- --------------------------------------------------------------------*
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, 1996
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 (I.R.S.Employer Identification Number)
of incorporation or organization)
4640 FORBES BOULEVARD, LANHAM, MARYLAND 20706
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 306-5306
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
APPLICABLE ONLY TO 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 [ x ] No [ ]
As of July 31, 1996, the number of shares outstanding of the registrant's
common stock, par value $.01, was 2,734,395.
Total number of pages: 13
<PAGE>
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
INDEX
PAGE
Part I. Financial Information:
Item 1.Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited) as of June 30, 1996 and
March 31, 1996 .......................................... 3
Consolidated Statements of Income and Retained Earnings
(Unaudited) for the three months ended June 30, 1996 and 1995 .........5
Consolidated Statements of Cash Flows (Unaudited) for the Three
Months ended June 30, 1996 and 1995 .................................. 6
Notes to Consolidated Financial Statements (Unaudited)................ 7
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of Operations ............. 10
Part II.Other Information:
Item 6. Exhibits and Reports on Form 8-K .......................... 12
Signatures ................................................................. 13
Page 2
<PAGE>
Part I.Financial Information
ITEM 1
CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
ASSETS
June 30, 1996 March 31, 1996
CASH AND SHORT-TERM INVESTMENTS $ 664 $ 1,764
($635 and $550 restricted)
RECEIVABLES 1,467 1,223
REAL ESTATE INVENTORY 23,007 21,860
COLLATERAL FOR BONDS PAYABLE 5,626 5,871
PROPERTY AND EQUIPMENT - less accumulated
depreciation of $246 and $233 158 172
OTHER ASSETS 720 637
--------- --------
TOTAL ASSETS
$ 31,642 $ 31,527
========= ========
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 3
<PAGE>
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
<S> ---------------- ----------------
<C> <C>
MORTGAGE NOTES AND LOANS PAYABLE
Construction and mortgage notes secured by real estate $ 13,841 $ 13,785
inventory
Other notes payable -
---------------- 29
13,841 13,814
BONDS PAYABLE 5,424 5,660
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 5,410 5,362
CUSTOMER DEPOSITS 320 237
Total Liabilities ---------------- -------------
24,995 25,073
PREFERRED STOCK - $.01 par value, 4,000,000 shares - -
authorized, none issued
COMMON STOCK - $.01 par value, 10,000,000 shares 29 29
authorized, 2,904,343 shares issued
ADDITIONAL PAID-IN CAPITAL 2,354 2,348
RETAINED EARNINGS 4,266 4,079
TREASURY STOCK - 169,948 shares (2) (2)
Total Stockholders' Equity ---------------- -------------
6,647 6,454
---------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 31,642 $ 31,527
================ =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 4
<PAGE>
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 June 30,
<S> ------------------------------------------
<C> <C>
1996 1995
---------- ----------
REVENUES
Home sales $ 13,907 $ 14,611
Interest and other income 161 209
---------- -----------
14,068 14,820
COSTS AND EXPENSES
Cost of home sales ---------- -----------
11,992 12,617
Selling, general and administrative 1,642 1,664
Interest 144 202
Depreciation 23 10
----------- -----------
13,801 14,493
----------- -----------
INCOME BEFORE INCOME TAXES 267 327
PROVISION FOR INCOME TAXES 80 20
------------ -----------
NET INCOME 187 307
RETAINED EARNINGS, BEGINNING OF PERIOD 4,079 3,136
------------ ------------
RETAINED EARNINGS, END OF PERIOD $ 4,266 $ 3,443
============ ============
PER SHARE DATA (Primary and Fully Diluted)
Net income $ .07 $ .11
============= ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Primary and fully diluted 2,734,395 2,724,395
============= ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 5
<PAGE>
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
<S> -------------------------------
<C> <C>
1996 1995
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 187 $ 307
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 23 10
Changes in operating assets and liabilities
Increase in restricted cash (85) (25)
Increase in receivables (244) (670)
Increase in real estate inventory (1,147) (307)
Decrease in collateral for bonds payable 245 217
Increase (decrease) in accounts payable and accrued 48 (296)
liabilities
Increase (decrease) in customer deposits 83 (4)
Other (83) 15
---------- --------
Net cash used in operating activities (973) (753)
---------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Property and equipment, net (9) (6)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage notes and loans payable 8,175 8,753
Payments of mortgage notes and loans payable (8,148) (8,374)
Repayments of bonds payable - finance subsidiaries (236) (214)
Proceeds from stock options exercised 6 -
----------- ---------
Net cash (used in) provided by financing activities (203) 165
---------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,185) (594)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,214 1,481
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29 $ 887
=========== =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 487 $ 453
============ =============
Income taxes $ 45 $ 21
============ =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 6
<PAGE>
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 and develops building lots. The Company currently conducts its
building activities in Metropolitan Washington, D.C. and 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.
On April 16, 1990, the Company and certain of its wholly-owned subsidiaries
filed voluntary petitions for relief under Chapter 11, Title 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
District of New Jersey (the "Bankruptcy Court"). On August 12, 1992, the
Bankruptcy Court entered an order confirming the Company's Plan of
Reorganization (the "Plan" or "Plan of Reorganization").
NOTE 2 - CASH AND CASH EQUIVALENTS
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.
NOTE 3 - INTEREST INCURRED
Interest costs incurred and the related amount capitalized to inventories
and expensed to the Consolidated Statements of Income and Retained Earnings
are as follows (in thousands):
Three Months Ended June 30,
---------------------------------------
1996 1995
-------- --------
Incurred $ 524 $ 478
Capitalized 379 276
Expensed 145 202
Page 7
<PAGE>
NOTE 4 -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 Sheet
(Unaudited)
June 30,1996 March 31, 1996
--------------- ----------------
<S> <C> <C>
Assets:
Collateral for bonds payable $5,625 $5,871
Other assets 8 30
-------------- ----------------
$5,634 $5,901
============== ================
Liabilities and Equity:
Bonds payable $5,424 $5,660
Equity and intercompany advances 210 241
-------------- ---------------
$5,634 $5,901
</TABLE>
<TABLE>
<CAPTION>
Condensed Statement of Operations
(Unaudited)
Three Months Ended June 30,
-----------------------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Revenues $137 $182
========= =========
Income before taxes $5 $6
======== ========
</TABLE>
Page 8
<PAGE>
NOTE 5 - COMMITMENTS AND CONTINGENCIES
At June 30, 1996, the Company had commitments to purchase 813 finished
building lots at a total purchase price of approximately $30,374,000, over a
four-year period. Substantial deposits will be forfeited if the Company is
unable to satisfy these commitments.
The Plan of Reorganization provides for distributions to creditors 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 Company has
calculated the cash flow (as defined in the Plan) for the period ended June
30, 1996 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. During the year ended March 31, 1993, the Company estimated
the initial liability for these potential distributions in the amount of
$1,322,000 and such amount is included in Accounts Payable and Accrued
Liabilities on the accompanying consolidated balance sheets.
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.
Page 9
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 $33,280,000 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 September 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 agreed to personally
guarantee certain of these obligations up to an aggregate maximum amount of
$14,500,000. At June 30, 1996, the outstanding principal amount of loans
guaranteed by the Company's Chairman and President was $4,777,000.
The Company generally acquires finished building lots under contracts which
spread the time for acquisition of such lots over a period of time that
roughly coincides with the estimated time required for the sale of the homes
on those lots. At June 30, 1996, the Company had commitments to purchase
813 finished building lots at a total purchase price of approximately
$30,374,000 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.
During the year ended March 31, 1996, the Company purchased a parcel of land
in Greater Tampa, Florida containing approximately 360 developed and
undeveloped lots. At June 30, 1996, the Company had developed 30 of those
undeveloped lots into finished building lots and had begun development of 79
additional lots. The Company obtained financing from a commercial bank to
fund a portion of the cost of acquiring and developing the land.
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. 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 will also affect the Company's long-term liquidity. 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
Page 10
<PAGE>
money 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 land or finished
building lots from or on behalf of another subsidiary and later resells that
land or finished building lots to the latter on terms that will assure that
the accommodation purchaser recovers its costs. 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 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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
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).
Three Months Ended June 30,
---------------------------------
1996 1995
----------- ----------
Homes delivered
Units 98 97
Home sales revenue $ 13,907 $ 14,611
Average sales price $ 141.9 $ 150.6
Homes sold
Units 127 78
Sales value $ 19,453 $ 10,924
Average sales price $ 153.2 $ 140.1
June 30,
--------------------------------
Backlog 1996 1995
--------- --------
Units 171 102
Sales value $ 30,684 $ 17,338
Average sales price $ 179.4 $ 170.0
The decrease in home sales revenues for the three months ended June 30, 1996
compared to the three months ended June 30, 1995 results from a decrease in
the average sales price of the homes delivered. The decrease in the average
sales price of homes delivered is attributable to the introduction of a
lower-priced townhome product in Metropolitan Washington, D.C.
The number of homes sold during the three months ended June 30, 1996 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 increases in the number of homes sold in both
Greater Tampa, Florida and in Metropolitan Washington, D.C. The increase in
the average sales price of the homes sold is attributable to both a
Page 11
<PAGE>
larger proportion of sales in Metropolitan Washington, D.C., where prices are
higher, and to increased sales prices in Metropolitan Washington, D.C..
The Backlog at June 30, 1996 and 1995 includes $7,590,000 and $2,202,000 of
contingent contracts, respectively.
The following table sets forth, for the periods indicated, certain
information regarding the Company's operations (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1995
----------------------------------- ---------------------------
Dollars % Dollars %
---------- ---------- ---------- --------
Home sales revenues $ 13,907 100.0 $ 14,611 100.0
Cost of home sales 11,992 86.2 12,617 86.4
Gross profit 1,915 13.8 1,994 13.6
Selling, general and administrative 1,642 11.8 1,664 11.4
expenses
Pre-tax profit 267 1.9 327 2.2
</TABLE>
While gross profit decreased for the three months ended June 30, 1996
compared to the three months ended June 30, 1995, gross profit as a
percentage of home sales revenue increased from 13.6% 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 June
30, 1996 decreased when compared with the prior comparable period but
increased as a percentage of the related home sales revenue. The decrease
in selling, general and administrative expenses is due to the decrease in
home sales revenue. The percentage increase in selling, general and
administrative expenses is due to the additional cost related to the opening
of new communities and to an increase in the fixed components of selling,
general and administrative expenses.
The change in pre-tax profit for the three months ended June 30, 1996
compared to the three months ended June 30, 1995 reflects the changes in
gross profit and in selling, general and administrative expenses described
above.
Interest and other income includes $137,000 and $182,000 and interest
expense includes $132,000 and $173,000 for the three months June 30, 1996
and June 30, 1995, respectively, from wholly-owned finance subsidiaries
established in prior years to sell collateralized mortgage obligations
through participation in various multi-builder bond programs.
Part II. Other Information
ITEM 6
EXHIBITS AND REPORTS ON FORM8-K
(a) Exhibits
None
(a)Reports on Form 8-K
None
Page 12
<PAGE>
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: AUGUST 14, 1996 By: /S/ ROBERT J. SUAREZ
---------------------
Robert J. Suarez
President
Date: AUGUST 14, 1996 By: /S/ MICHAEL P. VILLA
---------------------
Michael P. Villa
Vice President, Treasurer, and
Chief Financial Officer
Page 13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 664
<SECURITIES> 0
<RECEIVABLES> 1,467
<ALLOWANCES> 0
<INVENTORY> 23,007
<CURRENT-ASSETS> 0*
<PP&E> 404
<DEPRECIATION> 246
<TOTAL-ASSETS> 31,642
<CURRENT-LIABILITIES> 0*
<BONDS> 19,265
<COMMON> 29
0
0
<OTHER-SE> 6,618
<TOTAL-LIABILITY-AND-EQUITY> 31,642
<SALES> 13,907
<TOTAL-REVENUES> 14,068
<CGS> 11,992
<TOTAL-COSTS> 13,801
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 267
<INCOME-TAX> 80
<INCOME-CONTINUING> 187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
*- the Company does not present a classified balance sheet
</TABLE>
