<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 333-44515-04
Fox Ridge Homes, Inc.
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(exact name of registrant as specified in its charter)
Tennessee 62-1715049
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(State or other jurisdiction of (IRS employer identification
incorporation or organization) number)
5115 Maryland Way
Brentwood, Tennessee 37027
(615) 377-6840
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
(Not Applicable)
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(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
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As of August 13, 1998 there were 100 total shares of common stock outstanding.
APPLICABLE ONLY TO ISSUERS 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 Sections 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
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FOX RIDGE HOMES, INC.
FORM 10-Q
INDEX
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Page
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<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
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<S> <C> <C>
Item 1. Balance Sheets at June 30, 1998 (unaudited)
and December 31, 1997....................................... 3
Statements of Income for the
Three Months Ended June 30, 1998 (unaudited)
and June 30, 1997 (unaudited) and the
Six Months Ended June 30, 1998 (unaudited)
and June 30, 1997 (unaudited)............................... 4
Statements of Cash Flows for the Six
Months Ended June 30, 1998 (unaudited) and
June 30, 1997 (unaudited)................................... 5
Notes to Financial Statements............................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 7
PART II OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K............................ 8
Exhibit Index............................................... 9
Signature................................................... 10
</TABLE>
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PART I
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ITEM 1.
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FOX RIDGE HOMES, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
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(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ - $ -
Accounts receivable 38 192
Inventory, net 24,262 19,879
Investment in FRP, LP 81 179
Property and equipment, net 286 228
Goodwill, net 10,206 10,753
Other 177 122
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TOTAL ASSETS $ 35,050 $ 31,353
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LIABILITIES AND SHAREHOLDER'S EQUITY
Notes payable - lot acquisitions $ 900 $ 900
Notes payable - acquisition note 4,692 4,750
Accounts payable 3,183 2,281
Due to affiliate 9,220 8,012
Accrued expenses 1,485 637
Deferred taxes 281 281
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TOTAL LIABILITIES 19,761 16,861
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY:
Common stock, $.01 par, 100,000 shares
authorized; 100 shares issued and outstanding - -
Additional paid in capital 14,250 14,250
Retained earnings 1,039 242
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Total shareholder's equity 15,289 14,492
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TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $ 35,050 $ 31,353
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</TABLE>
See notes to financial statements.
3
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FOX RIDGE HOMES, INC.
STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR* SUCCESSOR PREDECESSOR*
------------ --------------- ----------- --------------
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUES:
Revenues $13,912 $8,752 $25,370 $19,983
Other income 23 21 25 36
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Total Revenues 13,935 8,773 25,395 20,019
EXPENSES:
Cost of sales 11,718 7,461 21,292 16,824
Interest expense 278 279 544 445
Selling, general and administrative 910 821 1,688 1,570
Amortization of goodwill 274 - 547 -
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Total expenses 13,180 8,561 24,071 18,839
Income before income tax expense 755 212 1,324 1,180
Income tax expense (299) (12) (527) (63)
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NET INCOME $ 456 $ 200 $ 797 $ 1,117
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</TABLE>
* Period is prior to the date that the Company was acquired by NVR Homes, Inc.
(see note 1)
See notes to financial statements.
4
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FOX RIDGE HOMES, INC.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
(SUCCESSOR) (PREDECESSOR)*
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 797 $ 1,117
Adjustments to reconcile net income
to net cash used by
Operating activities:
Depreciation and amortization 605 62
Equity earnings in FRP, LP (35) (49)
Net change in assets and liabilities:
Increase in inventories (4,383) (3,649)
Decrease (increase) in receivables 154 (1,032)
(Decrease) increase in accounts payable
and accrued liabilities 1,750 (1,075)
Other, net (55) 4
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Net cash used by operating activities (1,167) (4,622)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (116) (82)
Dividends from FRP, LP 133 95
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Net cash provided by investing
activities 17 13
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends - (1,793)
Increase in advances from affiliates 1,208 -
Net borrowings (repayments) under notes payable (58) 6,252
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Net cash provided by financing activities 1,150 4,459
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Net decrease in cash - (150)
Cash, beginning of the period - 660
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Cash, end of period $ - $ 510
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period $ 356 $ 212
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Taxes paid during the period
(net of refunds) $ (45) $ 78
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</TABLE>
* Period is prior to the date that the company was acquired by NVR Homes, Inc.
(see note 1)
See notes to financial statements.
5
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FOX RIDGE HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
Fox Ridge Homes, Inc. ("Fox Ridge" or the "Successor"), a wholly owned
subsidiary of NVR Homes Inc. ("Homes"), itself wholly owned by NVR, Inc.
("NVR"), was formed in 1997 to purchase substantially all of the assets and
assume certain liabilities (the "Purchase Transaction") of Fox Ridge Homes, Inc.
("FRH" or the "Predecessor"), a home builder in Nashville, Tennessee, which
occurred on October 31, 1997 (the "Purchase Date"). The accompanying unaudited
financial statements include the accounts of the Successor for the three and six
months ending June 30, 1998, and include the accounts of the Predecessor for the
three and six months ending June 30, 1997. As a result, the financial
statements for periods subsequent to the Purchase Date are not comparable to the
financial statements for periods prior to the Purchase Date. The statements are
provided pursuant to Fox Ridge's status as a guarantor of NVR's 11% Senior Notes
Due 2003. The statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six-month
period ended June 30, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998.
2. ADOPTION OF NEW ACCOUNTING PRINCIPLES
During the quarter ended March 31, 1998, Fox Ridge adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business enterprise
during a period from transactions and other events and circumstances from non-
owner sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. For the three
and six months ended June 30, 1998 and 1997, comprehensive income equaled net
income; therefore, a separate statement of comprehensive income is not included
in the accompanying financial statements.
Fox Ridge will also implement SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information in 1998. SFAS No. 131 establishes
standards for the way that public enterprises report information about operating
segments in annual and interim financial statements. Because Fox Ridge has only
one reportable operating segment pursuant to the guidance of SFAS No. 131, the
implementation of SFAS No. 131 has no impact on Fox Ridge's financial
statements.
6
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ITEM 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
FORWARD-LOOKING STATEMENTS
Some of the statements in this Form 10-Q, as well as statements made by the
Company in periodic press releases, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Certain, but not necessarily all, of such forward-looking statements can be
identified by the use of forward-looking terminology, such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereof or comparable terminology, or by discussion of
strategies, each of which involves risks and uncertainties. All statements
other than of historical facts included herein, including those regarding market
trends, the Company's financial position, business strategy, projected plans and
objectives of management for future operations, are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results or performance of the
Company to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Such risk
factors include, but are not limited to, general economic and business
conditions, interest rate changes, competition, the availability and cost of
land and other raw materials used by the Company in its homebuilding operations,
shortages of labor, weather related slow downs, building moratoria, governmental
regulation, the ability of the Company to integrate any acquired business,
technological problems encountered with year 2000 issues, certain conditions in
financial markets and other factors over which the Company has little or no
control.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Fox Ridge Homes, Inc. ("Fox Ridge" or the "Successor"), a wholly owned
subsidiary of NVR Homes Inc. ("Homes"), itself wholly owned by NVR, Inc.
("NVR"), was formed during 1997 to purchase substantially all of the assets and
assume certain liabilities (the "Purchase Transaction") of Fox Ridge Homes, Inc.
("FRH" or the "Predecessor"), a home builder in Nashville, Tennessee. The
analysis below of the results of operations is a comparison of the Predecessor's
results for the three and six months ended June 30, 1997 and the Successor's
results for the three and six months ended June 30, 1998.
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Income before income tax expense increased $543 to $755 in the second
quarter of 1998 from $212 in the second quarter of 1997. The increase is a
direct result of a higher number of settlements in the current quarter as
compared to the prior year quarter, coupled with improved gross margins, and
offset by goodwill amortization which resulted from the Purchase Transaction.
Fox Ridge settled 89 units during the second quarter of 1998 compared with 62
units settled in the second quarter of 1997. New orders increased by 34% from
82 units in the quarter ended June 30, 1997 to 110 units in the quarter ended
June 30, 1998. SG&A dollars have increased slightly due to the higher sales
volume.
Backlog units and dollars were 240 and $35,951, respectively, at June 30,
1998 compared to 165 and $22,735, respectively, at June 30, 1997. The increase
in backlog units and dollars is primarily attributable to a 42% increase in new
orders for the six month period ended June 30, 1998 compared to the same 1997
period.
7
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SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Income before income tax expense increased $144 to $1,324 for the first six
months of 1998 from $1,180 for the first six months of 1997. The increase is a
direct result of a higher number of settlements in the current year period as
compared to the prior year period, offset by goodwill amortization, which
resulted from the Purchase Transaction. In addition, SG&A dollars have
increased slightly due to the higher sales volume. Fox Ridge settled 168 units
during the first six months of 1998 compared with 143 units settled in the first
six months of 1997. New orders increased by 42% from 192 units in the six
months ended June 30, 1997 to 273 units in the six months ended June 30, 1998.
YEAR 2000 ISSUE
The Year 2000 Issue is the risk that computer programs using two-digit date
fields will fail to properly recognize the year 2000, with the result being
business interruptions due to computer system failures by the Company's software
or hardware or that of government entities, service providers and vendors. In
response to the Year 2000 Issue, the Company has completed its initial review to
assess the Company's exposure to Year 2000 Issues, and has developed a detailed
plan to remediate areas of exposure. Implementation of the remediation plan has
commenced, and the Company expects that remediation will be completed prior to
January 1, 2000. Based on the Company's continuing assessment, Management does
not believe that the Company's exposure to Year 2000 Issues will have a material
effect on its financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Fox Ridge generally provides for its working capital cash requirements
using cash generated from operations and advances from Homes. Insofar as Homes'
ability to make advances is not impaired, Fox Ridge believes that internally
generated cash and borrowings available from Homes will be sufficient to satisfy
near and long term cash requirements.
PART II
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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A. The Company did not file any reports on Form 8-K during the
quarter ended June 30, 1998.
B. Financial Data Schedule
8
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
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27 Financial Data Schedule 11
9
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SIGNATURE
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.
August 13, 1998 Fox Ridge Homes, Inc.
By: /s/ Paul C. Saville
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Paul C. Saville
Executive Vice President
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FOX RIDGE HOMES, INC.'S CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 38
<ALLOWANCES> 0
<INVENTORY> 24,262
<CURRENT-ASSETS> 0
<PP&E> 286
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,050
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 14,250
<OTHER-SE> 1,039
<TOTAL-LIABILITY-AND-EQUITY> 35,050
<SALES> 25,370
<TOTAL-REVENUES> 25,395
<CGS> 21,292
<TOTAL-COSTS> 22,980
<OTHER-EXPENSES> 547<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 544
<INCOME-PRETAX> 1,324
<INCOME-TAX> 527
<INCOME-CONTINUING> 797
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 797
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Item represents the non-cash amortization of goodwill.
</FN>
</TABLE>
