<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 March 31, 2000
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.)
10707 Clay Road, Houston, Texas 77041
(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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 2000
Common stock, $.01 par value 13,520,028 shares
<PAGE> 2
<TABLE>
<CAPTION>
U.S. HOME CORPORATION
INDEX
Page
Number
------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
March 31, 2000 and December 31, 1999 3
Consolidated Condensed Statements of
Operations--Three Months Ended
March 31, 2000 and 1999 5
Consolidated condensed Statements of
Cash Flow--Three Months Ended
March 31, 2000 and 1999 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 16
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
ASSETS
March 31, December 31,
2000 1999
---------- -----------
(Unaudited)
HOUSING:
<S> <C> <C>
Cash (including restricted funds) ......... $ 7,747 $ 6,170
Receivables, net .......................... 59,464 30,329
Single-Family Housing Inventories ......... 1,275,834 1,245,375
Option Deposits on Real Estate ............ 114,605 103,213
Other Assets .............................. 82,076 79,901
---------- ----------
1,539,726 1,464,988
---------- ----------
FINANCIAL SERVICES:
Cash (including restricted funds) ......... 7,365 6,596
Residential Mortgage Loans ................ 86,507 78,675
Other Assets .............................. 19,769 22,732
---------- ----------
113,641 108,003
---------- ----------
CORPORATE:
Cash and Other Assets ...................... 35,100 29,649
---------- ----------
$1,688,467 $1,602,640
========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets
<PAGE> 4
<TABLE>
<CAPTION>
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
CORPORATE AND HOUSING:
<S> <C> <C>
Accounts Payable ........................... $ 155,537 $ 160,329
Accrued Expenses and Other Current
Liabilities 127,808 117,411
Revolving Credit Facility .................. 158,000 97,000
Long-Term Debt ............................. 550,297 553,089
----------- -----------
991,642 927,829
----------- -----------
FINANCIAL SERVICES:
Accrued Expenses and Other Current
Liabilities 12,921 12,677
Revolving Credit Facilities ................ 87,185 83,485
----------- -----------
100,106 96,162
----------- -----------
1,091,748 1,023,991
----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, authorized
50,000,000 shares, outstanding
13,214,260 shares at March 31, 2000
and 13,289,088 shares at December 31, 1999 137 137
Capital In Excess of Par Value ............. 403,838 403,467
Retained Earnings .......................... 210,002 190,456
Unearned Compensation on Restricted Stock .. (3,640) (3,643)
----------- -----------
610,337 590,417
Less Treasury Stock, at cost, 462,370 shares
at March 31, 2000 and 387,542 shares at
December 31, 1999 ........................ (13,618) (11,768)
----------- -----------
Total Stockholders' Equity ............... 596,719 578,649
----------- -----------
$ 1,688,467 $ 1,602,640
=========== ===========
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<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
March 31,
-------------------
2000 1999
-------- --------
HOUSING:
<S> <C> <C>
Operating Revenues ............................. $467,108 $392,337
Operating Costs and Expenses -
Cost of products sold ........................ 377,583 320,161
Selling, general and administrative .......... 45,109 38,153
Interest ..................................... 11,216 10,504
-------- --------
433,908 368,818
-------- --------
Housing Operating Income ....................... 33,200 23,519
-------- --------
FINANCIAL SERVICES:
Operating Revenues ............................. 10,083 8,311
General, Administrative and Other Expenses ..... 5,797 4,964
-------- --------
Financial Services Operating Income ............ 4,286 3,347
-------- --------
CORPORATE GENERAL AND ADMINISTRATIVE ............. 4,285 3,604
LENNAR MERGER EXPENSES ........................... 1,675 --
-------- --------
INCOME BEFORE INCOME TAXES ....................... 31,526 23,262
PROVISION FOR INCOME TAXES ....................... 11,980 8,723
-------- --------
NET INCOME ....................................... $ 19,546 $ 14,539
======== ========
Basic Earnings Per Share ......................... $ 1.48 $ 1.09
Diluted Earnings Per Share ....................... $ 1.45 $ 1.06
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
<TABLE>
<CAPTION>
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three-months Ended
March 31,
-------------------------
2000 1999
---------- -----------
<S> <C> <C>
Net Cash Used in Operating Activities: $ (51,224) $ (46,281)
---------- ----------
Net Cash Flows Used in Investing Activities:
Decrease (increase) in restricted cash (1,250) 1,456
Principal collections on investments in
mortgage loans 382 98
Purchase of property, plant and equipment,
net of disposals (3,181) (4,293)
Other - (117)
---------- ----------
Net cash used in investing activities (4,049) (2,856)
---------- ----------
Net Cash Flows Provided by Financing Activities:
Proceeds from revolving credit facilities,
net of repayments 64,700 (62,599)
Net proceeds from sale of senior subordinated
notes - 122,113
Repayment of notes and mortgage notes payable (3,368) (4,137)
Repurchase of common stock (1,835) (7,015)
---------- -----------
Net cash provided by financing activities 59,497 48,362
---------- -----------
Net Increase (Decrease) in Cash 4,224 (775)
Cash At Beginning of Period 6,099 7,285
---------- -----------
Cash At End of Period $ 10,323 $ 6,510
========== ===========
Supplemental Disclosure:
Interest paid, before amount capitalized -
Housing $ 27,544 $ 20,418
Financial Services 452 243
---------- -----------
$ 27,996 $ 20,661
========== ===========
Income taxes paid $ 1,903 $ 733
========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 2000
(Dollars in Thousands)
(Unaudited)
(1) ACQUISITION BY LENNAR CORPORATION
In February 2000, U.S. Home Corporation ("U.S. Home" or the "Company")
and Lennar Corporation ("Lennar") entered into a definitive agreement
for Lennar to acquire the Company through a merger. At meetings held on
April 28, 2000, the stockholders of the Company and Lennar approved the
merger. Per the terms of the merger agreement as amended, U.S. Home
completed the acquisition by Lennar on May 2, 2000 and the Company
became a wholly-owned subsidiary of Lennar.
Pursuant to a tender offer, Lennar completed the purchase for cash of
substantially all of the Company's outstanding senior and senior
subordinated indebtedness on May 3, 2000. Also Lennar repaid the
balance outstanding under the Company's Credit Facility.
(2) BASIS OF PRESENTATION AND SEGMENT INFORMATION
Basis of Presentation -
The accompanying consolidated condensed balance sheet as of December
31, 1999, 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.
<PAGE> 8
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 March 31, 2000 and December 31, 1999 and its
results of operations and cash flows for the three-month periods ended
March 31, 2000 and 1999.
Because of the seasonal nature of the Company's business, the results
of operations for the three-month periods ended March 31, 2000 and 1999
are not necessarily indicative of the results for the full year.
Segment Information -
The Company's financial reporting segments consist of home building,
financial services and corporate. The Company's home building
operations comprise the most substantial part of its business, with
approximately 98% of consolidated revenues in the three-month periods
ended March 31, 2000 and 1999 contributed by the home building
operations. The Company is one of the largest single-family
homebuilders in the United States based on homes delivered. The Company
currently builds and sells homes in more than 240 new home communities
in 33 market areas in 13 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 buyers. The Company's financial
services operations provide mortgage-banking services to the home
building operations' 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. Corporate
primarily includes the operations of the Company's corporate office
whose primary purpose is to provide financing, cash management, risk
management, capital allocations, management reporting and general
administration of the home building and financial services segments.
Assets, operating revenues and operating income of the Company's
reportable segments are included in the consolidated condensed balance
sheets and consolidated condensed statements of operations.
Expenditures for long-lived assets and depreciation and amortization
expenses were insignificant for the three-month periods ended March 31,
2000 and 1999.
<PAGE> 9
(3) INVENTORIES
The components of single-family housing inventories are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
<S> <C> <C>
Housing completed and under construction $ 506,346 $ 463,563
Models ................................. 103,957 102,512
Finished lots .......................... 205,272 209,827
Land under development ................. 323,309 328,683
Land held for development or sale ...... 136,950 140,790
---------- ----------
$1,275,834 $1,245,375
========== ==========
</TABLE>
(4) REVOLVING CREDIT FACILITIES AND LONG-TERM DEBT
Housing -
The housing revolving credit facility and long-term debt consist of the
following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
Revolving credit facility ............... $158,000 $ 97,000
-------- --------
7.95% Senior notes due 2001 ............. 75,000 75,000
8.25% Senior notes due 2004 ............. 100,000 100,000
7.75% Senior notes due 2005 ............. 99,820 99,811
8.88% Senior subordinated notes due 2007 125,000 125,000
8.875% Senior subordinated notes due 2009 124,101 124,076
Notes and mortgage notes payable ........ 26,376 29,202
-------- --------
550,297 553,089
-------- --------
$708,297 $650,089
======== ========
</TABLE>
The Company has an unsecured revolving credit agreement (the "Credit
Facility") with a group of banks. The Credit Facility was amended and
restated in February 2000 to provide for borrowings of up to $360,000,
of which up to $35,000 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,
land, finished lots and closing proceeds receivables less outstanding
<PAGE> 10
senior debt borrowings (as defined), 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 March 31, 2000, $188,389 of the Credit Facility commitment was
available for borrowing. Borrowings bear interest at a premium over the
London Interbank Offered Rate ("LIBOR") or the base rate announced by
the agent bank. The Credit Facility, as amended, expires on May 31,
2002, 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 the incurrence of
additional debt, creation of liens and the levels of land and housing
inventories maintained by the Company and limits the payment of cash
dividends in any fiscal quarter to fifty percent of the Company's
consolidated net income (as defined in the credit agreement) for the
preceding fiscal quarter.
Housing notes and mortgage notes payable are primarily for the
acquisition and development of land, with interest rates ranging from
8.0% to 10.0%. Assets pledged as collateral under these agreements
totaled approximately $47,288 at March 31, 2000.
Financial Services -
The financial services credit facilities consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
<S> <C> <C>
Mortgage Credit Facility $ 77,485 $ 76,185
Subsidiary Credit Agreement 9,700 7,300
---------- ------------
$ 87,185 $ 83,485
========== ============
</TABLE>
The Company's mortgage banking subsidiary, U.S. Home Mortgage
Corporation ("Mortgage"), may borrow up to $80,000 under a revolving
line of credit (the "Mortgage Credit Facility"). The Mortgage Credit
Facility is secured by residential mortgage loans, is not guaranteed by
the Company, matures on September 30, 2001 and bears interest at a
premium over the LIBOR rate.
In 1999, a subsidiary of Mortgage (the "Subsidiary") entered into an
unsecured revolving credit agreement (the "Subsidiary Credit
Agreement") with two banks providing up to a maximum of $10,000 of
borrowings subject to a borrowing base. The Subsidiary was organized to
loan money to joint ventures in which the Company is a joint venture
partner. The Subsidiary Credit Agreement is guaranteed by the Company
and a joint venture partner, matures on May 31, 2001 and bears interest
at a premium over the base rate announced by the agent bank or a
premium over the LIBOR rate.
<PAGE> 11
(5) INTEREST
A summary of housing interest for the three-month periods ended March
31, 2000 and 1999 follows:
<TABLE>
<CAPTION>
2000 1999
---------- ---------
<S> <C> <C>
Capitalized at beginning of period $ 84,878 $ 68,750
Capitalized 16,537 12,985
Previously capitalized interest included in
interest expense (11,216) (10,504)
Other (12) 9
--------- ---------
Capitalized at end of period $ 90,187 $ 71,240
========= =========
</TABLE>
Financial services interest expense for the three-month periods ended
March 31, 2000 and 1999, was $518 and $200, respectively, and is
included in general, administrative and other expenses in the
accompanying consolidated condensed statements of operations.
(6) EARNINGS PER SHARE
Basic earnings per share includes the weighted average number of
common shares outstanding for the periods. Diluted earnings per share
includes the assumed exercise of stock options. The following table
summarizes the basic earnings and diluted earnings per share
computations for the three-month periods ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
------------- -----------
Basic earnings per share:
<S> <C> <C>
Net income $ 19,546 $ 14,539
Weighted average number of common shares 13,218,735 13,345,945
Earnings per share $ 1.48 $ 1.09
=========== ===========
Diluted earnings per share:
Net income, assuming dilution $ 19,546 $ 14,539
Weighted average number of common shares 13,218,735 13,345,945
Incremental shares from assumed conversions
Contingent common shares 3,287 111,999
Stock options 237,525 315,693
----------- -----------
Adjusted weighted average number of
common shares 13,459,547 13,773,637
=========== ===========
Earnings per share $ 1.45 $ 1.06
=========== ===========
</TABLE>
<PAGE> 12
(7) TREASURY STOCK
As of March 31, 2000, the Company had remaining Board of Directors
authorization to repurchase up to 669,400 shares of outstanding common
stock, in the aggregate, from time to time in the open market and/or in
private transactions. During the three-month period ended March 31,
2000, the Company repurchased 71,000 shares of common stock for an
aggregate purchase price of $1,835. The cost of the repurchased shares
has been included in "Treasury Stock" in the accompanying consolidated
condensed balance sheets.
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):
<TABLE>
<CAPTION>
Three-Months Ended
March 31,
---------------------------------
2000 1999
---------- ----------
Revenues -
<S> <C> <C>
Single-family homes $ 457,605 $ 388,237
Land and other 9,503 4,100
---------- ----------
Total $ 467,108 $ 392,337
========== ==========
Single-family homes -
Gross margin amount $ 86,475 $ 70,342
Gross margin percentage 18.9% 18.1%
Units delivered 2,234 2,092
Average sales price $ 204,800 $ 185,600
New orders taken 3,272 2,962
Backlog at end of period:
Aggregate sales amount $1,222,132 $1,029,452
Units 5,381 5,175
Selling, general and
administrative expenses as a
percentage of housing revenues 9.7% 9.7%
Interest -
Paid or accrued $ 16,537 $ 12,985
Percentage capitalized 100.0% 100.0%
Previously capitalized
interest included in
interest expense $ 11,216 $ 10,504
Percentage of housing revenues 2.4% 2.7%
</TABLE>
<PAGE> 13
Revenues and Sales -
Revenues from sales of single-family homes for the three-month period ended
March 31, 2000 increased 17.9% compared to the three-month period ended March
31, 1999. The increase resulted primarily from a 6.8% increase in the number
of housing units delivered and a 10.3% increase in the average sales price. The
average sales price reflects price increases, product and geographical mix and
higher revenue contributions from options and upgrades sold through the
Company's design centers.
New orders taken for the three-month period ended March 31, 2000 increased 10.5%
compared to the same period in 1999. This increase in new orders taken reflects
the continued strong demand for new single-family homes which the Company
believes to be the result of several factors: an increase in the number of
communities open, continued strength in the economy as evidenced by strong
consumer confidence and high levels of employment, and an increase in family
wealth.
Gross Margins -
The single-family homes gross margin percentage for the three-month period ended
March 31, 2000 increased 80 basis points compared to the same period in 1999.
The increase was primarily due to product and geographic mix and price
increases.
Backlog -
The aggregate amount of sales backlog at March 31, 2000 increased 18.7% compared
to March 31, 1999. The increase in the value of the backlog reflects the
increase in the number of units under contract and the increase in the average
sales price. Substantially all of the Company's backlog units at March 31, 2000,
net of cancellations, are expected to result in revenues prior to March 31,
2001.
Selling, General and Administrative Expenses -
As a percentage of housing revenues, selling, general and administrative
expenses for the three-month period ended March 31, 2000 remained the same as
for the three-month period ended March 31, 1999. Actual selling, general and
administrative expenses for the three-month period ended March 31, 2000
increased $6,956 million when compared to the same period in 1999. This increase
was primarily due to increases in volume-related expenses ($2.5 million)
resulting from increased deliveries in 2000 when compared to 1999 and increased
compensation costs and marketing center expenses resulting from increased
activities.
<PAGE> 14
Interest -
Interest paid or accrued for the three-month period ended March 31, 2000
increased approximately 27.4% compared to the same period in 1999. The increase
in 2000 is primarily due to an increase in the average outstanding debt which
was primarily incurred in connection with the increases in single-family housing
inventories resulting from increased activities.
The Company capitalizes interest cost into housing inventories and charges the
previously capitalized interest to interest expense when the related inventories
are delivered. The amount of interest capitalized and previously capitalized
interest expensed in any period is a function of the amount of housing assets,
land sales and the number of housing units delivered, average outstanding debt
levels and average interest rates. Previously capitalized interest amounts
charged to interest expense in the three-month period ended March 31, 2000
increased 6.8% compared to the three-month period ended March 31, 1999. The
increase was attributable primarily to an increase in the number of housing
units delivered and an increase in the average interest expense per housing unit
delivered.
<PAGE> 15
Financial Services
Revenues -
Revenues for the financial services segment for the periods indicated were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Three-Months
Ended
March 31,
------------------------
2000 1999
-------- --------
<S> <C> <C>
U.S. Home Mortgage Corporation and
Subsidiary $ 8,785 $ 7,097
Other financial services operations 1,298 1,214
-------- --------
$ 10,083 $ 8,311
======== ========
</TABLE>
The increase in U.S. Home Mortgage Corporation's ("Mortgage") revenues for the
three-month period ended March 31, 2000 when compared to the three-month period
ended March 31, 1999 was primarily due to the increase in mortgage loan
originations and the increase in income from the sale of mortgage loans and
servicing rights.
Mortgage's "capture rate" for providing financing to buyers of homes delivered
by the Company remained substantially constant at 80% for the three-month
period ended March 31, 2000 compared to 83% for the same period in 1999.
Since a certain percentage of buyers typically elect to use other sources of
financing, the Company believes Mortgage's capture rate is near the maximum
capture rate.
Other
Corporate General and Administrative -
Corporate general and administrative includes the operations of the Company's
corporate office. As a percentage of total revenues, such expenses were .9% for
the three-month periods ended March 31, 2000 and 1999. Actual corporate general
and administrative expenses for the three-month period ended March 31, 2000
were $4.3 million, compared to $3.6 million for the three-month period ended
March 31, 1999.
Merger Expenses -
Merger expenses include investment banking, legal and other fees incurred in
conjunction with the Company's acquisition by Lennar.
<PAGE> 16
Financial Condition and Liquidity
Housing
The Company is significantly affected by the cyclical nature of the
homebuilding industry, which is sensitive to fluctuations in economic activity
and interest rates and the level of consumer confidence. Sale of new homes is
also affected by market conditions for rental properties and by the condition
of the resale market for used homes, including foreclosed homes. For example,
an oversupply of resale units depresses prices and reduces the margins
available on sales of new homes. The sale of new homes and profitability from
sales are heavily influenced by the level and expected direction of interest
rates. Increases in interest rates tend to have a depressing effect on the
market for new homes in view of increased monthly mortgage costs to potential
homebuyers.
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, including
the Company's principal unsecured revolving credit agreement (the "Credit
Facility").
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.
Primarily in its affordable and move-up home communities, 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. However, with the increase in the
number of retirement and active adult communities, the use of rolling lot
options as a percentage of the Company's total finished lot needs has and is
expected to continue to decrease since the majority of the finished lots for
these communities are developed on land owned by the Company. The retirement
and active adult communities are generally long-term projects and require
greater investments by the Company than are required for its affordable and
move-up home communities. These communities generally include more units than
the affordable and move-up communities and generally have more extensive
amenities, including golf courses and clubhouses, which require substantial
capital investment. The increases in land inventories in 2000 from 1999 were
primarily the result of increased activities, including an increase in the
Company's retirement and active adult community.
The Company has historically financed its working capital needs from operations
and borrowings. The Company expects to fund its future working capital needs
from its operations and from Lennar.
<PAGE> 17
Financial Services
Mortgage's activities represent a substantial portion of the financial services
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.
Financial services operating activities are affected primarily by the volume of
Mortgage's loan originations and the timing of the sale of mortgage loans and
related servicing rights to third party investors. Loans and servicing rights
are generally sold to investors within 30 days after homes are delivered. In
this regard, cash flow from financial services operating activities for 2000
provided more cash compared to 1999 primarily due to increased profitability
and the timing of payments related to Mortgage's origination activities.
The Company finances its financial services operations primarily from
short-term debt which is repaid with internally generated funds, such as from
the origination and sale of residential mortgage loans and related servicing
rights. As more fully discussed in Note 4 of Notes to Consolidated Condensed
Financial Statements, the short-term debt consists of an $80 million secured
revolving line of credit (the "Mortgage Credit Facility") which matures on
September 30, 2001. 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 does not guarantee any of its financial services subsidiaries'
debt, except with respect to an unsecured credit agreement of a subsidiary of
Mortgage. See Note 4 of Notes to Consolidated Condensed Financial Statements.
The Company believes that internally generated funds and the Mortgage Credit
Facility will be sufficient to provide for Mortgage's working capital needs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information included under Item 7A. Quantitative and Qualitative
Disclosures About Market Risks in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999 is incorporated herein by reference.
There have been no material changes in the Company's market risk during the
three-months ended March 31, 2000.
<PAGE> 18
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At a special meeting of stockholders of the Company, held on April 28,
2000, the stockholders approved the Plan and Agreement of Merger, as
amended. The votes of the Company's stockholders was as follows:
<TABLE>
<CAPTION>
Broker
In Favor Opposed Abstained Non-vote
---------- ------- --------- --------
<S> <C> <C> <C> <C>
9,280,151 19,666 11,440 -0-
</TABLE>
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-month periods
ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
States New Orders Deliveries Backlog
------------------- -------------- ------------- -----------
2000 1999 2000 1999 2000 1999
------ ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Arizona 433 365 264 293 600 665
California 299 240 162 244 420 417
Colorado 573 569 339 267 1,064 901
Florida 823 787 612 524 1,475 1,595
Maryland/Virginia 269 197 159 125 383 260
Minnesota 243 218 144 112 353 306
Nevada 73 64 48 69 111 102
New Jersey 172 103 137 116 324 125
Ohio 16 24 17 23 26 50
Texas 371 395 352 319 625 754
------ ----- ----- ----- ----- -----
3,272 2,962 2,234 2,092 5,381 5,175
Joint venture activity (1) 102 71 99 3 274 135
------ ----- ----- ----- ----- -----
3,374 3,033 2,333 2,095 5,655 5,310
====== ===== ===== ===== ===== =====
</TABLE>
(1) Includes communities owned by joint ventures in which the
Company has a 50% interest. The table below sets forth the new
orders taken, deliveries to customers and backlog of
single-family homes of these joint ventures for the three-month
periods ended March 31, 2000 and 1999:
<PAGE> 19
<TABLE>
<CAPTION>
2000 1999
---------------------------------- ------------------------------
Retirement Affordable Total Retirement Affordable Total
<S> <C> <C> <C> <C> <C> <C>
New Orders
Taken 36 66 102 20 51 71
Deliveries 13 86 99 - 3 3
Backlog 101 173 274 55 80 135
</TABLE>
Cautionary Disclosure Regarding Forward-Looking Statements -
Certain statements contained herein, in the Company's press releases,
oral communications and other filings with the Securities and Exchange
Commission that are not historical facts are, or may be considered to
be, forward looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Such matters involve risks
and uncertainties, including general economic conditions, fluctuations
in interest rates, the impact of competitive products and prices, the
supply of raw materials and prices, levels of consumer confidence and
other risks referred to under the caption "Item 7. Other Cautionary
Disclosure Regarding Forward-Looking Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and
the disclosure set forth under such caption is incorporated herein by
reference.
<PAGE> 20
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.01 - First Amendment to Second Amended and Restated
Warehousing Credit and Security Agreement, dated
as of March 23, 2000, by and between U.S. Home
Corporation and Residential Funding Corporation.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On February 28, 2000, under Item 5 of Form 8-K the Company filed a
Current Report on Form 8-K which included documents attached as
exhibits relating to the Plan and Agreement of Merger By and Among
the Company, Lennar and Len Acquisition Corporation, dated
February 16, 2000, a voting agreement by and among the Company and
certain stockholders of Lennar and an amendment to the rights
Agreement between the Company and First Chicago Trust Company of
New York.
On April 13, 2000, under Item 5 of Form 8-K, the Company filed a
Current Report on Form 8-K which included a document attached as an
exhibit relating to the Amendment to Merger Agreement dated March 17,
2000, amending a Plan dated as of February 16, 2000.
No other Current Reports on Form 8-K was filed by the Company during
January, February, March, or April 2000.
<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: May 11, 2000 /s/ Isaac Heimbinder
-------------------------------------
Isaac Heimbinder
President, Co-Chief Executive Officer
and Chief Operating Officer
Date: May 11, 2000 /s/ Chester P. Sadowski
-------------------------------------
Chester P. Sadowski
Senior Vice President-Controller and
Chief Accounting Officer
<PAGE> 22
INDEX OF EXHIBITS
Sequential
Exhibit Numbered
Number Page
- ------ -----------
10.01 First Amendment to Second Amended and Restated
Warehousing Credit and Security Agreement dated
as of March 23, 2000, by and between U.S. Home
Corporation and Residential Funding Corporation. 23
27 Financial Data Schedule 27
<PAGE> 23
EXHIBIT 10.1
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED WAREHOUSING CREDIT
AND SECURITY AGREEMENT (this "Amendment") is entered into as of this 9th day of
March 2000, 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 $80,000,000,
to finance the origination and acquisition of Mortgage Loans as evidenced by a
Promissory Note in the principal sum of $80,000,000, dated October 1, 1999 (the
"Note"), and by a Second Amended and Restated Warehousing Credit and Security
Agreement dated October 1, 1999, as the same may have been amended or
supplemented (the "Agreement");
WHEREAS, the Company has notified the Lender that the Parent has
entered into an agreement pursuant to which the Parent will cease to exist and
the Company will become a wholly owned, second tier subsidiary of Lennar
Corporation (the "Acquisition"); and
WHEREAS, without the prior written consent of the Lender, the
Acquisition would result in an Event of Default under Section 8.1(n) of the
Agreement; and
WHEREAS, the Company has requested that the Lender consent to the
Acquisition and waive any Event of Default that would otherwise occur under the
Agreement; and
WHEREAS, the Lender is willing to consent to the Acquisition and to
waive any Event of Default that would otherwise occur under the Agreement,
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. The effective date ("Effective Date") of this Amendment shall be
as of the effective date and time of the Acquisition.
3. Section 1.1 of the Agreement is amended by adding the following
definition in the appropriate alphabetical order:
"Construction Subsidiary" means any corporation, association
or other business entity engaged in the construction of improvements
on residential real property and all of the capital stock of which is,
directly or indirectly, owned by the Parent.
<PAGE> 24
4. Section 1.1 of the Agreement is amended to delete the following
definition in its entirety, replacing it with the following definition:
"Construction/Perm Mortgage Loan" means a First Mortgage Loan
in a principal amount not to exceed $600,000, made for financing the
purchase of real property and the construction of improvements on such
real property by a Construction Subsidiary, and which is converted to
a Permanent Mortgage Loan at the completion of the improvements.
"Parent" shall mean Lennar Corporation.
5. Section 2.2(c) of the Agreement is deleted in its entirety and the
following is substituted in lieu thereof:
2.2(c) Before funding, the Lender shall have a
reasonable time (1 Business Day under ordinary circumstances)
to examine such Advance Request and the Collateral Documents
to be delivered prior to such requested Advance, as set forth
in the applicable Exhibit hereto, and may reject such of them
as do not meet the requirements of this Agreement or of the
related Purchase Commitment. The Lender shall have no
obligation to make a Wet Settlement Advance directly to a
Construction Subsidiary against a Mortgage Loan unless the
Lender has received satisfactory evidence from the title
company closing the Mortgage Loan that such Mortgage Loan is
closed and funded.
6. Section 5.17(c) of the Agreement is deleted in its entirety and the
following is substituted in lieu thereof:
5.17(c) Prior to each Construction Advance, the
Company shall have received (1) a report of the stage of
completion of the improvements as set forth in the
construction accounting system of the Construction Subsidiary
confirming completion of the work for which the Construction
Advance is being requested and (2) a title insurance updated
endorsement for such Construction Advance if the title
insurance policy has a "pending disbursements clause"
requiring an endorsement to the title insurance policy to
insure each Construction Advance after the closing of the
Construction/Perm Mortgage Loan.
7. Pursuant to Section 9 of the Agreement, the Company must provide
Notice of consummation of the Acquisition to the Lender in a timely manner.
8. The Company must deliver to the Lender (a) an executed original of
this Amendment; (b) an executed Certificate of Secretary with corporate
resolutions; (c) the Notice required by Section 7 of this Amendment; and (d) a
$350 document production fee.
<PAGE> 25
9. 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.
10. Except as hereby expressly modified, the Agreement is otherwise
unchanged and remains in full force and effect, and the Company ratifies and
reaffirms all of its obligations thereunder.
11. 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
----------------------------
Thomas A. Napoli
Its: Vice President
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Jim Clapp
---------------------------
Jim Clapp
Its: Director
<PAGE> 26
STATE OF TEXAS)
) ss
COUNTY OF HARRIS)
On March 28, 2000, 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/ Donna Monroe
------------------------------
Donna Monroe
Notary Public
My Commission Expires: 3/26/03
STATE OF MARYLAND )
) ss
COUNTY OF MONTGOMERY)
On April 3, 2000, before me, a Notary Public, personally appeared
Jim Clapp , the Director 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/ Stephanie von dem Hagen
----------------------------
Stephanie von dem Hagen
Notary Public
(SEAL) My Commission Expires: 10/15/01
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The
consolidated Condensed Financial Statements As Of March 31,2000 And For
The Three-months Then Ended And Is Qualified In Its Entirety By Reference
To Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 19594
<SECURITIES> 0
<RECEIVABLES> 155653
<ALLOWANCES> 0
<INVENTORY> 1275834
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1688467
<CURRENT-LIABILITIES> 0
<BONDS> 505297
0
0
<COMMON> 137
<OTHER-SE> 596582
<TOTAL-LIABILITY-AND-EQUITY> 1688467
<SALES> 0
<TOTAL-REVENUES> 477191
<CGS> 377583
<TOTAL-COSTS> 432256
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11734
<INCOME-PRETAX> 33201
<INCOME-TAX> 12616
<INCOME-CONTINUING> 20585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19546
<EPS-BASIC> 1.48
<EPS-DILUTED> 1.45
</TABLE>
