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, 1996
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 22, 1996
- ---------------------- --------------
$.01 per value 6,988,160
<PAGE>
CONTINENTAL HOMES HOLDING CORP.
FORM 10-Q
FOR THE QUARTER ENDED
FEBRUARY 28, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of February 28, 1996
and May 31, 1995.................................................3
Consolidated Statements of Income for the three and
nine months ended February 28, 1996 and 1995.....................4
Consolidated Statements of Cash Flows for the nine
months ended February 28, 1996 and 1995..........................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
2
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
February 28, May 31,
1996 1995
---- ----
ASSETS (In thousands)
Homebuilding:
Cash and cash equivalents $ 19,894 $ 12,848
Receivables 15,258 10,108
Homes, lots and improvements in production 332,833 291,331
Property and equipment, net 2,382 2,456
Prepaid expenses and other assets 17,760 20,516
Excess of cost over related net assets acquired 12,048 13,400
--------- ---------
400,175 350,659
--------- ---------
Mortgage banking:
Mortgage loans held for sale 20,314 17,593
Mortgage loans held for long-term
investment, net 717 17,783
Other assets 251 798
--------- ---------
21,282 36,174
--------- ---------
Total assets $ 421,457 $ 386,833
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities $ 43,220 $ 39,405
Notes payable, senior and convertible debt 233,061 198,814
Deferred income taxes 2,937 2,048
--------- ---------
279,218 240,267
--------- ---------
Mortgage banking:
Notes payable 10,268 16,072
Bonds payable 712 17,939
Other 592 2,076
--------- ---------
11,572 36,087
--------- ---------
Total liabilities 290,790 276,354
--------- ---------
Minority interest in age-restricted community 4,880 --
--------- ---------
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 - 93,740 and
156,130 shares (81) (591)
Capital in excess of par value 59,610 59,610
Retained earnings 66,187 51,389
--------- ---------
Total stockholders' equity 125,787 110,479
--------- ---------
Total liabilities and stockholders' equity $ 421,457 $ 386,833
========= =========
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated balance sheets.
3
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
February 28, February 28,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Home sales $ 137,180 $ 104,483 $ 405,510 $ 305,753
Land sales 153 7,958 11,420 7,958
Mortgage banking and
title operations 3,411 1,462 8,357 4,945
Other income, net 252 148 358 380
--------- ----------- ----------- -----------
Total revenues 140,996 114,051 425,645 319,036
--------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding:
Cost of home sales 111,910 85,551 330,767 250,195
Cost of land sales 156 8,033 11,485 8,183
Selling, general and
administrative expenses 15,052 11,744 45,080 33,549
Interest, net 1,572 1,640 4,026 3,886
Minority interest in
age-restricted community (164) -- (164) --
Mortgage banking and title
operations:
Selling, general and
administrative expenses 1,762 1,432 5,017 4,173
Interest, net (157) (63) (123) (352)
--------- ----------- ----------- -----------
Total costs and expenses 130,131 108,337 396,088 299,634
--------- ----------- ----------- -----------
Income before income taxes and
extraordinary loss 10,865 5,714 29,557 19,402
Income taxes 4,705 2,641 12,858 8,721
--------- ----------- ----------- -----------
Income from operations 6,160 3,073 16,699 10,681
Extraordinary loss:
Loss on extinguishment of
debt, net (859) -- (859) --
--------- ----------- ----------- -----------
Net income $ 5,301 $ 3,073 $ 15,840 $ 10,681
========= =========== =========== ===========
Earnings per common share
Income from operations $ .88 $ .44 $2.40 $ 1.54
Net income .76 .44 2.28 1.54
Earnings per common share
assuming full dilution
Income from operations $ .65 $ .41 $1.95 $ 1.40
Net income .57 .41 1.86 1.40
Cash dividends per share $ .05 $ .05 $.15 $ .15
Weighted average number of
shares outstanding 6,974,427 6,939,998 6,949,509 6,955,453
========= =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated statements.
4
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
February 28,
----------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 15,840 $ 10,681
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 2,415 2,175
Minority interest in age-restricted community (164) --
Increase (decrease) in deferred income taxes 889 (1,841)
Extraordinary loss: Loss on extinguishment
of debt 1,457 --
Decrease (increase) in assets
Homes, lots and improvements in production (36,458) (45,437)
Receivables 9,298 9,052
Prepaid expenses and other assets 4,635 (5,222)
Increase (decrease) in liabilities
Accounts payable and other liabilities 2,331 (6,619)
------- --------
Net cash provided (used) by operating activities 243 (37,211)
------- --------
Cash flows from investing activities:
Net additions of property and equipment (475) (518)
Cash paid for acquisitions, net of cash acquired -- (19,398)
------- --------
Net cash used by investing activities (475) (19,916)
Cash flows from financing activities:
Increase (decrease) in notes payable to financial
institutions (24,998) 44,752
Retirement of bonds payable (17,227) (2,744)
Retirement of Convertible Subordinated Notes (33,250) --
Issuance of Convertible Subordinated Notes 83,285 --
Treasury stock acquired -- (556)
Stock options exercised 510 48
Dividends paid (1,042) (1,049)
------- --------
Net cash provided by financing activities 7,278 40,451
------- --------
Net increase (decrease) in cash 7,046 (16,676)
Cash at beginning of period 12,848 28,809
------- --------
Cash at end of period $ 19,894 $ 12,133
======= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 6,064 $ 5,830
Income taxes $ 10,422 $ 10,218
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated statements.
5
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
CONTINUED
Supplemental schedule of non-cash investing and financing activities:
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).
During fiscal 1996, the Company entered into a joint venture whereby the Company
contributed cash and the joint venture partner contributed assets (primarily
land) valued at $5,045,000.
The accompanying notes to consolidated financial statements are an integral part
of these unaudited consolidated statements.
6
<PAGE>
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, 1995, filed with the Securities and Exchange Commission.
The results of operations for the three and nine months ended February
28, 1996 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 $12,211,000 and $10,033,000
and expensed as a component of cost of home sales $11,786,000 and
$7,549,000 in the nine months ended February 28, 1996 and 1995,
respectively.
7
<PAGE>
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,
1996 1995
(In thousands)
12% senior notes, due 1999, net of
premium of $1,187 and $1,430 $111,187 $111,430
6-7/8% convertible subordinated notes,
due March 2002, net of discount of $-0-
and $2,345 -- 32,655
6-7/8% convertible subordinated notes,
due November 2002 86,250 --
Notes payable 35,624 54,729
--------- ---------
$233,061 $198,814
========= =========
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:
<TABLE>
<CAPTION>
Three months ended Nine months ended
February 28, February 28,
----------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Interest expense,
homebuilding $ 1,726 $ 1,697 $ 4,387 $ 4,151
Interest income,
homebuilding (154) (57) (361) (265)
1,572 $ 1,640 $ 4,026 $ 3,886
Interest expense,
mortgage banking $ 309 $ 631 $ 1,677 $ 1,679
Interest income,
mortgage banking (466) (694) (1,800) (2,031)
(157) $ (63) $ (123) $ (352)
</TABLE>
Note 5. Acquisition of Heftler Realty Co. (the "Acquisition")
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 $29.2 million in cash. The acquisition was accounted for by the
purchase method with the results of operations of Heftler included beginning
November 1, 1994. The excess of cost over related net assets acquired is being
amortized over ten years using the straight-line method.
The following unaudited pro forma combined financial data give effect
to the Acquisition as if it had occurred on the first day of the period. This
pro forma information has been prepared utilizing
8
<PAGE>
the historical consolidated financial statements of the Company and
Heftler. 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 Acquisition had been effected during the period presented. The
pro forma financial information is based on the purchase method of accounting
for the Acquisition and reflects adjustments to record the profit of acquired
inventories, amortize the excess purchase price over the underlying value of net
assets acquired, record the additional interest on acquisition indebtedness
assumed and adjust income taxes for pro forma adjustments.
Nine Months ended
February 28, 1995
-----------------
(in thousands, except per share data)
Total revenues $333,314
Net income 10,767
Earnings per common share 1.55
Earnings per common share
assuming full dilution 1.41
9
<PAGE>
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:
<TABLE>
<CAPTION>
Quarters ended Nine months ended
February 28, February 28,
---------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Units delivered 1,041 797 3,098 2,357
Average sales price $131,777 $ 131,095 $ 130,894 $ 129,721
Revenue from home
sales (000's) $137,180 $ 104,483 $ 405,510 $ 305,753
Percentage increase
from prior year 31.3% 43.8% 32.6% 28.9%
Change due to volume 30.6% 31.9% 31.4% 17.1%
Change due to average
sales price .7% 11.9% 1.2% 11.8%
</TABLE>
The volume increase for the quarter and nine months ended February 28,
1996 compared to the same periods during fiscal 1995 resulted from improved
sales in each market during the previous three fiscal quarters. The Company
believes that relatively low interest rates and the economic strength in certain
of its markets contributed to improved sales.
The following table summarizes information related to the Company's
backlog at the dates indicated:
<TABLE>
<CAPTION>
February 28,
------------------------------------------------------------
(Dollars in thousands)
1996 1995
---- ----
Units Dollars Units Dollars
<S> <C> <C> <C> <C>
Phoenix 904 $117,143 590 $ 76,355
Texas 555 59,930 297 31,400
South Florida 139 19,873 74 10,256
Denver 219 45,123 94 17,086
Southern California 116 28,486 49 13,316
----- -------- ----- --------
Total backlog 1,933 $270,555 1,104 $148,413
===== ======== ===== ========
Average price per unit $140 $134
======== ========
</TABLE>
The increase in backlog at February 28, 1996 resulted from improved
sales in each individual market during the six months ended February 28, 1996.
The aggregate sales value of new contracts signed increased 66% in the nine
months ended February 28, 1996 to $473,351,000 representing 3,538 homes
(including $24,326,000 in South Florida representing 173 homes) as compared with
$284,793,000 representing 2,193 homes (including $6,021,000 in South Florida
representing 40 homes) for the nine months ended February 28, 1995. Sales in
South Florida were included from November 1, 1994.
10
<PAGE>
The following table summarizes information related to cost of home
sales, selling, general and administrative ("SG&A") expenses and interest, net
for homebuilding:
<TABLE>
<CAPTION>
Quarters ended February 28, Nine months ended February 28,
--------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
Dollars % Dollars % Dollars % Dollars %
-------- ----- -------- ------ -------- ------- -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from home sales $137,180 100.0 % $104,483 100.0% $405,510 100.0% $305,753 100.0%
Cost of home sales 111,910 81.6 85,551 81.9 330,767 81.6 250,195 81.8
Gross profit 25,270 18.4 18,932 18.1 74,743 18.4 55,558 18.2
SG&A expenses 15,052 11.0 11,744 11.2 45,080 11.1 33,549 11.0
Operating income
from homebuilding 10,218 7.4 7,188 6.9 29,663 7.3 22,009 7.2
Interest, net 1,572 1.1 1,640 1.6 4,026 1.0 3,886 1.3
Pre-tax profit
from homebuilding $ 8,646 6.3 % $ 5,548 5.3% $ 25,637 6.3% $ 18,123 5.9%
</TABLE>
In connection with the acquisitions in Texas and South Florida, the
Company capitalized a portion of the purchase price and includes such
capitalized purchase price in the cost of home sales when the related units are
delivered (purchase accounting adjustments). Gross profit from home sales,
exclusive of purchase accounting adjustments were 18.5% and 18.5% for the
quarter and nine months ended February 28, 1996, respectively, compared to 19.0%
and 18.8% for the quarter and nine months ended February 28, 1995, respectively.
The increase in total SG&A expenses for the quarter and nine months
ended February 28, 1996 compared to the quarter and nine months ended February
28, 1995 was due to higher variable marketing costs (sales commissions,
advertising and model furniture amortization) due primarily to the increase in
the number of homes delivered, higher salaries and higher customer service
costs. Additionally, the first nine months of fiscal 1996 included $2,381,000 of
SG&A expenses from South Florida compared with $1,382,000 during the period from
November 1, 1994 (acquisition) through February 28, 1995. SG&A expenses for each
home delivered were $14,459 and $14,735 in the third quarter of fiscal 1996 and
1995, respectively and $14,551 and $14,234 in the first nine months of fiscal
1996 and 1995, respectively. The Company capitalizes certain SG&A expenses for
homebuilding. Accordingly, total SG&A costs incurred for homebuilding were
$16,990,000 and $50,831,000 for the three and nine months, respectively ended
February 28, 1996 compared to $13,754,000 and $38,471,000 for the corresponding
fiscal 1995 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 $5,836,000 and $16,598,000 for the three and nine months ended February 28,
1996, respectively compared to $5,519,000 and $14,184,000 for the three and nine
months ended February 28, 1995, respectively. Interest, net for homebuilding was
$1,572,000 and $1,640,000 for the three months ended February 28, 1996 and 1995,
respectively. For the nine month period ended February 28, 1996, interest, net
for homebuilding was $4,026,000 compared with $3,886,000 for the
11
<PAGE>
nine months ended February 28, 1995. The increase in interest incurred for the
nine months ended February 28, 1996 compared to the same period of the previous
year, was due to higher debt levels which resulted primarily from the Heftler
Acquisition.
The Company's pre-tax profit from homebuilding for the nine months
ended February 28, 1996 was $25,637,000 compared to $18,123,000 for the
corresponding period ended February 28, 1995. Pre-tax profit increased in the
first nine months of fiscal 1996 due primarily to improved results in Texas and
Southern California partially offset by the negative impact from the inclusion
of South Florida results. South Florida's pre-tax loss was primarily caused by
weather related delays in the opening of a new subdivision and delays in the
municipalities issuing permits. These delays resulted in fewer deliveries from
South Florida through October 1995.
Mortgage Banking
The Company's mortgage banking operations are conducted through its
wholly-owned subsidiary CH Mortgage Company ("CHMC"). The following table
summarizes operating information for the Company's mortgage banking operations:
<TABLE>
<CAPTION>
Quarters ended Nine months ended
February 28, February 28,
--------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Number of loans originated 678 441 2,039 1,457
Loan origination fees $ 639 $ 404 $ 1,925 $1,369
Sale of servicing and
marketing gains 2,169 600 4,647 2,045
Other revenue 163 134 368 453
------- ------- ------- ------
Total revenues 2,971 1,138 6,940 3,867
General and administrative
expenses 1,496 1,194 4,192 3,485
------- ------- ------- ------
Operating income (loss) from
mortgage banking 1,475 (56 ) 2,748 382
Interest, net (157) (63 ) (119) (352 )
------- ------- ------- ------
Pre-Tax profit from
mortgage banking $ 1,632 $ 7 $ 2,867 $ 734
======= ======= ======= ======
</TABLE>
Revenues and general and administrative expenses from mortgage banking increased
in the quarter and nine months ended February 28, 1996 compared to the
corresponding periods of fiscal 1995, primarily as a result of an increase in
the percentage of Phoenix and Texas homebuyers utilizing the Company's mortgage
banking operations. Additionally, revenues increased due to higher servicing
release premiums received on the sale of servicing and the sale of approximately
$47,705,000 in servicing rights from the servicing portfolio resulting in
approximately $932,000 of income.
12
<PAGE>
Consolidated Operations
Net income was $15,840,000 ($2.28 per share, $1.86 fully diluted) for
the nine months ended February 28, 1996 compared to $10,681,000 ($1.54 per
share, $1.40 fully diluted) for the period ended February 28, 1995.
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 Company's loan
agreements. At February 28, 1996, the Company had unsecured lines of credit from
two lenders for aggregate borrowings (excluding mortgage warehouse lines) of up
to $30,000,000. Additionally, the Company assumed $55 million of credit
facilities ($15 million of which are unsecured) in connection with the Texas and
Florida acquisitions. At February 28, 1996, there was $35,624,000 outstanding in
the aggregate under these credit lines. The Company's revolving lines of credit
bear interest at rates ranging from LIBOR plus 2-1/4% to prime plus 1/2%. The
Company is currently in discussions with a group of banks to obtain an unsecured
revolving credit facility to be used for working capital and general corporate
purposes. The new facility will replace all of the Company's existing lines of
credit (other than warehouse lines). 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.
CHMC has a warehouse line of credit for $25,000,000 which is guaranteed
by the Company. 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, 1996, the amount outstanding under the warehouse lines of credit
and the amount of funding drafts that had not been presented for payment was
$10,268,000. The Company believes that these lines are sufficient for its
mortgage banking operations.
On November 18, 1994, the Company acquired all of the outstanding
capital stock of Heftler for $29.2 million in cash.
On November 10, 1995, the Company completed the sale of $75,000,000
principal amount of its 6-7/8% Convertible Subordinated Notes due November 2002.
On December 5, 1995, the Company sold an additional $11,250,000 of such notes.
The net proceeds were used as follows: (i) approximately $33,250,000 was used to
redeem the Company's 6-7/8% Convertible Subordinated Notes due March 2002, (ii)
approximately $33,156,000 was used to reduce temporarily outstanding amounts
under certain of the Company's revolving lines of credit which were incurred for
working capital purposes, and (iii) approximately $6,631,000 was used to reduce
temporarily outstanding amounts under the Company's warehouse line of credit. In
connection with the redemption of the notes, the Company recorded, in the third
quarter of fiscal 1996, an extraordinary
13
<PAGE>
loss, net of taxes of approximately $859,000 due to the write-off of unamortized
discount and debt issuance costs. The Convertible Notes are immediately
convertible into shares of the Company's common stock at a rate of 42.105 shares
for each $1,000 principal amount of Convertible Notes.
On March 12, 1996 the Company commenced a cash tender offer and consent
solicitation for all of its outstanding 12% Senior Notes Due 1999 ($110 million
principal amount) and has filed with the Securities and Exchange Commission a
registration statement proposing a public offering of $150,000,000 principal
amount of new senior notes. A portion of the proceeds of the public offering
will be used to consummate the tender offer. Upon consummation of the tender
offer, the Company expects to record an extraordinary loss, net of taxes, of
approximately $7,000,000 related to the tender offer premium and the write-off
of debt issuance costs and the net premium relating to the repurchase of the
Senior Notes.
14
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Statement of Computation of Earnings Per Share.
27 Financial Data Schedule.
Pursuant to Rule 601(b)(4)(iii) the Company agrees to
furnish to the Securities and Exchange Commission, upon
request, copies of agreements not filed herewith because
they do not exceed ten percent of the total assets of the
Company.
(b) Reports on Form 8-K: There were no reports on Form 8-K
filed for the three months ended February 28, 1996.
15
<PAGE>
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 27, 1996 By: /s/ Kenda B. Gonzales
----------------------------
KENDA B. GONZALES
Senior Vice President/
Chief Financial Officer
Date: March 27, 1996 By: /s/ Donald R. Loback
----------------------------
DONALD R. LOBACK
Chief Executive Officer
16
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
11 Statement of Computation of Earnings
Per share.
27 Financial Data Schedule
17
Exhibit 11
<TABLE>
<CAPTION>
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,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Fully diluted:
Net income $5,301 $3,073 $15,840 $10,681
Interest expense on convertible
subordinated notes, net of
income taxes 910 401 1,904 1,203
--------- ------- -------- --------
$6,211 $3,474 $17,744 $11,884
========= ======= ======== ========
Weighted average number of
shares outstanding 6,974 6,940 6,950 6,956
Conversion of convertible
subordinated notes (42.55 shares
per $1,000 principal amount of
notes) 164 1,489 1,049 1,489
Conversion of convertible
subordinated notes (42.105
shares per $1,000 principal
amount of notes) 3,611 -- 1,441 --
Incremental shares relating to
stock options exercisable 79 37 86 48
--------- ------- -------- --------
Weighted average number of shares
outstanding assuming full
dilution 10,828 8,466 9,526 8,493
========= ======= ======== ========
Fully diluted net income
per share $ .57 $ .41 $ 1.86 $ 1.40
========= ======= ======== ========
</TABLE>
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<LEGEND>
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<CURRENCY> U.S. DOLLARS
<S> <C>
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<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> FEB-28-1996
<EXCHANGE-RATE> 1
<CASH> 19,894
<SECURITIES> 0
<RECEIVABLES> 36,289
<ALLOWANCES> 0
<INVENTORY> 332,833
<CURRENT-ASSETS> 0
<PP&E> 2,382
<DEPRECIATION> 0
<TOTAL-ASSETS> 421,457
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<COMMON> 71
0
0
<OTHER-SE> 125,787
<TOTAL-LIABILITY-AND-EQUITY> 421,457
<SALES> 405,510
<TOTAL-REVENUES> 425,645
<CGS> 330,767
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<EXTRAORDINARY> (859)
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<NET-INCOME> 15,840
<EPS-PRIMARY> 2.28
<EPS-DILUTED> 1.86
</TABLE>
