<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, 1995
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, 1995
Common stock, $.01 par value 11,232,859 shares
<PAGE> 2
U.S. HOME CORPORATION
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
June 30, 1995 and December 31, 1994 3
Consolidated Condensed Statements of
Operations--Three and Six Months Ended
June 30, 1995 and 1994 5
Consolidated Condensed Statements of
Cash Flows --Six Months Ended
June 30, 1995 and 1994 6
Notes to Consolidated Condensed
Financial Statements 7
Review by Independent Public Accountants 10
Report of Independent Public Accountants 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
ASSETS
------
June 30, December 31,
1995 1994
------------ --------------
(Unaudited)
HOUSING:
Cash (including restricted funds) .. $ 1,442 $ 1,148
Receivables, net ................... 31,960 22,219
Single-family housing inventories .. 613,812 576,779
Option deposits on real estate ..... 57,781 53,621
Deferred tax asset ................. 5,043 13,727
Other assets ....................... 44,181 41,869
-------- --------
754,219 709,363
-------- --------
FINANCIAL SERVICES:
Cash (including restricted funds) .. 5,658 5,567
Residential mortgage loans ......... 42,893 24,672
Other assets ....................... 7,408 8,349
-------- --------
55,959 38,588
-------- --------
$810,178 $747,951
======== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 4
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
HOUSING:
Current Liabilities -
Short-term debt ......................... $ 45,642 $ 8,642
Current maturities of long-term debt .... 10,997 10,572
Accounts payable ........................ 85,070 85,581
Accrued expenses and other
current liabilities ................... 40,369 40,497
182,078 145,292
Long-Term Debt .......................... 290,700 292,666
-------- --------
472,778 437,958
-------- --------
FINANCIAL SERVICES:
Current Liabilities -
Short-term debt ......................... 20,770 10,014
Accrued expenses and other
current liabilities .................... 7,757 7,481
-------- --------
28,527 17,495
Long-Term Debt .......................... 922 1,034
-------- --------
29,449 18,529
-------- --------
Total Liabilities ..................... 502,227 456,487
-------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share
redemption value, authorized 425,765
and 602,133 shares at June 30, 1995
and December 31, 1994, outstanding
342,404 and 518,772 shares at June 30,
1995 and December 31, 1994 8,560 12,969
Common Stock, $.01 par value, authorized
50,000,000 shares, outstanding
11,223,499 and 10,909,860 shares at
June 30, 1995 and December 31, 1994 112 109
Capital In Excess of Par Value 348,067 340,673
Unearned Compensation on Restricted
Stock (2,455) -
Retained Earnings (Deficit) (46,333) (62,287)
-------- --------
Total Stockholders' Equity 307,951 291,464
-------- --------
$810,178 $747,951
======== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 5
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1995 1994 1995 1994
--------- --------- --------- --------
HOUSING:
Operating Revenues ........... $ 255,564 $ 238,143 $ 515,691 $ 460,143
--------- --------- --------- ---------
Operating Costs and Expenses -
Cost of products sold ...... 215,664 200,001 434,010 385,805
Selling, general and
administrative ........... 28,250 26,430 57,392 51,477
--------- --------- --------- ---------
243,914 226,431 491,402 437,282
--------- --------- --------- ---------
Housing Operating Income ..... 11,650 11,712 24,289 22,861
--------- --------- --------- ---------
FINANCIAL SERVICES:
Operating Revenues ........... 3,714 2,943 6,789 6,243
--------- --------- --------- ---------
Operating Costs and Expenses -
General and administrative . 2,761 2,786 5,385 5,452
Interest ................... 100 113 166 320
--------- --------- --------- ---------
2,861 2,899 5,551 5,772
--------- --------- --------- ---------
Financial Services Operating
Income ................ 853 44 1,238 471
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES ..... 12,503 11,756 25,527 23,332
PROVISION FOR INCOME TAXES ..... 4,689 4,584 9,573 9,099
--------- --------- --------- ---------
NET INCOME ..................... $ 7,814 $ 7,172 $ 15,954 $ 14,233
========= ========= ========= =========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary ................... $ .67 $ .63 $ 1.37 $ 1.23
========= ========= ========= =========
Fully diluted ............. $ .59 $ .55 $ 1.20 $ 1.07
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
<PAGE> 6
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
-------------------------
1995 1994
----------- ---------
Net Cash Used by Operating Activities .. $ (41,875) $ (17,309)
--------- ---------
Net Cash Flows From Investing Activities:
Purchase of property, plant and equipment,
net of disposals ........... (1,480) (789)
Proceeds from investments in mortgages 390 866
Decrease (increase) in restricted cash 125 (30)
Other ........................ (437) (279)
--------- ---------
Net cash used by investing activities (1,402) (232)
--------- ---------
Net Cash Flows From Financing Activities:
Proceeds from short-term debt, net of
repayment .................. 47,757 5,720
Long-term debt assumed ....... -- 1,037
Repayment of long-term debt .. (3,970) (3,659)
--------- ---------
Net cash provided by financing activities . 43,787 3,098
--------- ---------
Net Increase (Decrease) in Cash 510 (14,443)
Cash At Beginning of Period .... 2,050 15,829
--------- ---------
Cash At End of Period .......... $ 2,560 $ 1,386
========= =========
Supplemental Disclosure:
Interest paid, before amount capitalized -
Housing .................... $ 15,599 $ 14,650
Financial Services ......... 150 372
--------- ---------
$ 15,749 $ 15,022
========= =========
The accompanying notes are an integral part of these statements.
<PAGE> 7
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated condensed balance sheet as of
December 31, 1994, 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 necessary to
present fairly the Company's financial position as of June 30, 1995
and December 31, 1994 and its results of operations for the three
and six month periods ended June 30, 1995 and 1994 and cash flows
for the six month periods ended June 30, 1995 and 1994.
Because of the seasonal nature of the Company's business, the
results of operations for the three and six month periods ended
June 30, 1995 and 1994 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,
1995 1994
--------- -----------
(Dollars in Thousands)
Housing completed and under construction $ 243,437 $ 224,870
Models ................................. 51,037 47,914
Finished lots .......................... 115,311 118,508
Land under development ................. 59,558 60,809
Land held for development or sale ...... 144,469 124,678
--------- ---------
$ 613,812 $ 576,779
========= =========
<PAGE> 8
(3) SHORT-TERM DEBT
Short-term debt consists of the following:
June 30, December 31,
1995 1994
--------- ------------
(Dollars in thousands)
Housing -
Revolving working capital facility $ 44,753 $ 7,553
Other short-term debt ............ 889 1,089
-------- --------
45,642 8,642
Financial Services ................. 20,770 10,014
-------- --------
Total short-term debt ............ $ 66,412 $ 18,656
======== ========
The revolving working capital agreement, as amended (the "Working
Capital Facility"), consists of a $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 $199,627,000 at June 30, 1995. This
collateral has provided the Company with an available borrowing
base capacity of $95,000,000 at June 30, 1995, of which $51,000,000
was outstanding, including $6,247,000 of letter of credit
obligations. 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 purchase of land.
Financial services short-term debt consists of an agreement with a
financial institution which, as amended, provides the Company's
mortgage banking subsidiary, U.S. Home Mortgage Corporation
("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, 1995
and bears interest at a premium over the London Interbank Offered
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 renewed prior to its maturity date.
<PAGE> 9
(4) LONG-TERM DEBT
Long-term debt consists of the following:
June 30, December 31,
1995 1994
--------- ------------
(Dollars in Thousands)
Housing -
Notes and mortgage notes payable $ 21,697 $ 23,238
9.75% Senior notes due 2003 .... 200,000 200,000
4.875% Convertible subordinated
debentures due 2005 ........... 80,000 80,000
--------- ---------
301,697 303,238
Less - Current maturities ...... (10,997) (10,572)
--------- ---------
290,700 292,666
Financial Services ............... 922 1,034
--------- ---------
Total long-term debt ............ $ 291,622 $ 293,700
========= =========
(5) HOUSING INTEREST
A summary of housing interest for the three and six month periods
ended June 30, 1995 and 1994 follows (dollars in thousands):
Three Month Period
-------------------------
1995 1994
--------- ---------
Capitalized at beginning of period $ 56,749 $ 54,884
Capitalized ...................... 7,958 7,673
Included in cost of sales ........ (6,709) (7,337)
Included in other ................ (360) (16)
--------- ---------
Capitalized at end of period ..... $ 57,638 $ 55,204
========= =========
Six Month Period
-------------------------
1995 1994
--------- ---------
Capitalized at beginning of period $ 56,082 $ 55,580
Capitalized ...................... 15,797 15,272
Included in cost of sales ........ (13,731) (14,196)
Included in other ................ (510) (1,452)
--------- ---------
Capitalized at end of period ..... $ 57,638 $ 55,204
========= =========
<PAGE> 10
(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, 1995 and 1994:
Three Month Period Six Month Period
---------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Primary 11,616,415 11,373,960 11,603,862 11,568,389
Fully diluted 14,129,263 13,627,481 14,122,072 13,821,910
The weighted average number of common and common equivalent shares
outstanding for primary income per share includes the dilutive
effect of the convertible redeemable preferred stock and Class B
warrants and the assumed exercise of stock options. 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.
<PAGE> 11
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have performed
a review of the consolidated condensed balance sheet as of June 30,
1995 and the related consolidated condensed statements of
operations for the three and six month periods ended June 30, 1995
and 1994 and cash flows for the six month periods ended June 30,
1995 and 1994 included in this report. Such review was made in
accordance with standards established by the American Institute of
Certified Public Accountants.
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO U.S. HOME CORPORATION:
We have reviewed the accompanying consolidated condensed balance sheet of
U.S. Home Corporation (a Delaware corporation) and subsidiaries as of June
30, 1995, and the related consolidated condensed statements of operations
for the three-month and six-month periods ended June 30, 1995 and 1994 and
cash flows for the six-month periods ended June 30, 1995 and 1994. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of U.S. Home Corporation and
subsidiaries as of December 31, 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein), and in our report dated February 8,
1995, we expressed an unqualified opinion on those statements. In our
opinion, the information set forth in the accompanying consolidated
condensed balance sheet as of December 31, 1994, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which
it has been derived.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
July 21, 1995
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Housing
The following table sets forth certain financial information for the
periods indicated (dollars in thousands, except average sales price):
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues -
Single-family homes .......$ 251,406 $ 229,554 $ 507,779 $ 448,094
Land and other ............ 4,158 8,589 7,912 12,049
--------- --------- --------- ---------
Total ..................$ 255,564 $ 238,143 $ 515,691 $ 460,143
========= ========= ========= =========
Single-family homes -
Gross margin amount .......$ 39,699 $ 37,168 $ 80,945 $ 72,610
Gross margin percentage ... 15.8% 16.2% 15.9% 16.2%
Units delivered ........... 1,599 1,511 3,248 2,991
Average sales price .......$ 157,200 $ 151,900 $ 156,300 $ 149,800
New orders taken .......... 1,868 1,571 4,145 3,911
Backlog at end of period .. 3,448 3,624
Selling, general and
administrative expenses as
a percentage of housing
revenues .................. 11.1% 11.1% 11.1% 11.2%
Interest expense -
Paid and accrued ..........$ 7,958 $ 7,673 $ 15,797 $ 15,272
Capitalized ...............$ 7,958 $ 7,673 $ 15,797 $ 15,272
Percent capitalized ....... 100.0% 100.0% 100.0% 100.0%
Capitalized interest included
in cost of products sold ..$ 6,709 $ 7,337 $ 13,731 $ 14,196
Revenues and Gross Margin -
Revenues from sales of single-family homes for the three and six month
periods ended June 30, 1995 increased 10% and 13% compared to the three and
six month periods ended June 30, 1994. The increases resulted from 6% and
9% increases in the number of housing units delivered and 3% and 4%
increases in average sales price. The increase in the average sales prices
in 1995 was primarily due to price increases.
<PAGE> 14
New orders taken for the three and six month periods ended June 30, 1995
increased 19% and 6% compared to the same periods in 1994. The increase in
the second quarter of 1995 offset a 3% decrease in new orders in the first
quarter of 1995. The increase in new orders taken in the second quarter of
1995 reflects the demand for new single-family homes brought about by the
decrease in mortgage interest rates in the second quarter of 1995. No
assurances can be given that new orders taken for the remainder of 1995
will continue at the second quarter pace. See Part II, "Item 5 - Other
Information" on page 16 for a table of unit activity by market for the
three and six month periods ended June 30, 1995 and 1994.
The decrease in gross margin percentages for the three and six month
periods ended June 30, 1995 from the same periods in 1994 resulted from a
more competitive housing environment in 1995 than in 1994 which was created
by the increase in mortgage interest rates during the last three quarters
of 1994, a reduction in the demand for new single-family homes and the
liquidation of excess housing inventories by other homebuilding companies
in certain markets.
During the six month period ended June 30, 1995, the Company was able to
minimize the impact of the more competitive housing environment upon new
orders by adjusting sales price incentives and opening additional
communities in existing markets. Even though mortgage interest rates
decreased subsequent to the first quarter of 1995, there will be continued
pressure on operating margins and sales prices as long as the current
competitive housing environment continues.
Selling, General and Administrative Expenses -
As a percentage of housing revenues, selling, general and administrative
expenses were substantially the same in 1995 and 1994. Actual selling,
general and administrative expenses for the three and six month periods
ended June 30, 1995 increased by $1.8 million and $5.9 million compared to
1994. These increases were attributable to increases in volume-related
expenses resulting from increased deliveries and revenues in 1995 when
compared to 1994 and increases in other selling, general and administrative
expenses resulting from increased activities.
<PAGE> 15
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,
---------------- -----------------
1995 1994 1995 1994
------- ------- ------- -------
U.S. Home Mortgage Corporation and
Subsidiary $2,882 $2,073 $5,154 $4,662
Other financial services operations 832 870 1,635 1,581
------ ------ ------ ------
$3,714 $2,943 $6,789 $6,243
====== ====== ====== ======
The increase in U.S. Home Mortgage Corporation and subsidiary's("Mortgage")
revenues for the three and six month periods ended June 30, 1995 when
compared to the three and six month month periods ended June 30, 1994 was
primarily due to an increase in mortgage loan originations and income from
the sale of mortgage loans and servicing rights.
Financial Condition and Liquidity -
Housing
The Company's most significant needs for capital resources are land and
finished lots purchases, land development and housing construction. The
Company's ability to generate cash adequate to meet these needs is
principally achieved from the sale of houses, 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 ("GECC"), would be utilized to meet
peak operating needs. The Company does not anticipate that the borrowing
base requirements of the Working Capital Facility will restrict the
Company's ability to borrow under such Facility. See Note 3 of Notes to
Consolidated Condensed Financial Statements. The Company employs various
operational guidelines to reduce initial cash requirements with respect to
investments in land, thereby increasing its financial flexibility and
reducing its risk by limiting the amount invested in land owned directly by
the Company. The Company intends to continue, where possible, to use
Company-owned lots in inventory 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 result in reduced carrying
costs and limited exposure to market changes and direct land investments.
<PAGE> 16
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, 1995 and 1994 is summarized below (dollars in thousands):
1995 1994
-------- --------
Net cash provided (used) by:
Operating activities $(32,514) $(38,359)
Investing activities (1,473) (936)
Financing activities 33,142 16,444
-------- --------
Net decrease in cash $ (845) $(22,851)
======== ========
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. Cash flows from housing operating activities for
1995 used less cash compared to 1994 primarily due to a decrease in
receivables, construction and land asset activities and the timing of
payments related to housing activities.
Cash flow from housing financing activities for 1995 increased from the
same period in 1994 primarily due to increased net borrowings under the
Working Capital Facility.
The Company anticipates that cash flow from operations and amounts
available under the Working Capital Facility will be sufficient to meet its
working capital obligations.
Financial Services
Mortgage's activities represent a substantial portion 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.
Financial services operating activities are affected primarily by
Mortgage's loan originations which result in the sale of mortgage loans and
related servicing rights to third party investors. Cash flows from
financial services operating activities are also affected by the timing of
the sales of loans and servicing rights which generally are sold to
investors within 30 days after homes are delivered. In this regard, cash
flows from financial services operating activities for 1995 used more cash
compared to 1994 primarily due to an increase in residential mortgage loan
receivables.
The Company finances its financial services operations primarily from
internally generated funds, such as the origination and sale of residential
mortgage loans and related servicing rights, and short-term debt. As more
fully discussed in Note 3 of Notes to Consolidated Condensed Financial
Statements, the short-term debt consists of a $35 million secured revolving
line of credit, as amended (the "Mortgage Credit Facility"), which matures
August 31, 1995. 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> 17
The Company has no obligation to provide funding to its financial services
operations, nor does it guarantee any of its financial services
subsidiaries' debt. The Company believes that the internally generated
funds and the Mortgage Credit Facility will be sufficient to provide for
Mortgage's working capital needs.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders was held on April 26, 1995. The
following members were re-elected to the Board of Directors to hold
office until the annual meeting of stockholders in 1996:
Nominee In Favor Withheld
------- ---------- --------
Glen Adams 10,007,432 78,470
Steven L. Gerard 10,038,165 47,737
Kenneth J. Hanau, Jr. 10,036,236 49,666
Charles A. McKee 10,034,612 51,290
Additional items voted upon were:
(a) The Corporate Officers and Presidents of Operations
Restricted Stock Plan which provides for an award, on a one
time basis, of the Company's common stock, $.01 par value,
to corporate officers and presidents of operations of the
Company.
(b) Appointment of Arthur Andersen LLP, independent public
accountants, to examine the Company's financial statements
for 1995.
The votes of the stockholders on these items were as follows:
Broker
Item In Favor Opposed Abstained Non-Vote
---- ----------- ------- --------- -------------
(a) 9,696,240 193,831 47,146 -
(b) 9,998,278 62,437 25,187 -
<PAGE> 18
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, 1995 and 1994:
Market New Orders Deliveries
--------------- --------------- --------------
1995 1994 1995 1994
----- ----- ---- -----
Three Month Period -
Florida 541 472 535 410
Mountain -
Arizona 257 210 207 251
Colorado 273 199 286 209
Nevada 111 105 64 71
Northeast/Midwest -
Indiana/Ohio 49 - 9 -
Maryland/Virginia 114 86 82 80
Minnesota 133 103 67 106
New Jersey 69 75 43 53
California 147 135 131 174
Texas 174 186 175 157
----- ----- ----- -----
1,868 1,571 1,599 1,511
===== ===== ===== =====
Market New Orders Deliveries Backlog
---------------- -------------- ------------- -----------
1995 1994 1995 1994 1995 1994
----- ----- ----- ----- ----- -----
Six Month Period -
Florida 1,326 1,408 1,205 840 1,267 1,535
Mountain -
Arizona 543 518 394 506 412 400
Colorado 698 493 541 412 547 557
Nevada 188 196 128 138 150 139
Northeast/Midwest -
Indiana/Ohio 64 - 16 - 58 -
Maryland/Virginia 225 184 154 177 153 138
Minnesota 203 235 127 197 163 182
New Jersey 139 117 122 95 186 111
California 326 360 232 326 180 171
Texas 433 400 329 300 332 391
----- ----- ----- ----- ----- -----
4,145 3,911 3,248 2,991 3,448 3,624
===== ===== ===== ===== ===== =====
<PAGE> 19
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - Tenth Amendment to Warehousing Credit and Security
Agreement (single-family mortgage loans), dated as
of June 1, 1995, between U.S. Home Mortgage
Corporation and Residential Funding Corporation
Exhibit 10.2 - Eleventh Amendment to Warehousing Credit and Secuity
Agreement (single-family mortgage loans), dated
as of July 24, 1995, between U.S. Home Mortgage
Corporation and Residential Funding Corporation
Exhibit 10.3 - U.S. Home Corporation's Corporate Officers and
Presidents of Operations Restricted Stock Plan.
Incorporated by reference from exhibit 10.8 to U.S.
Home Corporation's Annual Report on Form 10-K for
the year ended December 31, 1994.
Exhibit 11 - Computation of Income Per Common Share
Exhibit 15 - Letter with respect to unaudited interim financial
information
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company during April,
May or June 1995.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
U.S. HOME CORPORATION
Date: August 9, 1995 /s/ Isaac Heimbinder
--------------------------
Isaac Heimbinder
President, Co-Chief Executive Officer
and Chief Operating Officer
Date: August 9, 1995 /s/ Chester P. Sadowski
-------------------------------------
Chester P. Sadowski
Vice President, Controller
and Chief Accounting Officer
<PAGE> 21
INDEX OF EXHIBITS
Sequential
Numbered
Page
Exhibit
Number
10.1 Tenth Amendment to Warehousing Credit and Security
Agreement (single-familey mortgage loans), dated as
of June 1, 1995, between U.S. Home Mortgage Corporation
and Residential Funding corporation
10.2 Eleventh Amendment to Warehousing Credit and Security
Agreement (single family mortgage loans), dated as of
July 24, 1995, between U.S. Home Mortgage Corporation
and Residential Funding Corporation
11 Computation of Income Per Common Share
15 Letter with respect to unaudited interim financial
information
27 Financial Data Schedule
<PAGE> 22
Exhibit 10.1
TENTH AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS TENTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT
(this "Amendment") is entered into as of this 1st day of June, 1995, by and
between U.S. HOME MORTGAGE CORPORATION, a Florida corporation (the
"Company") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present commitment amount of
Twenty-Five Million Dollars ($25,000,000) (the "Commitment"), to finance
the origination and acquisition of Mortgage Loans as evidenced by a Fourth
Amended and Restated Promissory Note in the principal sum of Forty Million
Dollars ($40,000,000), dated as of June 15, 1993 (the "Note"), and by a
Warehousing Credit and Security Agreement dated as of April 15, 1992, as
the same may have been amended or supplemented (the "Agreement"); and
WHEREAS, the Company has requested the Lender to amend the Agreement
to reduce the interest rate, and the Lender has agreed to such amendment
subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants, agreements and conditions hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall
have their respective meanings set forth in the Agreement.
2. Section 1.1 of the Agreement shall be amended to delete the
definition of "Floating Rate" in its entirety and the following shall be
substituted in lieu thereof:
"Floating Rate" means a floating rate of interest which is equal
to nine-tenths of one percent (9/10%) per annum over LIBOR. The
Floating Rate will be adjusted as of the effective date of each weekly
change in LIBOR. The Lender's determination of the Floating Rate as of
any date of determination shall be conclusive and binding, absent
manifest error.
3. Section 2.4(a) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
<PAGE> 23
2.4(a) Prior to the occurrence of an Event of Default and
acceleration of the Obligations, the unpaid amount of each Advance
against Mortgage Loans shall bear interest, from the date of such
Advance at the Floating Rate.
4. Section 2.9 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.9 Commitment Fees.
(a) The Company agrees to pay to the Lender a Commitment Fee in
the amount of one-tenth of one percent (1/10%) per annum of the lesser
of Fifteen Million Dollars ($15,000,000) or the amount of the
Commitment, which Commitment Fee shall be paid quarterly in advance
and shall be computed on the basis of a 365-day year and applied to
the actual number of days elapsed in such calendar quarter. The
Company shall make quarterly payments of the Commitment Fee on the
first (1st) day of each calendar quarter. If the expiration date of
the Commitment is other than the last day of a calendar quarter, the
Company shall pay the prorated portion of the quarterly Commitment Fee
due from the beginning of the then current calendar quarter to and
including the expiration date. For the purposes hereof, calendar
quarters shall be defined as the three (3) month periods beginning on
each April 1, July 1, October 1 and January 1. The Company shall not
be entitled to a reduction in the amount of the Commitment Fee, in the
event the amount of the Commitment is reduced or in the event that the
Commitment is terminated prior to its stated expiration date. If the
Commitment terminates prior to its stated expiration date, the unpaid
balance of the Commitment Fee shall be due and payable in full on the
date of such termination.
(b) At the end of each calendar quarter during the term hereof
commencing with the calendar quarter beginning on April 1, 1995, the
Lender shall determine the three month average usage of the portion of
the Commitment in excess of Fifteen Million Dollars ($15,000,000) by
calculating the arithmetic daily average of the Advances outstanding
during each such calendar quarter. To the extent the quarterly average
usage (the "Used Portion") exceeds Fifteen Million Dollars
($15,000,000), the Company shall pay in arrears, within thirty (30)
days after the end of each calendar quarter, a fee (the "Usage Fee"),
equal to one-tenth of one percent (1/10%) per annum on the total
amount by which the Used Portion of the Commitment exceeds Fifteen
Million Dollars ($15,000,000) during such calendar quarter. If the
expiration date of the Commitment is other than the first (1st) day of
a quarter, the Company shall pay the prorated portion of the quarterly
Usage Fee due from the beginning of the then current quarter to and
including the expiration date. For the purposes hereof, quarters shall
be defined as beginning April 1, July 1, October 1 and January 1. In
the absence of manifest error, the calculation by the Lender of the
amount of any Usage Fee shall be conclusive.
<PAGE> 24
5. As a condition precedent to the effectiveness of this Amendment,
the Company shall deliver to the Lender (a) an executed original of this
Amendment; and (b) a Two Hundred Fifty Dollar ($250) document production
fee. This Amendment shall, assuming the foregoing conditions precedent have
been satisfied, become effective on June 1, 1995.
6. The Company represents, warrants and agrees that (a) there exists
no Default or Event of Default under the Loan Documents, (b) the Loan
Documents continue to be the legal, valid and binding agreements and
obligations of the Company enforceable in accordance with their terms, as
modified herein, (c) the Lender is not in default under any of the Loan
Documents and the Company has no offset or defense to its performance or
obligations under any of the Loan Documents, (d) the representations
contained in the Loan Documents remain true and accurate in all respects,
and (e) there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date of this
Amendment.
7. Except as hereby expressly modified, the Agreement shall otherwise
be unchanged and shall remain in full force and effect, and the Company
ratifies and reaffirms all of its obligations thereunder.
8. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused this
Amendment to be duly executed on their behalf by their duly authorized
officers as of the day and year above written.
U.S. HOME MORTGAGE CORPORATION,
a Florida corporation
/s/ Thomas A. Napoli
---------------------------------
By: Thomas A. Napoli
Its: Vice President
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
/s/ Donna A. West
---------------------------------
By: Donna A. West
Its: Vice President
<PAGE> 25
STATE OF Texas )
) ss
COUNTY OF Harris )
On May 31, 1995, before me, a Notary Public, personally appeared
Thomas A. Napoli, the Vice President of U.S. HOME MORTGAGE CORPORATION,
a Florida corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Glenda J. Barth
-----------------------------
Glenda J. Barth
Notary Public
(SEAL) My Commission Expires: 06/21/96
STATE OF Florida )
) ss
COUNTY OF Broward)
On June 1, 1995, before me, a Notary Public, personally appeared
Donna A. West , the Vice President of RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Marsha S. Grabin
------------------------------
Marsha S. Grabin
Notary Public
(SEAL) My Commission Expires: 09/15/98
<PAGE> 26
Exhibit 10.2
ELEVENTH AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS ELEVENTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT
(this "Amendment") is entered into as of this day of July 24, 1995 by and
between U.S. HOME MORTGAGE CORPORATION, a Florida corporation (the
"Company") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender").
WHEREAS, the Company and the Lender have entered into a single-family
revolving warehouse facility with a present commitment amount of
Twenty-Five Million Dollars ($25,000,000) (the "Commitment"), to finance
the origination and acquisition of Mortgage Loans as evidenced by a Fourth
Amended and Restated Promissory Note in the principal sum of Forty Million
Dollars ($40,000,000), dated as of June 15, 1993 (the "Note"), and by a
Warehousing Credit and Security Agreement dated as of April 15, 1992, as
the same may have been amended or supplemented (the "Agreement"); and
WHEREAS, the Company has requested the Lender to increase the
Commitment Amount, and the Lender has agreed to such increase subject to
the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants, agreements and conditions hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall
have their respective meanings set forth in the Agreement.
2. Section 1.1 of the Agreement shall be amended by adding
the following definitions:
"Commitment Amount" means Thirty-Five Million Dollars
($35,000,000). This increase of Commitment Amount was
effective as of June 30, 1995.
"Maturity Date" shall mean the earlier of: (a) the close of
business on August 31, 1995, as such date may be extended from time to
time in writing by the Lender, in its sole discretion, on which date
the Commitment shall expire of its own term, and without the necessity
of action by the Lender, and (b) the date the obligation of the Lender
to make further Advances hereunder is terminated pursuant to Section
8.1 below.
<PAGE> 27
3. Section 2.1(a) of the Agreement is hereby deleted in its
entirety and the following section is substituted in lieu thereof:
2.1(a) Subject to the terms and conditions of this Agreement and
provided no Default or Event of Default has occurred and is
continuing, the Lender agrees from time to time during the period from
the date hereof, to, but not including, the Maturity Date, to make
Advances to the Company, provided the total aggregate principal amount
outstanding at any one time of all such Advances shall not exceed the
Commitment Amount. The obligation of the Lender to make Advances
hereunder up to such Commitment Amount, is hereinafter referred to as
the "Commitment." Within the Commitment, the Company may borrow, repay
and reborrow. All Advances under this Agreement shall constitute a
single indebtedness, and all of the Collateral shall be security for
the Note and for the performance of all the Obligations.
4. Section 2.6 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.6 Expiration of Commitment. The Commitment shall
expire on the Maturity Date.
5. This Amendment shall become effective on the date ("Effective
Date") on which, the Company shall deliver to the Lender (a) an executed
original of this Amendment and (b) a Two Hundred Fifty Dollar ($250)
document production fee.
6. The Company represents, warrants and agrees that (a) there exists
no Default or Event of Default under the Loan Documents, (b) the Loan
Documents continue to be the legal, valid and binding agreements and
obligations of the Company enforceable in accordance with their terms, as
modified herein, (c) the Lender is not in default under any of the Loan
Documents and the Company has no offset or defense to its performance or
obligations under any of the Loan Documents, (d) the representations
contained in the Loan Documents remain true and accurate in all respects,
and (e) there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date of this
Amendment.
7. Except as hereby expressly modified, the Agreement shall otherwise
be unchanged and shall remain in full force and effect, and the Company
ratifies and reaffirms all of its obligations thereunder.
8. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
<PAGE> 28
IN WITNESS WHEREOF, the Company and the Lender have caused this
Amendment to be duly executed on their behalf by their duly authorized
officers as of the day and year above written.
U.S. HOME MORTGAGE CORPORATION,
a Florida corporation
/s/ Thomas A. Napoli
--------------------------
By: Thomas A. Napoli
Its: Vice Preident
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
/s/ Donna A. West
--------------------------
By: Donna A. West
Its: Vice President
STATE OF Texas )
) ss
COUNTY OF Harris)
On July 21, 1995, before me, a Notary Public, personally appeared
Thomas A. Napoli, the Vice President of U.S. HOME MORTGAGE CORPORATION,
a Florida corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Brenda Grable
---------------------
Brenda Grable
Notary Public
(SEAL) My Commission Expires: 07-01-97
<PAGE> 29
STATE OF Florida )
) ss
COUNTY OF Broward)
On July 24, 1995, before me, a Notary Public, personally appeared ,
Donna A. West the Vice President of RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that
he/she executed the same in his/her authorized capacity, and that by
his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Marsha S. Grabin
------------------------
Marsha S. Grabin
Notary Public
(SEAL) My Commission Expires: 09-15-98
<PAGE>30
EXHIBIT 11
(Unaudited)
U.S. HOME CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Income Per Common And Common
Equivalent Share -
Net income $ 7,814 $ 7,172 $ 15,594 $ 14,233
========== ========== ========== ==========
Weighted average common
shares outstanding 11,595,298 11,373,960 11,588,003 11,359,210
Effect of assumed exercise
of dilutive stock options
and warrants 21,117 - 15,859 209,179
---------- ---------- ---------- ----------
Total common and common
equivalent shares 11,616,415 11,373,960 11,603,862 11,568,389
========== ========== ========== ==========
Income per common and common
equivalent share $ .67 $ .63 $ 1.37 $ 1.23
========== ========== ========== ==========
<PAGE> 31
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Income Per Common Share,
Assuming Full Dilution -
Net income $ 7,814 $ 7,172 $ 15,954 $ 14,233
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income tax effect 480 260 961 520
---------- ---------- ---------- ----------
Income per common share,
assuming full dilution $ 8,294 $ 7,432 $ 16,915 $ 14,753
========== ========== ========== ==========
Total common and common
equivalent shares 11,616,415 11,373,960 11,603,862 11,568,389
Assumed additional common
shares from exercise of
dilutive stock options and
warrants resulting from use
of market price of common
stock at end of period 259,327 - 264,689 -
Assumed conversion of 4.875%
convertible subordinated
debentures at $35.50 per
share at date of issuance 2,253,521 2,253,521 2,253,521 2,253,521
---------- ---------- ---------- ----------
Total common shares,
assuming full dilution 14,129,263 13,627,481 14,122,072 13,821,910
========== ========== ========== ==========
Income per common share,
assuming full dilution $ .59 $ .55 $ 1.20 $ 1.07
========== ========== ========== ==========
Note: See Note 6 of Notes to Consolidated Condensed Financial Statements.
<PAGE> 32
EXHIBIT 15
To U.S. HOME CORPORATION:
We are aware that U.S. Home Corporation has incorporated by reference in
its Registration Statements No. 33-64712, 33-52993 and 33-58863 its Form
10-Q for the quarter ended June 30, 1995, which includes our report dated
July 21, 1995 covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933,
that report is not considered a part of the registration statement prepared
or certified by our firm within the meaning of Sections 7 and 11 of the
Act.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
August 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Informaton Extracted From The
Consolidated Condensed Financial Statements As Of June 30, 1995 And For
The Six Months Then Ended And Is Qualified In Its Entirety By Reference
To Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 7100
<SECURITIES> 0
<RECEIVABLES> 74853
<ALLOWANCES> 0
<INVENTORY> 613812
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 810178
<CURRENT-LIABILITIES> 210605
<BONDS> 291622
<COMMON> 112
0
8560
<OTHER-SE> 299279
<TOTAL-LIABILITY-AND-EQUITY> 810178
<SALES> 0
<TOTAL-REVENUES> 522480
<CGS> 434010
<TOTAL-COSTS> 496787
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 166
<INCOME-PRETAX> 25527
<INCOME-TAX> 9573
<INCOME-CONTINUING> 15954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15954
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.20
</TABLE>
