SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1995
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 March 31, 1995
--------------------- --------------
$.01 per value 6,924,770
CONTINENTAL HOMES HOLDING CORP.
FORM 10-Q
FOR THE QUARTER ENDED
FEBRUARY 28, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of February 28, 1995
and May 31, 1994..................................... 3
Consolidated Statements of Income for the three and
nine months ended February 28, 1995 and 1994......... 4
Consolidated Statements of Cash Flows for the nine
months ended February 28, 1995 and 1994.............. 5
Notes to unaudited Consolidated Financial
Statements........................................... 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...................... 15
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
February 28, May 31,
1995 1994
ASSETS ----------- ---------
(In thousands)
Homebuilding:
Cash ............................................. $ 12,133 $ 28,809
Receivables ...................................... 8,629 9,928
Homes, lots and improvements in production ....... 284,099 205,369
Property and equipment, net ...................... 2,095 1,914
Prepaid expenses and other assets ................ 18,675 13,621
Excess of cost over related net assets acquired .. 14,072 6,743
--------- ---------
339,703 266,384
--------- ---------
Mortgage banking and title operations:
Mortgage loans held for sale ..................... 12,138 17,570
Mortgage loans held for long-term
investment, net ................................ 17,930 20,132
Other assets ..................................... 1,134 1,404
--------- ---------
31,202 39,106
--------- ---------
Total assets ..................................... $ 370,905 $ 305,490
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities ........... $ 31,732 $ 35,179
Notes payable, senior and convertible debt ....... 198,460 144,048
Deferred income taxes ............................ 1,416 2,232
--------- ---------
231,608 181,459
--------- ---------
Mortgage banking and title operations:
Notes payable .................................... 11,317 3,439
Bonds payable .................................... 18,188 20,832
Other ............................................ 2,108 1,200
--------- ---------
31,613 25,471
--------- ---------
Total liabilities ................................ 263,221 206,930
--------- ---------
Commitments and contingencies
Stockholders' equity Preferred stock, $.01 par value:
Authorized - 2,000,000 shares
Issued - None .................................. -- --
Common stock, $.01 par value:
Authorized - 20,000,000 shares
Issued - 7,080,900 shares ...................... 71 71
Treasury stock, at cost - 156,130 and
118,130 shares ................................. (591) (83)
Capital in excess of par value ................... 59,610 59,610
Retained earnings ................................ 48,594 38,962
--------- ---------
Total stockholders' equity ....................... 107,684 98,560
--------- ---------
Total liabilities and stockholders' equity ....... $ 370,905 $ 305,490
========= =========
The accompanying notes to consolidated financial statements are an integral part
of these unaudited consolidated balance sheets.
<TABLE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
February 28, February 28,
------------------ ---------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Home sales ....................................... $ 104,483 $ 72,647 $ 305,753 $ 237,273
Land sales ....................................... 7,958 260 7,958 680
Mortgage banking and
title operations ............................... 1,462 1,726 4,945 5,123
Other income, net ................................ 148 7 380 49
----------- ----------- ----------- -----------
Total revenues ................................. 114,051 74,640 319,036 243,125
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding:
Cost of home sales ............................... 85,551 59,344 250,195 193,602
Cost of land sales ............................... 8,033 291 8,183 718
Selling, general and
administrative expenses ........................ 11,744 8,141 33,549 25,913
Interest, net .................................... 1,640 748 3,886 3,267
Mortgage banking and title operations:
Selling, general and
administrative expenses ........................ 1,432 1,380 4,173 3,408
Interest, net .................................... (63) (26) (352) (7)
----------- ----------- ----------- -----------
Total costs and expenses ....................... 108,337 69,878 299,634 226,901
----------- ----------- ----------- -----------
Income before income taxes ............................. 5,714 4,762 19,402 16,224
Income taxes ........................................... 2,641 2,035 8,721 7,033
----------- ----------- ----------- -----------
Net income ............................................. $ 3,073 $ 2,727 $ 10,681 $ 9,191
=========== =========== =========== ===========
Earnings per common share .............................. $ .44 $ .39 $ 1.54 $ 1.55
Earnings per common share
assuming full dilution ............................... $ .41 $ .37 $ 1.40 $ 1.38
Cash dividend per share ................................ $ .05 $ .05 $ .15 $ .15
Weighted average number of
shares outstanding ................................... 6,939,998 6,953,734 6,955,453 5,946,950
=========== =========== =========== ===========
The accompanying notes to consolidated financial statements are an integral part
of these unaudited consolidated statements.
</TABLE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
February 28,
----------------------
1995 1994
---- ----
(In thousands)
Cash flows from operating activities:
Net income ..................................... $ 10,681 $ 9,191
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .............. 2,175 1,711
Increase (decrease) in deferred income
taxes ..................................... (1,841) 241
Decrease (increase) in assets
Homes, lots and improvements in production ... (45,437) (10,662)
Receivables .................................. 9,052 15,988
Prepaid expenses and other assets ............ (5,222) (2,662)
Decrease in liabilities
Accounts payable and other liabilities ....... (6,619) (3,850)
--------- ---------
Net cash provided (used) by operating
activities .................................... (37,211) 9,957
--------- ---------
Cash flows from investing activities:
Net additions of property and equipment ........ (518) (383)
Cash received from unconsolidated joint
ventures ..................................... -- 2,417
Cash paid for Milburn Investments, Inc.
and Subsidiaries, net of cash acquired ....... (3,900) (7,042)
Cash paid for Aspen Homes ...................... -- (6,982)
Cash paid for Heftler Realty Co.,
net of cash acquired ......................... (15,498) --
--------- ---------
Net cash used by investing activities .......... (19,916) (11,990)
--------- ---------
Cash flows from financing activities:
Increase (decrease) in notes payable to
financial institutions ....................... 44,752 (17,511)
Retirement of bonds payable .................... (2,744) (7,101)
Sale of common stock ........................... -- 34,219
Redemption of Series A Preferred Stock ......... -- (6,200)
Treasury stock acquired ........................ (556) --
Stock options exercised ........................ 48 538
Dividends paid ................................. (1,049) (867)
--------- ---------
Net cash provided by financing activities ...... 40,451 3,078
--------- ---------
Net increase (decrease) in cash ................ (16,676) 1,045
Cash at beginning of period .................... 28,809 11,552
--------- ---------
Cash at end of period .......................... $ 12,133 $ 12,597
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized ......... $ 5,830 $ 5,606
Income taxes ................................. $ 10,218 $ 9,644
The accompanying notes to consolidated financial statements are an integral part
of these unaudited consolidated statements.
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
CONTINUED
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 $92,660,000 (primarily homes, lots and
improvements in production and mortgage related assets) and liabilities of
$66,590,000 (primarily notes payable to financial institutions and mortgage
related debt).
On November 18, 1994, the Company acquired Heftler Realty Co. As a result of the
acquisition, the Company recorded additional assets of $51,116,000 (primarily
homes, lots and improvements in production ) and liabilities of $22,616,000
(primarily notes payable to financial institutions).
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, 1994, filed with the Securities and Exchange Commission.
The results of operations for the three and nine months ended February
28, 1995 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 $10,033,000 and $6,016,000
and expensed as a component of cost of home sales $7,549,000 and
$5,527,000 in the nine months ended February 28, 1995 and 1994,
respectively. The increase in interest capitalized is attributable to
the Company's increased level of homes, lots and improvements in
production.
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 3. Notes Payable, Senior and Convertible Subordinated Debt
Notes payable, senior and convertible subordinated debt for
homebuilding consist of:
February 28, May 31,
1995 1994
----------- ---------
(In thousands)
12% senior notes, due 1999, net of
premium of $1,511 and $1,753 ................. $ 111,511 $ 111,753
6-7/8% convertible subordinated notes,
due 2002, net of discount of $2,435
and $2,705 ................................... 32,565 32,295
Notes payable .................................. 54,384 --
--------- ---------
$ 198,460 $ 144,048
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 Nine months ended
February 28, February 28,
---------------------- ---------------------
1995 1994 1995 1994
---- ---- ---- ----
(In thousands)
Interest expense,
homebuilding ............. $ 1,697 $ 805 $ 4,151 $ 3,442
Interest income,
homebuilding ............. (57) (57) (265) (175)
-------- -------- -------- --------
$ 1,640 $ 748 $ 3,886 $ 3,267
======== ======== ======== ========
Interest expense,
mortgage banking ......... $ 631 $ 780 $ 1,679 $ 2,164
Interest income,
mortgage banking ......... (694) (806) (2,031) (2,171)
-------- -------- -------- --------
$ (63) $ (26) $ (352) $ (7)
======== ======== ======== ========
Note 5. Acquisition of Milburn Investments, Inc., Aspen Homes and
Heftler Realty Co. (the "Acquisitions")
On July 29, 1993, the Company completed the acquisition of 100% of the
Common Stock of Milburn Investments, Inc. ("Milburn"), an Austin, Texas
homebuilder, for approximately $26.3 million ("Milburn Acquisition"). The
consideration consisted of approximately $20 million in cash and $6.3 million in
Series A Preferred Stock issued by the Company. On November 4, 1993 the Company
redeemed the Series A Preferred Stock. On January 28, 1994, the Company acquired
the operations of Aspen Homes ("Aspen"), a San Antonio, Texas homebuilder for
total cash consideration of $6,982,000. On November 18, 1994, the Company
completed the acquisition of 100% of the Common Stock of Heftler Realty Co.
("Heftler"), a Miami, Florida homebuilder, for $28.5 million in cash ("Heftler
Acquisition").
The following unaudited pro forma combined financial data give effect
to the Milburn and Heftler Acquisitions as if they 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, Milburn and
Heftler. 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 and Heftler Acquisitions
had been effected during the period presented. The pro forma financial
information is based on the purchase method of accounting for the Milburn and
Heftler Acquisitions and reflects adjustments to record the profit of acquired
inventories, amortize the non-compete agreements 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 pro
forma adjustments.
Nine Months ended
February 28,
Total revenues -----------------------------
1995 1994
---- ----
(in thousands)
Net income ..................................... $333,314 $297,772
Earnings per common share ...................... 10,750 9,538
Earnings per common share ........................ 1.55 1.60
assuming full dilution ......................... 1.41 1.42
Milburn was the subject of an Internal Revenue Service ("IRS") audit
for periods prior to its acquisition by the Company. In December 1994, the IRS
completed their examination and the Company paid the resulting tax liability
(including interest) of approximately $4,700,000. Such payment exceeded the tax
liability recorded by the Company at the time Milburn was acquired. The Company
recorded this excess payment of approximately $3,900,000 (including interest) as
an adjustment to the purchase price of Milburn. The Company believes that it may
recover all or a portion of the excess payment from the seller (under the terms
of the acquisition agreement) or other parties.
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Homebuilding
The following table sets forth, for the periods indicated, unit
activity, average sales price and revenue from home sales for the Company:
Quarters ended Nine months ended
February 28, February 28,
----------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
Units delivered ................ 797 604 2,357 2,013
Average sales price ............ $131,094 $120,276 $129,721 $117,870
Revenue from homes
sales (000's) ................ $104,483 $ 72,647 $305,753 $237,273
Percentage increase
from prior year .............. 43.8% 59.9% 28.9% 64.5%
Change due to volume ........... 31.9% 50.3% 17.1% 56.0%
Change due to average
sales price .................. 11.9% 9.6% 11.8% 8.5%
The volume increase for the nine months ended February 28, 1995
compared to the same period in the prior year was attributable to the Texas and
Miami operations. Without Texas and Miami, the Company's unit volume was 2% less
during the nine months than in the same period last year. The increase in
average sales price was primarily due to deliveries in Phoenix and Denver, where
sales prices have increased as a result of rising costs.
The following table summarizes information related to the Company's
backlog at the dates indicated:
February 28,
--------------------------------------------
(Dollars in thousands)
1995 1994
---- ----
Units Dollars Units Dollars
----- ------- ----- -------
Phoenix .................... 590 $ 76,355 678 $ 84,418
Texas ...................... 297 31,400 309 33,852
Miami ...................... 74 10,256 -- --
Denver ..................... 94 17,086 94 16,837
California ................. 49 13,316 25 6,850
--------- --------- --------- ---------
Total backlog ..... 1,104 $ 148,413 1,106 $ 141,957
========= ========= ========= =========
Average price per unit ..... $ 134 $ 128
========= =========
The aggregate sales value of new contracts signed increased as a result
of the Texas and Miami operations in the three months ended February 28, 1995 to
$96,022,000 representing 756 homes (including $34,569,000 in Texas and Miami
representing 315 homes) as compared with $94,623,000 representing 754 homes
(including $32,372,000 in Texas representing 294 homes) for the three months
ended February 28, 1994.
<TABLE>
The following table summarizes information related to cost of home
sales, selling, general and administrative ("SG&A") expenses and interest, net
for homebuilding:
<CAPTION>
Quarters ended February 28, Nine months ended February 28,
1995 1994 1995 1994
Dollars % Dollars % Dollars % Dollars %
--------- ------ ---------- ------ --------- ------ --------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from home sales ................ $ 104,483 100.0% $ 72,647 100.0% $ 305,753 100.0% $ 237,273 100.0%
Cost of homes sales .................... 85,551 81.9 59,344 81.7 250,195 81.8 193,602 81.6
--------- ----- --------- ----- --------- ----- --------- -----
Gross profit ........................... 18,932 18.1 13,303 18.3 55,558 18.2 43,671 18.4
SG&A expenses .......................... 11,744 11.2 8,141 11.2 33,549 11.0 25,913 10.9
--------- ----- --------- ----- --------- ----- --------- -----
Operating income
from homebuilding .................... 7,188 6.9 5,162 7.1 22,009 7.2 17,758 7.5
Interest, net .......................... 1,640 1.6 748 1.0 3,886 1.3 3,267 1.4
--------- ----- --------- ----- --------- ----- --------- -----
Pre-tax profit
from homebuilding .................... $ 5,548 5.3% $ 4,414 6.1% $ 18,123 5.9% $ 14,491 6.1%
========= ===== ========= ===== ========= ===== ========= =====
</TABLE>
Gross profit from home sales was 18.1% (18.5% excluding California
operations) for the three months ended February 28, 1995 compared to 18.3%
(20.9% excluding California operations) for the corresponding fiscal 1994
period. Gross profit from home sales was 18.2% (19.1% excluding California
operations) for the nine months ended February 28, 1995 compared to 18.4% (20.8%
excluding California operations) for the nine months ended February 28, 1994.
The decrease in gross profit for the quarter and nine-month period ended
February 28, 1995 compared to the same periods in fiscal 1994 was primarily the
result of sales incentives and discounts that are being offered in the Austin
Market. The Austin market had experienced competitive pressure resulting in the
Company offering sales incentives and discounts in the Austin market. The
Southern California market has been weak due to difficult economic conditions,
concerns about home values and low consumer confidence. Accordingly, the Company
has aggressively marketed its California homes in older subdivisions by offering
sales incentives and discounts. At February 28, 1995, 22 homes remained to be
delivered from these older subdivisions. Deliveries from the two subdivisions in
Southern California which opened in the first two quarters of fiscal 1995 have
produced a significant improvement in gross margins compared to the older
subdivisions. An additional Southern California subdivision opened in March
1995.
The increase in total SG&A expenses for the quarter and nine months
ended February 28, 1995 was primarily due to the Texas and Miami operations. The
current fiscal quarter and nine months included $3,754,000 and $11,497,000,
respectively of SG&A expenses from Texas compared to $2,791,000 and $7,526,000,
respectively in the third quarter and nine-month period ended February 28, 1994.
In addition the current fiscal quarter and nine-months included $1,020,000 and
$1,382,000, respectively of SG&A expense related to the Miami operations. SG&A
expenses for each home delivered were $14,735 and $13,478 in the third quarter
of fiscal 1995 and 1994, respectively and $14,234 and $12,872 in the first nine
months of fiscal 1995 and 1994, respectively. The Company capitalizes certain
SG&A expenses for homebuilding, accordingly, total SG&A costs incurred for
homebuilding were $13,754,000 and $38,471,000 for the three and nine months,
respectively ended February 28, 1995 compared to $9,668,000 and $29,647,000 for
the corresponding fiscal 1994 periods.
The Company capitalizes certain interest costs for its homebuilding
operations and includes such capitalized interest in cost of home sales when the
related units are delivered. Accordingly, total interest incurred by the Company
was $5,519,000 and $14,184,000 for the three and nine months ended February 28,
1995, respectively compared to $2,960,000 and $9,458,000 for the three and nine
months ended February 28, 1994, respectively. Interest, net for homebuilding was
$1,640,000 and $748,000 for the three months ended February 28, 1995 and 1994,
respectively. For the nine month period ended February 28, 1995, interest, net
for homebuilding was $3,886,000 compared with $3,267,000 for the nine months
ended February 28, 1994. The increase in interest, both incurred and expensed,
was primarily due to higher debt levels which resulted from the Heftler
Acquisition.
The Company's pre-tax profit from homebuilding for the nine months
ended February 28, 1995 was $18,123,000 compared to $14,491,000 for the
corresponding period ended February 28, 1994. The increase in pre-tax profit was
due primarily to improved results from Phoenix, Denver and Southern California
which contributed an additional $3,350,000 of pre-tax profit in the nine months
ended February 28, 1995 compared to the nine months ended February 28, 1994.
Mortgage Banking
The Company's mortgage banking operations are conducted through its
wholly-owned subsidiaries American Western Mortgage Company ("AWMC") in Arizona
and Miltex Management, Inc. ("MMI") in Texas. The following table summarizes
operating information for the Company's mortgage banking operations:
Quarters ended Nine months ended
February 28, February 28,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
(Dollars in thousands)
Number of loans originated ......... 441 579 1,457 1,751
Loan origination fees .............. $ 404 $ 498 $ 1,369 $ 1,529
Sale of servicing and
marketing gains ................. 600 760 2,045 2,382
Other revenue ...................... 134 86 453 298
------- ------- ------- -------
Total revenues ............ 1,138 1,344 3,867 4,209
General and administrative
expenses ......................... 1,194 1,082 3,485 2,779
------- ------- ------- -------
Operating income (loss) from
mortgage banking ................. (56) 262 382 1,430
Interest, net ...................... (63) (26) (352) (7)
------- ------- ------- -------
Pre-Tax profit from
mortgage banking ............... $ 7 $ 288 $ 734 $ 1,437
======= ======= ======= =======
Revenues from mortgage banking operations decreased in the third quarter of
fiscal 1995 primarily as a result of a decrease in third party originations in
Texas. General and administrative expenses increased in the nine months ended
February 28, 1995 primarily as a result of the Texas operations being reflected
for the entire period in fiscal 1995. The Company retains a portion of the loan
servicing of the loans it originates. At February 28, 1995, the servicing
portfolio was approximately $58,376,000 compared to $59,037,000 at February 28,
1994.
Consolidated Operations
Net income was $10,681,000 ($1.54 per share, $1.40 fully diluted) for
the nine months ended February 28, 1995 compared to $9,191,000 ($1.55 per share,
$1.38 fully diluted) for the period ended February 28, 1994.
Liquidity and Capital Resources
The Company's financing needs depend primarily upon sales volume, asset
turnover, land acquisition and inventory balances. The Company has financed, and
expects to continue to finance, its working capital needs through funds
generated by operations and borrowings. Funds for future land acquisitions and
construction costs are expected to be provided primarily by cash flows from
operations and future borrowings as permitted under the 12% Senior Note
Indenture. At February 28, 1995, the Company had unsecured lines of credit from
two lenders for aggregate borrowings (excluding mortgage warehouse lines) of up
to $20,000,000, and guaranteed a $10,000,000 secured line of credit for one of
its subsidiaries. Additionally, the Company assumed $55 million of credit
facilities ($15 million of which are unsecured) in connection with the
Acquisitions. At February 28, 1995, there was $54,384,000 outstanding in the
aggregate under these credit lines. The Company's revolving lines of credit bear
interest at rates ranging from prime plus 1/2% to prime plus 1%. The Company
believes that amounts generated from operations and such additional borrowings
will provide funds adequate to finance its homebuilding activities and meet its
debt service requirements. The Company does not have any significant current
commitments for capital expenditures.
AWMC has a warehouse line of credit for $15,000,000 which is guaranteed
by the Company. In addition, MMI has a warehouse line of credit for $10,000,000.
Pursuant to the warehouse lines of credit, the Company issues drafts to fund its
mortgage loans. The amount represented by a draft is drawn on the warehouse line
of credit when the draft is presented for payment. At February 28, 1995, the
amount outstanding under the warehouse lines of credit and the amount of funding
drafts that had not been presented for payment was $11,317,000. The Company
believes that these lines are sufficient for its mortgage banking operations.
On July 29, 1993, the Company acquired all of the outstanding capital
stock of Milburn for approximately $26.3 million ($20 million in cash and $6.3
million of Series A Preferred Stock). On January 28, 1994, the Company acquired
the operations of Aspen Homes for total cash consideration of $6,982,000. On
November 18, 1994, the Company acquired all of the outstanding capital stock of
Heftler for $28.5 million in cash.
In November 1993, the Company completed a public offering of 1,704,400
shares of Common Stock at $21.50 per share. The net proceeds of the offering
(approximately $34,219,000) were used to redeem the Series A Preferred Stock and
to reduce temporarily all amounts outstanding under the Company's revolving
lines of credit and mortgage banking warehouse lines of credit.
On March 22, 1994, the Company obtained the consent of the holders of
the majority of the outstanding 12% Senior Notes to certain amendments to the
Indenture, including to permit the sale of an additional $35,000,000 of Senior
Notes. In connection therewith, the Company paid $1,102,020 to the holders of
the outstanding Notes. On March 31, 1994, the Company completed the sale of the
additional Senior Notes at 107% of par.
The Board of Directors authorized on December 22, 1994 the repurchase
from time to time of up to 500,000 shares of its Common Stock. Through March 31,
1995, the Company had purchased 45,000 shares for an aggregate price of
$556,000.
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1(a) Fifth Modification Agreement dated as of March
14, 1995 between Bank One, Arizona NA "BOAZ"
(formerly Valley National Bank of Arizona
"VNB") and CHHC.
10.2(a) Second Modification Agreement dated as of March
15, 1995 between BOAZ and Milburn Investments,
Inc.
10.3(a) First Modification Agreement dated as of March
2, 1995 between BOAZ and Miltex Mortgage of
Texas L.P.
11 Statement of Computation of Earnings Per Share.
(b) Reports on Form 8-K: The Company filed a report on Form 8K/A-1
dated November 18, 1994.
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: April 12, 1995 By: /s/ Kenda B. Gonzales
---------------------
KENDA B. GONZALES
Secretary and Treasurer
(Chief Financial Officer)
Date: April 12, 1995 By: /s/ Donald R. Loback
--------------------
DONALD R. LOBACK
Co-Chief Executive Officer
EXHIBIT INDEX
Exhibit
Number Description Page
10.1(a) Fifth Modification Agreement dated as of
March 14, 1995 between Bank One, Arizona
NA "BOAZ" (formerly Valley National
Bank of Arizona "VNB") and CHHC.
10.2(a) Second Modification Agreement dated as of
March 15, 1995 between BOAZ and Milburn
Investments, Inc.
10.3(a) First Modification Agreement dated as of
March 2, 1995 between BOAZ and Miltex
Mortgage of Texas L.P.
11 Statement of Computation of Earnings
Per share.
FIFTH MODIFICATION AGREEMENT
DATE: March 14, 1995
PARTIES: Borrower: CONTINENTAL HOMES HOLDING CORP.,
a Delaware corporation.
Bank: BANK ONE, ARIZONA, NA,
a national banking association.
RECITALS:
A. Bank has extended to Borrower credit ("Loan") in the principal
amount of $10,000,000.00 pursuant to the Loan Agreement, dated February 25, 1993
("Loan Agreement"), and evidenced by the Promissory Note, dated February 25,
1993 ("Note"). The unpaid principal of the Loan as of the date hereof is
$8,000,000.00.
B. Bank and Borrower have executed and delivered previously the
following agreements ("Modifications") modifying the terms of the Loan, the
Note, and/or the Loan Agreement: First Modification Agreement, dated February
25, 1994, Second Modification Agreement, dated March 31, 1994, Third
Modification Agreement, dated November 17, 1994, and Fourth Modification
Agreement, dated November 22, 1994. (The Note, the Loan Agreement, any
arbitration resolution, any environmental certification and indemnity agreement,
and all other agreements, documents, and instruments evidencing, securing, or
otherwise relating to the Loan, as modified in the Modifications, are sometimes
referred to individually and collectively as the "Loan Documents". Hereinafter,
"Note", "Loan Agreement", and "Loan Documents" shall mean such documents as
modified in the Modifications.)
C. Borrower has requested that Bank modify the Loan and the Loan
Documents as provided herein. Bank is willing to so modify the Loan and the Loan
Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
2.1 The Loan Documents are modified as follows:
2.1.1 Paragraph 18 is hereby added to the section of the
Note entitled "EVENTS OF DEFAULT" as follows:
18. The occurrence of any condition or event that is a
default or is designated as a default, an event of default or an Event
of Default, in that certain Loan Agreement dated March 14, 1995
between CHI Construction Company, an Arizona corporation, and Bank,
providing for a loan by Bank in the maximum principal amount of
$5,000,000.00. as the same may be amended, modified, extended,
renewed, restated, and supplemented from time to time.
2.1.2 The following clause is hereby added to the end of the
definition of "Permitted Debt" in Section 2 of the Loan Agreement:
(q) the Debt arising pursuant to that certain Loan Agreement dated
March 14, 1995 between CHI Construction Company, an Arizona
corporation, and Bank, providing for a loan by Bank in the maximum
principal amount of $5,000,000.00. as the same may be amended,
modified, extended, renewed, restated, and supplemented from time to
time.
2.1.3 Bank confirms its consent to Borrower's acquisition of
the stock of Milburn Investments, Inc., a Texas corporation, the Texas assets of
Aspen Homes and its affiliates, and the stock of Heftler Realty Co., a Florida
corporation, and acknowledges that no default occurred under Section 7.4 of the
Loan Agreement as a result thereof.
2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantor(s) is materially incomplete, incorrect, or misleading as
of the date hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Bank in connection with the Loan from the most recent financial
statement received by Bank.
4.3 Each and all representations and warranties of Borrower in the
Loan Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
5. BORROWER COVENANTS.
Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such
additional agreements, documents, and instruments as reasonably required by Bank
to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges Bank
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity of Borrower, whether now known or unknown to Borrower, (i) in respect
of the Loan, the Loan Documents, or the actions or omissions of Bank in respect
of the Loan or the Loan Documents and (ii) arising from events occurring prior
to the date of this Agreement.
5.3 Contemporaneously with the execution and delivery of this
Agreement, Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Note and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of the date hereof.
5.3.2 All the internal and external costs and expenses
incurred by Bank in connection with this Agreement (including, without
limitation, inside and outside attorneys' expenses and fees).
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (i) Bank has executed and
delivered this Agreement, (ii) Borrower has performed all of the obligations of
Borrower under this Agreement to be performed contemporaneously with the
execution and delivery of this Agreement, (iii) each guarantor(s) of the Loan,
if any, has executed and delivered to Bank a Consent and Agreement of
Guarantor(s), and (iv) if required by Bank, Borrower and any guarantor(s) have
executed and delivered to Bank an arbitration resolution, an environmental
questionnaire, and an environmental certification and indemnity agreement.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION,
OR WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Borrower and Bank and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Borrower, provided, however, Borrower may not assign any of its
right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
CONTINENTAL HOMES HOLDING CORP.,
a Delaware corporation
By: /s/Kenda B. Gonzales
------------------------------
Name: Kenda B. Gonzales
------------------------------
Title: Financial Vice President
------------------------------
BANK ONE, ARIZONA, NA,
a national banking association
By: /s/Rhonda R. Williams
------------------------------
Name: Rhonda R. Williams
------------------------------
Title: Assistant Vice President
------------------------------
SECOND MODIFICATION AGREEMENT
DATE: March 15, 1995
PARTIES: Borrower: MILBURN INVESTMENTS, INC.,
a Texas corporation.
Bank: BANK ONE, ARIZONA, NA,
a national banking association.
RECITALS:
A. Bank has extended to Borrower credit ("Loan") in the principal amount of
$25,000,000.00 pursuant to the Amended and Restated Loan Agreement, dated
October 28, 1994 ("Loan Agreement"), and evidenced by the Replacement Promissory
Note, dated October 28, 1994 ("Note"). The unpaid principal of the Loan as of
the date hereof is $23,788,021.01.
B. Bank and Borrower have executed and delivered previously the following
agreements ("Modifications") modifying the terms of the Loan, the Note, and the
Loan Agreement: First Modification Agreement, dated December 8, 1994. (The Note,
the Loan Agreement, any arbitration resolution, any environmental certification
and indemnity agreement, and all other agreements, documents, and instruments
evidencing, securing, or otherwise relating to the Loan, as modified in the
Modifications, are sometimes referred to individually and collectively as the
"Loan Documents". Hereinafter, "Note" and "Loan Agreement" shall mean such
documents as modified in the Modifications.)
D. Borrower has requested that Bank modify the Loan and the Loan
Documents as provided herein. Bank is willing to so modify the Loan and the
Loan Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
2.1 The Loan Documents are modified as follows:
2.1.1 Clauses (i), (ii) and (iii) in the definition of Term
Adjustment in Section 2 of the Loan Agreement are hereby modified in their
entirety as follows:
(i) with respect to a Presold Unit remaining in Mandatory
Collateral beyond the first nine (9) months of the Presold Unit's
Term, a decrease in the otherwise applicable Maximum Allowed Advance
to the lesser of (A) fifty percent (50%) of the respective Unit Base
Appraised Value, or (B) fifty percent (50%) of the sales price in the
respective Purchase Contract, or (C) fifty percent (50%) of the
respective Unit Total Costs plus fifty percent (50%) of the Lot Cost
for the Lot related to such Unit;
(ii) with respect to a Spec Unit remaining in Mandatory
Collateral beyond the the first six (6) months of the Spec Unit's Term,
a decrease in the otherwise applicable Maximum Allowed Advance to the
lesser of (A) sixty-five percent (65%) of the respective Unit Base
Appraised Value, or (B) sixty-five percent (65%) of the respective Unit
Total Costs plus fifty percent (50%) of the Lot Cost for the Lot
related to such Unit; and with respect to a Spec Unit remaining in
Mandatory Collateral beyond the first nine (9) months of the Spec
Unit's Term, a decrease in the otherwise applicable Maximum Allowed
Advance to the lesser of (I) fifty percent (50%) of the respective Unit
Base Appraised Value, or (II) fifty percent (50%) of the respective
Unit Total Costs plus fifty percent (50%) of the Lot Cost for the Lot
related to such Unit;
(iii) with respect to a Model Unit remaining in Mandatory
Collateral beyond the first eighteen (18) months of the Model Unit's
Term, a decrease in the otherwise applicable Maximum Allowed Advance to
the lesser of (A) sixty-five percent (65%) of the respective Unit Base
Appraised Value, or (B) sixty-five percent (65%) of the respective Unit
Total Costs plus fifty percent (50%) of the Lot Cost for the Lot
related to such Unit; and with respect to a Model Unit remaining in
Mandatory Collateral beyond the first twenty-one (21) months of the
Model Unit's Term, a decrease in the otherwise applicable Maximum
Allowed Advance to the lesser of (I) sixty percent (60%) of the
respective Unit Base Appraised Value, or (II) sixty percent (60%) of
the respective Unit Total Costs plus fifty percent (50%) of the Lot
Cost for the Lot related to such Unit; or
2.2 Each of the Loan Documents is modified to provide that it shall be a
default or an event of default thereunder if Borrower shall fail to comply with
any of the covenants of Borrower herein or if any representation or warranty by
Borrower herein or by any guarantor in any related Consent and Agreement of
Guarantor(s) is materially incomplete, incorrect, or misleading as of the date
hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents shall
be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial condition of
Borrower or any other person whose financial statement has been delivered to
Bank in connection with the Loan from the most recent financial statement
received by Bank.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and binding
obligation of Borrower, enforceable against Borrower in accordance with their
terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
5. BORROWER COVENANTS.
Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such additional
agreements, documents, and instruments as reasonably required by Bank to
effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges Bank and
its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity of Borrower, whether now known or unknown to Borrower, (i) in respect
of the Loan, the Loan Documents, or the actions or omissions of Bank in respect
of the Loan or the Loan Documents and (ii) arising from events occurring prior
to the date of this Agreement.
5.3 Contemporaneously with the execution and delivery of this Agreement,
Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Note and all amounts,
other than interest and principal, due and payable by Borrower under the Loan
Documents as of the date hereof.
5.3.2 All the internal and external costs and expenses incurred by Bank
in connection with this Agreement (including, without limitation, inside and
outside attorneys, appraisal, appraisal review, processing, title, filing, and
recording costs, expenses, and fees).
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (i) Bank has executed and
delivered this Agreement, (ii) Borrower has performed all of the obligations of
Borrower under this Agreement to be performed contemporaneously with the
execution and delivery of this Agreement, (iii) each guarantor(s) of the Loan,
if any, has executed and delivered to Bank a Consent and Agreement of
Guarantor(s), and (iv) if required by Bank, Borrower and any guarantor(s) have
executed and delivered to Bank an arbitration resolution, an environmental
questionnaire, and an environmental certification and indemnity agreement.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Borrower and Bank and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Borrower, provided, however, Borrower may not assign any of its
right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
MILBURN INVESTMENTS, INC.,
a Texas corporation
By: /s/Kenda B. Gonzales
------------------------------
Name: Kenda B. Gonzales
------------------------------
Title: Treasurer
------------------------------
BANK ONE, ARIZONA, NA,
a national banking association
By: /s/Rhonda R. Williams
------------------------------
Name: Rhonda R. Williams
------------------------------
Title: Asst. Vice President
------------------------------
FIRST MODIFICATION AGREEMENT
DATE: March 2, 1995
PARTIES: Borrower: MILTEX MORTGAGE OF TEXAS LIMITED PARTNERSHIP, a Texas
limited partnership dba Miltex Mortgage Company.
Bank: BANK ONE, ARIZONA, NA, a national banking association.
RECITALS:
A. Bank has extended to Borrower credit ("Loan") in the principal amount of
$10,000,000.00 pursuant to the Mortgage Warehousing Credit and Security
Agreement, dated May 27, 1994 ("Credit Agreement"), and evidenced by the
Revolving Line of Credit Promissory Note, dated May 27, 1994 ("Note"). The
unpaid principal of the Loan as of the date hereof is $5,410,108.00. The Note,
the Credit Agreement, any arbitration resolution, any environmental
certification and indemnity agreement, and all other agreements, documents, and
instruments evidencing, securing, or otherwise relating to the Loan are
sometimes referred to individually and collectively as the "Loan Documents".
B. Borrower has requested that Bank modify the Loan and the Loan
Documents as provided herein. Bank is willing to so modify the Loan and the
Loan Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
2.1 The Loan Documents are modified as follows:
2.1.1 Section 2.5(c)(v) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(v) Rejection by Purchaser. Two (2) Business Days have elapsed
after the Collateral Documents for such Eligible Mortgage are rejected by
the Approved Investor as unsatisfactory;
2.1.2 Section 2.5(c)(vi) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(vi) Failure to Purchase. Forty (40) calendar days have elapsed
from the delivery of an Eligible Mortgage Loan to an Approved Investor for
purchase without the purchase being made;
2.2 Each of the Loan Documents is modified to provide that it shall be a
default or an event of default thereunder if Borrower shall fail to comply with
any of the covenants of Borrower herein or if any representation or warranty by
Borrower herein or by any guarantor in any related Consent and Agreement of
Guarantor(s) is materially incomplete, incorrect, or misleading as of the date
hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents shall
be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial condition of
Borrower or any other person whose financial statement has been delivered to
Bank in connection with the Loan from the most recent financial statement
received by Bank.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and binding
obligation of Borrower, enforceable against Borrower in accordance with their
terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
5. BORROWER COVENANTS.
Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such additional
agreements, documents, and instruments as reasonably required by Bank to
effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges Bank and
its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity of Borrower, whether now known or unknown to Borrower, (i) in respect
of the Loan, the Loan Documents, or the actions or omissions of Bank in respect
of the Loan or the Loan Documents and (ii) arising from events occurring prior
to the date of this Agreement.
5.3 Contemporaneously with the execution and delivery of this Agreement,
Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Note and all amounts,
other than interest and principal, due and payable by Borrower under the Loan
Documents as of the date hereof.
5.3.2 All the internal and external costs and expenses incurred by Bank
in connection with this Agreement (including, without limitation, inside and
outside attorneys, appraisal, appraisal review, processing, title, filing, and
recording costs, expenses, and fees).
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (i) Bank has executed and
delivered this Agreement, (ii) Borrower has performed all of the obligations of
Borrower under this Agreement to be performed contemporaneously with the
execution and delivery of this Agreement, (iii) each guarantor(s) of the Loan,
if any, has executed and delivered to Bank a Consent and Agreement of
Guarantor(s), and (iv) if required by Bank, Borrower and any guarantor(s) have
executed and delivered to Bank an arbitration resolution, an environmental
questionnaire, and an environmental certification and indemnity agreement.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Borrower and Bank and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Borrower, provided, however, Borrower may not assign any of its
right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
MILTEX MORTGAGE OF TEXAS LIMITED
PARTNERSHIP, a Texas limited partnership
dba Miltex Mortgage Company
By: MILTEX MANAGEMENT, INC., a Texas
corporation
Its Sole General Partner
By: /s/Randall C. Present
------------------------------
Name: Randall C. Present
------------------------------
Title: President
------------------------------
BANK ONE, ARIZONA, NA, a national
banking association
By: /s/Rhonda R. Williams
------------------------------
Name: Rhonda R. Williams
------------------------------
Title: Assistant Vice President
------------------------------
Continental Homes Holding Corp.
Computation of Earnings Per Share
(In thousands, except per share data)
Three months ended Nine months ended
February 28, February 28,
----------------- ---------------
1995 1994 1995 1994
---- ---- ---- ----
Fully diluted:
Net income ............................. $ 3,073 $ 2,727 $10,681 $ 9,191
Interest expense on convertible
subordinated notes, net of
income taxes ......................... 401 401 1,203 1,203
------- ------- ------- -------
$ 3,474 $ 3,128 $11,884 $10,394
======= ======= ======= =======
Weighted average number of
shares outstanding ................... 6,940 6,954 6,956 5,947
Conversion of convertible
subordinated notes (42.55 shares
per $1,000 principal amount of
notes) ............................... 1,489 1,489 1,489 1,489
Incremental shares relating to
stock options exercisable ............ 37 98 48 117
------- ------- ------- -------
Weighted average number of shares
outstanding assuming full
dilution ............................. 8,466 8,541 8,493 7,553
======= ======= ======= =======
Fully diluted net income
per share ............................ $.41 $.37 $1.40 $1.38
======= ======= ======= =======
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> FEB-28-1995
<EXCHANGE-RATE> 1
<CASH> 12333
<SECURITIES> 0
<RECEIVABLES> 38697
<ALLOWANCES> 0
<INVENTORY> 284099
<CURRENT-ASSETS> 0
<PP&E> 2095
<DEPRECIATION> 0
<TOTAL-ASSETS> 370905
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0
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</TABLE>
