SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
------------------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 10 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1997
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 (IRS 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 April 9, 1997
--------------------- -------------
$.01 par value 6,897,580
- - --------------------------------------------------------------------------------
<PAGE>
CONTINENTAL HOMES HOLDING CORP.
FORM 10-Q
FOR THE QUARTER ENDED
FEBRUARY 28, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of February 28, 1997 and
May 31, 1996.................................................. 3
Consolidated Statements of Income for the three and nine months ended
February 28, 1997 and 1996.................................... 4
Consolidated Statements of Cash Flows for the nine months ended
February 28, 1997 and 1996.................................... 5
Notes to unaudited Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 8
PART 11. OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders.............. 12
Item 6. Exhibits and Reports on Form 8-K................................. 12
2
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
---- ----
(In thousands)
<S> <C> <C>
ASSETS
Homebuilding:
Cash and cash equivalents $ 37,027 $ 25,236
Receivables 24,196 16,693
Homes, lots and improvements in production 392,958 344,880
Property and equipment, net 3,727 2,271
Prepaid expenses and other assets 21,323 16,797
Excess of cost over related net assets acquired 9,894 11,715
--------- ---------
489,125 417,592
--------- ---------
Mortgage banking:
Mortgage loans held for sale 20,935 20,350
Mortgage loans held for long-term investment, net 0 86
Other assets 289 406
--------- ---------
21,224 20,842
--------- ---------
Total assets $ 510,349 $ 438,434
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities $ 63,484 $ 52,240
Notes payable, senior and convertible subordinated debt 275,360 244,999
Deferred income taxes 2,528 1,236
--------- ---------
341,372 298,475
--------- ---------
Mortgage banking:
Notes payable 14,180 5,359
Bonds payable 0 168
Other 550 686
--------- ---------
14,730 6,213
--------- ---------
Total liabilities 356,102 304,688
--------- ---------
Minority interest 4,241 4,797
--------- ---------
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 - 183,320 and 88,265 shares (2,191) (384)
Capital in excess of par value 60,517 60,396
Retained earnings 91,609 68,866
--------- ---------
Total stockholders' equity 150,006 128,949
--------- ---------
Total liabilities and stockholders' equity $ 510,349 $ 438,434
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these unaudited consolidated balance sheets.
3
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
February 28, February 28,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Home sales $ 169,986 $ 137,180 $ 516,533 $ 405,510
Land sales 424 153 15,548 11,420
Mortgage banking and title operations 2,396 3,411 8,226 8,357
Other income, net 3 252 99 358
----------- ----------- ----------- -----------
Total revenues 172,809 140,996 540,406 425,645
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding:
Cost of home sales 140,783 111,910 423,433 330,767
Cost of land sales 102 156 14,594 11,485
Selling, general and administrative
expenses 18,074 15,052 53,798 45,080
Interest, net 847 1,572 3,593 4,026
Minority interest (255) (164) (557) (164)
Mortgage banking and title operations:
Selling, general and administrative
expenses 1,879 1,762 6,017 5,017
Interest, net (178) (157) (577) (123)
----------- ----------- ----------- -----------
Total costs and expenses 161,252 130,131 500,301 396,088
----------- ----------- ----------- -----------
Income before income taxes and
extraordinary loss 11,557 10,865 40,105 29,557
Income taxes 4,799 4,705 16,319 12,858
----------- ----------- ----------- -----------
Income from operations 6,758 6,160 23,786 16,699
Extraordinary loss:
Loss on extinguishment of
debt, net 0 (859) 0 (859)
----------- ----------- ----------- -----------
Net income $ 6,758 $ 5,301 $ 23,786 $ 15,840
=========== =========== =========== ===========
Earnings per common share
Income from operations $ .98 $ .88 $ 3.42 $ 2.40
Net income .98 .76 3.42 2.28
Earnings per common share assuming
full dilution
Income from operations $ .72 $ .65 $ 2.48 $ 1.95
Net income .72 .57 2.48 1.86
Cash dividends per share $ .05 $ .05 $ .15 $ .15
Weighted average number of shares
outstanding 6,897,402 6,974,427 6,960,023 6,949,509
=========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these unaudited consolidated statements.
4
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
February 28,
------------
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $ 23,786 $ 15,840
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 2,423 2,415
Minority interest (556) (164)
Increase (decrease) in deferred income taxes 1,292 889
Extraordinary loss on extinguishment of debt -- 1,457
Decrease (increase) in assets:
Homes, lots and improvements in production (40,281) (36,458)
Receivables (7,845) 9,298
Prepaid expenses and other assets (4,544) 4,635
Increase (decrease) in liabilities:
Accounts payable and other liabilities 9,664 2,331
-------- --------
Net cash provided (used) by operating activities (16,061) 243
-------- --------
Cash flows from investing activities:
Net additions of property and equipment (2,094) (475)
Cash paid for acquisitions, net of cash acquired (1,205) --
Adjustment to purchase price 1,700 --
-------- --------
Net cash used by investing activities (1,599) (475)
-------- --------
Cash flows from financing activities:
Increase (decrease) in notes payable to financial
institutions 12,173 (24,998)
Retirement of bonds payable (168) (17,227)
Retirement of Convertible Subordinated Notes -- (33,250)
Issuance of Senior Notes 20,175 --
Issuance of Convertible Subordinated Notes -- 83,285
Repurchase of stock (1,922) --
Stock options exercised 236 510
Dividends paid (1,043) (1,042)
-------- --------
Net cash provided by financing activities 29,451 7,278
-------- --------
Net increase (decrease) in cash 11,791 7,046
Cash at beginning of period 25,236 12,848
-------- --------
Cash at end of period $ 37,027 $ 19,894
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 4,680 $ 6,064
Income taxes $ 12,987 $ 10,422
</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
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 (the
"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, 1996, filed with the
Securities and Exchange Commission.
The results of operations for the three and nine months ended
February 28, 1997 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
$14,755,000 and $12,211,000 and expensed as a component of cost of
home sales $13,352,000 and $11,786,000 in the nine months ended
February 28, 1997 and 1996, respectively.
Note 3. Notes payable, Senior and Convertible Subordinated Debt
Notes payable, senior and convertible subordinated debt for
homebuilding consist of:
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
---- ----
(In thousands)
<S> <C> <C>
10% senior notes, due 2006, net of discount of $1,647 and $1,972 $148,353 $128,028
12% Senior notes, due 1999, net of premium of $77 and $113 11,577 11,613
6-7/8% convertible subordinated notes, due 2002 86,250 86,250
Notes payable 29,180 19,108
-------- --------
$275,360 $244,999
======== ========
</TABLE>
6
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 4. Interest, net
The summary of the components of interest, net is as follows:
Three months ended Nine months ended
February 28, February 28,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
(In thousands)
Interest expense, homebuilding $ 1,300 $ 1,726 $ 4,285 $ 4,387
Interest income, homebuilding (453) (154) (692) (361)
------- ------- ------- -------
$ 847 $ 1,572 $ 3,593 $ 4,026
======= ======= ======= =======
Interest expense, mortgage banking $ 135 $ 309 $ 395 $ 1,677
Interest income, mortgage banking (313) (466) (972) (1,800)
------- ------- ------- -------
$ (178) $ (157) $ (577) $ (123)
======= ======= ======= =======
Note 5. Statement of Financial Accounting Standards
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128),
Earnings Per Share, which supersedes Accounting Principal Board
Opinion 15, the existing authoritative guidance. SFAS 128 is
effective for financial statements for both interim and annual
periods ending after December 15, 1997 and requires restatement of
all prior-period EPS data presented. The new statement modifies
the calculations of primary and fully diluted EPS and replaces
them with basic and diluted EPS. The Company has determined that
adoption of SFAS 128 will not have a material impact on its
previous or current reported EPS data.
7
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
ITEM 2.
-------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Units delivered 1,208 1,041 3,721 3,098
Average sales price $ 140,717 $ 131,777 $ 138,816 $ 130,894
Revenue from home sales (000's) $ 169,986 $ 137,180 $ 516,533 $ 405,510
Percentage increase from prior year 23.9% 31.3% 27.4% 32.6%
Change due to volume 16.0% 30.6% 20.1% 31.4%
Change due to average sales price 7.9% .7% 7.3% 1.2%
</TABLE>
The volume increase in the quarter and nine months ended February 28,
1997 compared to the same periods during fiscal 1996 resulted from improved
deliveries in Denver, South Florida, California and Texas and the Company's
expansion into the Dallas, Texas market. The average sales price increase in the
quarter and nine months ended February 28, 1997 compared to the same periods
during fiscal 1996 resulted primarily from an increase in volume in the Denver
and California markets where the average sales price is over $200,000 and
$300,000, respectively.
The following table summarizes information related to the Company's
backlog at the dates indicated:
February 28,
------------
(Dollars in thousands)
1997 1996
---- ----
Units Dollars Units Dollars
-------- -------- -------- --------
Phoenix 713 $ 95,417 904 $117,143
Texas 499 54,804 555 59,930
South Florida 163 19,903 139 19,873
Denver 211 41,685 219 45,123
Southern California 50 15,867 116 28,486
-------- -------- -------- --------
Total backlog 1,636 $227,676 1,933 $270,555
======== ======== ======== ========
Average price per unit $139 $140
==== ====
The aggregate sales value of new contracts signed decreased 9% in the
nine months ended February 28, 1997 to $432,426,000 representing 3,208 homes as
compared with $473,351,000 representing 3,538 homes for the nine months ended
February 28, 1996. Most of the decline was a result of decreased order activity
in the Phoenix and Austin markets during the first nine months of fiscal 1997
compared to the same period last year. This decline was the result of unusually
strong new orders in the prior period and not due to a significant deterioration
in either market.
8
<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,
--------------------------- ------------------------------
1997 1996 1997 1996
---- ---- ---- ----
Dollars % Dollars % Dollars % Dollars %
-------- ----- -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from
home sales $169,986 100.0% $137,180 100.0% $516,533 100.0% $405,510 100.0%
Cost of home sales 140,783 82.8 111,910 81.6 423,433 82.0 330,767 81.6
-------- ----- -------- ----- -------- ----- -------- -----
Gross profit 29,203 17.2 25,270 18.4 93,100 18.0 74,743 18.4
SG&A expenses 18,074 10.6 15,052 11.0 53,798 10.4 45,080 11.1
-------- ----- -------- ----- -------- ----- -------- -----
Operating income from
homebuilding 11,129 6.6 10,218 7.4 39,302 7.6 29,663 7.3
Interest, net 847 .5 1,572 1.1 3,593 .7 4,026 1.0
-------- ----- -------- ----- -------- ----- -------- -----
Pre-tax profit from
homebuilding $ 10,282 6.1% $ 8,646 6.3% $ 35,709 6.9% $ 25,637 6.3%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
Gross profit from home sales was 17.2% for the quarter ended February
28, 1997 compared to 18.4% for the corresponding fiscal 1996 period. Gross
profit from home sales was 18.0% for the nine months ended February 28, 1997
compared to 18.4% for the nine months ended February 28, 1996. The decline in
gross profits was primarily due to lower margins in the Austin and California
markets. In addition, the Company's highest margins are in Phoenix and Austin.
As deliveries increase in other markets, the mix will continue to put pressure
on margins.
The increase in total SG&A expense for the quarter and nine months
ended February 28, 1997 compared to the quarter and nine months ended February
28, 1996 was principally due to the increased volume which increased variable
marketing costs (sales commissions, advertising and model furniture
amortization). Additionally, SG&A increased with the addition of the Dallas
operation during the first quarter of fiscal 1997. SG&A expenses for each home
delivered were $14,962 and $14,459 in the third quarter of fiscal 1997 and 1996,
respectively and $14,458 and $14,551 in the first nine months of fiscal 1997 and
1996, respectively. The Company capitalizes certain SG&A expenses for
homebuilding. Accordingly, total SG&A costs incurred for homebuilding were
$20,941,000 and $62,262,000 for the three and nine months ended February 28,
1997 compared to $16,990,000 and $50,831,000 for the corresponding fiscal 1996
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 $6,832,000 and $19,040,000 for the three and nine months ended February 28,
1997, respectively compared to $5,836,000 and $16,598,000 for the three and nine
months ended February 28, 1996, respectively. For the nine month period ended
February 28, 1997, interest, net for homebuilding was $3,593,000 compared with
$4,026,000 for the nine months ended February 28, 1996.
The Company's pre-tax profit from homebuilding for the nine months
ended February 28, 1997 was $35,709,000 compared to $25,637,000 for the
corresponding period ended February 28, 1996. Pre-tax profit increased in the
nine months of fiscal 1997 due primarily to increased volume in most markets and
improved operating results in all markets.
9
<PAGE>
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:
Quarters ended Nine months ended
February 28, February 28,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
(Dollars in thousands)
Number of loans originated 677 678 2,234 2,039
Loan origination fees $ 677 $ 639 $2,157 $1,925
Sale of servicing and marketing gains 1,010 2,169 3,705 4,647
Other revenue 277 163 848 368
------ ------ ------ ------
Total revenues 1,964 2,971 6,710 6,940
General and administrative expenses 1,599 1,496 5,103 4,192
------ ------ ------ ------
Operating income (loss) from mortgage banking 365 1,475 1,607 2,748
Interest, net 178 157 577 119
------ ------ ------ ------
Pre-tax profit from mortgage banking $ 543 $1,632 $2,184 $2,867
====== ====== ====== ======
Revenues from mortgage banking decreased in the quarter and nine months ended
February 28, 1997 primarily as a result of a gain recognized in January 1996 as
a result of the sale of approximately $47,705,000 in servicing rights from the
servicing portfolio. General and administrative expenses increased in the
quarter and nine months ended February 28, 1997 primarily as a result of an
increase in originations and expansion into the Denver, Miami and Southern
California markets.
Consolidated operations
Net income was $23,786,000 ($3.42 per share, $2.48 fully diluted) for
the nine months ended February 28, 1997 compared to $15,840,000 ($2.28 per
share, $1.86 fully diluted) for the period ended February 28, 1996.
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. On June 27, 1996, the Company entered into a credit agreement
("Credit Agreement") with a group of banks which provides for a $110 million
unsecured revolving line of credit. Borrowings under the Credit Agreement bear
interest at LIBOR plus 1.75% or prime plus .125% at the Company's election and
subject to the rating on its senior debt. Available borrowings under the Credit
Agreement are limited to certain percentages of housing unit costs, finished
lots, land under development and receivables as defined in the Credit Agreement.
As a result of this formula, the borrowing base at February 28, 1997 was
$88,266,000 and $20,000,000 was outstanding. The Company believes that amounts
10
<PAGE>
generated from operations and such additional borrowings will provide funds
adequate to finance its existing homebuilding activities and meet its debt
service requirements. The Company is currently negotiating to increase the
aforementioned credit agreement to $140 million. Such increase will be used to
fund the development costs at its Rancho Carrillo project in San Diego. The
Company believes the line will be increased by the end of fiscal 1997.
CHMC has a warehouse line of credit for $25,000,000 which is guaranteed
by the Company. Pursuant to the warehouse line 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, 1997, the amount outstanding under the warehouse line of credit and
the amount of funding drafts that had not been presented for payment was
$14,180,000. The Company believes that this line is sufficient for its mortgage
banking operations.
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 to redeem the Company's 6-7/8% Convertible
Subordinated Notes due March 2002 and to reduce temporarily outstanding amounts
under certain of the Company's revolving lines of credit (including the
warehouse line of credit). In connection with the redemption of the notes, the
Company recorded, in the third quarter of fiscal 1996, an extraordinary 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 April 18, 1996 the Company completed the sale of $130,000,000
principal amount of its 10% Senior Notes due April 2006. The Company used
approximately $107,542,000 of the net proceeds to repurchase $98,500,000
aggregate principal amount of its 12% Senior Notes due 1999. The remaining
proceeds were used to reduce temporarily outstanding amounts under certain of
the Company's revolving lines of credit. In connection with the repurchase of
the 12% Senior Notes, the Company recorded, in the fourth quarter of fiscal
1996, an extraordinary loss, net of taxes, of approximately, $6,059,000 related
primarily to a tender offer premium. On January 30, 1997, the Company issued an
additional $20,000,000 principal amount of its 10% Senior Notes due April 2006.
The net proceeds were used to reduce temporarily outstanding amounts under the
Company's revolving line of credit.
Pursuant to a stock repurchase plan approved by the Board of Directors
on December 22, 1994, the Company repurchased 117,000 shares of its common stock
at an average price of $16.36 in November 1996.
Forward looking information; certain cautionary statements
- - ----------------------------------------------------------
Certain statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section are forward
looking statements. Such statements involve risks and uncertainties and actual
results may differ materially from those projected or implied. Further, certain
forward looking statements are based on assumptions of future events which may
not prove to be accurate. Risks and uncertainties include risks associated with
new and future communities, competition, financing availability, fluctuations in
interest rates or labor and material costs, government regulation, geographic
concentration and general economic conditions.
11
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders
---------------------------------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) 11 Statement of Computation of Earnings Per Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K: There were no reports on Form 8-K filed for
the nine months ended February 28, 1997.
12
<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: April 10, 1997 By: /s/Julie E. Collins
-----------------------------------
JULIE E. COLLINS
Financial Vice President
Date: April 10 , 1997 By: /s/ Donald R. Loback
-----------------------------------
DONALD R. LOBACK
Chief Executive Officer
13
Exhibit 11
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,
------------ ------------
Fully diluted: 1997 1996 1997 1996
---- ---- ---- ----
Net income $ 6,758 $ 5,301 $23,786 $15,840
Interest expense on convertible
subordinated notes, net of
income taxes 875 910 2,624 1,904
------- ------- ------- -------
$ 7,633 $ 6,211 $26,410 $17,744
======= ======= ======= =======
Weighted average number of
shares outstanding 6,897 6,974 6,960 6,950
Conversion of convertible
subordinated notes (42.55 shares
per $1,000 principal amount of notes) -- 164 -- 1,049
Conversion of convertible
subordinated notes (42.105 shares
per $1,000 principal amount of notes) 3,632 3,611 3,632 1,441
Incremental shares relating to stock
options exercisable 64 79 56 86
------- ------- ------- -------
Weighted average number of shares
outstanding assuming full dilution 10,593 10,828 10,648 9,526
======= ======= ======= =======
Fully diluted net income per share $ .72 $ .57 $ 2.48 $ 1.86
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> FEB-28-1997
<EXCHANGE-RATE> 1
<CASH> 37,027
<SECURITIES> 0
<RECEIVABLES> 45,131
<ALLOWANCES> 0
<INVENTORY> 392,958
<CURRENT-ASSETS> 0
<PP&E> 3,727
<DEPRECIATION> 0
<TOTAL-ASSETS> 510,349
<CURRENT-LIABILITIES> 0
<BONDS> 289,540
71
0
<COMMON> 0
<OTHER-SE> 149,935
<TOTAL-LIABILITY-AND-EQUITY> 510,349
<SALES> 516,533
<TOTAL-REVENUES> 540,406
<CGS> 423,433
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,016
<INCOME-PRETAX> 40,105
<INCOME-TAX> 16,319
<INCOME-CONTINUING> 23,786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,786
<EPS-PRIMARY> 3.42
<EPS-DILUTED> 2.48
</TABLE>
