SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-2
____________________________________________________________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14830
CONTINENTAL HOMES HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware 86-0554624
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7001 N. Scottsdale Road, Suite 2050 85253
Scottsdale, Arizona (Zip Code)
(Address of principal executive offices)
(602) 483-0006
(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock September 30, 1993
--------------------- ------------------
$.01 per value 5,218,195
------------------
____________________________________________________________________________
<PAGE>
CONTINENTAL HOMES HOLDING CORP.
FORM 10-Q
FOR THE QUARTER ENDED
AUGUST 31, 1993
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of August 31, 1993
and May 31, 1993 . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the three
months ended August 31, 1993 and 1992 . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the three
months ended August 31, 1993 and 1992 . . . . . . . . . . . . 5
Notes to unaudited Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 31, May 31,
1993 1993
---------- -------
ASSETS (In thousands)
Homebuilding:
Cash $ 13,588 $ 11,552
Receivables 7,163 8,648
Homes, lots and improvements in production 167,235 142,589
Property and equipment, net 1,736 667
Prepaid expenses and other assets 9,359 7,107
Excess of cost over related net assets acquired 7,167 2,235
Investment in unconsolidated joint ventures 4,539 --
-------- --------
210,787 172,798
-------- --------
Mortgage banking and title operations:
Mortgage loans held for sale 16,326 8,825
Mortgage loans held for long-term
investment, net 29,065 5,003
Other assets 1,343 899
-------- --------
46,734 14,727
-------- --------
Total assets $257,521 $187,525
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities $ 30,273 $ 21,059
Notes payable, senior and convertible debt 122,949 106,183
Deferred income taxes 1,930 ( 89)
-------- --------
155,152 127,153
-------- --------
Mortgage banking and title operations:
Notes payable 8,617 3,500
Bonds payable 29,547 5,104
Other 3,298 218
-------- --------
41,462 8,822
-------- --------
Total liabilities 196,614 135,975
-------- --------
Commitments and contingencies
Stockholders' equity
Series A Preferred stock, $.01 par value:
Authorized - 2,000,000 shares
Issued - 200 shares 6,111 --
Common stock, $.01 par value:
Authorized - 20,000,000 shares
Issued - 5,376,500 shares 54 54
Treasury stock, at cost - 161,555 and
187,055 shares (363) (631)
Capital in excess of par value 25,033 25,033
Retained earnings 30,072 27,094
-------- --------
Total stockholders' equity 60,907 51,550
-------- --------
Total liabilities and stockholders' equity $257,521 $187,525
======== ========
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated balance sheets.
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended
August 31,
-------------------
1993 1992
---- ----
REVENUES
Home sales $ 76,924 $ 50,680
Land sales 254 130
Mortgage banking 1,045 632
Other income, net 177 157
-------- --------
Total revenues 78,400 51,599
-------- --------
COSTS AND EXPENSES
Homebuilding:
Cost of home sales 62,665 41,118
Cost of land sales 342 174
Selling, general and
administrative expenses 7,687 5,336
Interest, net 1,157 1,171
Mortgage banking and title operations:
Selling, general and
administrative expenses 703 364
Interest, net 35 (42)
-------- --------
Total costs and expenses 72,589 48,121
-------- --------
Equity in loss of unconsolidated
joint ventures (10) (196)
-------- --------
Income before income taxes 5,801 3,282
Income taxes 2,564 1,312
-------- --------
Net income $ 3,237 $ 1,970
======== ========
Earnings per common share $ .62 $ .39
Earnings per common share
assuming full dilution $ .53 $ .36
Cash dividend per share $ .05 $ .05
Weighted average number of
shares outstanding 5,194,877 5,101,896
========= =========
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated statements.
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
August 31,
------------------
1993 1992
---- ----
(In thousands)
Cash flows from operating activities:
Net income $ 3,237 $ 1,970
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 458 263
Increase in deferred income taxes 164 871
Decrease (increase) in assets
Homes, lots and improvements in production 3,279 (2,708)
Receivables 10,090 3,904
Prepaid expenses and other assets 178 (2,230)
Increase (decrease) in liabilities
Accounts payable and other liabilities 2,411 (1,297)
-------- --------
Net cash provided by operating activities 19,817 773
-------- --------
Cash flows from investing activities:
Net additions of property and equipment (66) (9)
Cash advanced to unconsolidated joint ventures -- (151)
Cash received from unconsolidated joint ventures 148 --
Cash paid for Milburn Investments, Inc.
and Subsidiaries, net of cash acquired (7,068) --
-------- --------
Net cash used by investing activities (6,986) (160)
-------- --------
Cash flows from financing activities:
Decrease in notes payable to financial
institutions (9,521) (41,247)
Retirement of bonds payable (1,283) (1,039)
Issuance of 12% Senior Notes -- 71,598
Stock options exercised 268 13
Dividends paid (259) (254)
-------- --------
Net cash provided (used) by financing activities (10,795) 29,071
-------- --------
Net increase in cash 2,036 29,684
Cash at beginning of period 11,552 5,070
-------- --------
Cash at end of period $ 13,588 $ 34,754
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 1,734 $ 1,644
Income taxes $ 135 $ --
Supplemental schedule of non-cash investing and financing activities:
On July 29, 1993, the Company acquired Milburn Investments, Inc. and
Subsidiaries. Non-cash consideration paid included the issuance of $6.3
million of Series A preferred stock. As a result of the acquisition, the
Company recorded additional assets of $96,733,000 (primarily homes, lots and
improvements in production and mortgage related assets) and liabilities of
$70,433,000 (primarily notes payable to financial institutions and mortgage
related debt).
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated statements.
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The consolidated financial statements include the accounts of
Continental Homes Holding Corp. and its subsidiaries ("Company"). In
the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the
Company's financial position, results of operations and cash flows for
the periods presented.
These consolidated financial statements should be read in conjunction
with the consolidated financial statements and the related disclosures
contained in the Company's annual report on Form 10-K for the year
ended May 31, 1993, filed with the Securities and Exchange Commission.
The results of operations for the three months ended August 31, 1993
are not necessarily indicative of the results to be expected for the
full year.
Note 2. Interest Capitalization
The Company follows the practice of capitalizing for its homebuilding
operations certain interest costs incurred on land under development
and homes under construction. Such capitalized interest is included
in cost of home sales when the units are delivered. The Company
capitalized such interest in the amount of $1,953,000 and $1,466,000
and expensed as a component of cost of goods sold $1,679,000 and
$1,658,000 in the three months ended August 31, 1993 and 1992,
respectively.
Note 3. Notes Payable, Senior and Subordinated Debt
Notes payable, senior and convertible debt for homebuilding consist
of:
August 31, May 31,
1993 1993
----------- -------
(In thousands)
12% senior notes, due 1999, net of
discount of $719 and $752 $ 74,281 $74,248
6-7/8% convertible subordinated notes,
due 2002, net of discount of $2,975
and $3,065 32,025 31,935
Notes payable 16,643 --
-------- --------
$122,949 $106,183
======== ========
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 4. Interest, Net
Interest, net is comprised of interest expense and interest income.
The summary of the components of interest, net is as follows:
Three months ended
August 31,
------------------
1993 1992
---- ----
(In thousands)
Interest expense, homebuilding $1,320 $1,248
Interest income, homebuilding (163) (77)
------ ------
1,157 $1,171
Interest expense, mortgage banking $ 513 $ 397
Interest income, mortgage banking (478) (439)
------ ------
$ 35 $ (42)
====== ======
Note 5. Acquisition of Milburn Investments, Inc.
On July 29, 1993, the Company completed the acquisition (the
"Acquisition") of 100% of the Common Stock of Milburn Investments, Inc.
("Milburn"), for approximately $26.3 million. The consideration consisted
of approximately $20 million in cash and $6.3 million in Series A Preferred
Stock issued by the Company.
The following unaudited pro forma combined financial data give effect
to the Milburn Acquisition as if it had occurred on the first day of each
period. This pro forma information has been prepared utilizing the
historical consolidated financial statements of the Company and Milburn.
This information should be read in conjunction with the historical financial
statements and notes thereto. The pro forma financial data is provided for
comparative purposes only and does not purport to be indicative of the
results which would have been obtained if the Milburn Acquisition had been
effected during the periods presented. The pro forma financial information
is based on the purchase method of accounting for the Milburn Acquisition
and reflects adjustments to record the profit of acquired inventories,
amortize the non-compete agreement and the excess purchase price over the
underlying value of net assets acquired, reflect the additional interest on
acquisition indebtedness assumed and adjust income taxes for the pro forma
adjustments.
Three months ended
August 31,
------------------
1993 1992
---- ----
(In thousands)
Total revenues $97,646 $71,799
Net income 3,678 3,049
Earnings per common share .71 .60
Earnings per common share
assuming full dilution .60 .52
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
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.
CONTINENTAL HOMES HOLDING CORP.
Date: March 29, 1994 By: /s/ Kenda B. Gonzales
--------------------------
KENDA B. GONZALES
Secretary and Treasurer
(Chief Financial Officer)
Date: March 29, 1994 By: /s/ Donald R. Loback
--------------------------
DONALD R. LOBACK
Co-Chief Executive Officer
