W A S H I N G T O N H O M E S
-----------------------------------
1 9 9 7 A N N U A L R E P O R T
[PHOTO OMITTED]
<PAGE>
Washington Homes designs, builds, and markets
single-family detached homes and townhomes.
It is a leading provider of moderately-priced,
quality homes with 62 communities in five states.
Washington Homes is comprised of eight home-
building divisions: four in Maryland, Virginia, and
Pennsylvania, and four under the Westminster
Homes name in North Carolina and Tennessee.
The Company reached two significant bench-
marks in fiscal 1997--Westminster Homes cele-
brated its 30th anniversary and in June of 1997
Washington Homes delivered its 20,000th home.
[MAP OMITTED WITH STATES LISTED BELOW]
MARYLAND
PENNSYLVANIA
VIRGINIA
NORTH CAROLINA
TENNESSEE
<PAGE>
Washington Homes, Inc. Selected Financial Data
- --------------------------------------------------------------------------------
Years Ended July 31, In Thousands, Except Per Share Amounts and Number of Homes
<TABLE>
<CAPTION>
Statement of Operations 1997 1996 1995 1994 1993
- ----------------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $217,459 $175,025 $183,485 $143,240 $134,125
Gross profit 37,551 33,829 36,428 29,761 29,626
Earnings before interest and taxes* 10,782 11,240 13,520 10,006 14,722
Total interest and finance expense 5,836 4,771 4,921 2,874 3,219
Net earnings from operations* 2,878 3,747 5,045 4,426 7,006
Earnings per common share* 0.36 0.47 0.64 0.56 1.23
Dividends per common share -- -- 0.05 0.20 0.05
Selected Operating Data
- -----------------------
Number of homes delivered 1,315 1,087 1,167 991 960
Number of net new orders 1,305 1,127 1,124 1,024 1,009
Number of homes in backlog at end of period 591 601 561 604 571
Balance Sheet Data
- ------------------
Cash $ 10,313 $ 15,384 $ 15,111 $ 20,076 $ 22,882
Residential inventories 111,520 125,033 119,652 118,379 69,162
Total assets 142,842 170,227 164,063 166,025 116,226
Notes and loans payable 65,569 74,282 72,608 76,832 29,280
Shareholders' equity $ 54,480 $ 67,769 $ 64,022 $ 59,374 $ 56,536
</TABLE>
Earnings Before
Total Revenues Interest and Taxes* Shareholders' Equity
- ---------------------- ------------------------ ----------------------
In Millions of Dollars In Millions at Dollars In Millions of Dollars
[THREE GRAPHS OMITTED]
* Presented on a pro-forma basis to exclude the $19.1 million pre-tax,
non-cash charge for impairment of long-lived assets recorded in the third
quarter of fiscal 1997. For further discussion of the non-cash charge, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the accompanying consolidated financial statements and
notes thereto.
1
<PAGE>
L E T T E R T O S H A R E H O L D E R S
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
Fiscal 1997 was a year in which Washington Homes positioned itself to maximize
its long-term potential. I am pleased to report, the Company achieved record
levels of revenues, deliveries, and net new orders. Total revenues increased 24%
to $217.5 million, deliveries increased 21% to 1,315 homes, and net new orders
increased 16% to 1,305 orders in the year. The gross margin, however, decreased
from 20.0% to 17.9% due to our previously announced Washington inventory
turnover strategy, initial closings in the expansion cities, and reduced margins
in our existing North Carolina markets. Gross margins in the fourth quarter
increased to 18.1% compared with 17.9% and 16.8% in the second and third
quarters, which would indicate that margins are stabilizing going forward.
Results by Market
- -----------------
Deliveries in the Washington market increased 14% while net new orders were up
10% over fiscal 1996. With more than 25,000 new home starts last year,
Washington remains the fourth largest market in the United States. We look to
take advantage of more than 50,000 new jobs created in the past twelve months,
primarily in the technology sector of northern Virginia, by expanding our
presence in the northern Virginia market.
Deliveries and net new orders in our existing North Carolina markets of Raleigh
and Greensboro decreased 7%, year-over-year. The declines were a result of
delays in development, which strained an already tight labor market. In the past
several months, we have reallocated management resources from other areas of the
Company to expand our subcontractor base, as well as introduce new suppliers to
the market.
Expansion Markets
- -----------------
Despite achieving our anticipated delivery volume in our three expansion
markets, we sustained an operating loss due to costs associated with opening an
additional six communities and introductory pricing needed to generate
momentum. Going forward, we expect that increased volume and better margins in
these cities will positively affect our 1998 results.
Significant Events
- ------------------
As previously reported, our successful inventory turnover strategy, adopted in
the summer of 1996, resulted in lower gross margin levels. The adoption of FASB
121, coupled with lower margins, forced the Company to re-evaluate the carrying
value of its land inventory. As a result, we took a $9 million after-tax,
non-cash charge to inventory. The Company also re-evaluated the goodwill
established with the 1988 acquisition of Washington Homes, and consequently
reduced the goodwill from $16 million to $6 million.
In the third quarter, the Company reached an agreement with the Internal Revenue
Service on all previously announced, outstanding tax issues. As as result of the
settlement, the Company recorded an extraordinary loss of $390,000 or $0.05 per
share.
Inventory Turnover
- ------------------
We were successful in reducing our overall inventory levels during the year,
albeit at
2
<PAGE>
lower margins. Our inventory of land, both finished and unfinished, was reduced
by $19 million during fiscal 1997. The reduction consisted, in part, of $7
million from land sales and $9 million in inventory adjustments. The benefit of
reduced land inventory allowed the Company to reduce its debt by $9 million. In
the future, we look to allocate capital for inventory among our eight
homebuilding operations based on the highest level of returns.
Capital Availability
- --------------------
At year-end, the Company signed a new $70 million credit agreement with First
Union National Bank replacing $49 million of credit lines with several lenders.
This new facility lowered our cost of funds and reduced the costs associated
with administering the facility. It provides a significant portion of the
financial capacity needed to meet our strategic growth objectives over the next
few years. This facility is in addition to the Company's $43 million Senior
Notes, which were issued in April 1994 with principal curtailments beginning in
October 1998.
Strategic Alliances
- -------------------
We have entered into strategic alliances with many of our vendors, including
General Electric, Progress Lighting, Timberlake Cabinets, and Jacuzzi. Most of
these alliances involve comprehensive agreements under which the vendors not
only supply and deliver their products, but also install them in each house. Our
agreements provide for quality assurance, on-time delivery, ease in scheduling,
solid warranties, rebates, and reductions in cost for Washington Homes. Our size
gives us national purchasing power with the benefit of
[PHOTO OMITTED]
Geaton A. DeCesaris, Sr.
Chairman of the Board
[PHOTO OMITTED]
Geaton A. DeCesaris, Jr.
President and
Chief Executive Officer
3
<PAGE>
R E L A T I O N S H I P S
- ---------------------------------------------
Our agreements provide for quality assurance,
on-time delivery, ease in scheduling, solid
warranties, rebates, and reductions in cost.
- ---------------------------------------------
volume discounts and local distribution. This program is well underway in our
Washington market and in process in North Carolina and our expansion cities.
This fall, we are designing a new, value-engineered product line that will help
reduce construction costs and increase margins, allowing us to be more
competitive, while passing savings on to our customers. We are including our
major suppliers in the process in order to benefit from their product specific
expertise.
Ancillary Businesses
- --------------------
As expected, all of our ancillary businesses contributed to our overall
profitability in fiscal 1997. Our mortgage subsidiary, Homebuyer's Mortgage,
closed 45% of our loans in Washington and 35% in North Carolina. Our title
company, New Homebuyer's Title, closed 98% of our homes in Maryland and
Virginia, an increase of 150 closings over the prior year period. Although not a
separate profit center, the Design Showcase continued to provide our Maryland
customers with a comfortable, warm environment to select their options away from
the buzz of activity in our sales centers. This high-traffic retail center
provides greater visibility and attracts a wider audience, outside the typical
real estate environment. All these services provide a "one-stop shopping"
experience for our customers, further
[PHOTO OMITTED]
4
<PAGE>
[PHOTO OMITTED]
Strengthening strategic alliances has been a major focus of
fiscal year 1997. Our size gives us national purchasing
power. Expanding the use of panelization throughout the
Company is an example of how Washington Homes is reducing
the building-cycle time and incorporating its cost saving
technology Company-wide.
5
<PAGE>
M A N A G E M E N T
- --------------------------------------------
Our corporate and divisional management team
members average more than fifteen years
of industry experience, including ten years
with Washington Homes.
- --------------------------------------------
[PHOTO OMITTED]
distinguishing Washington Homes from other homebuilders.
Experienced Management
- ----------------------
As the Company continued to expand outside our core Washington market, we
recognized the need to further strengthen our management team. In July, Thomas
J. Pellerito joined us in the newly created position of President--Homebuilding
Operations and as Chief Operating Officer. Tom came to us with more than
eighteen years' experience in the homebuilding industry and has headed
homebuilding operations that have delivered over 12,000 new homes, primarily in
the Washington, D.C. market. In August, we hired Robert Hutson to head our
Raleigh division and to eventually oversee all of our homebuilding operations at
Westminster Homes. Robert came to us after heading a Florida division that
delivered over 800 homes annually for a national builder. Tom and Robert joined
our corporate and divisional management team whose members average more than
fifteen years of industry experience, including ten years with Washington Homes.
In addition to working with Tom, I expect to spend more time in our North
Carolina operations and will be concentrating on increasing the profitability of
our ancillary businesses and other activities that will maximize shareholder
value.
6
<PAGE>
In conjunction with its expansion into new markets, the
Company has added management talent, which strengthens an
already experienced team. Executive management is involved
in key divisional strategic decisions, such as capital
allocation and land acquisition.
[PHOTO OMITTED]
7
<PAGE>
G R O W T H
- ---------------------------------------------
Our goal is to become one of the nation's top
twenty-five homebuilders.
- ---------------------------------------------
[PHOTO OMITTED]
Washington Homes' Mission Statement: "We are people working
as a team proudly committed to building affordable homes of
quality and value, while serving our community and achieving
a superior performance for our investors."
Looking Ahead
- -------------
With our 1996 expansion markets now fully operational, we believe we are on
track to meet our objective to become one of the nation's top twenty-five
homebuilders. Our gross margins stabilized in the fourth quarter and we expect
gross margins to remain relatively stable throughout the year. We are focused on
increasing efficiencies and growing our existing markets. Additionally, we are
reviewing opportunities in several markets that fit into our long-term plan, and
if the right situation presents itself, we would consider a new market entry.
In summation, our short- and mid-term objectives are to centralize the
purchasing process, increase the profitability of the expansion cities,
value-engineer our product line, increase absorptions, and reduce the
building-cycle time. We hope to look back on 1997 as a year in which we
strengthened our core to achieve these objectives.
In closing, I would like to thank all of our employees, shareholders,
suppliers, and vendors for their unwavering support and belief in Washington
Homes. We look forward to all of you being a part of our success in 1998 and
beyond.
/s/ Geaton A. DeCesaris, Jr.
Geaton A. DeCesaris, Jr.
President and Chief Executive Officer
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
- ---------------------
The following tables present certain information regarding the Company's
operations for the last three fiscal years (dollars in thousands):
1997 1996 1995
- --------------------------------------------------------------------------------
Revenues:
Homebuilding $206,576 $167,821 $176,609
Land 7,958 5,145 5,398
Other 2,925 2,059 1,478
------------------------------------------------
Total $217,459 $175,025 $183,485
------------------------------------------------
Homes delivered 1,315 1,087 1,167
Net new orders 1,305 1,127 1,124
Homes in backlog at end
of period 591 601 561
Sales value of backlog $ 96,343 $ 97,625 $ 91,062
------------------------------------------------
Annual Operating Cycle
- ----------------------
The homebuilding industry in general, and the operations of the Company, are
seasonal in nature. The number of new sales contracts signed escalates from
January through April, compared to the balance of the year. Deliveries peak in
the fiscal quarter ended July 31, as a substantial portion of homes contracted
during the fiscal quarter ended April 30 are delivered. Delivery volume is
relatively constant during the remainder of the year. As a result of increased
deliveries and reduced selling, general and administrative costs as a percent of
revenues, net earnings are substantially greater in the fourth quarter, compared
to the prior three quarters.
The following table contains quarterly operating information for the Company's
last two fiscal years and illustrates the annual operating cycle (in thousands
except per share amounts and number of homes):
Three Months Ended
- --------------------------------------------------------------------------------
October 31, January 31, April 30, July 31,
1996 1997 1997 1997
- --------------------------------------------------------------------------------
Number of homes
delivered 281 298 258 478
Net new orders 327 312 438 228
Total revenues $46,662 $48,681 $ 42,801 $79,316
Gross profit from
homebuilding $ 8,067 $ 8,308 $ 6,966 $13,536
Net earnings (loss)* $ 931 $ 655 $(16,834) $ 1,960
Net earnings (loss)
per share, based
on 7,942,763
shares* $ 0.12 $ 0.08 $ (2.12) $ 0.25
-----------------------------------------------------
* The quarter ended April 30, 1997 includes an after-tax, non-cash charge of
$15.8 million for the write-down of goodwill and certain land inventory and
an extraordinary loss of $390,000 from an IRS settlement.
- --------------------------------------------------------------------------------
October 31, January 31, April 30, July 31,
1995 1996 1996 1996
- --------------------------------------------------------------------------------
Number of homes
delivered 246 219 245 377
Net new orders 251 218 410 248
Total revenues $37,827 $34,882 $39,404 $62,911
Gross profit from
homebuilding $ 7,550 $ 6,981 $ 7,278 $11,737
Net earnings $ 710 $ 385 $ 614 $ 2,037
Net earnings per
share, based on
7,942,763 shares $ .09 $ .05 $ .08 $ .26
-----------------------------------------------------
<PAGE>
Product Mix
- -----------
Since the spring of 1994, the Company has expanded into markets in North
Carolina and Tennessee. This expansion is in part responsible for a shift in the
Company's product mix to more detached homes. The following table sets forth a
breakdown of the Company's deliveries by housing type in each of the last three
fiscal years:
1997 1996 1995
- -----------------------------------------------------------------
Detached 890 668 602
Attached 425 419 565
---------------------------------------
Total 1,315 1,087 1,167
---------------------------------------
Geographic Concentration
- ------------------------
During the last three fiscal years the Company has built moderately priced,
quality homes in the metropolitan areas of Washington, DC-Baltimore, Maryland,
Raleigh and Greensboro, North Carolina and Pittsburgh, Pennsylvania. In fiscal
1996, the Company commenced operations in the Charlotte, North Carolina and
Nashville, Tennessee markets. The following tables describe the Company's
operations in each of its markets during the last three fiscal years:
1997 1996 1995
- --------------------------------------------------------------------
Net New Orders
Washington-Baltimore 730 664 750
North Carolina 454 409 354
Pittsburgh 55 33 20
Nashville 66 21 --
---------------------------------------
Total Net New Orders 1,305 1,127 1,124
---------------------------------------
1997 1996 1995
- --------------------------------------------------------------------
Homes Delivered
Washington-Baltimore 775 677 857
North Carolina 420 382 287
Pittsburgh 53 24 23
Nashville 67 4 --
---------------------------------------
Total Deliveries 1,315 1,087 1,167
---------------------------------------
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------
Backlog of Sold Homes
Washington-Baltimore 366 411 424
North Carolina 185 151 124
Pittsburgh 24 22 13
Nashville 16 17 --
---------------------------------------
Total Backlog 591 601 561
---------------------------------------
1997 1996 1995
- --------------------------------------------------------------------
Active Communities
Washington-Baltimore 30 33 44
North Carolina 23 18 13
Pittsburgh 5 3 1
Nashville 4 5 --
---------------------------------------
Total Active Communities 62 59 58
---------------------------------------
Year Ended July 31, 1997 Compared to Year Ended July 31, 1996
- -------------------------------------------------------------
Total revenues increased by 24.3% to $217.5 million in Fiscal 1997 from $175.0
million in Fiscal 1996, as the number of homes delivered increased by 21.0% to
1,315 units from 1,087 units. The average sales price of homes delivered in
Fiscal 1997 increased to $157,100 from $154,400. Deliveries in the existing
North Carolina markets declined by 5.3%, but were offset by growth in the new
markets (Charlotte, Nashville, Pittsburgh) and a 14.5% increase in the
Washington market.
The gross profit margin as a percentage of homebuilding revenues decreased to
17.9% in fiscal 1997 from 20.0% largely due to the competitive Washington
market, the Company's strategy to increase inventory turnover, lower margins on
initial closings in our expansion cities, and reduced margins in our existing
North Carolina markets.
Total selling, general, and administrative expenses increased to $29.1 million
in fiscal 1997 from $23.9 million in the prior year due to increased volume,
expanded number of division operations, and the growth of the Company's mortgage
subsidiary. However, selling, general, and administrative expenses as a
percentage of homebuilding revenues decreased to 14.1% in fiscal 1997 from 14.2%
in fiscal 1996.
Interest and financing expenses increased to $5.8 million in fiscal 1997 from
$4.8 million but remained constant at 2.8% as a percentage of homebuilding
revenues.
Gross profit from land sales increased in 1997 to $673,000 from $282,000 in
fiscal 1996.
In fiscal 1997, the Company reported earnings from operations before non-cash
charges and extraordinary items of $2.9 million, or $0.36 per share, as compared
to $3.7 million, or $0.47 per share, in fiscal 1996. During fiscal 1997, the
Company recorded an after-tax, non-cash charge of $15.8 million for the
write-down of goodwill and certain land inventory in suburban Maryland, and an
extraordinary loss of $390,000 from an IRS settlement. As a result, the Company
reported a net loss of $13.3 million or $1.67 per share for the year.
Year Ended July 31, 1996 Compared to Year Ended July 31, 1995
- -------------------------------------------------------------
Total revenues decreased by 4.6% to $175.0 million in fiscal 1996 from $183.5
million in fiscal 1995 as the number of homes delivered decreased by 6.9% to
1,087 units from 1,167. The fiscal 1996 decrease was partially offset by an
increase in the average sales price of homes delivered to $154,400 from
$151,300. Deliveries in the Washington market declined by 21.0%, offset by a
33.1% increase in North Carolina.
The gross profit margin as a percentage of homebuilding revenues increased to
20.0% in fiscal 1996 from 19.8% largely due to higher deliveries in the North
Carolina markets where higher margins were achieved.
Total selling, general and administrative expenses were relatively constant at
$23.9 million in fiscal 1996 as compared to $23.5 million in the prior year.
Selling, general and administrative expenses as a percentage of homebuilding
revenues increased to 14.2% in fiscal 1996 from 13.3% in fiscal 1995 as a result
of lower delivery volume.
10
<PAGE>
Interest and financing expenses were relatively constant at $4.8 million in
fiscal 1996 compared to $4.9 million in the prior year.
Gross profit from land sales were lower in 1996 at $282,000 from $1.5 million in
fiscal 1995.
Net earnings decreased by 26% to $3.7 million in fiscal 1996 from $5.0 million
in fiscal 1995 due to the decreased number of home deliveries and lower profits
from land sales.
Capital Resources and Liquidity
- -------------------------------
Funding for the Company's residential building and land development activities
is provided principally by cash flows from homebuilding operations and borrowing
from banks and other financial institutions. The Company's capital needs depend
upon its sales volume, asset turnover, land purchases and inventory levels.
At July 31, 1997, the Company had cash and cash equivalents of $10.3 million, of
which $118,000 was restricted to collateralize deposits and escrows. The
remaining $10.2 million was available to the Company.
In April 1994, the Company issued $43,000,000 principal amount of Senior Notes
due October 2000. Two series of Senior Notes were issued: $30.0 million with a
fixed rate of 8.61% per annum and $13.0 million with a floating rate of LIBOR
plus 2.4%. The notes are to be repaid in three equal annual principal
installments commencing in October 1998.
In July 1997, the Company obtained a new $70 million revolving credit facility
replacing two credit facilities totaling $49 million. The new facility provides
funding for land acquisition and home construction, letters of credit, and the
initial principal payment on the Senior Notes. At July 31, 1997, $19.5 million
was outstanding. Borrowings under the facility bear interest at LIBOR plus 1.55%
or 1.75%, depending on the type of collateral and are secured by the related
inventory.
In addition to the Senior Notes and revolving credit facility, the Company has
loans with various lenders providing $5.2 million for land acquisition,
development and home construction. These loans bear interest at fixed rates
ranging from 8% to 10% or variable rates ranging from prime to prime plus 1%
with maturities ranging from the date of lot recordation through December 1999.
At July 31, 1997, in the aggregate, the Company had $103.2 million in borrowing
availability of which $34.4 million was available. During fiscal 1997, the
Company's average interest rate was 8.2%.
The Company participates in two joint ventures formed to develop residential
land into finished building lots for sale to the Company and other homebuilders
utilizing non-recourse acquisition and development loans. In one of the joint
ventures, in April 1995, the Company contributed land with a book value of $9.6
million and the Company has received cash proceeds to date of $7.4 million which
was used to reduce outstanding amounts under revolving credit facilities.
The Company believes that it will be able to fund its activities for the
foreseeable future through a combination of operating cash flow, existing cash
balances and existing facilities. Except for ordinary expenditures for the
construction of homes and acquisition and development of land, the Company does
not have any material commitments for capital expenditures at the present time.
Safe Harbor Statement
- ---------------------
Certain statements in the Company's Form 10-K, this Annual Report to
Shareholders, as well as statements made by the Company in periodic press
releases, oral statements made by the Company's officials to analysts and
shareholders in the course of presentations about the Company and conference
calls following the quarterly earnings releases, may be construed as
"Forward-Looking Statements" as defined in the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Such statements may involve unstated
risks, uncertainties and other factors that may cause actual results to differ
materially. Such risks, uncertainties and other factors include, but are not
limited to, changes in general economic condition; fluctuations in interest
rates; increases in costs of materials, supplies and labor; and general
competitive conditions.
11
<PAGE>
C O N S O L I D A T E D B A L A N C E S H E E T S
- -----------------------------------------------------
July 31,
-------------------
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 10,313 $ 15,384
Residential inventories 111,520 125,033
Excess of cost over net assets acquired, net 6,216 16,553
Investment in joint ventures 3,058 2,751
Other 11,735 10,506
-------------------
Total Assets $142,842 $170,227
-------------------
Liabilities and Shareholders' Equity
Liabilities
Notes and loans payable $ 65,569 $ 74,282
Trade accounts payable 16,231 17,572
Income taxes payable 137 408
Deferred income taxes 1,919 5,233
Other 4,506 4,963
-------------------
Total liabilities 88,362 102,458
-------------------
Commitments and contingent liabilities
Shareholders' equity:
Common stock $.01 par value; 15,000,000 shares authorized;
7,015,025 and 7,000,000 shares issued and outstanding 70 70
Non-voting common stock, 1,100,000 shares authorized;
927,738 and 942,763 shares issued and outstanding 9 9
Additional paid-in capital 35,147 35,147
Retained earnings 19,254 32,543
-------------------
Total shareholders' equity 54,480 67,769
-------------------
Total Liabilities and Shareholders' Equity $142,842 $170,227
-------------------
See Accompanying Notes to Consolidated Financial Statements.
12
<PAGE>
C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N S
-------------------------------------------------------------------------
Year Ended July 31,
----------------------------------
(In thousands except per share amounts) 1997 1996 1995
- --------------------------------------------------------------------------------
Revenues:
Homebuilding $206,576 $167,821 $176,609
Land sales 7,958 5,145 5,398
Other income 2,925 2,059 1,478
----------------------------------
Total revenues 217,459 175,025 183,485
----------------------------------
Expenses:
Cost of sales--homebuilding 169,698 134,274 141,656
Cost of sales--land sales 7,285 4,863 3,923
Cost of sales--impairment loss 9,200 -- --
Selling, general, and administrative 29,078 23,885 23,475
Interest expense 5,059 3,975 4,185
Financing fees 777 796 736
Write-down in carrying value of goodwill 9,981 -- --
Amortization and depreciation 616 763 912
----------------------------------
Total expenses 231,694 168,556 174,887
----------------------------------
Earnings (Loss) Before Income Taxes (14,235) 6,469 8,598
Income tax expense (benefit) (1,336) 2,722 3,553
----------------------------------
Earnings (Loss) Before Extraordinary Item (12,899) 3,747 5,045
Extraordinary loss--IRS settlement (390) -- --
----------------------------------
Net Earnings (Loss) $(13,289) $ 3,747 $ 5,045
----------------------------------
Earnings (Loss) Per Common Share Before
Extraordinary Item $ (1.62) $ 0.47 $ 0.64
----------------------------------
Earnings (Loss) Per Common Share $ (1.67) $ 0.47 $ 0.64
----------------------------------
C O N S O L I D A T E D S T A T E M E N T S
O F S H A R E H O L D E R S ' E Q U I T Y
---------------------------------------------
Years Ended July 31, 1997, 1996 and 1995 (in thousands)
- --------------------------------------------------------------------------------
Common Stock Additional Total Total
------------------------ Paid-in Retained Shareholders'
Shares Voting Non-voting Capital Earnings Equity
- --------------------------------------------------------------------------------
Balance, August 1, 1994 7,943 $70 $9 $35,147 $ 24,148 $ 59,374
Dividends -- -- -- -- (397) (397)
Net earnings -- -- -- -- 5,045 5,045
---------------------------------------------------------
Balance, July 31, 1995 7,943 70 9 35,147 28,796 64,022
Net earnings -- -- -- -- 3,747 3,747
---------------------------------------------------------
Balance, July 31, 1996 7,943 70 9 35,147 32,543 67,769
Net earnings (loss) -- -- -- -- (13,289) (13,289)
---------------------------------------------------------
Balance, July 31, 1997 7,943 $70 $9 $35,147 $ 19,254 $ 54,480
---------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
13
<PAGE>
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
- -------------------------------------------------------------------------
Year Ended July 31,
------------------------------
(In thousands) 1997 1996 1995
- -------------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net earnings (loss) $(13,289) $ 3,747 $ 5,045
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Amortization and depreciation 616 763 912
Deferred income taxes (3,314) 22 (1,374)
Write-down of goodwill 9,981 -- --
Impairment loss 9,200 -- --
Changes in assets and liabilities:
Residential inventories 4,313 (5,382) (10,838)
Other assets (1,421) (535) (447)
Trade accounts payable (1,341) 638 301
Income taxes payable (271) (298) (639)
Other liabilities (457) 381 (674)
------------------------------
Net cash provided by (used in) operating
activities 4,017 (664) (7,714)
Cash Flows From Investing Activities:
Purchases of property and equipment, net
of disposals (68) (262) (40)
Proceeds from (investment in) joint venture (307) (475) 7,410
------------------------------
Net cash provided by (used in) investing
activities (375) (737) 7,370
Cash Flows From Financing Activities:
Proceeds from notes and loans payable 120,442 103,917 81,469
Repayments of notes and loans payable (129,155) (102,243) (85,693)
Dividends paid -- -- (397)
------------------------------
Net cash provided by (used in) financing
activities (8,713) 1,674 (4,621)
------------------------------
Net Increase (Decrease) In Cash And Cash
Equivalents (5,071) 273 (4,965)
Cash And Cash Equivalents, Beginning Of Year 15,384 15,111 20,076
------------------------------
Cash And Cash Equivalents, End Of Year $ 10,313 $ 15,384 $ 15,111
------------------------------
See Accompanying Notes to Consolidated Financial Statements.
14
<PAGE>
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Y E A R S E N D E D J U L Y 3 1 , 1 9 9 7 , 1 9 9 6 A N D 1 9 9 5
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1. Summary of Significant Accounting Policies
- ---------------------------------------------
Organization. The Company is principally engaged in the business of the
construction and sale of moderately priced, quality residential housing in the
states of Maryland, North Carolina, Virginia, Pennsylvania, and Tennessee.
Generally, construction is not commenced until the Company has entered into a
sales contract with a customer. Homes are built on land that has been developed
by the Company or others.
Basis of Presentation. The consolidated financial statements include the
accounts of Washington Homes, Inc. and its wholly-owned subsidiaries
(collectively, the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation. The Company's investment in
joint ventures is accounted for using the equity method.
Use of Estimates. The preparation of financial statements in conformity 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.
Cash and Cash Equivalents. For purposes of the statements of cash flows, the
Company considers its cash, including temporary investments with original
maturities of three months or less, to be cash equivalents. Included in these
amounts at July 31, 1997 and 1996 were $118,000 and $600,000, respectively, that
are restricted to collateralize certain obligations of the Company.
Excess of Cost Over Net Assets Acquired, Net. Excess of cost over net assets
acquired (goodwill) represents the excess of purchase price over the fair value
of assets acquired less any write down to fair value and is being amortized over
a 40-year period. The Company annually reviews its goodwill recoverability by
assessing historical profitability and expectations as to future nondiscounted
cash flows and net income. Based upon its most recent analysis of the market
potential associated with the goodwill, the Company wrote down to fair value the
carrying value of goodwill by $10.0 million during fiscal 1997.
Warranties. The Company records an accrual at the date of closing for future
warranty costs based upon the relationship of historical homebuilding revenues
to actual warranty costs.
Income Taxes. The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Deferred income taxes are provided for temporary differences
in the recognition of certain income and expenses for financial and tax
reporting purposes.
Revenue Recognition. Homebuilding revenues and land sales are recorded at the
date of closing with the purchaser.
Earnings Per Common Share. Earnings per common share are based on the weighted
average number of common shares outstanding during each period. The weighted
average number of common and common equivalent shares outstanding was 7,943,000
for the years ended July 31, 1997, 1996 and 1995. Common stock equivalents for
stock options have not been included because the effect would be antidilutive.
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
No. 128") was issued in February 1997 by the Financial Accounting Standards
Board. SFAS No. 128 is effective for periods ending after December 15, 1997 and
early adoption is not permitted. SFAS No. 128 will require the Company to
compute and present basic and diluted earnings per share. Had the Company
computed net earnings per share in accordance with SFAS No. 128, both basic and
diluted earnings per share would have been the same as earnings per share
presented in the Company's consolidated statements of operations.
Recent Accounting Pronouncements. Effective for fiscal 1997, the Company adopted
SFAS No. 123, "Accounting for Stock-Based Compensation," and, as permitted by
this standard, will continue to apply the recognition and measurement principles
of Accounting Principles Board Opinion No. 25 to its stock options. This
statement requires footnote disclosure of the pro forma impact on net income and
earnings per share of the compensation cost that would have been recognized if
the fair value of all stock-based awards was recorded in the statements of
operations (see Note 5).
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." As
specified by this statement, the Company will apply this statement beginning in
fiscal 1999 and reclassify its financial statements for earlier periods provided
for comparative purposes.
SFAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. This statement supersedes FASB Statement
No. 14, "Financial Reporting for Segments of a Business Enterprise," but retains
the requirement to report information about major customers.
15
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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Y E A R S E N D E D J U L Y 3 1 , 1 9 9 7 , 1 9 9 6 A N D 1 9 9 5
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It amends FASB No. 94, "Consolidation of All Majority-Owned Subsidiaries," to
remove the special disclosure requirements for previously unconsolidated
subsidiaries.
At this point, the Company has not determined the impact of adopting SFAS No.
131.
2. Residential Inventories
- --------------------------
Homes in process are stated at cost (determined by accumulating actual costs,
including construction, interest and related overhead costs), which is not in
excess of market. Finished building lots represents the cost, which is not in
excess of market, of finished lots developed by the Company or acquired from
other developers. Upon delivery, the costs of the homes and related lots are
expensed on a specific identification basis. Land under development consists of
land being developed into finished building lots. Certain costs, including
interest, are capitalized as incurred during the development process. The
Company's inventory consists of the following:
July 31,
--------------------------
(in thousands) 1997 1996
- -----------------------------------------------------------------
Homes in process $ 41,389 $ 36,168
Finished lots 40,560 43,304
Land under development 29,571 45,561
--------------------------
$111,520 $125,033
--------------------------
In the first quarter of fiscal 1997, the Company adopted FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," which, among other things, requires impairment losses to be
recorded on long-lived assets that are expected to be disposed of when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. Based
on a review of long-lived assets during the third quarter of fiscal year 1997,
the Company wrote down to fair value, determined based on the present value of
expected future cash flows, the carrying value of certain land inventory by $9.2
million.
A significant portion of the land inventory write-down was attributable to two
long-term development projects in suburban Maryland. The remainder of the
writedown related to six close-out and three condominium communities. The
Company has made a decision to phase out its condominium operations which have
had results well below management's expectations.
3. Investment In Joint Ventures
- -------------------------------
The Company participates in two joint ventures formed to develop residential
land into finished building lots for sale to the Company and other homebuilders
utilizing non-recourse acquisition and development loans. In forming one of the
joint ventures in April 1995, land with a book value of $9.6 million was
contributed by the Company for which it received cash proceeds of $7.4 million
which were used to reduce outstanding amounts under Revolving Credit Facilities
(see Note 4). The Company's interest in the joint ventures operating results
has not been significant to date.
4. Notes and Loans Payable
- --------------------------
Notes and loans payable consist of the following:
July 31,
--------------------------
(in thousands) 1997 1996
- -----------------------------------------------------------------
Senior notes $43,000 $43,000
Revolving credit and term facility 19,455 22,852
acquisition, development and
construction loans 3,034 8,268
Mortgages and other notes payable 80 162
--------------------------
$65,569 $74,282
--------------------------
Senior Notes. In April 1994, the Company issued $43,000,000 principal amount of
unsecured Senior Notes due October 2000. Two series of Senior Notes were issued:
$30,000,000 with a fixed rate of 8.61% per annum, with interest payable
semi-annually beginning in October 1994 and $13,000,000 with a floating rate of
three or six-month LIBOR (5.844% at July 31, 1997) plus 2.4%, with interest
payable beginning October 1994 and either quarterly or semi-annually thereafter
at the option of the Company. Principal repayments are due in three equal annual
installments commencing October 1998.
Revolving Credit and Term Facility. At July 31, 1997, the Company had a $70.0
million facility to fund land acquisition and home construction, letters of
credit, and the initial payment of the senior notes.
The facility has a maturity date (which may be extended) of October 30, 1999. At
July 31, 1997, $19.5 million was outstanding. Borrowings under the facility bear
interest at thirty-day LIBOR (5.625% at July 31, 1997) plus either 1.55% or
1.75%, depending on the type of collateral and is secured by the related
inventory.
16
<PAGE>
The senior notes and revolving credit agreements require the Company to meet net
worth, leverage, and cash flow coverage tests and place limitations on
dividends, the securing of additional loans, investments, and finished lot
purchases. These provisions do not significantly restrict the Company's
operations.
Acquisition, Development, and Construction Loans. The Company has loans with
various lenders for acquisition, development, and construction amounting to
$3,034,000 and $8,268,000 at July 31, 1997 and 1996, respectively. These loans
bear interest at fixed rates ranging from 8% to 10% or variable rates of prime
to prime plus 1% and are collateralized by the related inventory.
Mortgages and Other Notes Payable. Mortgages and other notes payable, amounting
to approximately $80,000 and $162,000 at July 31, 1997 and 1996 respectively,
bear interest at rates ranging from 4.9% to 15% and mature in varying periods of
up to 13 years.
Future maturities of various notes and loans payable are as follows:
For the year ending July 31, (in thousands)
- --------------------------------------------------------------
1998 $ 1,119
1999 14,510
2000 35,607
2001 14,333
-------
$65,569
-------
The carrying amounts reported above for $13,000,000 of the senior notes, the
revolving credit facility and the land acquisition and development loans
approximate their fair value based upon the indebtedness having, for the most
part, short-term maturities and variable interest rates. The fair value of the
remaining $30,000,000 of senior notes is estimated to be $30,115,000 based upon
debt with interest rates currently available and similar terms and remaining
maturities.
Capitalized Interest. A summary of capitalized interest follows:
Year Ended July 31,
------------------------------------------
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Interest capitalized $1,454 $2,728 $3,167
Interest expense 5,059 3,975 4,185
Interest incurred 6,513 6,703 7,352
Interest paid 6,886 6,643 7,073
Interest in cost of sales 2,108 1,561 1,201
------------------------------------------
5. Shareholders' Equity
- -----------------------
Common Stock. The Company has 7,942,763 shares of Common Stock outstanding at
July 31, 1997, of which 7,015,025 shares are voting and 927,738 shares are
non-voting.
Stock Options. The Company has adopted two plans for the issuance of stock
options to its employees and members of its Board of Directors, respectively.
On September 17, 1992, the Company adopted the Washington Homes Stock Option
Plan (the "Employee Option Plan") pursuant to which options for up to 500,000
shares of Common Stock can be granted to officers and other key employees of the
Company. Options granted under the Employee Option Plan can be either incentive
stock options ("Incentive Stock Options") or non-qualified options
("Non-Qualified Options") as determined by a committee of the independent
directors of the Board of Directors. Options granted under the Employee Option
Plan will have an exercise price not less than fair market value at date of
grant.
Options will become exercisable, in part, after 12 months from the date of grant
and will generally remain exercisable for ten years from the date of grant.
<PAGE>
In September, 1996, options for 47,000 shares at $9.00 were exchanged for 47,000
shares at $3.69.
Number Option
of Shares Price
- --------------------------------------------------------------------------------
Outstanding at July 31, 1994 157,000 $9.00
Granted 153,500 $5.25
Canceled 133,500 $5.25- 9.00
Exercised -- --
---------------------------
Outstanding at July 31, 1995 177,000 $5.25- 9.00
Granted 173,000 $4.75- 5.50
Canceled 18,000 $4.87- 9.00
Exercised -- --
---------------------------
Outstanding at July 31, 1996 332,000 $4.75- 9.00
Granted 189,000 $3.69- 5.50
Canceled 89,000 $3.57- 5.50
Exercised -- --
---------------------------
Outstanding at July 31, 1997 432,000 $3.69- 5.50
Exercisable at July 31, 1997 86,250 $4.87- 5.50
---------------------------
At July 31, 1997, there were 68,000 shares reserved for future grants.
On September 15, 1994 the Company adopted the Washington Homes Non-Employee
Directors' Stock Option Plan pursuant to which options for up to 30,000 shares
of Common Stock can be granted to directors who are not employees of the Company
or its subsidiaries. Options that are Non-Qualified Options, are not exercisable
for one year and then can be exercised over a three-year period. During the year
ended July 31, 1997, options for 9,000 shares were granted at $3.69 per share.
During the year ended July 31, 1996 options for 6,000 shares were granted at
$6.00 per
17
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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Y E A R S E N D E D J U L Y 3 1 , 1 9 9 7 , 1 9 9 6 A N D 1 9 9 5
- -------------------------------------------------------------------------------
share and options for 2,000 shares at $3.63 were canceled. During the year ended
July 31, 1995, options for 6,000 shares were granted at $3.63 per share.
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 123
"Accounting for Stock-Based Compensation," issued in October 1995. In accordance
with the provisions of SFAS No. 123, the Company applies APB Opinion 25 and
related interpretations in accounting for its stock option plans and,
accordingly, does not recognize compensation cost. If the Company had elected to
recognize compensation cost based on the fair value of the options granted at
grant date as prescribed by SFAS No. 123, net income and earnings per share
would have been reduced to the pro forma amounts indicated in the table below
(in thousands except per share amounts):
Year Ended July 31,
-----------------------
1997 1996
- --------------------------------------------------------------------------------
Net earnings (loss)--as reported $(13,289) $3,747
Net earnings (loss)--pro forma (13,314) 3,717
Earnings (loss) per share--as reported (1.67) 0.47
Earnings (loss) per share--pro forma (1.68) 0.47
-----------------------
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:
Year Ended July 31,
-------------------
1997 1996
- --------------------------------------------------------------------------------
Expected dividend yield -- --
Expected stock price volatility 27% 37%
Risk-free interest rate 6.2% 6.8%
Expected life of options 9 9
--------------------
The weighted average fair value of options granted during 1997 and 1996 was
$1.96 and $2.92 per option, respectively.
6. Income Taxes
- ---------------
As discussed in Note 1, the Company follows the provisions of SFAS 109. The
provision (benefit) for income taxes includes the following:
Year Ended July 31,
--------------------------------------
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Current:
Federal $ 1,619 $2,210 $ 4,033
State 359 490 894
--------------------------------------
1,978 2,700 4,927
Deferred:
Federal (2,713) 18 (1,125)
State (601) 4 (249)
--------------------------------------
(3,314) 22 (1,374)
--------------------------------------
Total Provision (Benefit) $(1,336) $2,722 $ 3,553
--------------------------------------
The deferred income tax components of the provision for income taxes from
operations consists of the tax effect of the following temporary differences:
Year Ended July 31,
--------------------------------------
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Land basis $(3,088) $(206) $ (927)
Capitalized interest and points (682) 124 (671)
Uniform capitalized costs 877 301 (273)
Investment in joint ventures (406) -- 645
Other (15) (197) (148)
--------------------------------------
Total Deferred Provision (Benefit) $(3,314) $ 22 $(1,374)
--------------------------------------
<PAGE>
The difference between the effective tax rate and the expected statutory tax
rate computed on earnings from continuing operations is attributable to the
following:
Year Ended July 31,
--------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Taxes computed at statutory rate (34.0)% 34.0% 34.0%
Increases (decreases):
State income taxes (1.7) 5.3 5.0
Excess over net assets acquired 24.7 2.7 2.0
Other 1.6 .1 .3
--------------------------------------
Effective tax rate (9.4)% 42.1% 41.3%
--------------------------------------
The deferred income tax at July 31, 1997 and 1996 represents the tax effect of
temporary differences as follows:
July 31,
----------------------
(in thousands) 1997 1996
- --------------------------------------------------------------------------------
Land basis $ (189) $2,900
Capitalized interest 1,782 2,464
Uniform capitalized costs 281 (596)
Investment in joint venture 239 645
Other (194) (180)
----------------------
Deferred Income Taxes $1,919 $5,233
----------------------
During the years ended July 31, 1997, 1996 and 1995, income taxes in the amount
of $3,807,000, $2,998,000 and $5,509,000, respectively, were paid.
The Internal Revenue Service has examined the Company's tax return for the years
ended July 31, 1992, 1993, and 1994. The IRS raised issues primarily related to
the Company's recapitalization in 1992 and 1993, including a $20.0 million gain
on debt forgiveness which the Company treated as non-taxable under the
provisions of Section 108 of the Internal Revenue Code.
18
<PAGE>
In March 1997, the Company reached a settlement with the IRS for all items in
question. As a result, the Company recognized an extraordinary loss of $390,000
which relates to the extraordinary gain on debt forgiveness in fiscal 1992.
7. Employee Retirement Plan
- ---------------------------
The Company has a 401(k) Plan which allows eligible employees to defer a portion
of their total compensation subject to limitations of the Internal Revenue Code.
The Company matches 50% of participant contributions, up to a maximum of the
greater of $1,000 or 1.5% of compensation for each participant. The Company's
total matching contributions under the Plan for the years ended July 31, 1997,
1996 and 1995 were approximately $112,900, $67,500 and $50,000, respectively.
8. Related Party Transactions
- -----------------------------
In prior years, the Company engaged in transactions with related parties for the
acquisition of building lots. During the years ended July 31, 1996, and 1995,
the Company paid $2,596,000 and $1,253,000, respectively, to companies owned by
relatives of the Chairman of the Board to acquire building lots.
The Company leases certain office space from an affiliated entity (see Note 9).
9. Commitments and Contingent Liabilities
- -----------------------------------------
To assure the future availability of various building lots, in the ordinary
course of business the Company enters into option agreements to purchase
finished building lots. Deposits of approximately $2,028,000 at July 31, 1997,
secure the Company's performance under these agreements.
The Company leases its headquarters offices and offices for certain divisions
from an affiliate and certain other facilities from unrelated parties, all under
operating leases with terms ending at various dates from August 1997 through
October 2001. Future minimum rental payments required under operating lease
commitments that have initial or remaining non-cancelable lease terms in excess
of one year subsequent to July 31, 1997, are as follows:
For the year ending July 31, (in thousands)
- -------------------------------------------------------------------
1998 $ 957
1999 856
2000 756
2001 and thereafter 147
------
Total future rental payments $2,716
------
Rental expense under long-term leases amounted to $1,227,000, $1,072,000 and
$816,000 for the years ended July 31, 1997, 1996 and 1995, respectively.
At July 31, 1997 the Company was contingently liable to banks and other
financial institutions for approximately $20.6 million for outstanding letters
of credit and surety bonds relating to building lot acquisition contracts and
municipal bonding for land development activities.
The Company believes that it is not a party to any pending or threatened
litigation or administrative proceeding which is expected to have a material
adverse impact on the Company's financial position or results of operations.
19
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I N D E P E N D E N T A U D I T O R S ' R E P O R T
- -------------------------------------------------------
To the Shareholders and Board of Directors
of Washington Homes, Inc.:
We have audited the accompanying consolidated balance sheets of Washington
Homes, Inc. and subsidiaries as of July 31, 1997 and 1996 and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended July 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Washington Homes, Inc. and
subsidiaries as of July 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1997 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Washington, D.C.
September 12, 1997
20
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C O R P O R A T E I N F O R M A T I O N
-----------------------------------------
Annual Meeting
- --------------
November 20, 1997--10 a.m.
Greenbelt Marriott Hotel, Greenbelt, Maryland
Form 10-K
- ---------
A copy of the Company's Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission, is available without charge upon written request to:
Investor Relations
Washington Homes, Inc.
1802 Brightseat Road, 6th floor
Landover, Maryland 20785-4238
Corporate Office
- ----------------
1802 Brightseat Road, 6th floor
Landover, Maryland 20785-4238
Transfer Agent & Registrar
- --------------------------
Chase Mellon
Shareholder Services
New York, New York
http://www.cmssonline.com
Auditors
- --------
Deloitte & Touche LLP
Washington, D.C.
Common Price Range
- ------------------
The common stock is traded on the New York Stock Exchange, Symbol "WHI".
Fiscal 1997 High Low
- ----------------------------------------
1st Quarter 4.13 3.38
2nd Quarter 4.75 3.63
3rd Quarter 5.00 3.88
4th Quarter 4.13 3.63
Fiscal 1996 High Low
- ----------------------------------------
1st Quarter 5.63 4.25
2nd Quarter 6.38 4.88
3rd Quarter 5.75 4.50
4th Quarter 4.75 3.75
As of October 16, 1997, there were approximately 212 holders of record
representing an estimated 3,250 beneficial owners of the Company's common stock.
<PAGE>
D I R E C T O R S A N D O F F I C E R S
-------------------------------------------
Board of Directors
- ------------------
Geaton A. DeCesaris, Sr.+
Chairman of the Board
Geaton A. DeCesaris, Jr.+
President, Chief Executive Officer
Paul Sukalo
Senior Vice President
Thomas Connelly
Chief Financial Officer Western Pacific Housing
El Segundo, California
Richard S. Frary*
Managing Director Tallwood Associates, Inc.
New York, New York
Ronald M. Shapiro*
Counsel to the Firm Shapiro and Olander
Baltimore, Maryland
President, Shapiro, Robinson & Associates
Richard B. Talkin*
Attorney
Columbia, Maryland
Corporate Officers
- ------------------
Geaton A. DeCesaris, Sr.
Chairman of the Board
Geaton A. DeCesaris, Jr.
President, Chief Executive Officer
Thomas J. Pellerito
President--Homebuilding Operations, Chief Operating Officer
Christopher Spendley+
Secretary, Senior Vice President, Chief Financial Officer
Clayton W. Miller
Senior Vice President, Chief Accounting Officer
Paul Sukalo
Senior Vice President Production
Jacqueline A. Lozier
Treasurer
Division and Subsidiary Officers
- --------------------------------
William A. Wilder
Senior Vice President Land Operations
Timothy M. Bates
Vice President Virginia Division
Lawrence Breneman, Jr.
Vice President Pittsburgh Division
Marco A. DeCesaris
Vice President Chesapeake Division
Dorothy Minich
Vice President Patuxent Division
Robert Hutson
Executive Vice President Westminster Homes, Inc.
Paul Carty
Vice President Westminster Homes, Inc.
Charlotte Division
Craig Smith
Vice President Westminster Homes, Inc.
Greensboro Division
Robert Yeatman
Vice President Westminster Homes, Inc.
Nashville Division
Jeffrey Donohue
Senior Vice President Homebuyer's Mortgage, Inc.
+ Executive Committee
* Audit Committee and Compensation Committee
<PAGE>
Washington
Homes
Logo
Making the American dream affordable.(R)
- --------------------------------------------------------------------------------
1802 Brightseat Road
Landover, MD 20785
301-772-8900
http://www.washhomes.com
