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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 September 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 333-44515-03
RVN, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 51-0378026
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(State or other jurisdiction of (IRS employer identification
incorporation or organization) number)
1105 North Market Street
Wilmington, Delaware 19801
(302)427-7694
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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 November 4, 1998 there were 1,000 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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RVN, INC.
FORM 10-Q
INDEX
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Page
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PART I FINANCIAL INFORMATION
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Item 1. Balance Sheets at September 30, 1998 (unaudited)
and December 31, 1997......................................................... 3
Statements of Income for the
Three Months Ended September 30, 1998 (unaudited)
and September 30, 1997 (unaudited) and the
Nine Months Ended September 30, 1998 (unaudited)
and September 30, 1997 (unaudited)............................................ 3
Statements of Cash Flows for the Nine
Months Ended September 30, 1998 (unaudited) and
September 30, 1997 (unaudited)................................................ 4
Notes to Financial Statements................................................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................... 6
PART II OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.............................................. 7
Exhibit Index................................................................. 8
Signature..................................................................... 10
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PART I
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ITEM 1.
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RVN, INC
Balance Sheets
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10 $ 11
Royalty receivable 2,707 1,880
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Total assets $2,717 $1,891
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LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable and accrued expenses $ 931 $ 643
Commitments and contingencies
Shareholder's equity:
Common stock, $1 par value; 3,000 shares
authorized; 1,000 shares issued and outstanding 1 1
Additional paid-in capital 64 64
Retained earnings 1,721 1,183
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Total shareholder's equity 1,786 1,248
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Total liabilities and shareholder's equity $2,717 $1,891
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</TABLE>
RVN, INC.
Statements of Income
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenues:
Royalty revenue $ 7,971 $ 5,992 $20,378 $15,902
Other income 4 2 5 6
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Total revenues 7,975 5,994 20,383 15,908
Expenses:
General and administrative 6 8 17 28
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Income before income tax 7,969 5,986 20,366 15,880
Income tax expense (2,819) (2,102) (7,204) (5,558)
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Net Income $ 5,150 $ 3,884 $13,162 $10,322
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</TABLE>
See notes to financial statements.
3
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RVN, INC.
Statements of Cash Flows
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
Sept. 30, 1998 Sept. 30, 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 13,162 $10,322
Adjustments to reconcile net income to
net cash provided by
operating activities:
Increase in royalty receivables (827) (592)
Increase in accounts payable and
accrued liabilities 288 180
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Net cash provided by
operating activities 12,623 9,910
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Cash flows from financing activities:
Dividend to parent (12,624) (9,958)
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Net cash used by
financing activities (12,624) (9,958)
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Net increase (decrease) in cash (1) (48)
Cash, beginning of period 11 62
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Cash, end of period $ 10 $ 14
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Supplemental disclosure of cash flow information:
Interest paid during the period $ - $ -
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Taxes paid during the period, net of refunds $ 6,916 $ 5,353
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</TABLE>
See notes to financial statements.
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RVN, INC.
Notes to Financial Statements
(dollars in thousands)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of
RVN, Inc. ("RVN" or the "Company"). RVN is a wholly owned subsidiary of NVR,
Inc. ("NVR"). The statements are provided pursuant to RVN's status as a
guarantor of NVR's 11% Senior Notes due 2003 (the "Senior Notes"). 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 nine-month period ended September
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, the Company 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 nine month period ended September 30, 1998 and 1997, comprehensive income
equaled net income; therefore, a separate statement of comprehensive income is
not included in the accompanying financial statements.
The Company 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 the Company has
only one reportable operating segment pursuant to the guidance of SFAS No. 131,
the implementation of SFAS No. 131 has no impact on the Company's financial
statements.
3. SHAREHOLDER'S EQUITY
A summary of changes in shareholder's equity is presented below:
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings
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<S> <C> <C> <C>
Balance, December 31, 1997 $1 $64 $ 1,183
Net income - - 13,162
Dividend to parent - - (12,624)
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Balance, September 30, 1998 $1 $64 $ 1,721
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</TABLE>
5
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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 (on both a national and regional level), interest rate changes,
competition, the availability and cost of land and other raw materials used by
NVR, Inc. 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.
RVN, INC.
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RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
1997
Under a royalty agreement entered into on October 1, 1996 with NVR, Inc.
("NVR"), RVN's parent company, RVN, Inc. ("RVN") earns royalty fees based on a
percentage of settlement revenue for allowing NVR to use the Ryan Homes and
NVHomes tradenames to market homes. RVN earns 100% of its revenue from NVR. The
increase in royalty revenues in the current three and nine month periods as
compared to the prior year three and nine months periods resulted from higher
revenues earned by NVR. RVN has no significant other income or general and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
RVN provides for its working capital cash requirements using cash generated
solely from operations. As shown in RVN's statement of cash flows for the
period ended September 30, 1998, cash generated from operations is primarily
distributed to NVR. Insofar as NVR's ability to make royalty payments is not
impaired, RVN believes that internally generated cash will be sufficient to
satisfy its near and long term cash requirements.
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
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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.
7
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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 September 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.
November 9, 1998 RVN, Inc.
By: /s/ Paul C. Saville
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Paul C. Saville
Vice President
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RVN, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 2,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,717
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 1,721
<TOTAL-LIABILITY-AND-EQUITY> 2,717
<SALES> 0
<TOTAL-REVENUES> 20,383
<CGS> 0
<TOTAL-COSTS> 17
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,366
<INCOME-TAX> 7,204
<INCOME-CONTINUING> 13,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,162
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
