<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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)
<TABLE>
<S> <C>
DELAWARE 21-0718930
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
1800 WEST LOOP SOUTH, HOUSTON, TEXAS 77027
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 877-2311
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE OF WHICH REGISTERED
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<S> <C>
Common Stock, $.01 par value per share New York Stock Exchange
Convertible Redeemable Preferred Stock, $.10 par value per share New York Stock Exchange
Class B Warrants to acquire Common Stock New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES /X/ NO / /
As of February 10, 1995, the number of shares outstanding of Registrant's
voting stock was 11,428,632 and the aggregate market value of the Registrant's
voting stock held by non-affiliates was $200,873,556.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF 10-K
WHERE INCORPORATED
------------------
<S> <C>
Proxy Statement dated March 20, 1995 for the Annual Meeting of
Stockholders to be held on April 26, 1995............................... III
</TABLE>
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<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
U.S. Home Corporation ("U.S. Home" or the "Company"), organized in 1954 and
incorporated in the State of Delaware in 1959, is one of the largest
single-family home builders in the United States based on homes delivered. The
Company currently builds and sells homes in more than 190 new home communities
in 31 metropolitan areas in 12 states. Since its formation, the Company has
delivered more than 252,000 homes. The Company conducts substantially all of its
home building business through U.S. Home, the parent company.
The Company offers a wide variety of moderately-priced homes that are
designed to appeal to the affordable, move-up and retirement and
active-adult/second home buyers. In each of its markets, the Company's primary
strategy is to build quality homes, utilizing its Zero Defect Program, which the
Company believes offers prospective home buyers a high level of new home value.
The Company believes that many home purchasers compare homes on the basis of
location, perceived quality and dollars of purchase price per square foot of
living area. As a result, the Company attempts to purchase land and lots in
popular growth corridors, maintain high quality standards and design homes to
maximize living space.
In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
OPERATIONS
The Company is engaged in two related industry segments: home building and
financial services. The revenues, operating profits or losses and identifiable
assets attributable to the Company's industry segments are separately disclosed
in the Consolidated Financial Statements.
HOME BUILDING OPERATIONS
The Company's primary industry segment is the on-site development of
single-family residential communities. Currently, the Company builds in 31
metropolitan areas in 12 states. During 1994, the Company's product mix
consisted of deliveries of approximately 34% affordable homes, 47% move-up homes
and 19% retirement and active-adult/second homes. U.S. Home continues to pay
increasing attention to the active adult who is in the market for a second home
or is nearing retirement. The Company has set a goal to increase its retirement
and active-adult/second home deliveries to approximately 30% of the Company's
volume. However, there can be no assurance that such efforts will be successful.
The Company presently has retirement and active-adult/second home communities in
Texas, Maryland, New Jersey, Nevada and Florida, with expansion plans for
California and Arizona where two retirement communities are expected to open in
the latter part of 1995.
During 1994, the Company entered new markets in the Midwest by acquiring or
optioning property in Cleveland and Columbus, Ohio and Indianapolis, Indiana. By
the third quarter of 1995, the Company expects to open 10 new communities in
these Midwest markets.
2
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MARKETS
U.S. Home's building operations are currently conducted in the following
market areas:
<TABLE>
<CAPTION>
MARKETS METROPOLITAN AREAS
------- ------------------
<S> <C>
Florida.......................... Bonita Springs, Clearwater/Palm Harbor/Tarpon
Springs, Fort Myers, Key Largo, Naples, Orlando,
Sarasota/ Bradenton, Spring Hill/New Port Richey
and Tampa
Mountain --
Colorado....................... Colorado Springs, Denver and Fort Collins/Greeley/
Loveland
Arizona........................ Phoenix and Tucson
Nevada......................... Las Vegas
Northeast/Midwest --
Maryland/Virginia.............. Annapolis/Baltimore and Washington, D.C. area
Minnesota...................... Minneapolis/St. Paul
New Jersey..................... Dover/Jackson/Monroe/Princeton and Washington/
Lumberton
Indiana........................ Indianapolis
Ohio........................... Cleveland and Columbus
California....................... Bakersfield, Palmdale/Lancaster and Sacramento
Texas............................ Austin, Dallas/Fort Worth, Houston,
McAllen/Harlingen/ Brownsville and San Antonio
</TABLE>
The Company seeks to maintain geographic diversity and thus reduce the
potential risk of economic volatility in any given market.
The Company's homebuilding and marketing activities are conducted under the
name of U.S. Home in each of its markets except in Minneapolis/St. Paul where
the Company markets its homes under the name of Orrin Thompson Homes and in
Florida where homes are marketed under the name of Rutenberg Homes as well as
U.S. Home.
Set forth below are revenues for the Company from the sale of single-family
homes by market for each of the last three fiscal years:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
MARKETS 1994 1993 1992
------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Florida............................................ $293,278 $243,130 $202,859
Mountain --
Colorado......................................... 138,409 103,769 89,240
Arizona.......................................... 128,343 85,784 65,210
Nevada........................................... 43,540 28,946 19,475
Northeast/Midwest --
Maryland/Virginia................................ 67,689 49,913 53,042
Minnesota........................................ 67,496 64,645 45,375
New Jersey....................................... 39,198 31,810 18,887
California......................................... 107,625 104,416 108,426
Texas.............................................. 79,173 77,061 67,179
-------- -------- --------
$964,751 $789,474 $669,693
======== ======== ========
</TABLE>
3
<PAGE> 4
Set forth below are tables providing information (expressed in number of
housing units) with respect to new orders taken, deliveries to purchasers and
backlog of single-family homes by market for each of the last three fiscal
years:
NEW ORDERS TAKEN
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1994 1993 1992
------- ----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 2,127 1,979 1,654
Mountain --
Colorado.................................................. 812 841 676
Arizona................................................... 845 931 650
Nevada.................................................... 308 249 136
Northeast/Midwest --
Maryland/Virginia......................................... 333 334 369
Minnesota................................................. 339 493 323
New Jersey................................................ 283 210 179
Ohio...................................................... 10 -- --
California.................................................. 592 722 643
Texas....................................................... 585 659 644
----- ----- -----
6,234 6,418 5,274
===== ===== =====
</TABLE>
DELIVERIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1994 1993 1992
------- ----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 1,948 1,705 1,491
Mountain --
Colorado.................................................. 898 674 617
Arizona................................................... 970 729 600
Nevada.................................................... 299 206 137
Northeast/Midwest --
Maryland/Virginia......................................... 382 301 324
Minnesota................................................. 396 457 327
New Jersey................................................ 203 175 173
California.................................................. 643 692 722
Texas....................................................... 648 647 624
----- ----- -----
6,387 5,586 5,015
===== ===== =====
</TABLE>
4
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BACKLOG (1)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
MARKETS 1994 1993 1992
------- ----- ----- -----
<S> <C> <C> <C>
Florida..................................................... 1,146 967 693
Mountain --
Colorado.................................................. 390 476 309
Arizona................................................... 263 388 186
Nevada.................................................... 90 81 38
Northeast/Midwest --
Maryland/Virginia......................................... 82 131 98
Minnesota................................................. 87 144 108
New Jersey................................................ 169 89 54
Ohio...................................................... 10 -- --
California.................................................. 86 137 107
Texas....................................................... 228 291 279
----- ----- -----
2,551 2,704 1,872
===== ===== =====
</TABLE>
- ------------
(1) Homes under contract for sale but not delivered at end of year.
The Company anticipates that substantially all of its backlog units, net of
cancellations, as of December 31, 1994 will be completed and delivered during
1995. While operations in certain market areas are affected by seasonal factors
which limit on-site building and sales activities, the Company's ability to
build and deliver its backlog is not considered to be seriously affected by such
factors.
SALES AND MARKETING
The Company employs sales consultants for the sale of single-family homes,
although sales by independent real estate brokers are also encouraged. Specific
sales training programs are provided which inform sales consultants about sales
techniques and methods as well as information about their local market, realtors
and products. The sales programs focus on the Company's Zero Defect Program as a
marketing tool because the sales force is the first contact with the customer.
The Zero Defect Program is a quality assurance program with major emphasis on
construction (see Construction below).
The Company advertises primarily in magazines and local newspapers.
Additionally, homes are marketed by means of model homes, pictorial brochures
and on-site displays. The Company's general marketing strategy seeks to generate
one-third of housing sales through advertisements, one-third through customer
referrals and one-third through realtor contacts.
The Company markets homes in "model home parks" featuring one or more model
homes, attractively furnished and decorated and staffed by the Company's sales
consultants who provide information regarding floor plans, the various
elevations available, decorating options, as well as assisting with mortgage
financing information. The model may include a variety of options and upgrades
which the customer may request at an additional cost. Such upgrades may include
items such as pools, fireplaces and decks. The Company constantly studies both
aesthetic design and architectural trends, as well as quality construction and
engineering trends, in order to provide customers with high quality, design and
value. The Company has received numerous awards in various markets for
outstanding housing design.
Selling prices are set in each area based on local market conditions and
competitive factors. The Company's gross margins vary from area to area based on
competitive factors in each market.
5
<PAGE> 6
The Company's product lines include both single-family detached and
attached homes. During 1994, 1993 and 1992, approximately 85% of the homes
delivered were single-family detached. The number of units and average sales
prices of single-family homes delivered in 1994, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
SINGLE-FAMILY SINGLE-FAMILY
DETACHED ATTACHED
------------------------ ------------------------
NUMBER AVERAGE NUMBER AVERAGE
OF UNITS SALES PRICE OF UNITS SALES PRICE
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
1994....................................... 5,411 $155,200 976 $127,900
1993....................................... 4,773 145,000 813 119,500
1992....................................... 4,211 137,400 729 125,000
</TABLE>
The increases in the average sales prices of single-family detached homes
in 1994 and 1993 were primarily due to price increases. The increase in the
average sales prices of single-family attached homes in 1994 was primarily due
to an increase in deliveries in higher priced markets while the decrease in the
average sales prices of single-family attached homes in 1993 was primarily due
to an increase in the deliveries in lower priced markets.
In 1994, the national average sales prices of new single-family homes (both
detached and attached) as reported on a preliminary basis by the U.S. Census
Bureau was $154,100 compared with an average sales price of $151,000 for the
Company.
Variations in the general product and customer mix may exist from year to
year based on shifts in local market demand or product availability. The table
below sets forth the mix of the Company's deliveries for the affordable, move-up
and retirement and active-adult/second home products during the last three
years:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Affordable..................................................... 34% 31% 28%
Move-up........................................................ 47% 54% 56%
Retirement and active-adult/second home........................ 19% 15% 16%
</TABLE>
Many purchasers finance a large portion of the purchase price of a home
through conventional or government insured/guaranteed mortgages from lending
institutions. The Company generally assists purchasers in obtaining mortgages.
Approximately 85% of the homes delivered in 1994 and 86% delivered in 1993 and
in 1992, were purchased using mortgage financing.
The Company takes steps to qualify certain of its homes under Veterans
Administration ("VA") and Federal Housing Administration ("FHA") mortgage
financing programs, which provide mortgage financing sources. During 1994, 1993
and 1992, approximately 19%, 25% and 25% of the Company's homes delivered were
financed under VA and FHA mortgage programs.
CONSTRUCTION
The Company's investment in direct employee labor costs, equipment and
facilities is kept to a minimum because all construction of single-family homes
is performed by independent subcontractors. At all stages of construction,
however, on-site Company managers supervise and coordinate the activities of
these subcontractors and subject their work to quality and cost control
standards. The Company's Director of National Purchasing and Quality Control
provides centralized management of quality standards, both with respect to the
construction of homes and the purchase of certain major components used in the
construction of homes. Company employees are rated and compensation incentives
are affected by a measure of quality standards. The Company's commitment to
quality and its use in the Company's sales efforts are best illustrated by its
Zero Defect Program. Under the Zero Defect Program, the home buyer meets with
the construction supervisor prior to the commencement of, and during,
construction in order to ensure that the home buyer (i) is aware of all quality
features of the house, including those which are not readily apparent in the
finished house, (ii) agrees that the design features, including appliances,
match those ordered and (iii) is satisfied with the finished product. The
Company considers a completed house to have "zero defects" if, upon final
inspection by the home buyer, only a few minor cosmetic items remain to be
corrected.
6
<PAGE> 7
Construction subcontractors are selected on the basis of competitive bids
and written agreements govern their relationship with the Company. All bids are
based on detailed specifications and complete blueprints to ensure commitment to
the Company's expectation for high quality workmanship.
The Company purchases the majority of its construction material on a
decentralized basis with a "just in time" delivery schedule to each individual
job site. Materials are regularly purchased on a competitive bid basis to ensure
both competitive pricing and high quality. In addition to local purchasing, the
Company has entered into a number of national purchasing agreements in order to
maximize purchasing power. Agreements with each vendor are negotiated on an
annual basis by the Company's Director of National Purchasing and Quality
Control.
In order to minimize the risk associated with completed but unsold
inventory, the Company generally does not commence construction of a
single-family detached home prior to receipt of an executed purchase contract, a
deposit from the customer and preliminary mortgage approval based on the
purchaser's mortgage application. For single-family attached homes, construction
does not generally commence until 50% of the units in a building have been sold.
REGULATION
The Company and its subcontractors must comply with various federal, state
and local zoning, building, pollution, environmental, advertising and consumer
credit statutes, rules and regulations, as well as other activities, including
regulations relating to specific building materials to be used, building design
and minimum elevations of properties. All of these regulations have increased
the time and cost required to market the Company's products by extending the
time between the initial acquisition of land and the commencement of
construction. The Company's operations, like those of other home builders, have
been periodically subject to moratoriums on development activities caused by
insufficient water, sewage and energy-related facilities. Moratoriums in local
areas have not had a material adverse effect on its overall activities because
of the geographic diversification of the Company's operations.
COMPETITION
The single-family residential housing industry is highly competitive. U.S.
Home competes in each of its markets, with respect to the location, design and
price of its products, with numerous firms engaged in the on-site development of
single-family residential housing, ranging from regional and national firms to
small local companies. The Company is one of the largest on-site builders of
single-family homes in the United States, ranking among the ten largest
single-family on-site home builders in the United States for each of the last 20
years. However, because there are so many firms engaged in the single-family
home building industry, the Company accounts for less than 1% of all new on-site
single-family housing sales in the United States.
RAW MATERIALS AND SUBCONTRACTORS
The Company uses numerous suppliers of raw materials and services in its
business and such materials and services have been and continue to be available.
Where appropriate, the Company has adopted national programs for products to
maximize price discounts through volume purchases. The Company also utilizes
numerous independent subcontractors representing all building trades in
connection with the construction of its homes.
COMMUNITY DEVELOPMENT
A significant portion of the Company's land and lot needs are currently
satisfied through rolling lot options, which enable the Company to initially pay
a small fraction of total lot cost and then purchase the lots on a scheduled or
on an "as needed" basis. For example, during 1994, 56% of the Company's unit
deliveries were from lots owned by the Company and 44% were from lots acquired
by the exercise of rolling lot options.
The Company's policy is that land cannot be purchased or sold without prior
approval of the Company's Asset Management Committee. Asset Management Committee
approval requires submission of data relating
7
<PAGE> 8
to sales forecasts, a timing schedule (e.g., estimated dates on start of land
development, housing construction, model opening and sales) and a projection of
income and internal rate of return. All development expenditures are reviewed by
the respective President of Operations prior to the commencement of development.
In addition, the Company's amended and restated by-laws require approval by the
Company's Board of Directors of any acquisition of unimproved real property or
acreage by the Company in any single transaction or series of related
transactions involving an expenditure in excess of $5 million and any other
capital expenditures and other commitments by the Company in excess of $5
million per transaction (excluding transactions involving housing).
The Presidents of Operations and the Division Presidents are responsible
for maintaining continuity of housing sales through awareness of trends in
housing demand in each market area. Feasibility studies and market research
studies are generally required before approval of the purchase of land. These
studies examine the demographics of an area including population trends, income
trends, employment trends, housing stock and housing demand. Products are
matched to customer profile, determined in part by the market studies and the
experience of the local manager in each market.
Housing communities are generally built in or near major metropolitan areas
and are normally located in growing markets for such areas. At December 31,
1994, the Company's land and finished lot inventories totaled $304.0 million,
excluding option deposits. See Note 1 of Notes to Consolidated Financial
Statements. Substantially all are zoned for their intended use and serviced by
utilities. As of December 31, 1994, the Company had deposits totaling $53.6
million for options to purchase undeveloped land and finished lots for home
building operations for a total purchase price on exercise of approximately
$327.7 million.
The following table sets forth as of December 31, 1994, by market, the cost
of certain of the Company's land inventories and the estimated number of lots
controlled through direct ownership and under option which are being used or
that will be used in the Company's home building operations (dollars in
thousands):
<TABLE>
<CAPTION>
ESTIMATED NUMBER OF HOUSING
UNITS THAT COULD BE
CONSTRUCTED ON LAND
CONTROLLED
BOOK AS OF DECEMBER 31, 1994 (1)
COST ----------------------------
OF LAND UNDER
MARKETS OWNED OWNED OPTION TOTAL
---------------------------------------------- --------- ------ ------ ------
<S> <C> <C> <C> <C>
Florida....................................... $ 86,413 8,002 4,529 12,531
Mountain --
Colorado.................................... 43,146 3,183 3,946 7,129
Arizona..................................... 11,891 753 2,873 3,626
Nevada...................................... 16,159 494 743 1,237
Northeast/Midwest --
Maryland/Virginia........................... 22,430 568 533 1,101
Minnesota................................... 12,714 604 783 1,387
New Jersey.................................. 26,131 1,726 338 2,064
Indiana..................................... 262 10 134 144
Ohio........................................ 836 22 782 804
California.................................... 23,062 713 2,450 3,163
Texas......................................... 28,537 2,513 394 2,907
--------- ------ ------ ------
$ 271,581 18,588 17,505 36,093
======== ====== ====== ======
</TABLE>
- ------------
(1) Based upon current management estimates, which are subject to change. This
table does not include commercial property and other properties which the
Company has no current plans to use, with an aggregate cost of $32.4 million
(including $13.3 million relating to land under contract for sale and for
exchange). In view of the various stages of development of the land owned by
the Company as of December 31, 1994 (i.e., finished, under development and
development not started), any per lot cost derived by dividing the book cost
by the estimated number of units would not be meaningful.
8
<PAGE> 9
In 1994, revenues from the sale of developed and undeveloped land by the
Company amounted to $16.2 million, as compared to revenues of $8.5 million in
1993 and $6.6 million in 1992. In addition, the Company, in 1993 and 1992,
completed several exchanges of land assets with third parties in which the
Company received land suitable for development of single-family detached homes,
which could be more readily developed and sold, in return for land zoned
primarily for commercial use and single-family attached homes which the Company
had no near-term plans to utilize.
REORGANIZATION
The Company and certain of its affiliates commenced proceedings (the
"Cases") under Chapter 11 of title 11 of the United States Code on April 15,
1991 (the "Filing Date"), in order to restructure their indebtedness and other
liabilities. On May 25, 1993, the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") entered an order
confirming the first amended consolidated plan of reorganization of the Company
and certain of its affiliates (as modified, the "Plan"). Such order became final
on June 5, 1993, and the Plan became effective on June 21, 1993 (the "Effective
Date"). On the Effective Date, the Company also completed a public offering of
$200 million principal amount of 9.75% senior notes due 2003, the net proceeds
from which were utilized to pay a portion of the claims of certain unsecured
creditors of the Company under the Plan and to repay outstanding amounts under
the Company's debtor-in-possession financing facility.
The Plan effected a recapitalization of the Company and did not result in a
reduction in the scope or other major restructuring of the Company's operations.
During the pendency of the Cases, the Company continued its home building
operations in the ordinary course in its housing markets and improved its market
share in a majority of such markets. The Company was able to retain its senior
management and believes that it maintained customer, subcontractor and supplier
goodwill and the confidence of its employees.
As part of the Plan, creditors received 4,873,650 shares of common stock,
$.01 par value per share, and 2,816,762 shares of convertible redeemable
preferred stock, $.10 par value per share, and the pre-Effective Date
stockholders received 3,510,818 shares of common stock and Class B warrants to
acquire common stock (exercisable at $20 per share), which, if fully exercised,
would result in an additional 1,904,757 shares of common stock (a total of
5,415,575 shares). As of December 31, 1994, 2,297,867 shares of convertible
redeemable preferred stock had been converted into an equal number of shares of
common stock and 3,321 Class B warrants had been exercised. See Notes 5 and 6 of
Notes to Consolidated Financial Statements.
FINANCIAL SERVICES OPERATIONS
The Company's second industry segment consists primarily of its mortgage
banking activities. U.S. Home Mortgage Corporation ("Mortgage"), a wholly-owned
subsidiary of the Company, commenced operations in 1971 and serves an important
role in the Company's sale of its homes by arranging financing for customers.
Mortgage is a Federal National Mortgage Association/Government National
Mortgage Association/ Federal Home Loan Mortgage Corporation approved
seller-servicer, headquartered in Clearwater, Florida with branch offices in the
metropolitan areas of Phoenix and Tucson, Arizona; Sacramento, California;
Denver, Colorado; Washington, D.C.; Clearwater, Fort Myers and Orlando, Florida;
Minneapolis, Minnesota; Las Vegas, Nevada; and Dallas, Texas. The Company offers
a wide variety of conventional, FHA and VA financing programs through Mortgage,
thereby providing prospective buyers the benefits of both conventional and
government assisted loan programs. As a mortgage banker, Mortgage originates and
funds mortgage loans and sells the loans and the related servicing rights
directly to investors. Loans and servicing rights are generally sold by Mortgage
and funded by the investors within 30 days after home delivery. To limit its
risk of interest rate fluctuations, Mortgage regularly enters into fixed price
mandatory forward delivery contracts to sell mortgage-backed securities to
securities dealers or fixed price forward delivery commitments to sell specific
whole loans to investors on a mandatory or best efforts basis. Mortgage has a
secured revolving line of credit to fund the mortgage loans on an interim basis
until purchased by investors.
9
<PAGE> 10
The following table summarizes certain mortgage banking operating
information (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Residential mortgage loans
Number of loans originated........................... 2,987 3,050 2,502
Average amount of loan originated.................... $ 122 $ 114 $ 114
Total amount of loans originated:
Funded by Mortgage................................ $308,000 $317,000 $250,000
Brokered by Mortgage.............................. 58,000 30,000 35,000
-------- -------- --------
Total................................................ $366,000 $347,000 $285,000
======== ======== ========
Company's homes delivered financed by Mortgage as a
percentage of Company's homes delivered which were
financed............................................. 50% 51% 47%
Company's homes delivered financed by Mortgage as a
percentage of Mortgage's total originations.......... 92% 83% 82%
</TABLE>
While the Company continues to focus its attention primarily upon the
expansion of Mortgage's operations within the Company's own customer base,
Mortgage also offers its services to realtors, unaffiliated builders and
refinance customers.
Among the factors affecting Mortgage's operations are general economic
conditions, federal, state and local regulatory constraints, consumer confidence
and interest rate volatility. These factors, together with the number of homes
delivered by the Company, affect the volume of loan originations which in turn
impact the resulting volume of mortgage loans and mortgage servicing rights
available for sale.
ADDITIONAL INFORMATION
FINANCING OF HOUSING OPERATIONS
The Company finances its housing operations through internally generated
funds, unsecured public debt and a $95 million secured working capital credit
facility and certain other secured acquisition and development financing
facilities. See Notes 2 and 3 of Notes to Consolidated Financial Statements.
FINANCING OF FINANCIAL SERVICES OPERATIONS
The Company finances its financial services operations primarily through
internally generated funds (i.e., origination and sale of residential mortgage
loans and related servicing rights) and short-term debt. The short-term debt
consists of a $25 million secured revolving line of credit. See Note 2 of Notes
to Consolidated Financial Statements. This debt is not guaranteed by the Company
nor does the Company have any obligation to provide funding to its financial
services operations.
EMPLOYEES
At December 31, 1994, the Company had 1,353 employees, of whom 1,220 were
employed in home building operations and 133 were employed in financial services
operations. None of the Company's employees are represented by a union. The
Company considers its relations with its employees to be good. The Company's
single-family housing and community development operations are conducted
primarily through independent subcontractors, thereby limiting the number of
direct employees required.
ITEM 2. PROPERTIES
The Company leases its executive offices, located at 1800 West Loop South,
Houston, Texas 77027, pursuant to a lease scheduled to expire on February 28,
1999. The Company does not believe that its executive
10
<PAGE> 11
offices or its other facilities, consisting of sales and administrative offices
located in or near each of the Company's areas of operations and generally held
under leases with terms not exceeding five years, are material to its
operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation arising from the normal course of
business, none of which, in the opinion of the Company, will have a material
adverse effect on the financial position or results of operations of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers during 1994 and their respective ages and
positions are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
---- --- -------------------
<S> <C> <C>
Robert J. Strudler....... 52 Chairman and Chief Executive Officer
Isaac Heimbinder......... 51 President and Chief Operating Officer
Gary L. Frueh............ 54 Vice President -- Tax and Audit
Craig M. Johnson......... 41 Vice President -- Community Development
Thomas A. Napoli......... 53 Vice President -- Finance and Chief Financial
Officer
Chester P. Sadowski...... 48 Vice President -- Controller and Chief Accounting
Officer
Richard G. Slaughter..... 50 Vice President -- Planning and Secretary
Kelly F. Somoza.......... 41 Vice President
</TABLE>
No family relationship exists among any of the executive officers of the
Company.
Each of the foregoing officers has been elected to serve in the office
indicated until the first meeting of the Board of Directors following the next
annual meeting of stockholders of U.S. Home and until his or her successor is
elected and qualified.
Mr. Strudler has served as Chairman and Chief Executive Officer of the
Company since May 12, 1986.
Mr. Heimbinder has served as President and Chief Operating Officer of the
Company since May 12, 1986.
Mr. Frueh has been Vice President -- Tax and Audit since February 5, 1992;
prior thereto, he had been Vice President, Tax, since December 18, 1986.
Mr. Johnson was elected Vice President -- Community Development on June 11,
1992; prior thereto, he had been Executive Vice President, Community Development
since October 14, 1988.
Mr. Napoli has served as Vice President -- Finance and Chief Financial
Officer since April 21, 1989.
Mr. Sadowski has served as Vice President -- Controller and Chief
Accounting Officer since December 17, 1987.
Mr. Slaughter was elected Vice President -- Planning on December 18, 1986;
prior thereto, he had been Secretary since June 26, 1986.
Ms. Somoza was elected Vice President on June 11, 1992; prior thereto, she
had been Director, Investor Relations since December 31, 1981. Ms. Somoza is
responsible for the Company's public and investor relations, and is the
administrator of the Company's profit sharing and employees' savings programs.
11
<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of February 10, 1995, there were 7,115 holders of record of the
Company's common stock, $.01 par value per share. The principal market on which
the common stock is traded is the New York Stock Exchange.
The following tables set forth the high and low sale prices of the
Company's common stock, $.10 par value per share, outstanding prior to the
effectiveness of the Plan and the common stock (issued pursuant to the Plan) for
the periods indicated as reported on the New York Stock Exchange Composite Tape.
The Company believes that the stock price information through June 21, 1993 is
of limited use and relevance in the view of the significant changes in ownership
of the Company's capital stock and the Company's capital structure which
occurred under the Plan.
NEW COMMON STOCK
<TABLE>
<CAPTION>
1994 HIGH LOW
---- ------ ------
<S> <C> <C>
First Quarter.................................................... $29.38 $20.75
Second Quarter................................................... 22.25 14.00
Third Quarter.................................................... 18.50 14.63
Fourth Quarter................................................... 16.38 14.38
1993
----
Second Quarter subsequent to June 21, 1993....................... $22.13 $19.00
Third Quarter.................................................... 26.38 19.38
Fourth Quarter................................................... 29.00 24.88
OLD COMMON STOCK
1993
----
First Quarter.................................................... 1.50 .69
Second Quarter through June 21, 1993............................. 2.38 1.00
</TABLE>
Immediately prior to the Effective Date, the Company had 45,312,526 shares
of common stock, $.10 par value per share, outstanding. Pursuant to the Plan,
all pre-Effective Date capital stock was canceled and common stock, $.01 par
value per share, and other securities were issued.
No dividends were paid by the Company during 1994 or 1993. The Company's
working capital facility (the most restrictive of the Company's borrowing
agreements) prohibits the Company from paying dividends on its capital stock.
The senior note indenture and the Company's second restated certificate of
incorporation also contain restrictions on the payment of dividends.
12
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES.................... $995,311 $812,077 $689,900 $495,117 $ 633,178
OPERATING INCOME (LOSS)............... 52,526 44,640 29,349 (4,832) (87,870)
REORGANIZATION ITEMS.................. -- 6,915 50,703 3,978 --
INCOME TAXES.......................... 19,697 (33,966) -- -- --
-------- -------- -------- -------- ---------
INCOME (LOSS) BEFORE DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEM... 32,829 71,691 (21,354) (8,810) (87,870)
LOSS FROM DISCONTINUED OPERATIONS..... -- -- -- -- (15,654)
EXTRAORDINARY ITEM.................... -- -- -- -- 1,880
-------- -------- -------- -------- ---------
NET INCOME (LOSS)..................... $ 32,829 $ 71,691 $(21,354) $ (8,810) $(101,644)
======== ======== ======== ======== =========
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE (1):
PRIMARY --
Income (loss) before discontinued
operations and extraordinary
item............................. $ 2.89 $ 6.16(2) $ (1.89) $ (.78) $ (7.79)
Loss from discontinued operations... $ -- $ -- $ -- $ -- $ (1.39)
Extraordinary item.................. $ -- $ -- $ -- $ -- $ .17
Net income (loss)................... $ 2.89 $ 6.16(2) $ (1.89) $ (.78) $ (9.01)
FULLY DILUTED --
Income (loss) before discontinued
operations and extraordinary
item............................. $ 2.50 $ 5.93(2) $ (1.89) $ (.78) $ (7.79)
Loss from discontinued operations... $ -- $ -- $ -- $ -- $ (1.39)
Extraordinary item.................. $ -- $ -- $ -- $ -- $ .17
Net income (loss)................... $ 2.50 $ 5.93(2) $ (1.89) $ (.78) $ (9.01)
DIVIDENDS PER COMMON
SHARE............................... $ -- $ -- $ -- $ -- $ --
TOTAL ASSETS.......................... $747,951 $678,846 $543,471 $609,804 $ 620,609
======== ======== ======== ======== =========
TOTAL SHORT-TERM DEBT (3)............. $ 18,656 $ 20,566 $193,572 $206,226 $ 231,998
======== ======== ======== ======== =========
TOTAL LONG-TERM DEBT (3).............. $304,272 $313,039 $156,413 $199,825 $ 208,488
======== ======== ======== ======== =========
</TABLE>
- ---------------
(1) Income (loss) per common and common equivalent share has been computed using
the weighted average number of common and common equivalent shares
outstanding, assuming the new capital structure had been effective as of the
beginning of all periods presented. This differs from historical primary and
fully diluted income (loss) per common and common equivalent share
previously reported (based on the Company's former capital structure) for
the years ended December 31, 1992, 1991, and 1990 of $(.47), $(.20), and
$(2.27), respectively. The Company believes that earnings per common share
information for 1992, 1991, and 1990 is of limited use and relevance in view
of the significant changes in ownership of the Company's capital stock and
the Company's capital structure which occurred in 1993 under the Plan.
(Notes continued on following page)
13
<PAGE> 14
(2) Primary and fully diluted income per share in 1993 were $2.29 per share and
$2.21 per share, respectively, excluding $3.87 primary income per share and
$3.72 fully diluted income per share, respectively, due to the decrease in
the deferred tax asset valuation allowance. See Note 4 of Notes to
Consolidated Financial Statements.
(3) Includes unsecured debt of $266,635,000 at December 31, 1992 which was
exchanged for a combination of cash and equity securities, and secured debt
of $5,213,000 at December 31, 1992 which was either reinstated or the
property securing the debt was deeded to the lenders in full satisfaction of
the debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The historical financial statements for the years ended December 31, 1993
and 1992 include certain expenses and write-offs related to the Cases and the
Plan and do not include certain interest charges on the Company's unsecured debt
which was stayed during the pendency of the Cases.
HOUSING
The following table sets forth certain financial information for the
Company's housing segment for the periods indicated (dollars in thousands,
except average sales price):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues --
Single-family homes.............................. $964,751 $789,474 $669,693
Land and other................................... 17,627 9,476 9,522
-------- -------- --------
Total.................................... $982,378 $798,950 $679,215
======== ======== ========
Single-family homes --
Gross margin amount.............................. $156,982 $127,901 $108,851
Gross margin percentage.......................... 16.3% 16.2% 16.3%
Units delivered.................................. 6,387 5,586 4,940
Average sales price.............................. $151,000 $141,300 $135,600
New orders taken................................. 6,234 6,418 5,189
Backlog at end of year........................... 2,551 2,704 1,845
Selling, general and administrative expenses as a
percentage of housing revenues................... 11.0% 11.0% 12.0%
Interest expense --
Paid or accrued.................................. $ 30,820 $ 22,105 $ 14,462
Capitalized...................................... $ 30,820 $ 21,920 $ 13,210
Percentage capitalized........................... 100% 99.2% 91.3%
Capitalized interest included in cost of sales..... $ 28,871 $ 22,342 $ 23,338
</TABLE>
REVENUES AND GROSS MARGIN
Revenues from sales of single-family homes for 1994 increased 22% from
1993. The increase resulted from a 14% increase in the number of housing units
delivered and a 7% increase in the average sales price. Revenues from sales of
single-family homes for 1993 increased 18% from 1992, resulting primarily from a
13% increase in the number of housing units delivered and a 4% increase in the
average sales price.
The increase in units delivered in 1994 was primarily attributable to an
improved backlog level at December 31, 1993 when compared to the backlog level
at December 31, 1992. The increase in units delivered in 1993 was primarily
attributed to a continuation of generally improved industry conditions, as well
as increases in the Company's market share in many of its housing markets. The
increases in the average sales prices in 1994 and 1993 were primarily due to
price increases.
14
<PAGE> 15
The gross margin percentage was essentially unchanged over the three year
period as the Company was able to increase sales prices in the three year period
to offset cost increases.
New orders taken in 1994 decreased 3% from 1993. The decline in new orders
in 1994 occurred in the second half of the year and was attributable to the
increases in mortgage interest rates caused by Federal Reserve actions in the
last three quarters of 1994. New orders taken in 1993 increased 24% from 1992
attributable primarily to a continuation of generally improved industry
conditions.
If mortgage interest rates in 1995 continue at the present level or
increase, new orders in 1995 from the Company's current communities may be less
than new orders in 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
As a percentage of housing revenues, selling, general and administrative
expenses were 11% in both 1994 and 1993 as compared to 12% in 1992. Actual
selling, general and administrative expense for 1994 increased $19.5 million
compared to 1993. This increase was attributable to increases in volume-related
expenses ($6.5 million) 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 and earnings. Similarly, selling,
general and administrative expenses increased by $6.7 million in 1993 compared
to 1992, due to increases in volume-related expenses ($4.4 million) resulting
from increases in deliveries in 1993 when compared to 1992 and increases in
other selling, general and administrative expenses resulting from increased
activities and earnings.
INTEREST EXPENSE
Interest paid and accrued for 1994 increased approximately 39% compared to
1993 and increased approximately 53% in 1993 compared to 1992. The increase in
1994 over 1993 was primarily due to interest on a majority of the Company's debt
in the first six months of 1993 being stayed during the pendency of the Cases,
while the increase in 1993 over 1992 was primarily due to the sale of the 9.75%
senior notes in June 1993 and the 4.875% convertible subordinated debentures in
November 1993. The increase in the percentage of interest capitalized for 1993
over 1992 was primarily due to an increase in the amount of assets qualifying
for interest capitalization.
REORGANIZATION ITEMS, NET
Reorganization items in 1993 and 1992 represent expenses (primarily
professional and other fees) incurred by the Company resulting from the Cases
and are specific to the reorganization process. Pursuant to the Plan, the
Company issued 140,000 shares of common stock on June 21, 1993 to corporate
officers and certain other key employees for services rendered in connection
with the reorganization of the Company. The Company has reflected the issuance
as an increase in stockholders' equity and an offsetting charge to earnings of
$2.9 million based upon the market price of the common stock on June 21, 1993.
In connection with implementing the Plan, the Company recorded a $42.4
million provision in the fourth quarter of 1992 to reflect the impact of the
Plan on land utilization and its estimated net realizable value which amount has
been included in "Reorganization Items" in the Consolidated Statements of
Operations.
15
<PAGE> 16
FINANCIAL SERVICES
REVENUES
Revenues for the financial services segment for the periods indicated were
as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
U.S. Home Mortgage Corporation and Subsidiaries....... $ 9,885 $10,303 $ 7,828
Other financial services subsidiaries................. 3,048 2,824 2,857
------- ------- -------
$12,933 $13,127 $10,685
======= ======= =======
</TABLE>
Mortgage provides financing primarily to purchasers of homes sold by the
Company's housing operations through origination of residential mortgage loans
and engages in the sale of such mortgages and related servicing rights to
unaffiliated investors. Mortgage's operations are affected, among other things,
by general economic conditions, consumer confidence and interest rate
volatility. These factors, together with the number of homes delivered by the
Company, affect the volume of loan originations which in turn impact the
resulting volume of mortgages and servicing rights for sale.
The decrease in Mortgage's revenues for 1994 from 1993 was primarily due to
decreased marketing income as a result of increased pricing competition and
volatility in the secondary mortgage markets. The increase in Mortgage's
revenues for 1993 from 1992 was primarily due to an increase in the number of
residential mortgage loan originations. This increase was primarily due to an
increase in the number of Company homes deliveries financed by Mortgage.
GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expenses in 1994 increased $1.9 million from
1993 which had increased $.5 million from 1992. The increase in 1994 was due in
part to nonrecurring transactions which reduced general and administrative
expenses in 1993 by approximately $1.0 million. The balance of the increase in
1994 was primarily due to Mortgage opening additional branch and satellite
offices in the last half of 1993 and early 1994. The increase in 1993, which was
offset in part by the nonrecurring transactions referred to above, was due to
the opening of additional Mortgage offices in the last half of 1993 and an
increase in Mortgage's staffing as a result of increased volume of activities.
INTEREST EXPENSE
Interest expense in 1994 decreased approximately 58% from 1993 which was
approximately the same as 1992. The decrease in 1994 was due to a decrease in
the average short-term borrowings.
FINANCIAL CONDITION AND LIQUIDITY
HOUSING
The Company's most significant needs for capital resources are land and
finished lot 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 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 ("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 2 of Notes to
Consolidated 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,
16
<PAGE> 17
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. The increase in the land
inventories in 1994 from 1993 was primarily the result of increased activities,
including expansion of the retirement and active-adult/second home communities
which will continue into 1995.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the years ended December 31, 1994, 1993
and 1992 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net cash provided (used by):
Operating activities............................. $(17,887) $(61,613) $ 46,951
Investing activities............................. (1,676) 1,520 973
Financing activities............................. (3,445) 70,262 (48,759)
-------- -------- --------
Net increase (decrease) in cash.................... $(23,008) $ 10,169 $ (835)
======== ======== ========
</TABLE>
Housing operations 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 less cash in 1994 than in 1993
primarily due to an increase in the number of housing units delivered offset in
part by an increase in construction and land asset activities. Housing operating
activities used cash during 1993 compared to providing cash in 1992 primarily
due to an increase in the number of housing units under construction, land and
finished lot option deposit payments and reorganization expense payments, offset
in part by an increase in the number of housing units delivered.
Cash flow from housing financing activities for 1994 was used for the
repayment of notes and mortgages payable, offset by net borrowings under the
Working Capital Facility. Cash flow from housing financing activities for 1993
was provided by the net proceeds from the sale of the Company's 9.75% senior
notes and 4.875% convertible subordinated debentures, offset by the payment of
reorganization debt and liabilities and the repayment of the postpetition credit
facility with GECC. Cash flow from housing financing activities for 1992 was
used for the repayment of reorganization secured debt and certain outstanding
amounts under the postpetition credit facility with GECC.
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 of the financial
services segment's activities. As loan originations by Mortgage are primarily
from homes sold by the Company's home building operations, Mortgage's financial
condition and liquidity are to a significant extent dependent upon the financial
condition of the Company.
The Company finances its financial services operations primarily 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 2 of Notes to Consolidated Financial Statements, the
short-term debt consists of a $25 million secured revolving line of credit
entered into by Mortgage in April 1992, as amended (the "Mortgage Credit
Facility"). At December 31, 1994, $10.0 million was outstanding under the
Mortgage Credit Facility. The Company has no obligation to provide funding to
its financial services operations, nor does it guarantee any of its financial
services subsidiaries' debt. The Company believes that internally generated
funds and the Mortgage Credit Facility will be sufficient to provide for
Mortgage's working capital needs.
17
<PAGE> 18
The Mortgage Credit Facility bears interest at the greater of a premium
over the London Interbank Offered Rate or a premium over a composite rate for
dealer-placed 30-day commercial paper 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.
OTHER
Impact of Inflation
Inflation not only affects interest rates on funds borrowed by the Company,
but also affects the affordability of permanent mortgage financing available to
prospective customers. Increased construction costs associated with rising
interest rates, as well as increased material costs, compress gross margins in
the short-term, but may be recovered in the long-term through increases in sales
prices, although such increases may reduce sales volume. In recent years,
inflation has not had a significant adverse effect on the Company.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements:
Report of Independent Public Accountants............................................ 20
Consolidated Balance Sheets -- December 31, 1994 and 1993........................... 21
Consolidated Statements of Operations -- For the Years Ended December 31, 1994,
1993 and 1992.................................................................... 22
Consolidated Statements of Cash Flows -- For the Years Ended December 31, 1994,
1993 and 1992.................................................................... 23
Consolidated Statements of Stockholders' Equity -- For the Years Ended December 31,
1994, 1993 and 1992.............................................................. 24
Notes to Consolidated Financial Statements.......................................... 25
</TABLE>
19
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of U.S. Home Corporation:
We have audited the accompanying consolidated balance sheets of U.S. Home
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of U.S. Home
Corporation and subsidiaries as of December 31, 1994 and 1993, and the results
of their operations and cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
February 8, 1995
20
<PAGE> 21
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
ASSETS
HOUSING:
Cash (including restricted funds of $614 and $698)............................. $ 1,148 $ 15,192
Receivables, net............................................................... 22,219 14,027
Single-family housing inventories.............................................. 576,779 491,620
Option deposits on real estate................................................. 53,621 34,618
Deferred tax asset............................................................. 13,727 33,527
Other assets................................................................... 41,869 33,019
-------- --------
709,363 622,003
-------- --------
FINANCIAL SERVICES:
Cash (including restricted funds of $4,051 and $4,403)......................... 5,567 5,738
Residential mortgage loans..................................................... 24,672 38,412
Other assets................................................................... 8,349 12,693
-------- --------
38,588 56,843
-------- --------
$747,951 $678,846
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
HOUSING:
Current Liabilities --
Short-term debt.............................................................. $ 8,642 $ --
Current maturities of long-term debt......................................... 10,572 8,093
Accounts payable............................................................. 85,581 47,997
Accrued expenses and other current liabilities............................... 40,497 30,701
-------- --------
145,292 86,791
Long-Term Debt................................................................. 292,666 303,844
-------- --------
437,958 390,635
-------- --------
FINANCIAL SERVICES:
Current Liabilities --
Short-term debt.............................................................. 10,014 20,566
Accrued expenses and other current liabilities............................... 7,481 9,504
-------- --------
17,495 30,070
Long-Term Debt................................................................. 1,034 1,102
-------- --------
18,529 31,172
-------- --------
Total Liabilities....................................................... 456,487 421,807
-------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share redemption value, 518,772 and
1,954,730 shares outstanding at December 31, 1994 and 1993................... 12,969 48,868
Common Stock, 10,909,860 and 9,389,116 shares outstanding at December 31, 1994
and 1993..................................................................... 109 94
Capital in Excess of Par Value................................................. 340,673 303,193
Retained Earnings (Deficit).................................................... (62,287) (95,116)
-------- --------
Total Stockholders' Equity.............................................. 291,464 257,039
-------- --------
$747,951 $678,846
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
21
<PAGE> 22
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
HOUSING:
Operating Revenues....................................... $982,378 $798,950 $679,215
-------- -------- --------
Operating Costs and Expenses --
Cost of products sold................................. 823,597 668,706 567,970
Selling, general and administrative................... 107,736 88,229 81,575
Interest, net......................................... -- 185 1,252
-------- -------- --------
931,333 757,120 650,797
-------- -------- --------
Housing Operating Income................................. 51,045 41,830 28,418
-------- -------- --------
FINANCIAL SERVICES:
Operating Revenues....................................... 12,933 13,127 10,685
-------- -------- --------
Operating Costs and Expenses --
General and administrative............................ 10,915 9,049 8,523
Interest.............................................. 537 1,268 1,231
-------- -------- --------
11,452 10,317 9,754
-------- -------- --------
Financial Services Operating Income...................... 1,481 2,810 931
-------- -------- --------
INCOME BEFORE REORGANIZATION ITEMS AND INCOME TAXES........ 52,526 44,640 29,349
-------- -------- --------
REORGANIZATION ITEMS:
Impact of Plan on Land Utilization, net.................. -- -- 42,368
Other.................................................... -- 6,915 8,335
-------- -------- --------
-- 6,915 50,703
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES.......................... 52,526 37,725 (21,354)
-------- -------- --------
PROVISION FOR INCOME TAXES --
Federal and State Income Taxes........................... 19,697 11,034 --
Decrease in Deferred Tax Asset Valuation Allowance....... -- (45,000) --
-------- -------- --------
19,697 (33,966) --
-------- -------- --------
NET INCOME (LOSS).......................................... $ 32,829 $ 71,691 $(21,354)
======== ======== ========
INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE:
Primary.................................................. $ 2.89 $ 6.16 $ (1.89)
======== ======== ========
Fully Diluted............................................ $ 2.50 $ 5.93 $ (1.89)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE> 23
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)...................................... $ 32,829 $ 71,691 $(21,354)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Decrease in deferred tax asset.................... 22,125 9,148 --
Decrease in deferred tax asset valuation
allowance...................................... -- (45,000) --
Noncash reorganization items...................... -- 2,940 42,368
Other, net (principally depreciation and
amortization).................................. 4,578 9,060 11,519
Changes in assets and liabilities --
Decrease (increase) in receivables, inventories
and other assets............................... (107,200) (98,926) (944)
Increase (decrease) in accounts payable and
accrued liabilities............................ 48,662 (20,456) 12,105
--------- --------- --------
Net cash provided (used) by operating activities....... 994 (71,543) 43,694
--------- --------- --------
Cash Flows From Investing Activities:
Decrease in restricted cash............................ 436 4,098 2,347
Purchase of property, plant and equipment, net of
disposals........................................... (2,034) (2,273) (349)
Proceeds from investments in mortgages................. 868 1,015 4,810
Other.................................................. 22 (353) 281
--------- --------- --------
Net cash provided (used) by investing activities....... (708) 2,487 7,089
--------- --------- --------
Cash Flows From Financing Activities:
Repayment of short-term debt, net of proceeds.......... (2,410) (12,095) (11,755)
Net proceeds from sale of senior notes and convertible
subordinated debentures............................. -- 271,800 --
Long-term debt assumed................................. 1,037 -- --
Repayment of long-term debt............................ (12,692) (17,022) (31,340)
Payment of liabilities subject to compromise........... -- (166,020) --
--------- --------- --------
Net cash provided (used) by financing activities....... (14,065) 76,663 (43,095)
--------- --------- --------
Net Increase (Decrease) In Cash.......................... (13,779) 7,607 7,688
Cash At Beginning Of Year................................ 15,829 8,222 534
--------- --------- --------
Cash At End Of Year...................................... $ 2,050 $ 15,829 $ 8,222
========= ========= ========
Supplemental Disclosure:
Interest paid, before amount capitalized --
Housing............................................. $ 30,559 $ 30,384 $ 19,070
Financial Services.................................. 572 1,302 1,260
--------- --------- --------
$ 31,131 $ 31,686 $ 20,330
========= ========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 24
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK CONVERTIBLE CAPITAL IN RETAINED
--------------------- PREFERRED EXCESS OF EARNINGS
$.10 PAR $.01 PAR STOCK PAR VALUE (DEFICIT)
-------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991.......... $ 4,531 $ -- $ -- $ 216,322 $(145,453)
Net loss for the year................. -- -- -- -- (21,354)
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1992.......... 4,531 -- -- 216,322 (166,807)
Common and convertible redeemable
preferred stock issued in connection
with the Plan (8,524,468 shares and
2,816,762 shares, respectively)..... (4,531) 85 70,419 65,277 --
Conversion of convertible redeemable
preferred stock to common stock
(862,032 shares).................... -- 9 (21,551) 21,542 --
Other................................. -- -- -- 52 --
Net income for the year............... -- -- -- -- 71,691
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1993.......... -- 94 48,868 303,193 (95,116)
Conversion of convertible redeemable
preferred stock to common stock
(1,435,835 shares).................. -- 14 (35,896) 35,882 --
Issuance of common stock under
incentive bonus program (29,046
shares)............................. -- -- -- 740 --
Contribution of common stock issued to
profit sharing plan (55,000
shares)............................. -- 1 -- 847 --
Other................................. -- -- (3) 11 --
Net income for the year............... -- -- -- -- 32,829
-------- -------- ----------- ---------- ---------
BALANCE AT DECEMBER 31, 1994.......... $ -- $109 $ 12,969 $ 340,673 $ (62,287)
======= ====== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
24
<PAGE> 25
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Nature of Operations
The Company is one of the largest single-family home builders in the United
States based on homes delivered. The Company currently builds and sells homes in
more than 190 new home communities in 31 metropolitan areas in 12 states. The
Company offers a wide variety of moderately-priced homes that are designed to
appeal to the affordable, move-up and retirement and active-adult/second home
buyers. In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and all wholly-owned subsidiaries after elimination of all
significant intercompany balances and transactions. The financial statements for
1993 and 1992 have been conformed to the format used in 1994.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of any contingent assets and liabilities at the date of the
consolidated financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The Company is engaged in two related industry segments, the on-site
development of single-family residential communities and financial services.
Identifiable assets and the results of operations of the Company's segments are
reported in the consolidated balance sheets and consolidated statements of
operations. Capital expenditures, depreciation and amortization expense for the
years ended December 31, 1994, 1993 and 1992 were insignificant.
Income (Loss) Per Share
Primary income (loss) per common and common equivalent share has been
computed using the weighted average number of common and common equivalent
shares outstanding, assuming the new capital structure (see Note 6) had been
effective as of the beginning of all periods presented. This differs from
historical loss per common and common equivalent share for 1992 of $.47,
previously reported (based on the Company's former capital structure and
45,312,508 shares of common stock, $.10 par value per share, outstanding at
December 31, 1992). In management's opinion, per share information prior to the
Company's emergence from Chapter 11 is of limited use or relevance given the
significant changes in ownership and the Company's capital structure which
occurred as a result of the Company's reorganization pursuant to the Plan (see
Note 5).
The weighted average number of common and common equivalent shares
outstanding for primary income per share include the dilutive effect of the
convertible redeemable preferred stock and Class B warrants and the assumed
exercise of stock options for periods subsequent to June 21, 1993 (based on the
average stock price for the periods). No effect was given to the shares that
would be issuable on exercise of the warrants and stock options in 1994, since
they would be antidilutive or immaterial. Fully diluted income per share
includes the assumed conversion of the convertible subordinated debentures in
1994 and 1993 and the dilutive effect of the Class B warrants and stock options
(based on the higher year-end stock price) in 1993.
25
<PAGE> 26
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following weighted average number of common and common equivalent shares
were used to compute income (loss) per share:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Primary........................................ 11,366,810 11,631,071 11,284,885
Fully diluted.................................. 13,620,331 12,110,237 11,284,885
</TABLE>
Cash Equivalents
The Company considers all short-term investments with an initial maturity
of less than 90 days to be cash equivalents.
Financial Instruments
The Company believes that fair value approximates recorded values for such
financial instruments as cash and cash equivalents, trade receivables and
payables, short-term debt and option deposits because of the typically liquid,
short-term nature, market rate terms and lack of specific concentration of these
instruments.
The Company's senior notes and convertible subordinated debentures are
fixed rate instruments with yields which are currently below the prevailing
rates. These instruments trade at a discount; however, the actual amount of the
discount or the fair value of the instruments can not be determined as neither
of these instruments are actively traded on the open market. The Company does
not presently intend to repurchase any of these instruments prior to maturity.
In addition, the Working Capital Facility (see Note 2) prohibits the Company
from repurchasing any of these instruments.
The fair value of the Company's residential mortgage loans approximate
their carrying value as such loans are packaged and sold to investors generally
within 30 days after home delivery. Additionally, a significant portion of the
Company's interest rate risk associated with and generated by these loans is
mitigated by the use of forward delivery contracts and commitments. See Hedging
Contracts below.
HOUSING
Sales and Profit Recognition
Profit is recognized from the sale of real estate at time of closing, i.e.,
when sufficient down payment has been made; any financing has been arranged;
title, possession and other attributes of ownership have been transferred to the
buyer; and the Company is not obligated to perform additional significant
activities after the sale.
Inventories and Valuation
The components of single-family housing inventories are as follows (dollars
in thousands):
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Housing completed and under construction....................... $ 224,870 $ 193,827
Models......................................................... 47,914 34,366
Finished lots.................................................. 118,508 83,140
Land under development......................................... 60,809 58,824
Raw land held for development or sale.......................... 124,678 121,463
--------- ---------
$ 576,779 $ 491,620
========= =========
</TABLE>
The cost of acquiring and developing land and constructing certain
applicable amenities are allocated to the related parcels. The Company records
land inventories held for sale or investment at the lower of cost or
26
<PAGE> 27
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
net realizable value. Net realizable value differs from market value in that,
among other things, market value assumes a cash sale under current market
conditions, considers a potential purchaser's requirement for future profit and
discounts the timing of estimated future cash receipts, whereas net realizable
value is the price obtainable in the future based on the current intended use of
the land, net of disposal and holding costs, without provision for future
profits or discounting future cash flow to present value. Housing inventories
are recorded using the specific identification method at the lower of cost or
net realizable value. Excluding the $42,368,000 provision recorded in the fourth
quarter of 1992 (see Note 5), provisions to reduce land and housing inventories
to the lower of cost or net realizable value for 1994, 1993 and 1992 were not
significant. Total land and housing reserves were $35,417,000, $48,362,000 and
$59,777,000 at December 31, 1994, 1993 and 1992, respectively.
During 1993 and 1992, the Company completed several exchanges of land
assets with third parties totaling approximately $5,697,000 and $22,300,000,
respectively, in which the Company received land suitable for single-family
detached homes, which can be more readily developed and sold, in return for land
zoned primarily for commercial use and single-family attached homes for which
the Company had no near-term plans to utilize. The exchanges are treated as
non-cash transactions for purposes of the consolidated statements of cash flow.
Capitalization Period
Interest is capitalized on land, finished building lots and single-family
residential housing construction costs during the development and construction
period. Interest is capitalized to eligible assets using an allocation method
based on the Company's actual interest costs. A summary of interest for 1994,
1993 and 1992 follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Capitalized at beginning of year --
U.S. Home........................................ $ 55,580 $ 57,474 $ 92,898
Joint ventures consolidated...................... -- 1,234 --
-------- -------- --------
55,580 58,708 92,898
-------- -------- --------
Paid and accrued................................... 30,820 22,105 14,462
Expensed........................................... -- (185) (1,252)
-------- -------- --------
Capitalized........................................ 30,820 21,920 13,210
Included in cost of sales.......................... (28,871) (22,342) (23,338)
Included in reorganization items, asset write-downs
and other........................................ (1,447) (2,706) (25,296)
-------- -------- --------
Capitalized at end of year......................... $ 56,082 $ 55,580 $ 57,474
======== ======== ========
</TABLE>
Under Chapter 11 ("Chapter 11") of title 11 of the United States Code,
interest on the Company's unsecured debt was stayed, while the Company was in
reorganization (April 1991 to June 1993). Had the accrual of interest not been
stayed, paid and accrued interest for 1993 and 1992 would have been increased by
approximately $12,000,000 and $26,400,000, respectively, and interest expense
for 1993 and 1992 would have been increased by approximately $1,300,000 and
$5,900,000, respectively.
27
<PAGE> 28
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FINANCIAL SERVICES
Revenue Recognition
The sale of loans and loan servicing rights is recognized when the closed
loans are sold and delivered to an investor. During the years ended December 31,
1994, 1993 and 1992, revenues included net gains (losses) from the sale of loans
of $(831,000), $(262,000) and $(655,000), respectively, and net gains from the
sale of servicing of $4,212,000, $3,829,000 and $3,189,000 respectively.
Residential Mortgage Loans
Residential mortgage loans held for sale ($16,235,000 at December 31, 1994)
are included in the accompanying consolidated balance sheets at the lower of
cost or market on an aggregate basis. The Company estimates the fair value of
residential mortgage loans held at December 31, 1994 approximated recorded value
based on quoted market prices (at December 31, 1994) for similar loans sold
either on a whole loan basis or pooled and sold as collateral for
mortgage-backed securities.
Hedging Contracts
The Company manages its interest rate market risk on the inventory loans
held for sale and its estimated future commitments to originate and close
mortgage loans at fixed prices ("Loan Quotes") through hedging techniques by
regularly entering into either fixed price mandatory forward delivery contracts
("Forward Contracts") to sell mortgage-backed securities to security dealers or
fixed price forward delivery commitments ("Forward Commitments") to sell
specific whole loans to investors on a mandatory or best efforts basis ("Forward
Contracts" and "Forward Commitments" collectively "Hedging Contracts"). The
Company records the inventory of residential mortgage loans at the lower of cost
or market on an aggregate basis after considering any market value changes in
the inventory loans, Loan Quotes and Hedging Contracts. See Note 9.
(2) SHORT-TERM DEBT
Short-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Housing --
Revolving working capital facility............................. $ 7,553 $ --
Other short-term debt.......................................... 1,089 --
------- -------
8,642 --
Financial Services............................................... 10,014 20,566
------- -------
Total short-term debt............................................ $18,656 $20,566
======= =======
</TABLE>
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
$154,200,000 at December 31, 1994. This collateral has provided the Company with
an estimated available borrowing base capacity of $95,000,000 at December 31,
1994, of which $13,687,000 was outstanding, including $6,134,000 of letter of
credit obligations. The Working Capital Facility contains
28
<PAGE> 29
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 $25,000,000
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 the greater of a premium over the London Interbank
Offered Rate or a premium over a composite rate for dealer-placed 30-day
commercial paper. Certain residential mortgage loans have been pledged as
collateral to secure Mortgage's obligations under the Mortgage Credit Facility.
The Company expects the Mortgage Credit Facility to be extended or, replaced by
a credit facility similar to the terms and conditions of its present credit
facility.
The maximum and average amounts of short-term borrowings from banks and
other financial institutions (excluding short-term debt subject to compromise in
1993 and 1992) outstanding at any time and the weighted average interest rates,
without giving effect to commitment fees, during 1994, 1993 and 1992 were
(dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Housing --
Maximum amount...................................... $34,600 $60,900 $59,400
Average amount...................................... $10,700 $34,900 $47,500
Average rate........................................ 9.2% 8.3% 9.0%
Financial Services --
Maximum amount...................................... $21,600 $32,600 $22,800
Average amount...................................... $ 5,600 $16,200 $11,100
Average rate........................................ 6.3% 6.6% 7.5%
</TABLE>
Computations of the weighted average interest rates were made based upon the
weighted average of outstanding loan balances during the respective years.
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Housing --
Notes and mortgage notes payable............................. $ 23,238 $ 31,937
9.75% Senior notes due 2003.................................. 200,000 200,000
4.875% Convertible subordinated debentures due 2005.......... 80,000 80,000
-------- --------
303,238 311,937
Less -- Current maturities................................... (10,572) (8,093)
-------- --------
292,666 303,844
Financial Services............................................. 1,034 1,102
-------- --------
Total long-term debt........................................... $293,700 $304,946
======== ========
</TABLE>
29
<PAGE> 30
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Housing notes and mortgage notes payable are primarily for the acquisition
and development of land, with interest rates ranging from 6.0% to 10.25%. Assets
pledged as collateral under these agreements totaled approximately $71,000,000
at December 31, 1994.
In June 1993, the Company completed the sale of its 9.75% senior notes due
June 15, 2003. Interest is payable semi-annually. On or after June 15, 1998, the
senior notes may be redeemed at the option of the Company, in whole or in part,
at prices ranging from 103.656% (during the 12 month period ending June 14,
1999) to 100% (on and after June 15, 2001) of the principal amount thereof,
together with accrued and unpaid interest. The indenture relating to the senior
notes contains numerous covenants, including a minimum tangible net worth
requirement and a limitation on the incurring of additional debt.
In November 1993, the Company completed the sale of its 4.875% convertible
subordinated debentures due November 1, 2005. Interest is payable semi-annually.
The debentures are convertible at any time at the option of the holder into
common stock at a conversion price of $35.50 per share, subject to adjustment
under certain conditions. On or after November 1, 1996, the debentures may be
redeemed at the option of the Company, in whole or in part, at prices ranging
from 103.25% (during the 12 month period ending October 31, 1997) to 100% (on or
after November 1, 2004) of the principal amount thereof, together with accrued
and unpaid interest.
Upon a change of control of the Company, holders of the senior notes and
the debentures will have the right to require the Company to redeem the senior
notes and debentures at a price of 101% of the principal amount of the senior
notes and 100% of the principal amount of the debentures, together with accrued
and unpaid interest. There can be no assurance that sufficient funds will be
available to make the required repurchases if a change of control occurs. In
addition, the Working Capital Facility prohibits the Company from repurchasing
the senior notes and debentures prior to the termination of the Working Capital
Facility.
At December 31, 1994, housing long-term debt matures as follows:
$10,572,000 in 1995, $7,262,000 in 1996, $4,379,000 in 1997, $36,000 in 1998,
$39,000 in 1999, $950,000 in 2000, $200,000,000 in 2003 and $80,000,000 in 2005.
(4) INCOME TAXES
The Company and its subsidiaries file consolidated federal income tax
returns.
The components of the provision for income taxes consisted of the
following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current --
Federal............................................... $ 730 $ 555 $ 33
State................................................. 70 345 2
------- -------- ----
800 900 35
------- -------- ----
Deferred --
Federal............................................... 16,866 9,078 (33)
State................................................. 2,031 1,056 (2)
------- -------- ----
18,897 10,134 (35)
------- -------- ----
Decrease in valuation allowance......................... -- (45,000) --
------- -------- ----
Total provision............................... $19,697 $(33,966) $ --
======= ======== ====
</TABLE>
30
<PAGE> 31
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes are determined based upon the difference between the
financial statements and the tax basis of assets and liabilities and available
net operating loss carryforward ("NOL").
When the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," in 1992, a valuation allowance was provided
for the total amount of deferred tax assets attributable to the NOL because the
Company was precluded from recognizing the tax benefit of the NOL during the
pendency of the Cases. Subsequent to emerging from Chapter 11, the Company
concluded that it would, based on the Company's historical and current pretax
earnings (adjusted for reorganization items) and business plans, more likely
than not be able to realize substantially all of the benefit associated with
deferred tax assets. Accordingly, during the six months ended December 31, 1993,
the Company reduced its valuation allowance by $45,000,000 (based on 39.0%
effective tax rate), resulting in a reduction of the Company's provision for
income taxes and recognition of a deferred tax asset in the same amount, which
amount has been reduced to approximately $13,700,000 at December 31, 1994 as a
result of pretax income generated during 1994 and the last six months of 1993.
The decrease in the deferred tax asset valuation allowance increased primary and
fully diluted income per share in 1993 by $3.87 per share and $3.72 per share,
respectively.
At December 31, 1994, the Company has a net deferred tax asset of
$38,400,000, which is comprised of deferred tax assets of $54,800,000 (including
$16,300,000 relating to land and housing reserves which were expensed for
financial reporting purposes but deferred for federal income tax reporting
purposes and $24,200,000 relating to the Company's NOL) and deferred tax
liabilities of $16,400,000 (including $13,100,000 relating to interest expense
capitalized for financial reporting purposes but expensed for federal income tax
reporting purposes). At December 31, 1993, deferred tax assets and deferred tax
liabilities were $54,800,000 and $15,700,000, respectively, and were primarily
attributable to the same items as noted above. At December 31, 1994 and 1993,
valuation allowances totaling $22,200,000 and $4,400,000, respectively, had been
provided against the existing net deferred tax asset. The increase in the
valuation allowance in 1994 relates to the increase in the NOL resulting from
deductions taken in the 1993 tax returns. The NOL will reduce taxable income
when it is realized unless the valuation allowance is reduced at an earlier date
due to a change in circumstances.
At December 31, 1994, the Company has available an NOL of approximately
$98,400,000 which expires in the years 2000 through 2008. In addition, the
Company has a credit for alternative minimum tax ("AMT") paid ($2,000,000 at
December 31, 1994) which can be carried forward and be used to reduce regular
taxes payable in excess of AMT in future years.
Pretax income of approximately $35,200,000 will have to be generated during
the NOL carryforward period for the Company to fully utilize the remaining
deferred tax asset at December 31, 1994.
As a result of the Company's recognition of the deferred tax asset
attributable to its NOL, effective July 1, 1993 (and for all future periods),
the Company began providing income taxes based on its effective tax rate.
Excluding the decrease in deferred tax asset valuation allowance in 1993, the
following table reconciles the statutory federal income tax rate to the
effective income tax rate for:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992
---- ---- -----
<S> <C> <C> <C>
Tax provision (benefit) at statutory rate..................... 35.0% 35.0% (34.0)%
Increases (decreases) in taxes resulting from --
State and local income taxes, net of federal income tax
provision................................................ 4.0 4.0 (4.0)
Utilization of net operating loss carryforward in first half
of 1993.................................................. -- (9.8) --
Benefit of net operating loss carryforward not currently
recognized............................................... -- -- 37.8
Other, net.................................................. (1.5) -- .2
---- ---- -----
Effective rate................................................ 37.5% 29.2% --%
==== ==== =====
</TABLE>
31
<PAGE> 32
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) REORGANIZATION AND EMERGENCE FROM CHAPTER 11
On June 21, 1993 (the "Effective Date"), the Company and 46 of its
affiliates emerged from Chapter 11 pursuant to their First Amended Consolidated
Plan of Reorganization (as modified, the "Plan"). Seven other affiliates
(consisting of the Company's discontinued manufactured housing and building
supply operations, the "Liquidating Debtors") commenced liquidation pursuant to
their First Amended Joint Plan of Reorganization (the "Liquidating Plan").
None of the financial services subsidiaries were a party to the Company's
reorganization.
Under the Plan, creditors received 4,873,650 shares of common stock and
2,816,762 shares of convertible redeemable preferred stock and pre-Effective
Date stockholders received 3,510,818 shares of common stock and warrants
(exercisable at $20 per share), which, if fully exercised, would result in the
issuance of an additional 1,904,757 shares of the Company's common stock.
In connection with the Plan, the Company issued 140,000 shares of common
stock to corporate officers and certain other key employees for services
rendered in connection with the reorganization of the Company. The Company has
reflected the issuance as an increase in stockholders' equity and an offsetting
charge to earnings (which charge has been included in the accompanying
consolidated statement of operations for 1993 as "reorganization items, net") of
$2,940,000 based upon the prevailing market price of the Company's common stock
at the Effective Date.
In connection with preparing to implement the Plan, the Company recorded
provisions totaling $69,668,000 in 1992 to reflect the impact of the Plan on
land utilization ($42,368,000) and certain nonrecourse debt restructuring
($27,300,000) and recorded a gain from nonrecourse debt forgiven in connection
with the Plan ($27,300,000). The resulting net amount ($42,368,000) was included
in "reorganization items, net" in the accompanying consolidated statement of
operations for 1992. The primary component of the charge was a change in the
intended use and reduced holding period for certain land assets necessitated by
increased debt amortization and service requirements of certain indebtedness
originally planned to be issued under the Plan.
The Liquidating Plan provided, among other things, that the proceeds from
the liquidation of the assets of each Liquidating Debtor, if any, after payment
of that Liquidating Debtor's administrative and priority claims, would be
distributed to that Liquidating Debtor's secured and unsecured creditors.
(6) STOCKHOLDERS' EQUITY
As of December 31, 1994, the Company's capital structure consisted of the
following:
Common Stock -- Authorized 50,000,000 shares, par value $.01 per share,
outstanding 10,909,860 shares.
<TABLE>
<S> <C>
Shares reserved for issuance --
Convertible subordinated debentures............................. 2,253,521
Class B warrants................................................ 1,901,436
Stock plans..................................................... 1,100,000
Convertible redeemable preferred stock.......................... 602,133
---------
5,857,090
=========
</TABLE>
Preferred Stock -- Authorized 10,000,000 shares, par value $.10 per share,
including 602,133 convertible redeemable preferred shares and 9,397,867
undesignated as to series shares.
(a) Convertible redeemable preferred stock -- $25 per share liquidation
preference and redemption value, outstanding 518,772 shares. The shares may
be redeemed at the option of the Company at any time at an amount equal to
the liquidation preference/redemption value ($25 per share) plus any
declared and
32
<PAGE> 33
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
unpaid dividends. Each share of convertible redeemable preferred stock is
convertible, subject to adjustments, into one share of common stock at the
option of the holder and at any time prior to its redemption by the Company.
During 1994 and 1993, 1,435,835 shares and 862,032 shares, respectively, of
convertible redeemable preferred stock were converted into an equal number
of shares of common stock. If the closing price of the common stock is equal
to or greater than $30 per share for 20 consecutive trading days, the
convertible redeemable preferred stock will automatically convert into
common stock. Any shares converted are restored to the status of authorized
and unissued preferred stock without designation as to series. The holders
of the convertible redeemable preferred stock are entitled to one vote for
each share of convertible redeemable preferred stock held by them.
The holders of the convertible redeemable preferred stock vote together as a
single class with the holders of the common stock on all matters requiring
stockholder action.
(b) Undesignated as to series -- None outstanding. Shares may be issued in one
or more classes or series with preference, limitations and relative rights
as determined by the Board of Directors at the time of issuance. Any shares
issued will rank, as to dividends and liquidation preference, junior to the
convertible redeemable preferred stock.
Class B Warrants -- In connection with the Plan, pre-Effective Date
stockholders received Class B warrants to acquire an aggregate of 1,904,757
shares of common stock for $20 per share, of which 3,321 warrants had been
exercised at December 31, 1994. The warrants expire in June 1998.
The Working Capital Facility, the senior note indenture and the Company's
second restated certificate of incorporation contain restrictions on the (i)
payment of dividends on the Company's common and convertible redeemable
preferred stock and (ii) purchase, redemption, retirement or other acquisition
of the Company's common and preferred stock, other than upon conversion of the
convertible redeemable preferred stock into common stock and upon exercise into
the Company's common stock of Class B warrants and options to acquire common
stock issued pursuant to stock options and stock payment plans.
(7) STOCK PLANS
Stock Option Plans --
In June 1993, the Company adopted a qualified and non-qualified stock
option plan for key employees (the "Employee Plan") to purchase a maximum of
500,000 shares of the Company's common stock. In August 1993, the Company
adopted an additional stock option plan whereby options may be granted to non-
employee directors (the "Director Plan") to purchase a maximum of 100,000 shares
of the Company's common stock. Options under the Director Plan are granted
annually in a fixed amount.
Options granted under the Employee Plan will be granted at not less than
the closing price of the common stock on date of grant. Options granted under
the Director Plan will be granted at not less than the average closing price of
the common stock for the ten consecutive trading days prior to the date of
grant; provided that the grant price will not be less than 95% of the average
closing price of the common stock for the 20 consecutive trading days prior to
the date of grant. The options are exercisable as specified in the stock option
agreements relating to the options and may not be exercised later than ten years
from the date of grant.
In 1994, options for 104,000 shares were granted at exercise prices ranging
from $15.13 to $22.71 per share to certain key employees and non-employee
directors, options for an aggregate of 9,000 shares were cancelled and no
options were exercised.
In 1993, options for 318,500 shares were granted at exercise prices ranging
from $23.29 to $26.50 per share to certain key employees and non-employee
directors, options for an aggregate of 10,000 shares were cancelled and no
options were exercised.
33
<PAGE> 34
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1994, options for 403,500 shares were outstanding at
exercise prices ranging from $15.13 to $26.50 per share of which options for
143,834 shares were exercisable. As of December 31, 1994, 195,500 shares were
available for granting of options, including 38,500 shares to non-employee
directors.
Stock Payment Plan --
In December 1993, the Company adopted an employee stock payment plan (the
"Payment Plan") for key employees whereby up to 25% of an employee's annual
incentive pay (compensation other than base salary) may be payable in shares of
the Company's common stock as determined by the Company's Board of Directors, of
which up to 50% of the shares payable will vest to the employee not later than
two years after the end of the incentive compensation year and will expire in
the event the employee is not employed by the Company on the vesting date. The
Payment Plan has a five-year term and commences on January 1, 1994. As of
December 31, 1994, 250,000 shares of the Company's common stock were reserved
for issuance under the Payment Plan.
Shares to be issued under the Payment Plan will be valued at the average
closing price of the common stock for a ten consecutive trading day period as
defined in the plan.
Restricted Stock Plan --
In October 1994, the Company adopted, subject to stockholder approval, a
restricted stock plan (the "Restricted Plan") for officers and other key
employees. Under the Restricted Plan, which will be effective upon stockholder
approval, a maximum of 250,000 shares of the Company's common stock may be
granted as restricted stock. Participants in the Restricted Plan may not dispose
of any of the stock granted for five years from date of grant. Restrictions
lapse at the rate of 20% of the stock per year, commencing with the end of the
fifth year. The lapsing of the restrictions between the end of the fifth year
and the ninth year may be accelerated based upon improvements in the Company's
return on assets (as defined in the Restricted Plan) over the base year.
Upon issuance of the restricted stock, unearned compensation equivalent to
the average closing price of the common stock for a ten consecutive trading day
period as defined in the Restricted Plan will be charged to stockholders' equity
and subsequently amortized to expense over a nine year period.
(8) PROFIT SHARING
The Company has a qualified profit sharing plan for the benefit of its
employees which may be terminated at any time at the option of the Company. The
annual contributions may be made in such amount as the Board of Directors of the
Company determines, limited to 15% of the total compensation (as defined) of all
participating employees. The aggregate amounts accrued for contribution to the
profit sharing plan for distribution to employees were $891,000 in 1994,
$546,000 in 1993 and $493,000 in 1992.
(9) COMMITMENTS AND CONTINGENCIES
As of December 31, 1994, the Company had refundable and non-refundable
deposits outstanding totaling $53,621,000 for options and contracts to purchase
undeveloped land and finished lots having a total purchase price of
approximately $327,699,000. These options expire at various dates through 2001.
The Company is involved in litigation arising from the normal course of
business, none of which, in the opinion of the Company, will have a material
adverse effect on the financial position or results of operations of the
Company.
At December 31, 1994, Mortgage in connection with managing the interest
rate market risk on its inventory loans held for sale of $16,235,000 and Loan
Quotes of $22,816,000, had outstanding $15,338,000
34
<PAGE> 35
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(face amount of $15,500,000 and estimated fair value of $15,373,000) of Forward
Contracts and $23,310,000 of Forward Commitments which expire over the next four
months when the inventory loans are expected to be sold and Loan Quotes are
expected to close. At December 31, 1994, the estimated fair value of the
inventory loans and Loan Quotes hedged by Forward Contracts and not covered by
the Forward Commitments was $15,832,000.
Mortgage reduces its risk of nonperformance under the Hedging Contracts by
entering into those contracts with reputable security dealers and investors and
evaluating their financial condition. However, there is a risk if certain of the
Loan Quotes do not close or are renegotiated in a declining interest rate market
and close at lower prices. Mortgage reduces this risk by collecting commitment
fees on certain of the Loan Quotes along with entering into Forward Commitments
to deliver loans to investors on a best efforts basis and adjusting, from time
to time, the estimate of loan closings covered by Forward Contracts.
(10) UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION
Summarized quarterly financial information for the years ended December 31,
1994 and 1993 is as follows (dollars in thousands, except per share data).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1994 1994 1994 1994
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues........................ $ 222,000 $238,143 $ 252,553 $269,682
Gross profit.............................. $ 36,196 $ 38,142 $ 40,956 $ 43,487
Operating income.......................... $ 11,149 $ 11,712 $ 13,742 $ 14,442
Financial Services --
Operating revenues........................ $ 3,300 $ 2,943 $ 3,287 $ 3,403
Operating income.......................... $ 427 $ 44 $ 466 $ 544
Net Income.................................. $ 7,061 $ 7,172 $ 9,230 $ 9,366
Income Per Common and Common Equivalent
Share --
Primary................................... $ .60 $ .63 $ .81 $ .82
Fully diluted............................. $ .52 $ .55 $ .70 $ .72
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1993 1993 1993 1993
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues........................ $ 164,464 $192,328 $ 223,983 $218,175
Gross profit.............................. $ 28,071 $ 31,269 $ 36,497 $ 34,407
Operating income.......................... $ 7,779 $ 8,924 $ 12,709 $ 12,418
Financial Services --
Operating revenues........................ $ 2,590 $ 3,356 $ 3,490 $ 3,691
Operating income.......................... $ 402 $ 631 $ 1,125 $ 652
Reorganization Items........................ $ 2,890 $ 4,025 $ -- $ --
Net Income.................................. $ 5,029 $ 5,251 $ 53,438 $ 7,973
Income Per Common and Common Equivalent
Share --
Primary................................... $ .45 $ .46 $ 4.61 $ .67
Fully diluted............................. $ .45 $ .46 $ 4.55 $ .61
</TABLE>
35
<PAGE> 36
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) RECEIVABLES
The Company had housing and financial services receivables of approximately
$6,627,000 in 1994 and $2,799,000 in 1993 that were due after one year. The
balance due after one year in 1994 included notes and mortgage notes receivable
of $5,071,000 with interest rates ranging from 7.0% to 10.5%. A majority of the
balance matures within five years.
(12) ACCRUED EXPENSES
At December 31, 1994 and 1993, accrued expenses and other current
liabilities consisted of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Housing --
Customer deposits.............................................. $19,112 $14,750
Salaries and other compensation................................ 10,522 6,701
Interest....................................................... 1,972 1,711
Taxes, other than income taxes................................. 3,816 3,647
Other.......................................................... 5,075 3,892
------- -------
$40,497 $30,701
======= =======
Financial Services --
Accounts payable............................................... $ 2,741 $ 4,706
Other.......................................................... 4,740 4,798
------- -------
$ 7,481 $ 9,504
======= =======
</TABLE>
36
<PAGE> 37
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the directors of the Company is incorporated by
reference from the Nominees for Directors Section, pages 2 through 5, of the
Company's Proxy Statement, dated March 20, 1995, for the Annual Meeting of
Stockholders to be held on April 26, 1995, filed pursuant to Section 14 of the
Securities Exchange Act of 1934 ("1994 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information is incorporated by reference from the Executive
Compensation Section, pages 7 and 8 of the 1994 Proxy Statement (see Part I-Item
4, Executive Officers of the Company).
ITEM 12. COMMON STOCK
The information relating to the security ownership of certain beneficial
owners and management is incorporated by reference from the Security Ownership
of Management and Certain Beneficial Owners Section, pages 17 and 18 of the 1994
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. The following financial statements and financial statement
schedules are filed as part of this Report:
See Index to Financial Statements -- Item 8.
(a) 3. Exhibits
<TABLE>
<S> <C>
2.1 -- First Amended Consolidated Plan to Reorganization of U.S. Home
Corporation and certain of its affiliates dated April 1, 1993.
Incorporated by reference from exhibit 2.1 to U.S. Home Corporation's
Current Report on Form 8-K filed June 9, 1993.
2.2 -- Modification to "USH Debtors' First Amended Consolidated Plan of
Reorganization." Incorporated by reference from exhibit 2.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
2.3 -- First Amended Joint Plan of Reorganization of certain affiliates of
U.S. Home Corporation dated April 1, 1993. Incorporated by reference
from exhibit 2.3 to U.S. Home Corporation's Current Report on Form
8-K filed June 9, 1993.
2.4 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Consolidated Plan of Reorganization of U.S. Home Corporation
and certain of its affiliates. Incorporated by reference from exhibit
28.1 to U.S. Home Corporation's Current Report on Form 8-K filed June
9, 1993.
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C>
2.5 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Joint Plan of Reorganization of certain affiliates of U.S.
Home Corporation. Incorporated by reference from exhibit 28.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
3.1 -- Second Restated Certificate of Incorporation of U.S. Home Corporation
effective on June 21, 1993. Incorporated by reference from exhibit
3.1 to Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
3.1(i) -- Certificate of Amendment of Second Restated Certificate of
Incorporation as filed with the State of Delaware on May 13, 1994.
Incorporated by reference from exhibit 3.1 to U.S. Home Corporation's
Quarterly Report on Form 10-Q for the period ended June 30, 1994.
3.2 -- Amended and Restated By-Laws of U.S. Home Corporation, dated as of
June 21, 1993. Incorporated by reference from exhibit 3.2 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1 -- Amended and Restated Loan Agreement, dated as of June 21, 1993,
between U.S. Home Corporation and General Electric Capital
Corporation. Incorporated by reference from exhibit 10.1 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1(i) -- First Amendment to Amended and Restated Loan Agreement, dated as of
September 7, 1993, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.1(i)
to Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1(ii) -- Second Amendment to Amended and Restated Loan Agreement, dated as of
September 15, 1993, between U.S. Home Corporation and General
Electric Capital Corporation. Incorporated by reference from exhibit
10.1(ii) to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.1(iii) -- Third Amendment to Amended and Restated Loan Agreement, dated as of
October 22, 1993, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.2(iii)
to Amendment No. 3 to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.1(iv) -- Fourth Amendment to Amended and Restated Loan Agreement, dated as of
December 31, 1993, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.1(iv)
to U.S. Home Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993.
10.1(v) -- Fifth Amendment to Amended and Restated Loan Agreement, dated as of
June 30, 1994, between U.S. Home Corporation and General Electric
Capital Corporation. Incorporated by reference from exhibit 10.1 to
U.S. Home Corporation's Quarterly Report on Form 10-Q for the period
ended June 30, 1994.
10.1(vi) -- Sixth Amendment to Amended and Restated Loan Agreement, dated
effective as of September 16, 1994, between U.S. Home Corporation and
General Electric Capital Corporation.
10.2 -- Trust Indenture, dated as of June 21, 1993, by and between U.S. Home
Corporation and IBJ Schroder Bank & Trust Company, as trustee,
relating to U.S. Home Corporation's 9.75% Senior Notes due 2003.
Incorporated by reference from exhibit 10.2 to Registration Statement
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
10.3 -- Trust Indenture, dated as of November 3, 1993, by and between U.S.
Home Corporation and Marine Midland Bank, N.A., as trustee, relating
to U.S. Home Corporation's 4.875% Convertible Subordinated
Debentures. Incorporated by reference from exhibit 4.1 to U.S. Home
Corporation's Current Report on Form 8-K filed November 3, 1993.
10.4 -- Warrant Agreement, dated as of June 21, 1993, between U.S. Home
Corporation and The First National Bank of Boston relating to U.S.
Home Corporation's Class B Warrants. Incorporated by reference from
exhibit 10.3 to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.5 -- U.S. Home Corporation's 1993 Stock Option Plan. Incorporated by
reference from exhibit 4.1 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
10.6 -- U.S. Home Corporation's Non-Employee Directors' Stock Option Plan.
Incorporated by reference from exhibit 10.5 to Registration Statement
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
10.7 -- U.S. Home Corporation's Employee Stock Payment Plan. Incorporated by
reference from exhibit B to U.S. Home Corporation's 1993 Proxy
Statement dated March 3, 1994.
10.8 -- U.S. Home Corporation's Restricted Stock Plan.
10.9 -- U.S. Home Corporation's 1994 Corporate Officers Incentive
Compensation Plan.
10.10 -- U.S. Home Corporation's Key Employees' Separation Pay Plan.
Incorporated by reference from exhibit 10.5 to Amendment No. 1 to
Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
10.11 -- U.S. Home Corporation's Retirement Plan for Non-Employee Directors.
Incorporated by reference from exhibit 10 to U.S. Home Corporation's
Quarterly Report on Form 10-Q for the period ended September 30,
1994.
10.12 -- Employment and Consulting Agreement, dated May 12, 1986, between U.S.
Home Corporation and Robert J. Strudler. Incorporated by reference
from exhibit 10.1 to U.S. Home Corporation's Current Report on Form
8-K dated July 8, 1986.
10.12(i) -- First Amendment to Employment and Consulting Agreement, effective as
of February 8, 1990, between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.27(i) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1989.
10.12(ii) -- Second Amendment to Employment and Consulting Agreement effective as
of December 6, 1990, between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.14(ii) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1990.
10.12(iii) -- Third Amendment to Employment and Consulting Agreement, effective as
of June 21, 1993, between U.S. Home Corporation and Robert J.
Strudler. Incorporated by reference from exhibit 10.8(iii) to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.13 -- Employment and Consulting Agreement, dated May 12, 1986, between U.S.
Home Corporation and Isaac Heimbinder. Incorporated by reference from
exhibit 10.2 to U.S. Home Corporation's Current Report on Form 8-K
dated July 8, 1986.
10.13(i) -- First Amendment to Employment and Consulting Agreement, effective as
of February 8, 1990, between U.S. Home Corporation and Isaac
Heimbinder. Incorporated by reference from exhibit 10.28(i) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1989.
</TABLE>
39
<PAGE> 40
<TABLE>
<S> <C>
10.13(ii) -- Second Amendment to Employment and Consulting Agreement, effective as
of December 6, 1990, between U.S. Home Corporation and Isaac
Heimbinder. Incorporated by reference from exhibit 10.15(ii) to U.S.
Home Corporation's Annual Report on Form 10-K for the year ended
December 31, 1990.
10.13(iii) -- Third Amendment to Employment and Consulting Agreement, effective as
of June 21, 1993, between U.S. Home Corporation and Isaac Heimbinder.
Incorporated by reference from exhibit 10.9(iii) to Registration
Statement on Form S-3 of U.S. Home Corporation (Registration No.
33-68966).
10.14 -- Registration Rights Agreement, dated as of June 21, 1993, between
U.S. Home Corporation and Loomis, Sayles & Company Incorporated, on
behalf of certain holders of the common stock of U.S. Home
Corporation. Incorporated by reference from exhibit 10.10 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.15 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Isaac Heimbinder. Incorporated by
reference from exhibit 10.25 to U.S. Home Corporation's Annual Report
on Form 10-K for the year ended December 31, 1986.
10.16 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Robert J. Strudler. Incorporated
by reference from exhibit 10.26 to U.S. Home Corporation's Annual
Report on Form 10-K for the year ended December 31, 1986.
10.17 -- Letter, dated as of March 20, 1990, between U.S. Home Corporation and
William E. Reichard, as Successor Trustee, with respect to Trust
Agreements dated December 18, 1986 between U.S. Home Corporation, as
Grantor, Kenneth J. Hanau, Jr., as Trustee, with respect to
retirement benefits for Robert J. Strudler and Isaac Heimbinder.
Incorporated by reference from exhibit 10.19 to U.S. Home
Corporation's Annual Report on Form 10-K for the year ended December
31, 1992.
10.18 -- Warehousing Credit and Security Agreement (single-family mortgage
loans), dated as of April 15, 1992, between U.S. Home Mortgage
Corporation and Residential Funding Corporation. Incorporated by
reference from exhibit 10.3 to U.S. Home Corporation's Quarterly
Report on Form 10-Q for the period ended March 31, 1992.
10.18(i) -- First Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 1, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.1 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1992.
10.18(ii) -- Second Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 11, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.2 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1992.
10.18(iii) -- Third Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of October 21, 1992, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.3 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended
September 30, 1992.
</TABLE>
40
<PAGE> 41
<TABLE>
<S> <C>
10.18(iv) -- Fourth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of May 28, 1993, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference to exhibit 10.13(iv) to Amendment No. 2 to
Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
10.18(v) -- Fifth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of June 15, 1993, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.1 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1993.
10.18(vi) -- Sixth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of September 15, 1993,
between U.S. Home Mortgage Corporation and Residential Funding
Corporation. Incorporated by reference from exhibit 10.15(vi) to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.18(vii) -- 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.
Incorporated by reference from exhibit 10.2 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended June
30, 1994.
10.18(viii) -- Eighth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of October 1, 1994, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
10.18(ix) -- Ninth Amendment to Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of January 1, 1995, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
10.19 -- U.S. Home Corporation's Amortizing Incentive Plan. Incorporated by
reference from exhibit 4.2 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
10.20 -- Form of Indemnification Agreement for directors and executive
officers. Incorporated by reference from exhibit 10.15 to Amendment
No. 2 to Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
11 -- Computation of earnings per share.
22 -- Subsidiaries of U.S. Home Corporation.
23 -- Consent of Independent Public Accountants.
27 -- Financial Data Schedule.
</TABLE>
(b) Report on Form 8-K
No Current Report on Form 8-K was filed by the Company during October,
November or December 1994.
41
<PAGE> 42
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Date: February 17, 1995 U.S. HOME CORPORATION
By: /s/ ISAAC HEIMBINDER
--------------------------------------
Isaac Heimbinder
President and Chief Operating Officer
By: /s/ CHESTER P. SADOWSKI
--------------------------------------
Chester P. Sadowski
Vice President, Controller and Chief
Accounting Officer
(principal accounting officer)
By: /s/ THOMAS A. NAPOLI
--------------------------------------
Thomas A. Napoli
Vice President, Finance and Chief
Financial Officer
(principal financial officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ ROBERT J. STRUDLER Director, Chairman and Chief February 17, 1995
- --------------------------------------------- Executive Officer
Robert J. Strudler (principal executive
officer)
/s/ ISAAC HEIMBINDER Director, President and February 17, 1995
- --------------------------------------------- Chief Operating Officer
Isaac Heimbinder
/s/ GLEN ADAMS Director February 17, 1995
- ---------------------------------------------
Glen Adams
/s/ STEVEN L. GERARD Director February 17, 1995
- ---------------------------------------------
Steven L. Gerard
/s/ KENNETH J. HANAU, JR. Director February 17, 1995
- ---------------------------------------------
Kenneth J. Hanau, Jr.
/s/ MALCOLM T. HOPKINS Director February 17, 1995
- ---------------------------------------------
Malcom T. Hopkins
/s/ JACK L. McDONALD Director February 17, 1995
- ---------------------------------------------
Jack L. McDonald
/s/ CHARLES A. McKEE Director February 17, 1995
- ---------------------------------------------
Charles A. McKee
/s/ GEORGE A. POOLE, JR. Director February 17, 1995
- ---------------------------------------------
George A. Poole, Jr.
/s/ HERVE RIPAULT Director February 17, 1995
- ---------------------------------------------
Herve Ripault
/s/ JAMES W. SIGHT Director February 17, 1995
- ---------------------------------------------
James W. Sight
</TABLE>
42
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
10.1(vi) Sixth Amendment to Amended and Restated Loan
Agreement dated effective as of September 16,
1994, between U.S. Home Corporation and General
Electric Capital Corporation
10.8 U.S. Home Corporation's Restricted Stock Plan
10.9 U.S. Home Corporation's 1994 Corporate Officers
Incentive Compensation Plan
10.18(viii) Eighth Amendment to Warehousing Credit and
Security Agreement (single-family mortgage
loans), as of October 1, 1994, between U.S. Home
Mortgage Corporation and Residential Funding
Corporation
10.18(ix) Ninth Amendment to Warehousing Credit and
Security Agreement (single-family mortgage
loans), as of January 1, 1995, between U.S. Home
Mortgage Corporation and Residential Funding
Corporation
11 Computation of earnings per share
22 Subsidiaries of U.S. Home Corporation
23 Consent of Independent Public Accountants
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1(VI)
SIXTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Sixth
Amendment"), dated effective as of September 16, 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, that certain Fourth
Amendment to Amended and Restated Loan Agreement, dated effective as of
December 31, 1994, and that certain Fifth Amendment to Amended and Restated
Loan Agreement dated as of June 30, 1994 (as previously and hereafter amended
from time to time, the "Loan Agreement").
B. The parties hereto desire to further amend the Loan Agreement.
- ------------------------------------------------------------------------------
GENEL COMPANY, INC.'S ARIZONA MORTGAGE BANKER'S NUMBER IS BK 8284
<PAGE> 2
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 Sixth 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 Sixth Amendment shall have the respective meanings ascribed thereto in the
Loan Agreement.
2. SIXTH AMENDMENT TO LOAN AGREEMENT
The Loan Agreement is, effective as of the date hereof, amended as
follows:
2.1 Section 1 of the Loan Agreement is amended by adding or amending
and restating, as the case may be, the definitions set forth below:
"'Land Account to Net Worth Ratio' shall mean, as at the date
of determination thereof, the ratio of (i) the Land Account Balance
(as defined in the Fifth Amendment) as of such date to (ii) Adjusted
Consolidated Tangible Net Worth as of such date.
"'Sixth Amendment' shall mean that certain Sixth Amendment to
Amended and Restated Loan Agreement, dated effective as of September
16, 1994, between Borrower and Lender."
"'Total Land Account Balance' shall mean, on any date, the net
aggregate sum of book cost (net of reserves)
2
<PAGE> 3
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 USH Book
Cost of all Finished Building Lots owned by Borrower or any Guarantor
on such date; (iv) Option Deposits made by Borrower or Guarantors
(including refundable Option Deposits) on such date; and (v) Advance
Costs incurred by Borrower or Guarantors on such date."
2.2 Section 2.9(a) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) Borrower shall pay interest to Lender monthly in arrears,
on the first day of each month (each, an 'Interest Payment Date'), in
an amount equal to the quotient of (i) an amount equal to (A) the sum
of the daily unpaid principal amounts of the Loan outstanding on each
day during the previous month multiplied by (B) a rate equal to the
GECC Composite Commercial Paper Rate for the previous month plus 4.0%
(the 'Stated Rate'), divided by (ii) 360."
2.3 Section 2.10(a) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
"(a) Upon the effectiveness of the Sixth Amendment, Borrower
is obligated to pay Lender a fee (the "Availability Fee") of $475,000
per annum, with such per annum amount to be pro rated for any partial
year during which this Agreement is in effect. Upon the occurrence and
during the continuation of an Event of Default, the Availability Fee
will increase to $950,000 per annum and, if such Event of Default is
cured by Borrower, the Availability Fee shall revert to the rate of
$475,000 per annum. Upon the effectiveness of the Sixth Amendment, the
entire amount of the Availability Fee for the remaining term of this
Agreement (which, for purposes of this sentence, shall be calculated
at the rate of $475,000 per annum notwithstanding the existence of an
Event of Default on the date this Agreement is terminated) shall be
deemed to be fully earned by Lender and the termination of this
Agreement for any reason prior to June 21, 1997, shall not terminate
the obligation of Borrower to pay the entire remaining amount of the
Availability Fee for the anticipated term of this Agreement which,
upon termination of this Agreement for any reason prior to June 21,
1997, shall become immediately due and payable in full. Borrower shall
pay the Availability Fee to Lender in quarterly installments on the
first
3
<PAGE> 4
Business Day of each calendar quarter in immediately available funds;
provided that to the extent the conditions of Section 2.2 hereof are
met, the Availability Fee shall, at the option of Borrower, constitute
a Revolving Credit Advance."
2.4 Subsection (c) of Section 7.10 of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
"(c) Maximum Land Account Balance. Borrower shall not, at any
time, permit (i) its Land Account to Net Worth Ratio to be greater
than 1.15 to 1.0 or (ii) its Total Land Account Balance to exceed
$425,000,000."
2.5 Section 10.2 of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"10.2 Fees and Expenses. (a) Borrower shall, upon execution of
this Agreement, and thereafter pay all reasonable out-of-pocket
expenses of Lender in connection with the preparation and, subject to
subsection (b)(i) below, administration of the Loan Documents
(including the reasonable fees and expenses of all of its counsel and
advisors retained in connection with the Loan Documents and the
transactions contemplated thereby and advice in connection therewith).
If, at any time or times, regardless of the existence of an Event of
Default (except with respect to paragraphs (iv) and (v), which shall
be subject to an Event of Default having occurred and be continuing),
Lender (or in the case of paragraphs (iv) and (v) below, any Assignee
Lender) shall employ counsel or other advisors for advice or other
representation or shall incur reasonable legal or other costs and
expenses in connection with:
(i) subject to the terms of subsection (b)(ii)
below, any sale of participations, assignment, transfer or
other disposition of Lender's interest in the Loan or any of
the Loan Documents or any portion thereof;
(ii) any amendment, interpretation of, modification
or waiver, or consent with respect to, any of the Loan
Documents or, subject to the terms of subsection (b)(i) and
(iii) below, advice in connection with the administration of
the Loans made pursuant hereto or its rights hereunder or
thereunder;
4
<PAGE> 5
(iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender or any
Assignee Lender, Borrower, any Subsidiary of Borrower or any
other Person) in any way relating to the Collateral, any of
the Loan Documents or any other agreements to be executed or
delivered in connection herewith;
(iv) any attempt to enforce any rights of Lender or
any Assignee Lender against Borrower, any Subsidiary of
Borrower or any other Person, that may be obligated to Lender
by virtue of any of the Loan Documents;
(v) any attempt to verify, protect, value, collect,
sell, liquidate or otherwise dispose of the Collateral;
then, and in any such event, the attorneys' and other parties' fees
arising from such services, including those of any appellate
proceedings, and all expenses, costs, charges and other fees incurred
by such counsel and others in any way or respect arising in connection
with or relating to any of the events or actions described in this
Section shall be payable, on demand, by Borrower to Lender (or as
provided above to an Assignee Lender) and shall be additional
Obligations secured under this Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, such reasonable
expenses, costs, charges and fees may include: appraisers,
liquidators, review of applicable Court filings, paralegal fees, costs
and expenses; accountants' and investment bankers' fees, costs and
expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
(b) Notwithstanding the terms of subsection (a) hereof, (i)
Borrower shall not be obligated to pay any of the expenses incurred by
Lender (including the fees and expenses of its counsel and advisors)
in connection with the qualification of properties as Eligible
Collateral, for admittance of Eligible Collateral to the Borrowing
Base or determinations or calculations of Borrowing Base Availability,
(ii) Borrower shall only be obligated to pay 50% of the attorneys' and
other parties' fees arising from the activities described in
10.2(a)(i) hereof and (iii) Lender shall be obligated for any expenses
incurred by it in
5
<PAGE> 6
connection with the issuance of mortgagee title policies or
commitments issued in its favor (together with any related title
company charges) and any fees of local real estate counsel incurred in
connection therewith; provided, however, that Borrower shall remain
obligated to pay all usual and customary fees and premiums for the
issuance of owner's title policies (together with any related title
company charges), all recording fees and all fees, costs and expenses
for environmental matters, including environmental peer reports."
2.6 Schedule 1.1 to the Loan Agreement is hereby replaced in
its entirety by the revised Schedule 1.1 attached to this Sixth Amendment as
Exhibit A.
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
Sixth Amendment, except to the extent that any such representation or
warranty expressly relates to an earlier date and for changes therein
permitted or contemplated by the Loan Agreement.
(b) After giving effect to this Sixth Amendment, no
event has occurred and is continuing, or would result from the
execution of this Sixth Amendment, which constitutes or would
constitute a Default or an Event of Default.
(c) The execution, delivery and performance of this
Sixth Amendment have been duly authorized by all necessary corporate
action, and this Sixth Amendment is the legal and binding obligation
of Borrower, enforceable in accordance with its terms.
(d) Borrower's execution, delivery and performance of
this Sixth 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
6
<PAGE> 7
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 Sixth 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 Sixth 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.
7
<PAGE> 8
5. MISCELLANEOUS
5.1 This Sixth 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 Sixth 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 SIXTH 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.
8
<PAGE> 9
IN WITNESS WHEREOF, this Sixth 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
9
<PAGE> 10
EXHIBIT A
SCHEDULE 1.1
"Borrowing Base" shall mean all Eligible Collateral that
Lender has not rejected in its sole discretion as constituting a portion of the
Borrowing Base and with respect to which (a) Lender has a first priority Lien
perfected as contemplated by the terms of this Agreement, subject only to
Ordinary Course Liens; (b) Lender has received a binding mortgagee's policy of
title insurance on ALTA Form B (1970 and 1984) or the appropriate
state-specific form requested by Lender and otherwise in form and content
satisfactory to Lender, to be obtained at Lender's expense, insuring that the
Lien of the Collateral Documents constitutes a valid Lien encumbering the Real
Estate, free and clear of all defects and encumbrances except for Ordinary
Course Liens and such other Liens as Lender shall approve and naming Lender as
insured, issued by a nationally recognized title insurance company acceptable
to Lender, with no exceptions or exclusions other than as may be approved by
Lender (together with legible copies of all permitted title exceptions), and in
an amount not less than the value attributed to such Eligible Collateral by
Lender, with the total amount of the title policies to be issued in Lender's
favor to be (i) with respect to parcels of Real Estate located in the states of
Arizona, California, Colorado, Maryland, Minnesota, Nevada, New Jersey and
Virginia, in a maximum aggregate amount equal to the maximum principal amount
of $95,000,000; and (ii) with respect to parcels of Real Estate located in the
states of Texas, Florida or any other states not named in section (i) of this
definition, in an amount equal to the "book value" attributed to each parcel by
Lender. Notwithstanding the provisions of parenthetical (ii) of the immediately
preceding sentence, with respect to parcels of Real Estate located in the state
of Texas only, Lender hereby agrees that it will accept an interim construction
binder of title insurance in lieu of the above described mortgagee's title
insurance policy (but which otherwise meet all of the requirements of the
preceding sentence), provided that (x) an Event of Default has not occurred;
and (y) immediately upon Lender's request (whether or not an Event of Default
has occurred), Borrower shall obtain, at Lender's expense, mortgagee's policies
of title insurance on all parcels of Real Estate located in the state of Texas,
which policies shall meet all of the requirements of the preceding sentence.
Each title policy shall include such affirmative insurance as Lender may
require and shall be in form and substance satisfactory to Lender's legal
counsel. The title insurance policy shall be reinsured with such title
companies, in such
<PAGE> 11
amounts and in such manner and form as shall be acceptable to Lender. In the
event that a Lien (other than an Ordinary Course Lien) is filed against any
Eligible Collateral subsequent to its admission to the Borrowing Base (whether
or not such Lien is subordinate to the Lien perfected by Lender as contemplated
by this Agreement), in addition to all other rights and remedies that Lender
may have under this Agreement or the other Loan Documents, Lender shall be
entitled, in its sole discretion, to remove the Eligible Collateral affected by
such Lien from the Borrowing Base, effective immediately.
S-2
<PAGE> 1
EXHIBIT 10.8
U.S. HOME CORPORATION
CORPORATE OFFICERS AND PRESIDENTS OF OPERATIONS
RESTRICTED STOCK PLAN
1. PURPOSE.
The purpose of the U.S. Home Corporation Corporate Officers
and Presidents of Operations Restricted Stock Plan (the "Plan") is to create
incentives for the corporate officers and presidents of operations of U.S. Home
Corporation (the "Company") to provide services to the Company over a long
period of time and to enhance the level of performance of the Company by
awarding such employees shares of Stock (as defined herein) subject to certain
vesting requirements.
2. ADMINISTRATION.
(a) A committee (the "Committee"), which shall initially
be the Compensation and Stock Option Committee of the board of directors of the
Company (the "Board"), and which will be comprised of at least three members of
the Board, all of whom are "disinterested persons" (as defined below), will (i)
administer the Plan, (ii) establish, subject to the provisions of the Plan,
such rules and regulations as it may deem appropriate for the proper
administration of the Plan and (iii) make such determinations under, and such
interpretations of, and take such steps in connection with, the Plan or the
Stock issued thereunder as it may deem necessary or advisable. The members of
the Committee may be appointed from time to time by the Board and serve at the
pleasure of the Board. The Committee will hereinafter be referred to as the
"Administrator."
(b) For the purposes of this Section 2, a "disinterested
person" is a person who, on a given date, is disinterested within the meaning
of Rule 6b-13 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
3. STOCK.
The stock which is the subject of the Plan will be the shares
of common stock of the Company, $.01 par value per share (the "Stock"), whether
authorized and unissued or treasury stock. The total number of shares of Stock
which may be issued under the Plan will not exceed, in the aggregate, 250,000.
4. AWARD OF STOCK.
(a) All of the corporate officers and presidents of
operations of the Company listed on Schedule A attached hereto (each an
"Employee" and collectively, "Employees"), shall be eligible to receive Stock
in accordance with the terms hereof.
(b) In consideration of future services to be provided by
each Employee to the Company, each Employee shall be awarded, on a one-time
basis, the number of shares of Stock, subject to the restrictions contained
herein, determined by dividing $200,000 by the average closing price of the
Stock on the New York Stock Exchange (the "NYSE") for the 10 consecutive trading
days immediately following the date on which the Company releases its financial
results for the fiscal year ending December 3, 1994; provided that no fractional
shares of Stock shall be issued under the Plan.
(c) The closing price of the Stock, as of any particular
day, will be as reported in The Wall Street Journal; provided, however, that if
the Stock is not listed on the NYSE on any applicable day, the closing price
for such day will be not less than the fair market value of the Stock on such
day, as determined by the Administrator based on such empirical evidence as it
deems to be appropriate under the circumstances.
A-1
<PAGE> 2
(d) The Administrator shall have the right pursuant to the
terms hereof to award Stock to any individual who becomes a corporate officer
or president of operations of the Company after the effective date of the Plan
and prior to the initial Vesting Date (as defined herein). The Administrator
shall make such award substantially in accordance with the terms of the Plan,
including the vesting requirements contained in Section 5 hereof, but shall be
permitted to award a smaller number of shares of Stock based on the date on
which the individual commences employment as a corporate officer or president
of operations of the Company.
5. VESTING.
(a) On each Vesting Date, unless all shares of Stock awarded
to each Employee shall have previously vested with each Employee and subject to
the forfeiture provisions contained herein, a percentage of the shares of Stock
awarded hereunder to each Employee shall vest with each Employee such that the
cumulative percentage of total shares of Stock vested with each Employee shall
be the greater of the applicable percentages set forth below:
(i) (A) 20% as of the Vesting Date in the year 2000;
(B) 40% as of the Vesting Date in the year 2001;
(C) 60% as of the Vesting Date in the year 2002;
(D) 80% as of the Vesting Date in the year 2003;
(E) 100% as of the Vesting Date in the year
2004;
(ii) If, on a Vesting Date, the Return on Assets
Improvement (as defined herein) is:
(A) greater than 1.05 and less than or equal to
1.10, then 40%;
(B) greater than 1.10 and less than or equal to
1.15, then 60%;
(C) greater than 1.15 and less than or equal to
1.20, then 80%;
(D) greater than 1.20, then 100%;
provided, however, that no Employee shall be required to forfeit any shares of
Stock previously vested hereunder.
For the purposes hereof:
"Return on Assets Improvement" means (x) the sum of
the Return on Assets for the two fiscal years of the Company immediately prior
to the applicable Vesting Date divided by two, and the result divided by (y)
the Return on Assets for the fiscal year ended December 31, 1994, rounded to the
nearest hundredth.
"Return on Assets" means (x) the amount contained in
the Company's "income (loss) before income tax" line-item for the applicable
fiscal year of the Company as reported in the consolidated statements of
operations set forth in the audited financial statements for the Company for
such fiscal year, divided by (y) the Average Total Assets for such year.
"Average Total Assets" means an amount equal to (x)
(1) total housing assets at the beginning of the applicable fiscal year of the
Company (as reported in the consolidated balance sheet set forth in the audited
financial statements for the Company for the prior fiscal year), plus (2) total
housing assets at the end of such fiscal year (as reported in the consolidated
balance sheet set forth in the audited financial statements for the Company for
such fiscal year), divided by (y) two.
(b) In the event an Employee is not employed by the
Company on or prior to December 31 of any year which is immediately prior to any
Vesting Date, due to voluntary termination of employment by the Employee or
termination for Cause (as defined herein), all of the shares of Stock remaining
to be vested with such Employee hereunder and all rights arising from such
shares of Stock shall be forfeited by such Employee and returned to the
Company.
A-2
<PAGE> 3
(c) For purposes of the Plan, a voluntary termination by
an Employee will not be deemed to occur in the event such Employee is
Constructively Terminated (as defined herein).
(d) In the event an Employee is terminated without Cause
prior to January 1, 2000, 20% of the shares of Stock awarded hereunder shall
immediately vest with such Employee and the remaining shares of Stock to be
vested hereunder and all rights arising from such shares of Stock shall be
forfeited by such Employee and returned to the Company.
(e) In the event there is a Change of Control (as defined
herein) and within 24 months thereof an Employee is terminated without Cause or
Constructively Terminated, all shares of Stock remaining to be vested with such
Employee hereunder shall immediately vest with such Employee and the Company
shall immediately cause the issuance to such Employee of appropriate stock
certificates representing such shares of Stock in such Employee's name in
accordance with Section 6 hereof.
(f) In the event an Employee dies, is Permanently
Disabled (as defined herein), or retires (after not less than 20 years of
employment by the Company), the Administrator shall have the authority, in its
sole discretion, to vest such Employee (or such Employee's estate, if
applicable) in as many shares of Stock as the Administrator shall deem
appropriate, based upon such Employee's prior job performance.
(g) For purposes of the Plan:
(i) "Base Salary" shall mean an amount equal to
an Employee's maximum annual base salary in effect at
any time after the effective date of the Plan,
excluding any incentive compensation or bonus payable
or paid to an Employee.
(ii) "Cause" means (1) an Employee's continuing
willful failure to perform his duties with respect to
the Company (other than as a result of total or
partial incapacity due to physical or mental
illness), (2) gross negligence or malfeasance by an
Employee in the performance of his duties with
respect to the Company, (3) an act or acts on an
Employee's part constituting a felony under the laws
of the United States or any state thereof which
results or was intended to result directly or
indirectly in gain or personal enrichment by such
Employee at the expense of the Company or (4) any
other circumstances set forth in an employment
agreement between the Company and such Employee which
would constitute grounds for the Company to terminate
the employment of such Employee for cause (as defined
in the applicable employment agreement).
(iii) "Change of Control" means any of the
following: (i) the sale, lease, conveyance or other
disposition of all or substantially all of the
Company's assets as an entirety or substantially as
an entirety to any person (including any individual
or entity) or group of persons (within the meaning of
Section 13(d)(3) of the Exchange Act in one or a
series of transactions; provided that a transaction
where the holders of all classes of common equity of
the Company immediately prior to such transaction
own, directly or indirectly, 50% or more of the
aggregate voting power of all classes of common
equity of such person or group immediately after such
transaction will not be a Change of Control, (ii) the
liquidation or dissolution of the Company; provided
that a liquidation or dissolution of the Company
which is part of a transaction or series of related
transactions that does not constitute a Change of
Control under the "provided" clause of clause (i)
above will not constitute a Change of Control
hereunder or (iii) any transaction or a series of
related transactions (as a result of a tender offer,
merger, consolidation or otherwise) that results in,
or that is in connection with, any person, including,
a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) acquiring "beneficial ownership"
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% or more of the
aggregate voting power of all classes of
A-3
<PAGE> 4
common equity of the Company or of any person that
possesses "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly,
of 50% or more of the aggregate voting power of all
classes of common equity of the Company.
(v) "Constructively Terminated" means (1) a
reduction in an amount equal to or greater than 15
percent of an Employee's Base Salary, (2) a material
reduction in an Employee's job function, duties or
responsibilities or (3) a required relocation of an
Employee of more than 50 miles from such Employee's
current job location; provided, however, that the
employment with the Company or its divisions or
subsidiaries of a President of Operations will not be
deemed to be Constructively Terminated in the event
he or she is required to be a Division Chairman or
Division President with the Company or its divisions
or subsidiaries and has job functions, duties or
responsibilities of a Division Chairman or Division
President and/or is required to relocate in
connection with such change in position; provided,
further, that the employment of an Employee will not
be deemed Constructively Terminated unless such
Employee actually terminates his or her employment
with the Company within 60 days after the occurrence
of an event specified in clause (1), (2) or (3) above.
(vi) "Permanently Disabled" means physical or
mental incapacity of such nature that an Employee is
unable to engage in or perform the principal duties
of his customary employment or occupation on a
continuing or sustained basis. All determinations as
to the date and extent of disability of any Employee
shall be made by the Administrator upon the basis of
such evidence as it deems necessary or desirable.
(vii) "Vesting Date" means the date each year,
commencing in 2000, on which the Company releases its
financial results for the previous fiscal year.
6. STOCK CERTIFICATES.
(a) Each Employee shall receive a stock certificate
reflecting the number of shares of Stock awarded hereunder. Such certificate
shall be registered in the name of such Employee and shall bear the following
legend:
"The securities (the "Shares") represented by this stock
certificate are restricted by the terms of the U.S. Home
Corporation Corporate Officers and Presidents of Operations
Restricted Stock Plan ("Restricted Stock Plan"), effective as
of January 1, 1995, which contains provisions affecting the
rights and obligations of the holder of the Shares and
restrictions on the transfer of the Shares. Any transfer of
the Shares represented by this stock certificate in violation
of the Restricted Stock Plan is null and void."
(b) The Administrator may, in its sole discretion,
require that the stock certificates evidencing the shares of Stock be held in
custody by the Company until the restrictions thereon shall have lapsed, and
that, as a condition of receiving the shares of Stock, the Employee shall have
delivered a stock power, endorsed in blank, relating to the shares of Stock.
If and to the extent any shares of Stock vest with an Employee in accordance
with terms hereof, stock certificates for the appropriate number of
unrestricted shares of Stock shall be delivered promptly to the Employee.
Shares of Common Stock will not be released to an Employee unless and until the
amount of federal, state or local taxes required to be withheld has been paid
or satisfied. Tax withholding liabilities may be satisfied by the Employee
relinquishing shares of Common Stock vested pursuant to the Plan, valued at the
market price of the Common Stock on the date such shares of Common Stock are
released to the Employee.
A-4
<PAGE> 5
7. TERM AND EFFECTIVE DATE.
The Plan will become effective upon (i) approval by the Board
and (ii) approval by the affirmative vote of a majority of the shares of voting
capital stock of the Company present or represented and entitled to vote at the
1995 annual meeting of the Company's stockholders. Subject to Section 15
hereof, the Plan shall terminate upon issuance and vesting of the Stock issuable
pursuant to the Plan.
8. TRANSFERABILITY.
Employees shall not be permitted to sell, transfer, pledge,
assign or otherwise encumber shares of Stock awarded hereunder prior to the
vesting of such shares of Stock. Upon vesting of such shares of Stock, an
Employee will only transfer such shares of Stock in compliance with applicable
federal and state securities laws. Employees who are affiliates of the Company
may generally dispose of their shares in accordance with Rule 44 promulgated
under the Securities Act of 1933, as amended.
9. RIGHTS AS A STOCKHOLDER.
Except as provided in Section 8 hereof or this Section 9,
Employees shall have, with respect to any shares of Stock remaining to be
vested hereunder, all of the rights of stockholders of the Company, including
the right to vote such shares of Stock and to receive any cash dividends.
Stock dividends, if any, issued with respect to such shares of Stock shall be
subject to the same restrictions and other terms and conditions hereunder that
apply to such shares of Stock.
10. INVESTMENT PURPOSE.
At the time of issuance of any shares of Stock, the
Administrator may, if it will deem it necessary or desirable for any reason,
require an Employee to represent in writing to the Company that (a) it is such
Employee's then intention to acquire the Stock for investment purposes and not
with a view to the distribution thereof and/or (b) upon acquisition of the
Stock, the Employee will not beneficially own in excess of 4.9 percent of the
value of the equity securities (as defined in Rule 3a-11-1 under the Exchange
Act) of the Company; provided that for purposes of this Section 10(b),
all outstanding options and convertible securities to acquire Stock shall be
deemed to be exercised or converted; provided, further, that this Section 10(b)
shall be inoperative after June 21, 1995.
11. RIGHT TO TERMINATE EMPLOYMENT.
Nothing contained herein will restrict the right of the
Company to terminate the employment of any Employee at any time.
12. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or
taken pursuant to the provisions of the Plan by the Administrator will be final
and be binding and conclusive for all purposes.
13. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the
Plan to the Company will be deemed to include any subsidiary corporations and
parent corporations of the Company, as those terms are defined in Section 424
of the Internal Revenue Code of 1986, as amended.
14. GOVERNING LAW.
The Plan will be governed by the laws of the State of Delaware.
A-5
<PAGE> 6
15. AMENDMENT AND TERMINATION.
The Administrator may at any time terminate, amend or modify
the Plan in any respect it deems suitable; provided, however, that, solely with
respect to persons subject to Section 16 of the Exchange Act, no such action of
the Administrator, without the approval of the stockholders of the Company, may
(I) materially increase the benefits accruing to employees eligible to receive
Stock under the Plan, (ii) materially increase the total amount of Stock which
may be awarded under the Plan or (iii) materially modify the requirements for
participation in the Plan; provided, further, that no amendment, modification
or termination of the Plan may in any manner affect any Stock (whether vested
or not) theretofore awarded under the Plan without the consent of the Employee
to whom Stock has been awarded.
16. OVERRIDE.
(a) With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision of the Plan or action by the Administrator fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator.
(b) All transactions pursuant to terms of the Plan,
including, without limitation, awards and vesting of Stock, shall only be
effective at such time as counsel to the Company shall have determined that
such transaction will not violate federal or state securities or other laws.
The Administrator may, in its sole discretion, defer the effectiveness of such
transaction to pursue whatever actions may be required to ensure compliance
with such federal or state securities or other laws.
A-6
<PAGE> 7
SCHEDULE A
<TABLE>
<CAPTION>
CORPORATE OFFICERS PRESIDENTS OF OPERATIONS
- ------------------ ------------------------
<S> <C>
Robert J. Strudler Sam B. Crimaldi
Isaac Heimbinder James R. Petty
Gary L. Frueh Christopher B. Rediger
Craig M. Johnson Michael T. Richardson
Thomas A. Napoli Philip J. Walsh III
Chester P. Sadowski
Richard G. Slaughter
Kelly F. Somoza
</TABLE>
A-7
<PAGE> 1
(12/13/93)
EXHIBIT 10.9
U.S. HOME CORPORATION
CORPORATE OFFICERS'(1)
INCENTIVE COMPENSATION PROGRAM
For the Incentive Period
January 1, 1994 to December 31, 1994
Set forth below is an outline of the Corporate Officers' Incentive
Compensation Program for the incentive period January 1, 1994 to December 31,
1994 ("Incentive 1994").
Corporate Officers who are employed by the Corporation as of January
1, 1994 will be eligible to participate in the Corporate Officers' Incentive
Compensation Program for the period commencing January 1, 1994 and ending
December 31, 1994. Effective January 1, 1994, base salaries are established as
set forth in Exhibit A hereto.
Under this Program, an incentive compensation pool equal to the lessor
of $600,000 or 2% of the pre-tax profits of the Corporation earned in fiscal
1994, shall be established to be distributed to the Corporate Officers at the
sole discretion and upon approval of a majority of the non-management members
of the Compensation Committee and of the Board of Directors of the Corporation
based on its evaluation of the following factors:
1. The Board of Directors shall review the profit and loss of the
Company for the fiscal year ended December 31, 1994 as
compared to the projected profit and loss for the period
January 1, 1994 through December 31, 1994 as set forth in the
1994 Business Plan as presented to the Board of Directors.
2. The Board of Directors shall review the cash flow of the
Company as compared to the projected cash flow for the period
January 1, 1994 through December 31, 1994 as set forth in the
1994 Business Plan as presented to the Board of Directors.
3. The Board of Directors shall review the overall performance of
the Company in comparison to competitive industry performance
taking into consideration, an analysis of rates of growth,
return on equity and return on sales.
4. The Board of Directors shall review incentive bonus payments
by competitors in relation to proposed payments to said
officers to insure that they are designed to retain and
motivate executives.
5. All other actions by said Officers to maximize the value of
shareholders' equity.
Upon the recommendation of the Chairman and President of the Company,
the Board of Directors shall determine, in its sole discretion, the amount each
respective Officer shall receive from the said incentive compensation pool,
provided that the maximum incentive compensation payable to any Officer shall
not exceed 75% of the base compensation of such Officer.
____________
(1) Excludes Chairman and President who are subject to Employment and
Consulting Agreements which govern payment of bonus (see Exhibit A).
<PAGE> 2
Coporate Officers' Incentive Program Page 2
To be entitled to receive a bonus, a Corporate Officer must remain in
the employ of the Company for the entire fiscal year.
Notwithstanding the foregoing, the Corporation shall have the right to
terminate employment of any Corporate Officer covered under this Program at
will, without notice, and without cause, at any time.
The total bonus earned pursuant to the incentive program set forth
herein shall be paid upon approval of the Board of Directors of the Company as
follows:
A. 75% of the aggregate incentive bonus earned by the Corporate
Officer shall be paid in cash within 30 days following receipt
of 1994 audited financial statements.
B. 25% of the aggregate incentive bonus earned by the Corporate
Officer shall be paid in shares of U.S. Home Corporation's
common stock, with each share valued at the average market
price of said shares on the New York Stock Exchange, as of the
close of trading for the ten (10) trading days commencing the
day following release by the Company of its results for the
fiscal year ended December 31, 1994. Said shares shall be
held in escrow by the Company to be delivered to the
respective Corporate Officers as follows:
1. 1/2 of such shares shall be delivered to the
Corporate Officer within thirty (30) days of the
determination of the respective stock price.
2. 1/2 of such shares shall be delivered to the
Corporate Officer on or prior to January 31, 1997.
However, in order to receive such shares, the
Corporate Officer must remain in the employ of the
Corporation as of December 31, 1996.
Notwithstanding the foregoing, in the event that said Corporate
Officer's employment with the Corporation is terminated by the Corporation
other than for "Cause", all remaining shares not previously delivered to the
Corporate Officer shall be delivered to said Corporate Officer within thirty
(30) days following termination. For purposes of this Program, the term
"Cause" shall mean (i) the Officer's continuing, willful failure to perform his
duties required of his position (other than as a result of total or partial
incapacity due to physical or mental illness), (ii) gross negligence or
malfeasance by the Officer in the performance of his duties hereunder, (iii) an
act or acts on the Officer's part constituting a felony under the laws of the
United States or any state thereof which results or was intended to result
directly or indirectly in gain or personal enrichment by the Officer at the
expense of the Company, or (iv) breach of the provisions of Exhibit B hereto
pertaining to confidentiality and competitive activities, but shall not mean
(A) the refusal to relocate to another city more than 50 miles from the
Officer's present place of business, nor (B) a refusal to perform the duties
required of his position as a result of either a material change in the scope
of his job responsibilities or a reduction in base compensation.
The transfer of said shares by such Corporate Officer shall be
required to conform to all applicable laws and regulations pertaining thereto.
<PAGE> 3
Coporate Officers' Incentive Program Page 3
EXHIBIT A
<TABLE>
<CAPTION>
Name and Title 1993 Proposed 1994 %
of Employee Base Salary Base Salary Inc.
- -------------------------- ----------- ------------- ----
<S> <C> <C> <C>
Gary L. Frueh 120,000 126,000 5.00%
Vice President - Tax
Craig Johnson 135,000 145,000 7.41%
Vice President -
Community Development
Kelly Somoza 95,000 100,000 5.26%
Vice President
Thomas A. Napoli 135,000 145,000 7.41%
Vice President - Finance and
Chief Financial Officer
Chester P. Sadowski 145,000 152,000 4.83%
Vice President - Controller and
Chief Accounting Officer
Richard G. Slaughter 145,000 152,000 4.83%
Vice President - Planning and
Secretary
</TABLE>
<PAGE> 4
Coporate Officers' Incentive Program Page 4
EXHIBIT B
A. Confidentiality. The Officer acknowledges that he has acquired and
will acquire confidential information respecting the business of the
Company. Accordingly, the Officer agrees that, without the written
consent of the Company as authorized by its Board of Directors, he
will not, at any time, willfully disclose any such confidential
information to any unauthorized third party with an intent that such
disclosure will result in financial benefit to the Officer or to any
person other than the Company. For this purpose, information shall be
considered confidential only if such information is uniquely
proprietary to the Company and has not been made publicly available
prior to its disclosure by the Officer.
B. Competitive Activity. Until the end of his employment, the Officer
shall devote full business time to business of the Corporation and
shall not, without the consent of the Board of Directors of the
Company, directly or indirectly, knowingly engage or be interested in
(as owner, partner, shareholder, employee, director, officer, agent,
consultant or otherwise), with or without compensation, any business
which is in competition with any line of business being actively
conducted by the Company or any of its affiliates or subsidiaries
during his employment period. Nothing herein, however, shall prohibit
the Officer from acquiring or holding not more than one percent of any
class of publicly traded securities of any such business.
<PAGE> 1
EXHIBIT 10.18(VIII)
EIGHTH AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS EIGHTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT
(this "Amendment") is entered into as of this 1st day of October, 1994, 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 Forty Million
Dollars ($40,000,000) (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 reduce the Commitment
amount, to provide for tiered pricing on the Commitment, and to amend certain
other terms of the Agreement, and the Lender has agreed to such reduction and
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 by adding the
following definition:
"C.P. Rate" means, as of any date of determination, the rate
of interest per annum which is equal to the composite rate for
dealer-placed thirty-day commercial paper published by Knight-Ridder,
Inc. on its MoneyCenter system at 10 a.m. on the first Business Day of
such week. The CP Rate shall be rounded, if necessary, to the next
highest one eighth of one percent. If such composite commercial paper
rate is not so published for any period, then during such period the
CP Rate shall mean the rate for thirty-day commercial paper sold
through dealers published for the first Business Day of such week in
The Wall Street Journal in its regular column entitled "Money Rates."
-1-
<PAGE> 2
3. From the date hereof until December 31, 1994, Section 1.1 of
the Agreement shall be amended to delete the definition of "Floating Rate" in
its entirety, replacing it with the following definition:
"Floating Rate" means the Tier 1 Floating Rate or the Tier 2
Floating Rate, as applicable.
4. Effective as of November 1, 1994, 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 November 1, 1994, to and including August 31, 1995 (unless such
period is earlier terminated pursuant hereto) to make Advances to the
Company, provided the total aggregate principal amount outstanding at
any one time of all such Advances shall not exceed Twenty-Five Million
Dollars ($25,000,000). The obligation of the Lender to make Advances
hereunder up to such limit, 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.
5. Effective as of November 1, 1994, Section 2.1(b)(1) of the
Agreement is hereby deleted in its entirety and the following section is
substituted in lieu thereof:
(1) The aggregate amount of Wet Settlement Advances
outstanding at any one time shall not exceed Seven Million Dollars
($7,000,000).
6. From the date hereof through December 31, 1994, Section 2.4(a)
of the Agreement shall be deleted in its entirety and the following shall be
substituted in lieu thereof:
2.4(a) From the date hereof, to and including December 31,
1994, the unpaid amount of each Ordinary Warehousing Advance shall
bear interest, from the date of such Ordinary Warehousing Advance
until paid in full, at rates of interest which are equal to:
(i) From the date hereof, to and including December 31,
1994, the unpaid amount of each Ordinary Warehousing Advance shall
bear interest, from the date of such
-2-
<PAGE> 3
Ordinary Warehousing Advance until paid in full, at rates of interest
which are equal to:
(A) On the outstanding principal amount of
Ordinary Warehousing Advances in an amount not to exceed
twenty percent (20%) of the Commitment, a floating rate of
interest which is equal to the greater of (a) LIBOR plus one
and one-quarter percent (1.25%) per annum or (b) the C.P.
Rate plus one percent (1.00%) per annum (the "Tier 1 Floating
Rate").
(B) On the outstanding principal amount of
Ordinary Warehousing Advances to the extent such outstanding
principal amount exceeds twenty percent (20%) of the
Commitment, a floating rate of interest which is equal to
LIBOR plus one and one- half percent (1.50%) per annum (the
"Tier 2 Floating Rate").
(ii) From November 1, 1994, to and including December 31,
1994, the unpaid amount of each Ordinary Warehousing Advance shall
bear interest, from the date of such Ordinary Warehousing Advance
until paid in full, at a floating rate of interest which is equal to
the greater of (a) LIBOR plus one and one-quarter percent (1.25%) per
annum or (b) the C.P. Rate plus one percent (1.00%) per annum.
(iii) Each Floating Rate will be adjusted as of the
effective date of each change in LIBOR. The Lender's determination of
each Floating Rate as of any date of determination shall be
conclusive and binding, absent manifest error.
7. Effective as of November 1, 1994, the words "Thirty Million
Dollars ($30,000,000)" in Sections 2.9(a) and 2.9(b) of the Agreement shall be
replaced with the words "Fifteen Million Dollars ($15,000,000)" wherever they
appear in such sections.
8. On December 31, 1994, the provisions of the Agreement amended
by paragraphs 3 and 6 of this Amendment shall automatically revert to the
provisions in effect prior to the effective date of this Amendment.
9. As a condition precedent to the effectiveness of this
Amendment, the Company shall deliver to the Lender an executed original of this
Amendment.
10. 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
-3-
<PAGE> 4
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.
11. 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.
12. 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
By: /s/ Thomas A. Napali
Its: Vice President
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ DONNA A WEST
Its: Vice President
-4-
<PAGE> 5
STATE OF Texas )
) ss
COUNTY OF Harris )
On November 15, 1994, 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
Notary Public
(SEAL) My Commission Expires: 7-1-97
STATE OF Florida )
) ss
COUNTY OF Broward )
On November 16, 1994, 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.
Marsha S. Grabin
Notary Public
(SEAL) My Commission Expires: 9-15-98
-5-
<PAGE> 1
EXHIBIT 10.18(IX)
NINTH AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS NINTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT
(this "Amendment") is entered into as of this 1st day of January, 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 extend the period for
which the interest rate under the Agreement has been made, and the Lender has
agreed to such extension 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 the rate of interest applicable to the
Advance pursuant to Section 2.4(a).
3. Section 2.4(a) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.4(a) The unpaid amount of each Advance shall bear interest,
from the date of such Advance until paid in full, at a Floating Rate
of interest equal to the greater of (i) LIBOR plus one and one-quarter
percent (1.25%) per annum, or (ii) the C.P. Rate plus one percent
(1.00%) per annum. The Floating Rate will be adjusted as of any
-1-
<PAGE> 2
effective change in LIBOR or the C.P. Rate, as applicable. The
Lender's determination of the Floating Rate as of any date of
determination shall be conclusive and binding, absent manifest error.
4. 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.
5. 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.
6. 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.
7. 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
By: /s/ Thomas A. Napoli
Its: Vice President
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Donna A. West
Its: Vice President
-2-
<PAGE> 3
STATE OF Texas )
) ss
COUNTY OF Harris )
On December 28, 1994, 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
Notary Public
(SEAL) My Commission Expires: 7/1/97
STATE OF Florida )
) ss
COUNTY OF Broward )
On December 30, 1994, 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
Notary Public
(SEAL) My Commission Expires: 9/15/98
-3-
<PAGE> 1
EXHIBIT 11
U.S. HOME CORPORATION AND SUBSIDIARIES
INCOME (LOSS) PER COMMON SHARE FOR THE CONSOLIDATED STATEMENTS
INCOME (LOSS) HAS BEEN COMPUTED ON THE WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON SHARE EQUIVALENTS OUTSTANDING AS FOLLOWS:
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Income (loss) per common and
common equivalent shares -
Net income (loss) $ 32,829 $ 71,691 $ (21,354)
=========== =========== ===========
Weighted average common
shares outstanding 11,366,810 11,259,262 11,284,885
Effect of assumed exercise of
dilutive stock options
and warrants - 371,809 -
----------- ----------- -----------
Total common and common
equivalent shares 11,366,810 11,631,071 11,284,885
=========== =========== ===========
Income (loss) per common and
common equivalent shares $ 2.89 $ 6.16 $ (1.89)
=========== =========== ===========
Income (loss) per common share,
assuming full dilution -
Net income (loss) $ 32,829 $ 71,691 $ (21,354)
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income taxes 1,220 174 -
----------- ----------- -----------
Income (loss) per common share,
assuming full dilution $ 34,049 $ 71,865 $ (21,354)
=========== =========== ===========
Total common and common
equivalent shares 11,366,810 11,631,071 11,284,885
Assumed additional common shares
from exercise of dilutive stock
options and warrants resulting
from use of market price of
common stock at end of period - 102,550 -
Assumed conversion of 4.875%
convertible subordinated
debentures at $35.50 per share
at date of issuance (see Note 3
of Notes to Consolidated
Financial Statements) 2,253,521 376,616 -
----------- ----------- -----------
Common shares, assuming
full dilution 13,620,331 12,110,237 11,284,885
=========== =========== ===========
Income (loss) per common share
assuming full dilution $ 2.50 $ 5.93 $ (1.89)
=========== =========== ===========
</TABLE>
Note a - See Note 1 of Notes to Consolidated Financial Statements
<PAGE> 1
EXHIBIT 22
Subsidiaries of the Company
The following table sets forth the names of U.S. Home's subsidiaries
and the state in which incorporated. All subsidiaries are directly or
indirectly wholly-owned by U.S. Home. Certain insignificant subsidiaries are
omitted.
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
---------------
<S> <C>
Fidelity Guaranty and Acceptance Corporation Delaware
U.S. Home Acceptance Corporation Delaware
U.S. Home Insurors, Inc. Florida
U.S.H. Indemnity Company, Ltd. Bermuda
San Felipe Indemnity Company, Ltd. Bermuda
U.S. Home Mortgage Corporation Florida
USH II Corporation Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 8, 1995 included in this Form 10-K,
into the Company's previously filed Registration Statements No. 33-64712 and
33-52993.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
February 22, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The
Consolidated Condensed Financial Statements As Of December 31, 1994 And For The
Year Then Ended And Is Qualified In Its Entirety By Reference To Such Financial
Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 6,715
<SECURITIES> 0
<RECEIVABLES> 46,891
<ALLOWANCES> 0
<INVENTORY> 576,638
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 747,951
<CURRENT-LIABILITIES> 162,787
<BONDS> 293,700
<COMMON> 109
0
12,969
<OTHER-SE> 278,386
<TOTAL-LIABILITY-AND-EQUITY> 747,951
<SALES> 0
<TOTAL-REVENUES> 995,311
<CGS> 823,597
<TOTAL-COSTS> 942,248
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 537
<INCOME-PRETAX> 52,526
<INCOME-TAX> 19,697
<INCOME-CONTINUING> 32,829
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,829
<EPS-PRIMARY> 2.89
<EPS-DILUTED> 2.50
</TABLE>
