<PAGE> 1
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: 000-23677
NEWMARK HOMES CORP.
(Exact name of Registrant as specified in its charter)
Nevada 76-0460831
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Soldiers Field Drive
Sugar Land, TX 77479
(Address of principal executive offices) (Zip code)
281-243-0100
(Registrant's telephone number including area code)
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 ____
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
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 ____ No ____
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Title Outstanding
----- -----------
Common Stock, par value $.01 11,500,000 shares as of May 1, 2000
<PAGE> 2
NEWMARK HOMES CORP.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. Financial Information....................................................... 3
ITEM 1. Financial Statements........................................................ 3
Condensed Consolidated Statements of Financial Position..................... 3
Condensed Consolidated Statements of Operations............................. 4
Condensed Consolidated Statements of Stockholders' Equity................... 5
Condensed Consolidated Statements of Cash Flows............................. 6
Notes to the Condensed Consolidated Financial Statements.................... 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 9
ITEM 3. Changes in Information About Market Risk.................................... 13
PART II. Other Information........................................................... 13
ITEM 1. Legal Proceedings........................................................... 13
ITEM 2. Changes in Securities....................................................... 14
ITEM 3. Defaults Upon Senior Securities............................................. 14
ITEM 4. Submission of Matters to a Vote of Security Holders......................... 14
ITEM 5. Other Information........................................................... 14
ITEM 6. Exhibits and Reports on Form 8-K............................................ 14
Reports on Form 8-K......................................................... 14
Signatures.................................................................. 15
Exhibit 27 - Financial Data Schedule........................................ 16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NEWMARK HOMES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
(unaudited)
<S> <C> <C>
Cash ..................................................................................... $ 6,869 $ 8,080
Receivables .............................................................................. 9,402 9,206
Inventory ................................................................................ 262,065 255,576
Investment in unconsolidated subsidiaries ................................................ 752 640
Other assets, net ........................................................................ 10,301 9,738
Goodwill, net of accumulated amortization of $7,056 and $6,608 in
2000 and 1999, respectively ......................................................... 45,001 45,652
-------- --------
Total assets ........................................................... $334,390 $328,892
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Construction loans payable ............................................................... $154,640 $149,380
Acquisition notes payable ................................................................ 11,055 14,473
Other payables to affiliates ............................................................. 3,173 1,745
Accounts payable and accrued liabilities ................................................. 31,951 36,639
Other liabilities ........................................................................ 18,629 17,037
-------- --------
Total liabilities ...................................................... 219,448 219,274
-------- --------
Stockholders' equity:
Common stock -- $.01 par value; 30,000,000 shares authorized,
11,500,000 shares issued and outstanding .................................... 115 115
Additional paid-in capital .......................................................... 106,855 106,855
Retained earnings ................................................................... 7,972 2,648
-------- --------
Total stockholders' equity ............................................. 114,942 109,618
-------- --------
Total liabilities and stockholders' equity ............................. $334,390 $328,892
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE> 4
NEWMARK HOMES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenues ................................................................... $ 136,426 $ 92,832
Cost of sales .............................................................. 113,209 78,339
------------ ------------
Gross profit ............................................................... 23,217 14,493
Equity in earnings from unconsolidated subsidiaries ........................ 122 123
Selling, general and administrative expenses ............................... (13,566) (10,324)
Depreciation and amortization .............................................. (1,048) (840)
------------ ------------
Operating income ...................................................... 8,725 3,452
Other income (expense):
Interest expense ...................................................... (744) (403)
Other income, net ..................................................... 348 114
------------ ------------
Income before income taxes ....................................... 8,329 3,163
Income taxes ............................................................... 3,005 1,168
------------ ------------
Net income ....................................................... $ 5,324 $ 1,995
============ ============
Earnings per common share:
Basic ................................................................. $ .46 $ .17
============ ============
Diluted ............................................................... $ .46 $ .17
============ ============
Weighted average number of shares of common
stock equivalents outstanding:
Basic ............................................................. 11,500,000 11,500,000
============ ============
Diluted ........................................................... 11,500,000 11,500,000
============ ============
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE> 5
NEWMARK HOMES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
----- -------- -------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1999....................... $ 115 $106,855 $ 2,648 $ 109,618
Net income....................................... - - 5,324 5,324
----- -------- -------- --------
Balance, March 31, 2000.......................... $ 115 $106,855 $ 7,972 $114,942
===== ======== ======== ========
Balance, December 31, 1998....................... $ 115 $ 73,768 $ 16,229 $ 90,112
Net income....................................... - - 1,995 1,995
----- -------- -------- --------
Balance, March 31, 1999.......................... $ 115 $ 73,768 $ 18,224 $ 92,107
===== ======== ======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE> 6
NEWMARK HOMES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................................... $ 5,324 $ 1,995
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization ..................................................... 1,048 840
Net (gain) on sale of property, premises and equipment ............................ (19) (24)
Equity in earnings from unconsolidated subsidiaries ............................... (122) (123)
Changes in operating assets and liabilities:
Inventory and land held for development, net .................................. (6,489) (25,259)
Receivables ................................................................... (196) (1,378)
Other assets .................................................................. (877) (1,093)
Payable to affiliates.......................................................... 1,428 (2,442)
Accounts payable and accrued liabilities ...................................... (4,687) (1,331)
Other liabilities ............................................................. 1,592 2,085
-------- --------
Net cash used in operating activities ......................................... (2,998) (26,730)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, premises and equipment ....................................... (396) (621)
Proceeds from sales of property, premises and equipment ............................ 61 111
Increase in goodwill ................................................................ 270 --
Investment in unconsolidated subsidiaries .......................................... (93) (50)
Distributions from unconsolidated subsidiaries ...................................... 103 228
-------- --------
Net cash used in investing activities ......................................... (55) (332)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances on construction loans payable ................................ 89,436 86,857
Principal payments on construction loans payable .................................... (84,176) (60,065)
Principal payments on acquisition notes payable ..................................... (3,418) (2,468)
-------- --------
Net cash provided by financing activities ..................................... 1,842 24,324
-------- --------
DECREASE IN CASH ....................................................................... (1,211) (2,738)
CASH, beginning of period .............................................................. 8,080 5,794
-------- --------
CASH, end of period .................................................................... $ 6,869 $ 3,056
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for:
Interest .......................................................................... $ 4,288 $ 3,572
======== ========
Income taxes ...................................................................... $ 1,540 $ 4,079
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
6
<PAGE> 7
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Newmark Homes Corp. and subsidiaries (the "Company") is an 80% owned subsidiary
of Technical Olympic USA, Inc. ("TOUSA") as of December 15, 1999. The Company
was formed in December 1994 to serve as a real estate holding company.
The Company's primary subsidiaries are as follows:
<TABLE>
<CAPTION>
SUBSIDIARY NATURE OF BUSINESS
---------- ------------------
<S> <C>
Newmark Home Corporation ("Newmark")........ Single-family residential homebuilding in Texas,
Tennessee and North Carolina - formed in 1983.
Westbrooke Communities, Inc.
("Westbrooke")......................... Single-family residential homebuilding and residential
lot developer in Florida - formed in 1976.
The Adler Companies, Inc. ("Adler")......... Single-family residential homebuilding in Florida -
formed in 1990.
Pacific United Development Corporation
("PUDC")............................... Residential lot development in Texas and Tennessee -
formed in 1993.
</TABLE>
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. The accounting and reporting policies of the Company conform
to generally accepted accounting principles and general practices within the
homebuilding industry. All significant intercompany balances and transactions
have been eliminated in the consolidated financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
INTERIM PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
by the Company and are unaudited. Certain information and footnote disclosures
normally included in financial statements presented in accordance with generally
accepted accounting principles have been omitted from the accompanying
statements. The Company's management believes the disclosures made are adequate
to make the information presented not misleading. However, the financial
statements included as part of this 10-Q filing should be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 1999 Annual Report on Form 10-K.
EARNINGS PER SHARE
Basic Earnings Per Share is computed by dividing earnings attributable to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted Earnings Per Share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. The following table reconciles the
computation of basic and diluted Earnings Per Share for the three months ended
March 31, 2000 and 1999.
7
<PAGE> 8
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
----------- -----------
Income available to common shareholders
(Numerator) .............................. $ 5,324,000 $ 1,995,000
Weighted average of shares outstanding
(Denominator) ............................ 11,500,000 11,500,000
Basic and diluted Earnings Per Share ..... $ .46 $ .17
Effect of dilutive Securities
1998 Tandem Stock Option Plan ....... -- --
----------- -----------
Diluted Earnings Per Share ............... $ .46 $ .17
=========== ===========
8
<PAGE> 9
NOTE 2. INVENTORY
Inventory balances as of March 31, 2000 and December 31, 1999 consist of the
following:
<TABLE>
<CAPTION>
CARRYING VALUE
NUMBER OF HOMES (IN THOUSANDS)
------------------------------ ---------------------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
2000 1999 2000 1999
----- ----- -------- --------
<S> <C> <C> <C> <C>
Completed .................................... 182 137 $ 38,178 $ 29,145
Under construction ........................... 979 1,038 143,414 142,975
Models ....................................... 83 80 18,744 19,763
Residential lots ............................. -- -- 61,729 63,693
----- ----- -------- --------
Total ......................... 1,244 1,255 $262,065 $255,576
===== ===== ======== ========
</TABLE>
NOTE 3. CAPITALIZED INTEREST
A summary of interest capitalized in inventory is as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
------ ------
Interest capitalized, beginning of period ........ $6,266 $5,516
Interest incurred ................................ 3,904 2,724
Less interest included in:
Cost of sales .............................. 2,553 1,698
Other income ............................... 744 403
------ ------
Interest capitalized, end of period .............. $6,873 $6,139
====== ======
NOTE 4. COMMITMENTS AND CONTINGENCIES
The Company is subject to certain pending or threatened litigation and other
claims. Management, after review and consultation with legal counsel, believes
the Company has meritorious defenses to these matters and that any potential
liability from these matters would not materially affect the Company's
consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This Quarterly Report on Form 10-Q may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, Section
21E of the Securities Exchange Act of 1934, as amended and the Private
Securities Litigation Reform Act of 1995. Such matters involve risks and
uncertainties, including the Company's exposure to certain market risks, changes
in economic conditions, tax and interest rates, increases in raw material and
labor costs, weather conditions, and general competitive factors that may cause
actual results to differ materially.
9
<PAGE> 10
RESULTS OF OPERATIONS
The following tables set forth certain operating and financial data for the
Company:
<TABLE>
<CAPTION>
NEW SALES CONTRACTS, HOMES IN
NET OF CANCELLATIONS HOME CLOSINGS SALES BACKLOG
-------------------- ------------------ ------------------
THREE MONTHS THREE MONTHS AS OF
ENDED MARCH 31, ENDED MARCH 31, MARCH 31,
-------------------- ------------------ ------------------
2000 1999 2000 1999 2000 1999
------ ------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Houston ...................................... 165 191 128 121 158 245
Austin ....................................... 187 208 165 118 317 274
Dallas/Ft. Worth ............................. 38 68 29 35 41 90
San Antonio .................................. 12 -- 4 -- 9 --
Ft. Lauderdale, Palm Beach, Miami ............ 173 160 210 125 494 350
Nashville .................................... 31 26 17 15 26 33
Charlotte .................................... 5 1 4 -- 2 1
Greensboro/Winston-Salem ..................... 6 -- 6 -- 5 --
---- ---- ---- ---- ---- ----
Total ........................................ 617 654 563 414 1,052 993
==== ==== ==== ==== ==== ====
</TABLE>
10
<PAGE> 11
AS A PERCENTAGE OF REVENUE
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
---- ----
Cost of sales.................................. 83.0% 84.4%
Gross profit................................... 17.0% 15.6%
Selling, general and administrative expenses... 9.9% 11.1%
Income before income taxes..................... 6.1% 3.4%
Income taxes (1)............................... 36.1% 36.9%
Net income..................................... 3.9% 2.1%
(1) As a percent of income before income taxes.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999.
Revenues increased by 47.0% to $136.4 million in the three months ending March
31, 2000 from $92.8 million in the three months ending March 31, 1999 due to a
combination of an increase in units closed and an increase in average selling
price. The number of homes closed by the Company increased by 36.0% to 563 homes
in the three months ending March 31, 2000 from 414 homes in the three months
ending March 31, 1999. The Company's average selling price of homes closed in
the three months ending March 31, 2000 was $240,449, an increase of 7.9% from
the $222,902 average selling price in the three months ending March 31, 1999.
The average selling price of a Newmark(R) home closed in the three months ending
March 31, 2000 was $265,158, an increase of 11.4% from the $238,133 average
selling price in the three months ending March 31, 1999. The Fedrick, Harris
Estate Homes average selling price of homes closed in the three months ending
March 31, 2000 was $444,253, an increase of 5.8% from the $419,993 average
selling price in the three months ending March 31, 1999. In the South Florida
market, Westbrooke and Adler's selling price of homes closed in the three months
ending March 31, 2000 was $198,913, an increase of 6.0% from the $187,689
average selling price in the three months ending March 31, 1999. Also, revenues
generated from sales of custom homes under the Fedrick, Harris Estate Homes
brand name increased from $10.5 million in the three months ending March 31,
1999 to $17.3 million in the three months ending March 31, 2000 primarily due to
increased unit sales in Houston, Austin and Nashville. In addition, revenue from
land sales in the three months ending March 31, 2000 increased to $1.1 million
from $.5 million in the three months ending March 31, 1999.
New net sales contracts decreased 5.9% to 617 homes for the three months ended
March 31, 2000 from 654 homes for the three months ended March 31, 1999. The
dollar amount of new net sales contracts increased 7.1% to $163.6 million.
The Company was operating in 77 subdivisions at March 31, 2000 compared to 69
subdivisions at March 31, 1999. At March 31, 2000, the Company's backlog of
sales contracts was 1,052 homes, a 5.9% increase over comparable figures at
March 31, 1999.
Cost of sales increased by 44.5% to $113.2 million in the three months ended
March 31, 2000 from $78.3 million in the comparable period of 1999. The increase
was attributable to the increase in revenues from home closings as described
above. Cost of land sales for the three months ended March 31, 2000 increased to
$.9 million from $.5 million for the comparable period of 1999. As a percentage
of revenues, cost of sales for the three months ended March 31, 2000 decreased
to 83.0% in 2000 from 84.4% in 1999.
Selling, general and administrative ("SG&A") expense increased by 31.4% to $13.6
million in the three months ended March 31, 2000, from $10.3 million in the
comparable period of 1999. The increase was primarily caused by the expansion
into the new markets of Nashville, Tennessee and Charlotte and Greensboro, North
Carolina as well as the expansion in the Company's existing Texas and Florida
markets, as indicated by the 46.7% increase in the Company's revenues and the
5.9% increase in the backlog at the end of March 2000 versus March 1999. As a
percentage of revenues, SG&A expense decreased to 9.9% in the three months ended
March 31, 2000 from 11.1% in the comparable period of 1999.
11
<PAGE> 12
Interest expense, net of interest capitalized, totaled $.7 million in the three
months ended March 31, 2000 compared to $.4 million in the comparable period of
1999. The Company follows a policy of capitalizing interest only on inventory
under construction or development. During the three months ended March 31, 2000
and 1999, the Company expensed a portion of interest incurred and other
financing costs on those completed homes held in inventory. This expense
increased due to the increase in the average number of completed homes held in
inventory for the quarter ending March 31, 2000. Capitalized interest and other
financing costs are included in cost of sales at the time of home closings.
The Company's provision for income taxes decreased as a percentage of earnings
before taxes to 36.1% for the three months ended March 31, 2000 compared to
36.9% for the three months ended March 31, 1999. The decrease is primarily the
result of the increase in deductible amortization of goodwill resulting from the
election of the Internal Revenue Code Section 338(h)(10). The election of
Internal Revenue Code Section 338(h)(10) was made on December 15, 1999 when
TOUSA acquired 80% of the Company's outstanding common stock. The Company
recognized federal income tax expense amounting to $2.9 million for the three
months ended March 31, 2000 compared to $1.2 million for the three months ended
March 31, 1999.
Net income increased by 166.8% to $5.3 million in the three months ended March
31, 2000, from $2.0 million in the comparable period of 1999. The increase was
attributable to the increase in revenues in the Company's most profitable
markets.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had available cash and cash equivalents of $6.9
million. Inventories (including finished homes and construction in progress,
developed residential lots and other land) at March 31, 2000 increased by $6.5
million from $255.6 million at December 31, 1999 due to a general increase in
business activity and the expansion of operations in the newer market areas.
Because of the increased business activity and expansion of operations in the
newer markets, the Company's ratio of construction loans payable to total
capital assets increased to 57.7% at March 31, 2000 from 57.1% at December 31,
1999. The equity to total assets ratio increased during the three months to
34.3% at March 31, 2000 from 33.3% at December 31, 1999.
The Company's financing needs depend upon the results of its operations, sales
volume, inventory levels, inventory turnover, and acquisitions. The Company has
financed its operations through borrowings from financial institutions and
through funds from earnings.
At March 31, 2000, the Company had unused lines of credit for construction loans
totaling approximately $234.2 million of which $31.7 million is available to
draw down.
The Company's growth requires significant amounts of cash. It is anticipated
that future home construction, lot and land purchases and acquisitions will be
funded through internally generated funds and new and existing borrowing
relationships. The Company continuously evaluates its capital structure and, in
the future, may seek to further increase secured debt and obtain additional
equity to fund ongoing operations as well as to pursue additional growth
opportunities.
Except for ordinary expenditures for the construction of homes and, to a limited
extent, the acquisition of land and lots for development and sale of homes, at
March 31, 2000, the Company had no material commitments for capital
expenditures.
12
<PAGE> 13
SEASONALITY AND QUARTERLY RESULTS
The homebuilding industry is seasonal, as generally there are more sales in the
spring and summer months, resulting in more home closings in the fall. The
Company operates in the Southwestern and Southeastern markets of the United
States, where weather conditions are more suitable to a year-round construction
process than other areas. The Company also believes its geographic dispersion to
be somewhat counter-cyclical, with adverse economic conditions associated with
certain of its markets often being offset by more favorable economic conditions
in other markets. The seasonality of school terms has an impact on the Company
operations, but it is somewhat mitigated by the fact that many of the Company's
buyers at the higher end of the Company's price range, including Fedrick, Harris
Estate Homes, no longer have children in school. As a result of these factors,
among others, the Company generally experiences more sales in the spring and
summer months, and more closings in the summer and fall months. Likewise,
Westbrooke has experienced seasonality in its revenues, generally completing
more sales in the spring and summer months and more closings in the fourth
quarter.
The Company historically has experienced, and in the future expects to continue
to experience, variability in revenues on a quarterly basis. Factors expected to
contribute to the variability include, among others: (i) the timing of home
closings; (ii) the Company's ability to continue to acquire land and options on
acceptable terms; (iii) the timing of receipt of regulatory approvals for the
construction of homes; (iv) the condition of the real estate market and general
economic conditions; (v) the cyclical nature of the homebuilding industry; (vi)
prevailing interest rates and the availability of mortgage financing; (vii)
pricing policies of the Company's competitors; (viii) the timing of the opening
of new residential projects; (ix) weather; and (x) the cost and availability of
materials and labor. The Company's historical financial performance is not
necessarily a meaningful indicator of future results and the Company expects its
financial results to vary from project to project and from quarter to quarter.
YEAR 2000 READINESS DISCLOSURE
The Company assessed its operating system, computer software applications,
computer equipment and other equipment with embedded electronic circuits for
Year 2000 compliance prior to, on, and after December 31, 1999 and did not
experience any operational issues as a result of year 2000. In addition, the
Company did not experience any adverse impact as a result of year 2000 issues
from any of its significant subcontractors, suppliers, financial institutions or
other service providers. The Company plans no further financial commitments
regarding Year 2000 issues.
ITEM 3. CHANGES IN INFORMATION ABOUT MARKET RISK.
The Company is exposed to market risk primarily related to potential adverse
changes in interest rates as discussed below. The Company does not enter into,
or intend to enter into, derivative financial instruments for trading or
speculative purposes. The Company's exposure to market risks is changes to
interest rates related to the Company's construction loans. The interest rates
relative to the Company's construction loans fluctuate with the prime and Libor
lending rates, both upwards and downwards.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of the Company's management, the
ultimate disposition of these matters is not expected to have a material effect
on the financial condition or results of operations of the Company.
13
<PAGE> 14
ITEM 2. CHANGES IN SECURITIES.
None. No disclosure required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None. No disclosure required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None. No disclosure required.
ITEM 5. OTHER INFORMATION.
None. No disclosure required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a.) Exhibit 27 - Financial Data Schedule.
(b.) Reports on Form 8-K.
The registrant filed no reports on Form 8-K during the quarter ended
March 31, 2000.
14
<PAGE> 15
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.
NEWMARK HOMES CORP.
May 12, 2000 By: /s/ Terry C. White
- ------------ ------------------------------
Date Terry C. White, Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
15
<PAGE> 16
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE REGISTRANT'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,869
<SECURITIES> 0
<RECEIVABLES> 9,402
<ALLOWANCES> 0
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0
0
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</TABLE>
