<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-5899
U.S. HOME CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 21-0718930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 West Loop South, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-2311
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
Common stock, $.01 par value 11,448,088 shares
<PAGE> 2
U.S. HOME CORPORATION
---------------------
INDEX
-----
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
June 30, 1996 and December 31, 1995 3
Consolidated Condensed Statements of
Operations--Three and Six Months Ended
June 30, 1996 and 1995 5
Consolidated Condensed Statements of
Cash Flows--Six Months Ended
June 30, 1996 and 1995 6
Notes to Consolidated Condensed
Financial Statements 7
Review by Independent Public Accountants 10
Report of Independent Public Accountants 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 12
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 18
<PAGE> 3
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
ASSETS
------
June 30, December 31,
1996 1995
---------- ------------
(Unaudited)
HOUSING:
Cash (including restricted funds) ......... $ 9,019 $ 5,110
Receivables, net .......................... 53,588 33,454
Single-Family Housing Inventories ......... 689,066 632,035
Option Deposits on Real Estate ............ 68,161 63,375
Other Assets .............................. 50,431 43,437
-------- --------
870,265 777,411
======== ========
FINANCIAL SERVICES:
Cash (including restricted funds) ......... 4,754 5,456
Residential Mortgage Loans ................ 49,432 43,292
Other Assets .............................. 15,211 15,925
69,397 64,673
-------- --------
$939,662 $842,084
======== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 4
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
HOUSING:
Accounts Payable $ 106,642 $ 88,234
Accrued Expenses and Other Current
Liabilities 57,357 46,070
Revolving Credit Facility 8,000 24,000
Senior and Convertible Subordinated Debt
and Notes Payable 367,016 300,599
--------- --------
539,015 458,903
--------- --------
FINANCIAL SERVICES:
Accrued Expenses and Other
Current Liabilities 22,637 18,818
Revolving Credit Facility 29,288 35,371
--------- --------
51,925 54,189
--------- --------
Total Liabilities 590,940 513,092
--------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock,
$25 per share redemption value,
authorized 207,206 and 403,597
shares at June 30, 1996 and
December 31, 1995, outstanding
122,863 and 319,254 shares at
June 30, 1996 and December 31, 1995 3,072 7,981
Common Stock, $.01 par value, authorized
50,000,000 shares, outstanding
11,447,920 and 11,243,147 shares at
June 30, 1996 and December 31, 1995 114 112
Capital In Excess of Par Value 353,701 348,577
Retained Earnings (Deficit) (5,998) (25,367)
Unearned Compensation on Restricted
Stock (2,167) (2,311)
-------- --------
Total Stockholders' Equity 348,722 328,992
-------- --------
$939,662 $842,084
======== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 5
<TABLE>
<CAPTION>
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
HOUSING:
<S> <C> <C> <C> <C>
Operating Revenues ................... $288,428 $255,564 $556,335 $515,691
-------- -------- -------- --------
Operating Costs and Expenses -
Cost of products sold .............. 242,961 215,664 467,935 434,010
Selling, general and administrative. 31,112 28,250 60,523 57,392
-------- -------- -------- --------
274,073 243,914 528,458 491,402
-------- -------- -------- --------
Housing Operating Income ............. 14,355 11,650 27,877 24,289
-------- -------- -------- --------
FINANCIAL SERVICES:
Operating Revenues ................... 4,808 3,714 9,663 6,789
-------- -------- -------- --------
Operating Costs and Expenses -
General and administrative ......... 2,973 2,761 6,213 5,385
Interest ........................... 364 100 825 166
-------- -------- -------- --------
3,337 2,861 7,038 5,551
-------- -------- -------- --------
Financial Services Operating
Income ............................. 1,471 853 2,625 1,238
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ............. 15,826 12,503 30,502 25,527
PROVISION FOR INCOME TAXES ............. 5,776 4,689 11,133 9,573
-------- -------- -------- --------
NET INCOME ............................. $ 10,050 $ 7,814 $ 19,369 $ 15,954
======== ======== ======== ========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary ............................ $ .84 $ .67 $ 1.61 $ 1.37
======== ======== ======== ========
Fully diluted ...................... $ .75 $ .59 $ 1.44 $ 1.20
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
----------------
1996 1995
--------- ---------
Net Cash Used by Operating Activities .......... $(39,188) $(41,875)
-------- --------
Net Cash Flows From Investing Activities:
Purchase of property, plant and equipment,
net of disposals ........................... (985) (1,480)
Proceeds from investments in mortgages ....... 1,055 390
Decrease (increase) in restricted cash ....... (474) 125
Other ........................................ (414) (437)
-------- --------
Net cash used by investing activities ........ (818) (1,402)
-------- --------
Net Cash Flows From Financing Activities:
Repayment of revolving credit facilities,
net of proceeds ............................ (22,083) 47,757
Net proceeds from sale of 7.95% senior notes . 73,406 --
Repayment of notes and mortgage notes payables (8,583) (3,970)
-------- --------
Net cash provided by financing activities .... 42,740 43,787
-------- --------
Net Increase in Cash ........................... 2,734 510
Cash At Beginning of Period .................... 6,228 2,050
-------- --------
Cash At End of Period .......................... $ 8,962 $ 2,560
======== ========
Supplemental Disclosure:
Interest paid, before amount capitalized -
Housing .................................... $ 14,339 $ 15,599
-------- --------
Financial Services ......................... 802 150
-------- --------
$ 15,141 $ 15,749
======== ========
Income taxes paid ............................ $ 5,179 $ 890
======== ========
The accompanying notes are an integral part of these statements.
<PAGE> 7
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(Dollars in Thousands)
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated condensed balance sheet as of
December 31, 1995, which has been derived from audited financial
statements, and the accompanying unaudited consolidated condensed
financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
those rules and regulations. Although the Company believes that the
disclosures made are adequate to ensure that the information
presented is not misleading, it is suggested that these
consolidated condensed financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's latest Annual Report on Form 10-K.
The preparation of consolidated condensed financial statements
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 financial
statements and revenues and expenses during the reporting period.
Management's estimates and assumptions are reflective of, among
other things, prevailing market conditions, expected market
conditions based on published economic forecasts, current operating
strategies and the availability of capital which are all subject to
change. Changes to the aforementioned or other conditions could in
turn cause changes to such estimates and assumptions and, as a
result, actual results could differ from the original estimates.
In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all adjustments (all of
which were normal and recurring adjustments) necessary to present
fairly the Company's financial position as of June 30, 1996 and
December 31, 1995 and its results of operations for the three and
six month periods ended June 30, 1996 and 1995 and cash flows for
the six month periods ended June 30, 1996 and 1995.
Because of the seasonal nature of the Company's business, the
results of operations for the three and six month periods ended
June 30, 1996 and 1995 are not necessarily indicative of the
results for the full year.
<PAGE> 8
(2) INVENTORIES
The components of single-family housing inventories are as follows:
June 30, December 31,
1996 1995
---------- ------------
Housing completed and under construction $276,663 $238,508
Models 65,433 63,475
Finished lots 130,472 129,260
Land under development 65,507 50,714
Land held for development or sale 150,991 150,078
-------- --------
$689,066 $632,035
======== ========
(3) REVOLVING CREDIT FACILITIES, SENIOR AND CONVERTIBLE SUBORDINATED DEBT
AND NOTES PAYABLE
Housing -
Revolving credit facility, senior and convertible subordinated debt
and notes payable consist of the following:
June 30, December 31,
1996 1995
Revolving credit facility $ 8,000 $ 24,000
--------- -----------
7.95% Senior notes due 2001 75,000 -
9.75% Senior notes due 2003 200,000 200,000
4.875% Convertible subordinated
debentures due 2005 80,000 80,000
Notes and mortgage notes payable 12,016 20,599
--------- -----------
367,016 300,599
--------- -----------
$ 375,016 $ 324,599
========= ===========
The Company has a three-year unsecured revolving credit facility (the
"Credit Facility") with a group of banks. The Credit Facility provides
up to a maximum of $130,000 of which up to $20,000 may be used for
letter of credit obligations, subject to a borrowing base limitation.
The amount available for borrowing under the Credit Facility is based
on housing inventories, finished lots and closing proceeds receivable
less the outstanding senior debt, including amounts outstanding under
the Credit Facility; as the amount invested in these categories
changes, the amount of available borrowings will increase or decrease.
At June 30, 1996, $79,782 of the Credit Facility was available for
<PAGE> 9
borrowing. Borrowings bear interest at a premium over the Eurodollar
rate or a bank corporate base rate announced by the agent bank. The
Credit Facility expires on September 29, 1998, but may be extended
annually for successive one-year periods with the consent of the banks
and contains numerous real estate and financial covenants, including
restrictions on incurring additional debt, creation of liens and the
levels of land and housing inventories maintained by the Company and a
prohibition on the payment of dividends, other than stock dividends.
On February 16, 1996, the Company completed the sale of $75,000
principal amount of its 7.95% senior notes ("Senior Notes") due March
1, 2001. Interest on the Senior Notes is payable on March 1 and
September 1 of each year, commencing on September 1, 1996. The
indenture relating to the Senior Notes contains certain covenants,
including a minimum tangible net worth requirement and a limitation on
the incurrence of additional debt.
Financial Services -
Financial Services revolving credit facility consists of an agreement
with a financial institution whereby the Company's mortgage banking
subsidiary, U.S. Home Mortgage Corporation ("Mortgage"), may borrow up
to $45,000 under a revolving line of credit (the "Mortgage Credit
Facility") secured by residential mortgage loans and mortgage notes
receivable. The Mortgage Credit Facility is not guaranteed by the
Company, matures on August 31, 1996 and bears interest at a premium
over the London Interbank Offered Rate. The Mortgage Credit Facility
has been in place since 1992 and has been renewed on various terms and
conditions on an annual basis and the Company expects it to be
extended or replaced by a credit facility similar to its present terms
and conditions. However, there can be no assurance that the Mortgage
Credit Facility will be extended or replaced.
<PAGE> 10
(4) HOUSING INTEREST
A summary of housing interest for the three and six month periods
ended June 30, 1996 and 1995 follows:
Three Month Period
-------------------
1996 1995
-------- --------
Capitalized at beginning of period $ 61,184 $ 56,749
Capitalized 8,388 7,958
Included in cost of sales (7,427) (6,709)
Included in other 20 (360)
-------- --------
Capitalized at end of period $ 62,165 $ 57,638
======== ========
Six Month Period
--------------------
1996 1995
-------- --------
Capitalized at beginning of period $ 59,898 $ 56,082
Capitalized 16,327 15,797
Included in cost of sales (14,056) (13,731)
Included in other (4) (510)
-------- --------
Capitalized at end of period $ 62,165 $ 57,638
======== ========
(5) INCOME PER SHARE
The following weighted average number of common and common equivalent
shares were used to compute income per share for the three and six
month periods ended June 30, 1996 and 1995:
Three Month Period Six Month Period
----------------------- ------------------------
1996 1995 1996 1995
---------- --------- ---------- ----------
Primary 12,009,926 11,616,415 12,067,432 11,603,862
Fully diluted 14,263,447 14,129,263 14,320,953 14,122,072
The weighted average number of common and common equivalent shares
outstanding for primary income per share includes the dilutive effect
of the convertible redeemable preferred stock and Class B warrants and
the assumed exercise of stock options. Fully diluted income per share
includes the assumed conversion of the convertible subordinated
debentures.
<PAGE> 11
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have performed a
review of the consolidated condensed balance sheet as of June 30, 1996
and the related consolidated condensed statements of operations for the
three and six month periods ended June 30, 1996 and 1995 and cash flows
for the six month periods ended June 30, 1996 and 1995 included in this
report. Such review was made in accordance with standards established
by the American Institute of Certified Public Accountants.
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO U.S. HOME CORPORATION:
We have reviewed the accompanying consolidated condensed balance sheet of
U.S. Home Corporation (a Delaware corporation) and subsidiaries as of June
30, 1996, and the related consolidated condensed statements of operations
for the three and six month periods ended June 30, 1996 and 1995 and cash
flows for the six month periods ended June 30, 1996 and 1995. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of U.S. Home Corporation and
subsidiaries as of December 31, 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein), and in our report dated February 1,
1996, we expressed an unqualified opinion on those statements. In our
opinion, the information set forth in the accompanying consolidated
condensed balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which
it has been derived.
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
July 23, 1996
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
Housing
-------
The following table sets forth certain financial information for the
periods indicated (dollars in thousands, except average sales price):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- -------
Revenues -
Single-family homes ....... $285,833 $251,406 $550,558 $507,779
Land and other ............ 2,595 4,158 5,777 7,912
-------- -------- -------- --------
Total ................... $288,428 $255,564 $556,335 $515,691
======== ======== ======== ========
Single-family homes -
Gross margin amount ....... $ 45,279 $ 39,699 $ 87,771 $ 80,945
Gross margin percentage ... 15.8% 15.8% 15.9% 15.9%
Units delivered ........... 1,722 1,599 3,365 3,248
Average sales price ....... $166,000 $157,200 $163,600 $156,300
New orders taken .......... 1,779 1,868 4,478 4,145
Backlog at end of period .. 3,844 3,448
Selling, general and
administrative expenses as
a percentage of housing
revenues .................. 10.8% 11.1% 10.9% 11.1%
Interest expense -
Paid and accrued .......... $ 8,388 $ 7,958 $ 16,327 $ 15,797
Capitalized ............... $ 8,388 $ 7,958 $ 16,327 $ 15,797
Percent capitalized ....... 100.0% 100.0% 100.0% 100.0%
Capitalized interest included
in cost of products sold .. $ 7,427 $ 6,709 $ 14,056 $ 13,731
Revenues -
Revenues from sales of single-family homes for the three and six month
periods ended June 30, 1996 increased 14% and 8% compared to the three and
six month periods ended June 30, 1995. The increase resulted from 8% and 4%
increases in the number of housing units delivered and 6% and 5% increases
in the average sales price. The increase in the average sales prices in
1996 was primarily due to price increases.
<PAGE> 14
New orders taken for the three month period ended June 30, 1996 decreased
5% compared to the same period in 1995, while new orders taken for the six
month period ended June 30, 1996 increased 8% compared to the same period
in 1995. The Company believes the decline in new orders in the second
quarter of 1996 was primarily due to the increase in mortgage interest
rates which began during the first quarter of 1996. Because of the current
interest rate environment and the uncertainty with respect to future
interest rates, the comparative performance of new orders taken for the
remainder of 1996 may be less than the same period in 1995. If the decline
in new orders continues, the backlog level at December 31, 1996 could be
less than the backlog level at December 31, 1995. If the decline in new
orders continues in 1997, deliveries in 1997 could be lower than deliveries
in 1996. See Part II, "Item 5 - Other Information" on page 16 for a table
of unit activity by state for the three and six month periods ended June
30, 1996 and 1995.
Financial Services
------------------
Revenues -
Revenues for the financial services segment for the periods indicated were
as follows (dollars in thousands):
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- ---------------
1996 1995 1996 1995
------- ------- ------- ------
U.S. Home Mortgage Corporation and
Subsidiary $ 3,993 $ 2,882 $ 7,827 5,154
Other financial services operations 815 832 1,836 1,635
------- ------- ------- ------
$ 4,808 $ 3,714 $ 9,663 $6,789
======= ======= ======= ======
The increases in U.S. Home Mortgage Corporation and subsidiary's
("Mortgage") revenues for the three and six month periods ended June 30,
1996 when compared to the three and six month periods ended June 30, 1995
were primarily due to an increase in mortgage loan originations and income
from the sale of mortgage loans and servicing rights.
Financial Condition and Liquidity
Housing
-------
The Company's most significant needs for capital resources are land and
finished 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 borrowings under its financing
facilities.
<PAGE> 15
Access to quality land and lot locations is an integral part of the
Company's success. Typically, in order to secure the rights to quality
locations and provide sufficient lead time for development, the Company
must acquire land rights well in advance of when orders for housing units
are expected to occur. The Company attempts to minimize its exposure to the
cyclical nature of the housing market and its use of working capital by
employing rolling lot options, which enable the Company to initially pay a
small portion of the total lot cost and then purchase the lots on a
scheduled basis. The increase in land inventories in 1996 from 1995 was
primarily the result of increased activities, including increase in the
Company's retirement and active-adult communities.
In February 1996, the Company sold $75 million principal amount of its
7.95% senior notes due 2001. The net proceeds thereof were used to repay
the outstanding balance under the Credit Facility and for working capital
and general corporate purposes. See Note 3 of Notes to Consolidated
Condensed Financial Statements.
The Company has financed, and expects to continue to finance, its working
capital needs from operations and borrowings, including those made under
the Company's unsecured revolving credit facility ("Credit Facility"). The
Credit Facility (and previous credit facilities) have enabled the Company
to meet peak operating needs. See Note 3 of Notes to Consolidated Condensed
Financial Statements.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the six month periods ended June
30, 1996 and 1995 is summarized below (dollars in thousands):
1996 1995
-------- --------
Net cash provided (used) by:
Operating activities $(39,655) $(32,514)
Investing activities (1,956) (1,473)
Financing activities 48,823 33,142
Net increase (decrease) in cash $ 7,212 $ (845)
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 for 1996 used more cash than in
1995 primarily due to an increase in housing proceeds receivable and
housing construction and land asset activities offset in part by increased
profitability and the timing of payments related to these activities.
Cash flow from housing financing activities for 1996 provided cash
reflecting the sale of the Company's 7.95% senior notes, partially offset
by the repayment of the outstanding amount under the Credit Facility, while
1995 provided cash reflecting primarily net borrowings under the Company's
previous revolving credit facility.
The Company's federal income tax returns for the years ended
December 31, 1993 and 1992 are currently being examined by the Internal
Revenue Service.
<PAGE> 16
The Company believes that cash flow from operations and amounts available
under the Credit Facility will be sufficient to meet its working capital
obligations and other needs. However, should the Company require capital in
excess of that which is currently available there can be no assurance that
it will be available.
Financial Services
------------------
Mortgage's activities represent a substantial portion of the financial
services segment's activities. As loan originations by Mortgage are
primarily from housing units delivered 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.
Financial services operating activities are affected primarily by
Mortgage's loan originations which result in the sale of mortgage loans and
related servicing rights to third party investors. Cash flows from
financial services operating activities are also affected by the timing of
the sales of loans and servicing rights which generally are sold to
investors within 30 days after homes are delivered. In this regard, cash
flows from financial services operating activities for 1996 used less cash
compared to 1995 primarily because the increase in residential mortgage
loan receivables in 1996 was less than the increase in residential mortgage
loan receivables in 1995.
The Company finances its financial services operations primarily from
internally generated funds, such as from the origination and sale of
residential mortgage loans and related servicing rights, and short-term
debt. As more fully discussed in Note 3 of Notes to Consolidated Condensed
Financial Statements, the short-term debt consists of a $45 million secured
revolving line of credit (the "Mortgage Credit Facility") which matures on
August 31, 1996. 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.
The Company has no obligation to provide funding to its financial services
operations, nor does it guarantee any of its financial services
subsidiaries' debt. The Company believes that the internally generated
funds and the Mortgage Credit Facility will be sufficient to provide for
Mortgage's working capital needs.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On June 21, 1993, the Company and 46 of its affiliates (the "USH
Debtors") emerged from Chapter 11 pursuant to their First Amended
Consolidated Plan of Reorganization and seven other affiliates of
the Company (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. On June 5, 1996, the United States Bankruptcy Court
for the Southern District of New York entered orders which closed
the Chapter 11 cases of all of the USH Debtors (other than the
Company) and the Liquidating Debtors.
<PAGE> 17
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held on April
24, 1996. The following persons were re-elected to the Company's
Board of Directors to hold office until the annual meeting of
stockholders in 1997 and until their respective successors are duly
elected and qualified:
Director In Favor Withheld
---------------------- ------------ -----------
Glen Adams 8,744,996 54,169
Steven G. Gerard 8,745,876 53,289
Kenneth J. Hanau, Jr. 8,744,952 54,213
Isaac Heimbinder 8,745,692 53,473
Malcolm T. Hopkins 8,744,584 54,581
Jack L. McDonald 8,744,478 54,687
Charles A. McKee 8,743,209 55,956
George A. Poole, Jr. 8,745,632 53,533
Herve Repault 8,745,787 53,378
James W. Sight 8,744,975 54,190
Robert J. Strudler 8,745,118 54,047
Additional items voted upon by the Company's stockholders at the
meeting were:
(a) the Company's 1996 Employees' Stock Option Plan; and
(b) the ratification of the appointment of Arthur Andersen LLP,
independent public accountants, to examine the Company's
financial statements for 1996.
The votes of the Company's stockholders on these items were as
follows:
Broker
Item In Favor Opposed Abstained Non-Vote
----- --------- -------- --------- --------
(a) 8,268,632 463,845 25,438 42,250
(b) 8,755,674 33,325 10,166 -
<PAGE> 18
Item 5. Other Information
Additional Operating Data -
The following table provides information (expressed in number of
housing units) with respect to new orders taken, deliveries to
purchasers of single-family homes and backlog by state for the
three and six month periods ended June 30, 1996 and 1995:
States New Orders Deliveries
------ ---------- ----------
1996 1995 1996 1995
---- ---- ---- ----
Three Month Period -
Arizona 224 257 243 207
California 157 147 119 131
Colorado 207 273 294 286
Florida 481 541 493 535
Indiana/Ohio 48 49 28 9
Maryland/Virginia 129 114 80 82
Minnesota 88 133 81 67
Nevada 103 111 109 64
New Jersey 100 69 111 43
Texas 242 174 164 175
----- ----- ----- -----
1,779 1,868 1,722 1,599
===== ===== ===== =====
States New Orders Deliveries Backlog
------ ---------- ---------- -------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
Six Month Period -
Arizona 494 543 516 394 363 412
California 317 326 231 232 197 180
Colorado 817 698 556 541 723 547
Florida 1,328 1,326 1,062 1,205 1,252 1,267
Indiana/Ohio 125 64 60 16 127 58
Maryland/Virginia 237 225 153 154 197 153
Minnesota 191 203 145 127 165 163
Nevada 238 188 187 128 170 150
New Jersey 271 139 171 122 283 186
Texas 460 433 284 329 367 332
----- ----- ----- ----- ----- -----
4,478 4,145 3,365 3,248 3,844 3,448
===== ===== ===== ===== ===== =====
<PAGE> 19
Cautionary Disclosure Regarding Forward-Looking Statements -
The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995
and is including this disclosure in order to do so.
Certain statements in the Company's press releases, oral
communications and filings with the Securities and Exchange
Commission that are not historical facts are, or may be considered
to be, forward-looking statements. Given the risks, uncertainties
and contingencies of the Company's business, the actual results
may differ materially from those expressed or implied by such
forward-looking statements. Further, certain forward-looking
statements are based on assumptions concerning future events which
may not prove to be accurate.
Forward-looking statements by the Company regarding results of
operations and, ultimately, financial condition, are subject to
numerous risks and assumptions, including the following:
General economic and business conditions, the level and
direction of interest rates and the level of consumer
confidence have significant impact on the willingness and
ability of purchasers to enter into contracts for homes and
to consummate purchases of such homes under contract
(backlog), as well as on the performance of Mortgage, the
Company's principal subsidiary.
The development of many of the Company's communities,
particularly its retirement and active adult communities,
result from a lengthy, complex series of events involving
land purchase, regulatory compliance, capital availability,
marketing and sales, any of which can materially affect the
financial results for a community.
The Company is in a highly competitive and fragmented
industry, which places constant pressure on price (including
the ability of the Company to respond to increases in prices
from its suppliers), quality and marketing and particularly
challenges the Company upon any entry into new geographic
markets.
The Company faces numerous regulatory hurdles in its
development efforts, such as laws and regulations regarding
zoning, environmental protection, building design and
construction, density and rate of development.
The Company's access to capital sufficient to fund its
development activities is affected by the Company's
financial leverage and by the willingness of the capital
markets and banks to absorb equity or debt of the Company.
The Company may encounter other contingencies, including labor
shortages, work stoppages, product liability, litigation,
natural risks such as floods or hurricanes and other factors
over which the Company has little or no control.
<PAGE> 20
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 11 - Computation of Income Per Common Share
Exhibit 15 - Letter with respect to unaudited interim financial
information
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company during
April, May or June 1996.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. HOME CORPORATION
Date: August 8, 1996 /s/ Isaac Heimbinder
----------------------------
Isaac Heimbinder
President, Co-Chief Executive
Officer and Chief Operating
Officer
Date: August 8, 1996 /s/ Chester P. Sadowski
----------------------------
Chester P. Sadowski
Vice President, Controller
and Chief Accounting Officer
<PAGE> 22
INDEX OF EXHIBITS
Sequential
Exhibit Numbered
Number Page
11 Computation of Income Per Common Share 23
15 Letter with respect to unaudited interim
financial information 25
27 Financial Data Schedule 26
<PAGE> 23
EXHIBIT 11
(Unaudited)
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
COMPUTATION OF INCOME PER COMMON SHARE
--------------------------------------
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1996 1995 1996 1995
----------- ----------- ------------ -----------
Income Per Common And
Common Equivalent
Share -
Net income $ 10,050 $ 7,814 $ 19,369 $ 15,954
=========== =========== =========== ===========
Weighted average common
shares outstanding 11,588,063 11,595,298 11,582,034 11,588,003
Effect of assumed
exercise of
dilutive stock
options and
warrants 421,863 21,117 485,398 15,859
---------- ----------- ----------- -----------
Total common and common
equivalent shares 12,009,926 11,616,415 12,067,432 11,603,862
=========== =========== =========== ===========
Income per common
and common
equivalent share $ .84 $ .67 $ 1.61 $ 1.37
=========== =========== =========== ===========
<PAGE> 24
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1996 1995 1996 1995
----------- ----------- ------------ -----------
Income Per Common Share,
Assuming Full Dilution -
Net income $ 10,050 $ 7,814 $ 19,369 $ 15,954
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income tax effect 614 480 1,227 961
----------- ----------- ----------- -----------
Income per common share,
assuming full dilution $ 10,664 $ 8,294 $ 20,596 $ 16,915
=========== =========== =========== ===========
Total common and common
equivalent shares 12,009,926 11,616,415 12,067,432 11,603,862
Assumed additional
common shares from
exercise of dilutive
stock options and
warrants resulting
from use of market
price of common
stock at end of period - 259,327 - 264,689
Assumed conversion of
4.875% convertible
subordinated debentures
at $35.50 per share at
date of issuance 2,253,521 2,253,521 2,253,521 2,253,521
----------- ----------- ----------- -----------
Total common shares,
assuming full
dilution 14,263,447 14,129,263 14,320,953 14,122,072
=========== =========== =========== ===========
Income per common
share, assuming
full dilution $ .75 $ .59 $ 1.44 $ 1.20
=========== =========== =========== ===========
Note: See Note 5 of Notes to Consolidated Condensed Financial Statements.
<PAGE> 25
Exhibit 15
To U.S. HOME CORPORATION:
We are aware that U.S. Home Corporation has incorporated by reference in
its Registration Statements No. 33-64712, 33-52993, 33-00583 and 33-02775
its Form 10-Q for the quarter ended June 30, 1996, which includes our
report dated July 23, 1996 covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the Securities
Act of 1933, that report is not considered a part of the registration
statement prepared or certified by our firm within the meaning of Sections
7 and 11 of the Act.
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
August 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From
The Consolidated Condensed Financial Statements As Of June 30, 1996
And For The Six Months Then Ended And Is Qualified In Its Entirety By
Reference To Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,773
<SECURITIES> 0
<RECEIVABLES> 103,020
<ALLOWANCES> 0
<INVENTORY> 689,066
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 939,662
<CURRENT-LIABILITIES> 0
<BONDS> 404,303
0
3,072
<COMMON> 114
<OTHER-SE> 345,536
<TOTAL-LIABILITY-AND-EQUITY> 939,662
<SALES> 0
<TOTAL-REVENUES> 565,998
<CGS> 467,935
<TOTAL-COSTS> 534,671
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 825
<INCOME-PRETAX> 30,502
<INCOME-TAX> 11,133
<INCOME-CONTINUING> 19,369
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,369
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.44
</TABLE>
