- --------------------------------------------------------------------*
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 DECEMBER 31, 1995
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 0-13800
INTERNATIONAL AMERICAN HOMES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2472608
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification Number)
4640 FORBES BOULEVARD, LANHAM, MARYLAND 20706
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 306-5306
6001 MONTROSE ROAD, ROCKVILLE, MARYLAND 20852
(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 <check-mark> No
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 Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes <check-mark> No
As of January 31, 1996, the number of shares outstanding of the
registrant's common stock, par value $.01, was 2,612,132. After giving effect
to the future issuance of 112,263 shares of common stock to creditors, pursuant
to the Company's confirmed Plan of Reorganization, the aggregate number of
shares of common stock outstanding will be 2,724,395.
- ----------------------------------------------------------------------
Total number of pages: 17
<PAGE>
Page 2
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
INDEX
PAGE
Part I. Financial Information:
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited) as of December 31, 1995
and March 31, 1995 ............................................ 3
Consolidated Statements of Income and Retained Earnings
(Unaudited) for the three months ended December 31, 1995 and
1994 .......................................................... 5
Consolidated Statements of Income and Retained Earnings
(Unaudited) for the nine months ended December 31, 1995 and
1994 .......................................................... 6
Consolidated Statements of Cash Flows (Unaudited) for the nine
months ended December 31, 1995 and 1994 ....................... 7
Notes to Consolidated Financial Statements (Unaudited)......... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................ 12
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K ............................. 16
Signatures .............................................................. 17
<PAGE>
Page 3
Part I.Financial Information
ITEM 1
CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1995
----------------- --------------
<S> <C> <C>
$ 1,570 $ 1,938
CASH AND SHORT-TERM INVESTMENTS
($860 and $457 restricted)
RECEIVABLES 729 444
REAL ESTATE INVENTORY 19,490 16,997
COLLATERAL FOR BONDS PAYABLE 6,805 7,620
PROPERTY AND EQUIPMENT - less accumulated depreciation of 123 106
$209 and $162
OTHER ASSETS 639 583
-------- --------
TOTAL ASSETS $ 29,356 $ 27,688
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
Page 4
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1995
----------------------- ----------------------
<S> <C> <C>
MORTGAGE NOTES AND LOANS PAYABLE
Construction and mortgage notes secured by real estate $ 11,281 $ 9,664
inventory
Other notes payable 49 60
-------- --------
11,330 9,724
BONDS PAYABLE 6,570 7,362
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 4,919 4,908
CUSTOMER DEPOSITS 209 183
-------- --------
Total Liabilities 23,028 22,177
-------- --------
PREFERRED STOCK - $.01 par value, 4,000,000 shares - -
authorized, none issued
COMMON STOCK - $.01 par value, 10,000,000 shares authorized, 29 29
2,894,343 shares issued including 112,263 shares to be
issued to creditors
ADDITIONAL PAID-IN CAPITAL 2,348 2,348
RETAINED EARNINGS 3,953 3,136
TREASURY STOCK - 169,948 shares (2) (2)
------- ------
Total Stockholders' Equity 6,328 5,511
------- ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 29,356 $ 27,688
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
Page 5
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
<S> <C> <C>
1995 1994
--------- ---------
REVENUES
Home sales $ 13,719 $ 15,691
Interest and other income 231 301
-------- --------
13,950 15,992
-------- --------
COSTS AND EXPENSES
Cost of home sales 11,827 13,702
Selling, general and administrative 1,593 1,537
Interest 210 274
Depreciation 21 20
------- -------
13,651 15,533
------- -------
INCOME BEFORE INCOME TAXES 299 459
PROVISION FOR INCOME TAXES 15 (214)
------- -------
NET INCOME 284 673
RETAINED EARNINGS BEGINNING OF PERIOD 3,669 2,514
--------- --------
RETAINED EARNINGS END OF PERIOD $ 3,953 $ 3,187
========= ========
PER SHARE DATA (Primary and Fully Diluted)
Net income $ .10 $ .25
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Primary and fully diluted 2,724,395 2,724,395
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
Page 6
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
------------------------------
<S> <C> <C>
1995 1994
---------- ------------
REVENUES
Home sales $ 42,988 $ 38,470
Interest and other income 675 893
---------- -----------
43,663 39,363
---------- -----------
COSTS AND EXPENSES
Cost of home sales 37,220 33,121
Selling, general and administrative 4,927 4,169
Interest 602 798
Depreciation 47 61
---------- ----------
42,796 38,149
---------- ----------
INCOME BEFORE INCOME TAXES 867 1,214
PROVISION FOR INCOME TAXES 50 76
---------- ----------
NET INCOME 817 1,138
RETAINED EARNINGS BEGINNING OF PERIOD 3,136 2,049
---------- ----------
RETAINED EARNINGS END OF PERIOD $ 3,953 $ 3,187
========== ==========
PER SHARE DATA (Primary and Fully Diluted)
Net income $ .30 $ .42
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Primary and fully diluted 2,724,395 2,724,395
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
Page 7
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
-------------------------------------------
1995 1994
------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 817 $ 1,138
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 47 61
Changes in operating assets and liabilities
Increase in receivables (285) (568)
Increase in real estate inventory (2,493) (2,507)
Decrease in collateral for bonds payable 815 733
Increase (decrease) in accounts payable and accrued 11 (144)
liabilities
Increase (decrease) in customer deposits 26 (54)
Increase in other assets (56) (31)
------- -------
Net cash used in operating activities (1,118) (1,372)
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Property and equipment, net (64) (48)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage notes and loans payable 25,582 21,243
Payments of mortgage notes and loans payable (23,976) (20,367)
Repayments of bonds payable - finance subsidiaries (792) (680)
------- -------
Net cash provided by financing activities 814 196
------- -------
NET DECREASE IN CASH AND EQUIVALENTS (368) (1,224)
CASH AND EQUIVALENTS BEGINNING OF PERIOD 1,938 3,353
------- -------
CASH AND EQUIVALENTS END OF PERIOD $ 1,570 $ 2,129
======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
Page 8
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
International American Homes, Inc. (the "Company") was incorporated under the
laws of the State of Delaware on April 27, 1983. The Company, through its
subsidiaries, designs, builds, and sells single-family homes and townhomes.
The Company currently conducts its building activities in Metropolitan
Washington, D.C. and Greater Tampa, Florida.
The interim consolidated financial statements have been prepared without audit.
In the opinion of management, all adjustments for interim periods presented
have been made (which include only normal recurring accruals and deferrals) for
a fair presentation of consolidated financial position, results of operations,
and cash flows. The consolidated financial statements and condensed notes
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto included in the Company's latest Annual Report on Form 10-K.
Results for interim periods are not necessarily indicative of the results which
might be expected for a full year.
NOTE 2 - REORGANIZATION UNDER CHAPTER 11
On April 16, 1990, the Company and certain of its wholly-owned subsidiaries
filed voluntary petitions (the "Bankruptcy Petitions") for relief under Chapter
11, Title 11 of the United States Code in the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court"). Certain related
partnerships filed similar petitions in the same Court in 1990 and 1991. Under
the bankruptcy proceeding, substantially all claims against the Company as of
the date of the filing of the Bankruptcy Petitions were stayed while the
Company continued operations as a debtor-in-possession.
A Third Amended Joint Plan of Reorganization dated June 29, 1992 was filed with
the Bankruptcy Court. A Second Amended Disclosure Statement with respect to
the Third Amended Joint Plan of Reorganization and exhibits thereto were
approved by Bankruptcy Court Order dated June 29, 1992. On August 12, 1992,
the Bankruptcy Court entered an order confirming the Third Amended Joint Plan
of Reorganization. On October 29, 1992, the Bankruptcy Court approved certain
technical modifications to the Third Amended Joint Plan of Reorganization to be
effective as of August 12, 1992. A Fourth Amended Joint Plan of Reorganization
dated November 17, 1992, containing those technical modifications, was filed
with the Bankruptcy Court. (The Third Amended Joint Plan of Reorganization and
the Fourth Amended Joint Plan of Reorganization are collectively referred to as
the "Plan" or the "Plan of Reorganization.")
The Plan provides for an initial cash distribution to creditors of
approximately $4,700,000 less administrative expenses. The Plan further
provides for subsequent distributions equal to 50 percent of future cash flows
(as defined in the Plan), if any, for the periods ending June 30, 1993 through
June 30, 1998. The Plan also provides for the issuance of 2,043,296 shares of
the Company's common stock to the creditors resulting in the dilution of the
existing stockholders to 25 percent of the common stock outstanding after
issuance of the additional shares to the creditors.
The Company made partial initial distributions of cash amounting to $3,741,000
and issued 1,931,033 shares of the Company's common stock to the creditors
through December 31, 1995. The Company anticipates
<PAGE>
Page 9
that the remainder of the initial cash distribution amounting to approximately
$450,000 and the remaining 112,263 shares of stock will be distributed to
the creditors once certain remaining disputed claims are resolved.
The Company has calculated the cash flow (as defined in the Plan) for the
period ended on June 30, 1995 and has determined that there was no excess cash
flow (as defined in the Plan) for that period and accordingly no distribution
to creditors was required.
The accompanying financial statements reflect the estimated effect of the
reorganization, including the settlement of liabilities and other claims, the
estimated present value of future cash distributions to creditors of $1,322,000
and the issuance of 112,263 additional shares of common stock.
NOTE 3 - STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company generally considers
all highly liquid instruments purchased with an original maturity of three
months or less to be cash equivalents. The Company paid interest and income
taxes as follows (in thousands):
Period Interest Income Taxes
- ----------------------------------- -------- ------------
Nine months ended December 31, 1995 $ 1,679 $ 64
Nine months ended December 31, 1994 1,635 52
NOTE 4 - INTEREST INCLUDED IN COST OF SALES
Interest included in cost of sales is as follows (in thousands):
Period Interest
- ------------------------------------ --------
Three months ended December 31, 1995 $ 357
Nine months ended December 31, 1995 1,061
Three months ended December 31, 1994 314
Nine months ended December 31, 1994 839
<PAGE>
Page 10
NOTE 5 -CONDENSED FINANCIAL STATEMENTS OF CONSOLIDATED FINANCE SUBSIDIARIES
The Company's wholly-owned finance subsidiaries were established to sell
collateralized mortgage obligations through participation in various
multi-builder bond programs. In these sales, which last occurred in 1987, the
Company originated and pooled mortgage loans which were then pledged as
collateral for bonds payable. The interest rates on the mortgage loans that
comprise the collateral for bonds payable roughly equate with the interest
rates on the related bonds payable.
Condensed financial information is as follows (in thousands):
<TABLE>
<CAPTION>
Condensed Balance Sheets
December 31, 1995 March 31, 1995
----------------- ---------------
<S> <C> <C>
Assets:
Collateral for bonds payable $ 6,805 $ 7,620
Other assets 7 9
------- -------
$ 6,812 $ 7,629
======= =======
Liabilities and Equity:
Bonds payable $ 6,570 $ 7,362
Equity and intercompany advances 242 267
------- -------
$ 6,812 $ 7,629
======= =======
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements of Operations
Nine Months Ended December 31,
----------------------------------
1995 1994
----------- ------------
<S> <C> <C>
Revenues $ 548 $ 763
===== =====
Income before income taxes $ 16 $ 23
===== =====
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended December 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Revenues $ 186 $ 250
===== =====
Income before income taxes $ 4 $ 7
====== =====
</TABLE>
<PAGE>
Page 11
NOTE 6 - COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Company had commitments to purchase 772 finished
building lots at a total purchase price of approximately $27,266,000, over a
four year period. Substantial deposits will be forfeited if the Company is
unable to satisfy these commitments.
The Company is involved from time to time in litigation arising in the ordinary
course of business, none of which is expected to have a material adverse effect
on the Company's financial position or the results of operations.
NOTE 7 - COMMON STOCK
At the 1994 Annual Meeting of Stockholders, which was held on September 13,
1994, the stockholders approved a proposal to adopt certain amendments (the
"Amendments") to the Company's Restated Certificate of Incorporation (i) to
effect a 1-for-10 reverse stock split of the Company's issued and outstanding
common stock (the "Reverse Stock Split") and (ii) to change the number of
authorized shares of common stock from 30 million to 10 million. The
Amendments did not change the par value of the common stock which remained at
$.01 per share. The Amendments became effective on May 31, 1995 with the
filing of a Certificate of Amendment with the Secretary of State of Delaware on
May 31, 1995. The effect of the Reverse Stock Split has been retroactively
reflected in the statements for all periods presented.
Under the Plan of Reorganization, 2,043,296 shares of common stock, as adjusted
for the Reverse Stock Split, were to be issued pro rata to the creditors which
would represent 75% of the outstanding common stock after issuance of those
shares. 1,931,033 of those shares have been issued and the remaining 112,263
shares will be distributed to the creditors once certain remaining disputed
claims are resolved.
Income per share is based on the number of shares outstanding including the
additional shares to be issued pursuant to the Plan.
<PAGE>
Page 12
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE PLAN OF REORGANIZATION
See Note 2, "Reorganization Under Chapter 11" of Notes to Consolidated
Financial Statements of the Company appearing elsewhere in this report.
RESULTS OF OPERATIONS
The following table sets forth certain information with respect to homes
delivered and homes sold during the periods presented as well as homes sold
under contract but not delivered ("Backlog") at the dates shown (dollars in
thousands).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------------------ ---------------------------------------
1995 1994 1995 1994
------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Homes delivered
Units 93 105 284 267
Home sales revenue $ 13,719 $ 15,691 $ 42,988 $ 38,470
Average sales price $ 147.5 $ 149.4 $ 151.4 $ 144.1
Homes sold
Units 85 70 266 259
Sales value $ 12,504 $ 9,609 $ 40,042 $ 39,963
Average sales price $ 147.1 $ 137.3 $ 150.5 $ 154.3
</TABLE>
December 31,
-----------------------------------
1995 1994
------------- -----------
Backlog
Units 103 103
Sales value $ 18,079 $ 18,974
Average sales price $ 175.5 $ 184.2
The decrease in home sales revenues for the three months ended December 31,
1995 compared to the three months ended December 31, 1994 results from a
combination of a decrease in the number of homes delivered and a decrease in
the average sales price of the homes delivered.
The increase in home sales revenues for the nine months ended December 31, 1995
compared to the nine months ended December 31, 1994 results from a combination
of an increase in the number of homes delivered and an increase in the average
sales price of the homes delivered.
<PAGE>
Page 13
The number of homes sold during the three months ended December 31, 1995 and
the average sales price of the homes sold during that period were both higher
when compared with the prior comparable period. The increase in the number of
homes sold is due to an increase in the number of homes sold in Metropolitan
Washington, D.C., and the increase in the average sales price of the homes sold
is attributable to a larger proportion of sales in Metropolitan Washington,
D.C., where prices are higher.
The Company realized an increase in the number of homes sold during the nine
months ended December 31, 1995 compared to the nine months ended December 31,
1994. The average sales price of the homes, however, decreased as did the
average sales price of the homes in Backlog at December 31, 1995 when compared
to December 31, 1994. The increase in the number of homes sold is due
primarily to an increase in the number of homes sold in Greater Tampa, Florida.
The decrease in the average sales price of the homes sold and in the average
sales price of the homes in Backlog is attributable to a larger proportion of
sales in Greater Tampa, Florida, where prices are lower, and also to the
introduction of a lower priced townhouse product in Metropolitan Washington
D.C.
The Backlog at December 31, 1995 and at December 31, 1994 includes $6,142,000
and $3,681,000 of contingent contracts, respectively.
THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1994.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain information
regarding the Company's operations (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Ended December 31,
---------------------------------------------------------------------------------
1995 1994
----------------------------------- ---------------------------------------
Dollars % Dollars %
----------- ------------ -------------------- ------------
<S> <C> <C> <C> <C>
Home sales revenues $ 13,719 100.0% $ 15,691 100.0%
Cost of home sales 11,827 86.2 13,702 87.3
Gross profit 1,892 13.8 1,989 12.7
Selling, general and administrative 1,593 11.6 1,537 9.8
expenses
Pre-tax profit 299 2.1 459 2.9
</TABLE>
While gross profit decreased for the three months ended December 31, 1995
compared to the three months ended December 31, 1994, gross profit as a
percentage of home sales revenue increased from 12.7% to 13.8%. The decrease
in gross profits is due to the decrease in home sales revenue, while the
increase in gross profit as a percentage of home sales revenue is due primarily
to cost savings on both land and construction which have resulted in improved
margins realized on homes sold in Greater Tampa, Florida.
Selling, general and administrative expenses for the three months ended
December 31, 1995 increased when compared with the prior comparable period and
also increased as a percentage of the related home sales revenue. These
increases are due to the opening of new communities and to an increase in the
fixed components of selling, general, and administrative expenses.
<PAGE>
Page 14
The change in pre-tax profit for the three months ended December 31, 1995
compared to the three months ended December 31, 1994 is a reflection of the
changes in gross profit and in selling, general and administrative expenses
described above.
NINE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO THE NINE MONTHS ENDED DECEMBER
31, 1994.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain information
regarding the Company's operations (dollars in thousands).
<TABLE>
<CAPTION>
Nine Months Ended December 31,
--------------------------------------------------------------------------------
1995 1994
----------------------------------- -----------------------------------
Dollars % Dollars %
------------ ------------- ---------------- ------------
<S> <C> <C> <C> <C>
Home sales revenues $ 42,988 100.0% $ 38,470 100.0%
Cost of home sales 37,220 86.6 33,121 86.1
Gross profit 5,768 13.4 5,349 13.9
Selling, general and administrative 4,927 11.5 4,169 10.8
expenses
Pre-tax profit 867 2.0 1,214 3.2
</TABLE>
While gross profit increased for the nine months ended December 31, 1995
compared to the nine months ended December 31, 1994, gross profit as a
percentage of home sales revenue decreased from 13.9% to 13.4%. This
percentage decrease results primarily from comparative increases in developed
lot costs as well as increases in other construction costs. These cost
increases could not be recouped through higher sales prices due to strong
competition in the markets where the Company operates.
Selling, general and administrative expenses for the nine months ended December
31, 1995 increased when compared with the prior comparable period and also
increased as a percentage of the related home sales revenue. These increases
are due to the increase in sales and are also due to an increase in the fixed
components of selling, general, and administrative expenses.
The change in pre-tax profit for the nine months ended December 31, 1995
compared to the nine months ended December 31, 1994 is a reflection of the
changes in gross profit and in selling, general and administrative expenses
described above.
Uncertain local economic conditions in the areas where the Company operates
have adversely affected sales of new homes and the level of gross profit. The
Company is unable to predict the extent to which such factors will continue to
adversely affect the Company's operations in the future.
INTEREST AND OTHER INCOME
Interest and other income includes $548,000 and $763,000 and interest expense
includes $522,000 and $721,000 for the nine months ended December 31, 1995 and
for the nine months ended December 31, 1994, respectively, from wholly-owned
finance subsidiaries established to sell collateralized mortgage obligations
through participation in various multi-builder bond programs.
<PAGE>
Page 15
LIQUIDITY AND CAPITAL RESOURCES
The Company, through its subsidiaries, obtains financing from commercial banks
for a portion of the cost of acquiring finished building lots and for most of
the costs of the construction of homes. This financing is generally available
for homes that are subject to a contract of sale and also for a limited number
of homes in advance of sale. The Company's loan commitments as well as current
banking regulations limit the portion of each home that can be financed to
approximately 75% of its value. Since the Company uses its own capital
resources to fund those costs that cannot be financed, the Company's future
growth will be limited by the amount of such resources. As a result of the use
of these financing arrangements, the Company is currently, and expects to
continue to be, highly leveraged.
The Company's subsidiaries currently have financing agreements in the aggregate
amount of $31,450,000 with commercial banks located in the areas in which the
subsidiaries operate. The terms of these financing agreements vary, are each
for one year or more from their date of origination (with expiration dates
ranging from March 1996 to October 1998), are generally guaranteed by the
Company, and are all secured by the related real estate inventory. The
Company's Chairman and President has personally guaranteed certain of these
obligations up to a maximum aggregate principal amount of $19,500,000, of which
$3,548,000 was outstanding at December 31, 1995.
The Company generally acquires finished building lots under contracts which
spread the time for acquisition of those lots over a substantial period of time
roughly coinciding with the estimated time required for the sale of the homes
on those lots. At December 31, 1995, the Company had commitments to purchase
772 finished building lots at a total purchase price of approximately
$27,266,000 over a four year period. These commitments assure a continuing
supply of finished building lots in the future. Substantial deposits will be
forfeited if the Company is unable to satisfy these commitments.
The Company's short-term liquidity and its ability to operate over the short-
term are reasonably assured by the financing agreements in place, by the
Company's backlog of sales contracts, and by the commitments to acquire
finished building lots. The Company's long-term liquidity is not affected by
any material capital expenditures but would be impacted by the inability to
renew certain of the financing agreements when they mature. Also having an
impact on the Company's long-term liquidity are the strength of the housing
markets in the areas where the Company operates and the ability of the Company
to maintain a continued supply of finished building lots. Management believes
that the Company currently has adequate financing and liquidity to meet its
financial obligations and will be able to fund the acquisition and construction
of inventory to support modest growth. However, there is no assurance that
such financing will be available to the Company in the future. In addition,
homebuilding is a cyclical industry with economic conditions having a
substantial impact on operating performance.
The Plan does not permit the subsidiaries of the Company to pay any dividends
to the parent company. The Plan further prohibits the Company and its
subsidiaries from acquiring debt securities from or loaning or advancing any
monies to any other party except in the ordinary course of business. These
restrictions are effective until August 12, 1998 and by their nature require
the Company's subsidiaries to be self sufficient. From time to time, a
subsidiary of the Company makes a purchase of developed land from or on behalf
of another and later resells that land to the latter on terms that will assure
that the accommodation purchaser recovers its costs plus reasonable
compensation for having made the purchase. While such transactions can affect
temporarily the cash flow of each of the participating subsidiaries, they do
not impact the overall cash flow of the Company. The Plan further provides for
the payment of distributions to the creditors equal to 50 percent of cash flows
(as defined in the Plan), if any, generated by the Company's subsidiaries for
the periods ending June 30, 1993 through June 30, 1998. Any such payment of 50
percent of the cash flow would be funded from the cash flow generated. Despite
these
<PAGE>
Page 16
requirements and restrictions, management believes that the Company and
each of its subsidiaries currently have adequate liquidity to meet their
financial obligations. However, there is no assurance that these requirements
and restrictions will not have an impact on the future liquidity of the Company
or its subsidiaries.
Part II. Other Information
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE>
Page 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL AMERICAN HOMES, INC.
Date: FEBRUARY 14, 1996 By: /S/ ROBERT J. SUAREZ
-------------------------
Robert J. Suarez
President
Date: FEBRUARY 14, 1996 By: /S/ MICHAEL P. VILLA
-------------------------
Michael P. Villa
Vice President, Treasurer, and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 1,570
<SECURITIES> 0
<RECEIVABLES> 729
<ALLOWANCES> 0
<INVENTORY> 19,490
<CURRENT-ASSETS> 0 *
<PP&E> 332
<DEPRECIATION> 209
<TOTAL-ASSETS> 29,356
<CURRENT-LIABILITIES> 0 *
<BONDS> 17,900
<COMMON> 29
0
0
<OTHER-SE> 6,299
<TOTAL-LIABILITY-AND-EQUITY> 29,356
<SALES> 42,988
<TOTAL-REVENUES> 43,663
<CGS> 37,220
<TOTAL-COSTS> 42,796
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 867
<INCOME-TAX> 50
<INCOME-CONTINUING> 817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 817
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
* - the Company does not present a classified balance sheet
</TABLE>
