated effective as of December 31, 1994 (as
previously and 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 Fifth 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 Fifth Amendment shall have the respective
meanings ascribed thereto in the Loan Agreement.
2. FIFTH AMENDMENT TO LOAN AGREEMENT
The Loan Agreement is, effective as of the date hereof,
amended as follows:
<PAGE>
<PAGE> 26
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:
"'Consolidated Land Acquisition Expenditures'
shall mean, for any period, the aggregate amount of all
expenditures made and costs incurred by Borrower or any
of its subsidiaries during such period for the
acquisition of land including, without limitation, raw
land or land under development; provided, however, that
such amount shall not include any expenditures made or
costs incurred by Borrower or any of its Subsidiaries
in connection with the acquisition of land in the
Greenbriar Project or the Stoneybrook Project."
"'Fifth Amendment' shall mean that certain
Fifth Amendment to Amended and Restated Loan Agreement,
dated as of June 30, 1994, between Borrower and Lender."
"'Greenbriar Project' shall mean the adult,
retirement/second home community called "Greenbriar at
Whittingham" located in Middlesex County, New Jersey."
"'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 $110,000,000; (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."
"'Stoneybrook Project' shall mean the adult,
retirement/second home community called "Stoneybrook
Golf and Country Club" located in Sarasota County,
Florida."
2.2 Section 5.1 of the Loan Agreement is hereby
amended by adding a new subsection (l) thereto to read as
follows:
"(l) No later than 10 days before an
investment is made in accordance with Sections 7.1 or
7.2(a) hereof, a statement in reasonable detail setting
forth a description of each such proposed investment,
including, without limitation, a description of the
location and nature of the real estate project and
Borrower's proposed investment in such corporation,
partnership or joint venture."
<PAGE>
<PAGE> 27
2.3 Section 5.1 of the Loan Agreement is hereby
amended by adding a new subsection (m) thereto to read as
follows:
"(m) Within 45 days after the end of each
fiscal quarter, a statement describing each investment
made in accordance with Sections 7.1 and 7.2(a) hereof,
consisting of a detailed accounting of each such
investment, setting forth on a entity by entity basis
the total amount invested by Borrower in each such
entity both through the end of each such fiscal quarter
and during each such fiscal quarter, the ownership
percentage held by the Borrower in each such entity
associated with each such investment, and, if such
entity owns or is developing more than one residential
real estate project, the total amount invested by such
entity on a project by project basis through the end of
each such fiscal quarter, which statements shall be
prepared in accordance with GAAP.
2.4 Section 7.1 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"7.1 Mergers, Etc. Except as provided in the
proviso of clause (i) of Section 6.1 hereof, neither
Borrower, any Guarantor nor any Subsidiary of Borrower
shall directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or
otherwise combine with, any Person nor form any
Subsidiary; provided, that Borrower may invest in
corporations, partnerships or other joint ventures
(other than Unrestricted Subsidiaries) formed to own
and develop residential real estate, but only (i) to
the extent that the aggregate amounts invested, without
duplication with the aggregate amounts invested pursuant
to the proviso in Section 7.2(a) hereof, do not exceed
the lesser of (x) the sum of $10,000,000 plus 50% of
Adjusted Consolidated Net Income cumulated since the
Funding Date (or, if such cumulative Adjusted
Consolidated Net Income is a deficit, minus 100% of
such cumulative deficit) or (y) $20,000,000, (ii) if
Borrower shall promptly grant a perfected, first
priority Lien to Lender on the stock, notes, instruments
or other interests held by Borrower in such corporation,
partnership or joint venture, and (iii) unless a bona
fide, third party non-Affiliate holds more than an
immaterial interest in any such corporation, partnership
or joint venture, if any such corporation, partnership
or venture shall become a Guarantor and shall execute
and deliver a counterpart of the Guaranty and any of
the applicable Collateral Documents."
<PAGE>
<PAGE> 28
2.5 Section 7.2(a) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(a) Borrower shall not, and shall not permit
any Guarantor to, make investments in, or make or accrue
loans or advances of money through the direct or
indirect holding of securities or otherwise to (i) an
Unrestricted Subsidiary or (ii) any other Person;
provided, that Borrower may invest in any Guarantor and
any corporations, partnerships or other joint ventures
(other than Unrestricted Subsidiaries) formed to own
and develop residential real estate, but only (i)
subject to the provisions of subsection (b) of this
Section 7.2, to the extent that the aggregate amounts
invested, without duplication with the aggregate
amounts invested pursuant to the proviso in Section 7.1
hereof, do not exceed the lesser of (x) the sum of
$10,000,000 plus 50% of Adjusted Consolidated Net Income
cumulated since the Funding Date (or, if such cumulative
Adjusted Consolidated Net Income is a deficit, minus
100% of such cumulative deficit), or (y) $20,000,000,
(ii) if Borrower shall promptly grant a perfected, first
priority Lien to Lender on the Stock, notes, instruments
or other interest held by Borrower in such corporation,
partnership or venture and (iii) unless a bona fide,
third party non-Affiliate holds more than an immaterial
interest in any such corporation, partnership or joint
venture, if any such corporation, partnership or venture
shall become a Guarantor and shall execute and deliver
to Lender a counterpart of the Guaranty and any of the
applicable Collateral Documents."
2.6 Section 7.10(b) 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 that,
in the aggregate, exceed $55,000,000 when calculated on
the basis of a rolling 12-month period."
3. 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 Fifth 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.
<PAGE>
<PAGE> 29
(b) After giving effect to this Fifth Amendment,
no event has occurred and is continuing, or would result
from the execution of this Fifth Amendment, which
constitutes or would constitute a Default or an Event of
Default.
(c) The execution, delivery and performance
of this Fifth Amendment have been duly authorized by all
necessary corporate action, and this Fifth Amendment is
the legal and binding obligation of Borrower, enforceable
in accordance with its terms.
(d) Borrower's execution, delivery and
performance of this Fifth 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.
4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS
4.1 upon the effectiveness of this Fifth 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.
4.2 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.
4.3 Except as provided herein, the execution,
delivery and effectiveness of this Fifth 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.
<PAGE>
<PAGE> 30
5. MISCELLANEOUS
5.1 This Fifth Amendment may be executed in any number
of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
5.2 In all respects, including all matters of
construction, validity and performance, this Fifth 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.
5.3 THIS FIFTH 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 Fifth 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
<PAGE>
<PAGE>
<PAGE> 39
EXHIBIT 11
(Unaudited)
U.S. HOME CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
________________________ ______________________
1994 1993 1994 1993
____________ __________ __________ __________
<S> <C> <C> <C> <C>
Income Per Common And Common
Equivalent Share -
Net income $ 7,172 $ 5,251 $ 14,233 $ 10,280
=========== ========== =========== ==========
Weighted average common
shares outstanding 11,373,960 11,191,253 11,359,210 11,184,368
Effect of assumed exercise
of dilutive stock options
and warrants - 107,478 209,179 107,478
___________ __________ ___________ __________
Total common and common
equivalent shares 11,373,960 11,298,731 11,568,389 11,291,846
=========== ========== =========== ==========
Income per common and common
equivalent share $ .63 $ .46 $ 1.23 $ .91
=========== =========== =========== ==========
</TABLE>
<PAGE>
<PAGE> 40
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
________________________ ______________________
1994 1993 1994 1993
____________ __________ __________ __________
<S> <C> <C> <C> <C>
Income Per Common Share,
Assuming Full Dilution -
Net income $ 7,172 $ 5,251 $ 14,233 $ 10,280
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income tax effect 260 - 520 -
___________ ___________ ___________ ___________
Income per common share,
assuming full dilution $ 7,432 $ 5,251 $ 14,753 $ 10,280
=========== =========== =========== ===========
Total common and common
equivalent shares 11,373,960 11,298,731 11,568,389 11,291,846
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 - - - -
Assumed conversion of 4.875%
convertible subordinated
debentures at $35.50 per
share at date of issuance 2,253,521 - 2,253,521 -
___________ ___________ ___________ ___________
Total common shares, assuming
full dilution 13,627,481 11,298,731 13,821,910 11,291,846
=========== =========== =========== ===========
Income per common share,
assuming full dilution $ .55 $ .46 $ 1.07 $ .91
=========== =========== =========== ===========
</TABLE>
Note: See Note 6 of Notes to Consolidated Condensed Financial Statements.
<PAGE>
<PAGE>
<PAGE> 41
Exhibit 15
To U.S. HOME CORPORATION:
We are aware that U.S. Home Corporation has incorporated by reference
in its Registration Statements Nos. 33-64712 and 33-52993 its Form 10-Q
for the quarter ended June 30, 1994, which includes our report dated
July 22, 1994 covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of
1933, that report is not considered a part of the registration
statements prepared or certified by our firm or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Act.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Houston, Texas
August 8, 1994
<PAGE>
