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, 1998
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 1, 1998
--------------------- -------------
$.01 par value 6,868,900
- - --------------------------------------------------------------------------------
<PAGE>
CONTINENTAL HOMES HOLDING CORP.
FORM 10-Q
FOR THE QUARTER ENDED
FEBRUARY 28, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of February 28, 1998 and
May 31, 1997......................................................................... 3
Consolidated Statements of Income for the three and nine months ended
February 28, 1998 and 1997........................................................... 4
Consolidated Statements of Cash Flows for the nine months ended
February 28, 1998 and 1997........................................................... 5
Notes to unaudited Consolidated Financial Statements................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................. 8
PART II. OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders.................................. 13
Item 6. Exhibits and Reports on Form 8-K..................................................... 13
</TABLE>
2
<PAGE>
CONTINENTAL HOMES HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
February 28, May 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS (In thousands)
Homebuilding:
Cash and cash equivalents $ 27,099 $ 23,759
Receivables 16,586 27,894
Homes, lots and improvements in production 450,487 392,540
Property and equipment, net 4,031 3,656
Prepaid expenses and other assets 21,176 20,868
Excess of cost over related net assets acquired 8,575 9,565
Deferred income tax asset 4,961 2,471
--------- ---------
532,915 480,753
--------- ---------
Mortgage banking:
Mortgage loans held for sale 35,174 27,229
Other assets 498 274
--------- ---------
35,672 27,503
--------- ---------
Total assets $ 568,587 $ 508,256
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities $ 61,106 $ 62,163
Notes payable, senior and convertible subordinated debt 310,192 270,763
--------- ---------
371,298 332,926
--------- ---------
Mortgage banking:
Notes payable 16,522 15,662
Other 389 560
--------- ---------
16,911 16,222
--------- ---------
Total liabilities 388,209 349,148
--------- ---------
Minority interest 3,597 4,209
--------- ---------
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 - 7,085,109 shares 71 71
Treasury stock, at cost - 217,345 and 228,320 shares (2,887) (2,973)
Capital in excess of par value 61,048 60,878
Retained earnings 118,549 96,923
--------- ---------
Total stockholders' equity 176,781 154,899
--------- ---------
Total liabilities and stockholders' equity $ 568,587 $ 508,256
========= =========
</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,
------------ ------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Home sales $ 169,467 $ 169,986 $ 540,101 $ 516,533
Land sales 311 424 2,577 15,548
Mortgage banking and title operations 3,331 2,396 10,129 8,226
Other income, net (139) (129) (974) (112)
----------- ----------- ----------- -----------
Total revenues 172,970 172,677 551,833 540,195
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding:
Cost of home sales 139,468 140,783 445,594 423,433
Cost of land sales 190 102 2,506 14,594
Selling, general and administrative
expenses 18,231 17,942 56,754 53,587
Interest, net 855 847 2,311 3,593
Minority interest (158) (255) (612) (557)
Mortgage banking and title operations:
Selling, general and administrative
expenses 2,056 1,879 7,043 6,017
Interest, net (206) (178) (580) (577)
----------- ----------- ----------- -----------
Total costs and expenses 160,436 161,120 513,016 500,090
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 12,534 11,557 38,817 40,105
Income taxes 5,134 4,799 15,840 16,319
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 7,400 6,758 22,977 23,786
Extraordinary loss:
Loss on extinguishment of
debt, net of income taxes of $233 -- -- (322) --
----------- ----------- ----------- -----------
NET INCOME $ 7,400 $ 6,758 $ 22,655 $ 23,786
=========== =========== =========== ===========
BASIC EARNINGS PER COMMON SHARE
Income from operations $ 1.08 $ .98 $ 3.35 $ 3.42
Net income 1.08 .98 3.30 3.42
DILUTED EARNINGS PER COMMON SHARE
Income from operations $ .78 $ .72 $ 2.41 $ 2.48
Net income .78 .72 2.38 2.48
CASH DIVIDENDS PER SHARE $ .05 $ .05 $ .15 $ .15
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 6,865,905 6,897,402 6,860,308 6,960,023
=========== =========== =========== ===========
</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)
Nine months ended
February 28,
------------
1998 1997
---- ----
Cash flows from operating activities: (In thousands)
Net income $ 22,655 $ 23,786
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 2,644 2,424
Minority interest (612) (557)
Deferred income taxes (2,490) 1,292
Decrease (increase) in assets:
Homes, lots and improvements in production (57,947) (40,281)
Receivables 3,363 (7,845)
Prepaid expenses and other assets (1,195) (4,544)
Increase (decrease) in liabilities:
Accounts payable and other liabilities (1,228) 9,664
-------- --------
Net cash used by operating activities (34,810) (16,061)
-------- --------
Cash flows from investing activities:
Additions of property and equipment (1,237) (2,094)
Cash paid for acquisitions, net of cash acquired -- (1,205)
Adjustment to purchase price -- 1,700
-------- --------
Net cash used by investing activities (1,237) (1,599)
-------- --------
Cash flows from financing activities:
Increase in notes payable to financial
institutions 51,817 12,173
Retirement of bonds payable -- (168)
Retirement of 12% Senior Notes (11,557) --
Issuance of Senior Notes -- 20,175
Repurchase of stock -- (1,922)
Stock options exercised 156 236
Dividends paid (1,029) (1,043)
-------- --------
Net cash provided by financing activities 39,387 29,451
-------- --------
Net increase in cash 3,340 11,791
Cash at beginning of period 23,759 25,236
-------- --------
Cash at end of period $ 27,099 $ 37,027
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 4,553 $ 4,680
Income taxes $ 14,560 $ 12,987
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, 1997, filed with the Securities and Exchange Commission.
The results of operations for the three and nine months ended February
28, 1998 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 $16,815,000 and $14,755,000
and expensed as a component of cost of home sales $13,222,000 and
$13,352,000 in the nine months ended February 28, 1998 and 1997,
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,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
10% senior notes, due 2006, net of discount of $1,462 and $1,599 $148,538 $148,401
12% Senior notes, due 1999, net of premium of $65 -0- 11,565
6-7/8% convertible subordinated notes, due 2002 86,150 86,250
Notes payable 75,504 24,547
-------- --------
$310,192 $270,763
======== ========
</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,
------------ ------------
1998 1997 1998 1997
---- ---- ---- ----
Homebuilding: (In thousands)
Interest expense $ 1,272 $ 1,300 $ 3,657 $ 4,285
Interest income (417) (453) (1,346) (692)
------- ------- ------- -------
$ 855 $ 847 $ 2,311 $ 3,593
======= ======= ======= =======
Mortgage Banking:
Interest expense $ 311 $ 135 $ 896 $ 395
Interest income (517) (313) (1,476) (972)
------- ------- ------- -------
$ (206) $ (178) $ (580) $ (577)
======= ======= ======= =======
Note 5. Subsequent Event
In December 1997, the Company entered into a definitive agreement and
plan of merger with D.R. Horton, Inc. ("Horton") pursuant to which the Company
would be merged into Horton. Stockholders of record as of February 23, 1998 are
entitled to vote on the merger at stockholders' meetings for each corporation to
be held on Monday, April 20, 1998. If approved, the Company expects that the
merger will be effective that day.
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,
------------ ------------
1998 1997 1998 1997
----- ---- ---- ----
<S> <C> <C> <C> <C>
Units delivered 1,264 1,208 4,027 3,721
Average sales price $134,072 $140,717 $134,120 $138,816
Revenue from home sales (000's) $169,467 $169,986 $540,101 $516,533
Percentage increase (decrease) from
prior year (.3)% 23.9% 4.6% 27.4%
Change due to volume 4.6% 16.0% 8.2% 20.1%
Change due to average sales price (4.9)% 7.9% (3.6)% 7.3%
</TABLE>
The volume increase in the quarter and nine months ended February 28,
1998 compared to the same periods during fiscal 1997 resulted from improved
deliveries in Phoenix, Southern California, San Antonio and Dallas. The decrease
in average sales price in the quarter and nine months ended February 28, 1998
compared to the same periods during fiscal 1997 resulted primarily from a
decrease in average sales price in Phoenix, Denver, Southern California, Dallas
and South Florida due to product mix and a decrease in average sales price in
Austin due to competitive pricing pressures.
The following table summarizes information related to the Company's
backlog at the dates indicated:
February 28,
------------
(Dollars in thousands)
1998 1997
---- ----
Units Dollars Units Dollars
----- ------- ----- -------
Phoenix 802 $104,261 713 $ 95,417
Texas 808 91,845 499 54,804
South Florida 413 56,425 163 19,903
Denver 359 65,991 211 41,685
Southern California 164 43,866 50 15,867
----- -------- ----- --------
Total backlog 2,546 $362,388 1,636 $227,676
===== ======== ===== ========
Average price per unit $142 $139
==== ====
The increase in backlog at February 28, 1998 resulted from an increase
in sales in all markets during the prior six months compared to the same period
last year. The aggregate sales value of new contracts signed increased 45% in
the nine months ended February 28, 1998 to $627,072,000
8
<PAGE>
representing 4,558 homes as compared with $432,426,000 representing 3,208 homes
for the nine months ended February 28, 1997.
The following table summarizes information related to cost of home
sales, selling, general and administrative ("SG&A") expenses and interest, net
for homebuilding (dollars in thousands):
<TABLE>
<CAPTION>
Quarters ended February 28, Nine months ended February 28,
--------------------------- ------------------------------
1998 1997 1998 1997
---- ---- ---- ----
Dollars % Dollars % Dollars % Dollars %
------- - ------- - ------- - ------- -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from
home sales $169,467 100.0% $169,986 100.0% $540,101 100.0% $516,533 100.0%
Cost of home sales 139,468 82.3 140,783 82.8 445,594 82.5 423,433 82.0
-------- ----- -------- ------ -------- ----- -------- -----
Gross profit 29,999 17.7 29,203 17.2 94,507 17.5 93,100 18.0
SG&A expenses 18,231 10.8 17,942 10.6 56,754 10.5 53,587 10.4
-------- ----- -------- ----- -------- ----- -------- -----
Operating income from
homebuilding 11,768 6.9 11,261 6.6 37,753 7.0 39,513 7.6
Interest, net 855 .5 847 .5 2,311 .4 3,593 .7
-------- ----- -------- ----- -------- ----- -------- -----
Pre-tax profit from
homebuilding $ 10.913 6.4% $ 10,414 6.1% $ 35,442 6.6% $ 35,920 6.9%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
The increase in gross profit margin from home sales for the quarter
ended February 28, 1998 as compared to the prior quarter was primarily due to an
increase in margins in Phoenix, Southern California and San Antonio. The
decrease in gross margins for the nine months ended February 28, 1998 as
compared to the same period a year ago was primarily due to a decline in margins
in all markets except Phoenix and San Antonio.
The increase in total SG&A expense for the quarter and nine months
ended February 28, 1998 compared to the quarter and nine months ended February
28, 1997 was principally due to the increased volume which increased variable
marketing costs (sales commissions, advertising and model furniture
amortization) and an increase in plans and blueprint expenses and professional
fees. SG&A expenses for each home delivered were $14,423 and $14,853 in the
third quarter of fiscal 1998 and 1997, respectively and $14,093 and $14,401 in
the first nine months of fiscal 1998 and 1997, respectively. The Company
capitalizes certain SG&A expenses for homebuilding. Accordingly, total SG&A
costs incurred for homebuilding were $21,711,000 and $66,553,000 for the three
and nine months ended February 28, 1998 compared to $20,941,000 and $62,262,000
for the corresponding fiscal 1997 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 $6,949,000 and $20,472,000 for the three and nine months ended February 28,
1998, respectively compared to $6,832,000 and $19,040,000 for the three and nine
months ended February 28, 1997, respectively. The increase in interest incurred
during the quarter and nine months ended February 28, 1998 compared to the same
periods a year ago was primarily due to an increase in debt as a result of the
15% increase in inventory from February 28, 1997 to February 28, 1998. For the
nine month period ended February 28, 1998, interest, net for homebuilding was
$2,311,000 compared with $3,593,000 for the nine months ended February 28, 1997.
The decrease in interest, net was due to the capitalization of interest on the
Company's Carlsbad, California project which began development in October 1996,
as well as additional interest income.
9
<PAGE>
The Company's pre-tax profit from homebuilding for the nine months
ended February 28, 1998 was $35,442,000 compared to $35,920,000 for the
corresponding period ended February 28, 1997.
Mortgage Banking and Title Operations
- - -------------------------------------
The Company's mortgage banking operations are conducted through its
wholly-owned subsidiary CH Mortgage Company ("CHMC"). The Company also conducts
title operations in Austin, Texas through its wholly-owned subsidiary, Travis
County Title Company. The following table summarizes operating information for
the Company's mortgage banking and title operations:
<TABLE>
<CAPTION>
Quarters ended Nine months ended
February 28, February 28,
------------ ------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Number of loans originated 948 677 2,869 2,234
Loan origination fees $ 922 $ 677 $ 2,882 $ 2,157
Sale of servicing and marketing gains 1,571 1,010 4,589 3,705
Title policy premiums, net 402 352 1,350 1,233
Other revenue 436 357 1,308 1,131
------- ------- ------- -------
Total revenues 3,331 2,396 10,129 8,226
General and administrative expenses 2,056 1,879 7,043 6,017
------- ------- ------- -------
Operating income from mortgage banking and title 1,275 517 3,086 2,209
Interest, net 206 178 580 577
------- ------- ------- -------
Pre-tax profit from mortgage banking and title $ 1,481 $ 695 $ 3,666 $ 2,786
======= ======= ======= =======
</TABLE>
Revenues and general and administrative expenses from mortgage banking increased
in the quarter and nine months ended February 28, 1998 primarily as a result of
a 40% and 28% increase in originations, respectively.
Consolidated operations
- - -----------------------
Net income was $22,655,000 ($3.30 basic earnings per share, $2.38
diluted earnings per share) for the nine months ended February 28, 1998 compared
to $23,786,000 ($3.42 basic earnings per share, $2.48 diluted earnings per
share) for the period ended February 28, 1997.
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 $140 million
unsecured revolving line of credit. Borrowings under the Credit Agreement bear
interest at LIBOR plus 1.35% or prime plus .10% 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
10
<PAGE>
as defined in the Credit Agreement. As a result of this formula, the borrowing
base at February 28, 1998 was $140,000,000 of which $58,500,000 was outstanding.
The Company believes that amounts generated from operations and such additional
borrowings will provide funds adequate to finance its existing homebuilding
activities and meet its debt service requirements.
In order to provide funds for the origination of mortgage loans, 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, 1998, the amount outstanding under the warehouse line of credit and the
amount of funding drafts that had not been presented for payment was
$16,522,000. 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). 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. 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. On August 1, 1997, the Company redeemed
the remaining $11,500,000 principal amount outstanding of its 12% Senior Notes
due 1999, at a redemption price of 104%.
Pursuant to a stock repurchase plan approved by the Board of Directors
on December 22, 1994, the Company repurchased 162,000 shares of its common stock
during fiscal 1997 at an average price of $16.22.
In December 1997, the Company entered into a definitive agreement and
plan of merger with D.R. Horton, Inc. ("Horton") pursuant to which the Company
would be merged into Horton. Stockholders of record as of February 23, 1998 are
entitled to vote on the merger at stockholders' meetings for each corporation to
be held on Monday, April 20, 1998. If approved, the Company expects that the
merger will be effective that day. This merger would constitute a change in
control under the Company's 10% Senior Notes due April 2006 whereby the holders
would have the right to require the Company to repurchase the Notes at a price
equal to 101% of the principal amount.
Cautionary disclosure regarding forward-looking statements
- - ----------------------------------------------------------
The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 and is including this
disclosure in order to do so. Certain
11
<PAGE>
statements in this report that are not historical facts are, or may be
considered to be, forward-looking statements. Given the risks, uncertainties and
contingencies of the Company's business, the actual results may differ
materially from those expressed or implied by such forward-looking statements.
Further, certain forward-looking statements are based on assumptions concerning
future events which may not prove to be accurate.
Forward-looking statements by the Company regarding results of
operations and, ultimately, financial condition, are subject to numerous risks
and assumptions, including but not limited to, changes in general economic
conditions, fluctuations in interest rates or labor and material costs, consumer
confidence, competition, government regulations, financing availability,
geographic concentration and risks associated with new and future communities.
12
<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: The Company filed reports on Form 8-K dated
October 2, 1997 and December 18, 1997.
13
<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 9, 1998 By: /s/Julie E. Collins
-------------------------------
JULIE E. COLLINS
Chief Financial Officer
Date: April 9, 1998 By: /s/ W. Thomas Hickcox
-------------------------------
W. Thomas Hickcox
Chief Executive Officer
14
Exhibit 11
Continental Homes Holding Corp.
Computation of Earnings Per Share
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
February 28, February 28,
------------ ------------
Diluted earnings per share: 1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 7,400 $ 6,758 $22,655 $23,786
Interest expense on convertible
subordinated notes, net of
income taxes 874 875 2,623 2,624
------- ------- ------- -------
$ 8,274 $ 7,633 $25,278 $26,410
======= ======= ======= =======
Weighted average number of
shares outstanding 6,866 6,897 6,860 6,960
Conversion of convertible
subordinated notes (42.105 shares
per $1,000 principal amount of notes) 3,627 3,632 3,630 3,632
Incremental shares relating to stock
options exercisable 177 64 131 56
------- ------- ------- -------
Weighted average number of shares
outstanding assuming full dilution 10,670 10,593 10,621 10,648
======= ======= ======= =======
Diluted earnings per share $ .78 $ .72 $ 2.38 $ 2.48
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> FEB-28-1998
<EXCHANGE-RATE> 1
<CASH> 27,099
<SECURITIES> 0
<RECEIVABLES> 51,760
<ALLOWANCES> 0
<INVENTORY> 450,487
<CURRENT-ASSETS> 0
<PP&E> 4,031
<DEPRECIATION> 0
<TOTAL-ASSETS> 568,587
<CURRENT-LIABILITIES> 0
<BONDS> 326,714
71
0
<COMMON> 0
<OTHER-SE> 176,710
<TOTAL-LIABILITY-AND-EQUITY> 568,587
<SALES> 540,101
<TOTAL-REVENUES> 551,833
<CGS> 445,594
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,731
<INCOME-PRETAX> 38,817
<INCOME-TAX> 15,840
<INCOME-CONTINUING> 22,977
<DISCONTINUED> 0
<EXTRAORDINARY> (322)
<CHANGES> 0
<NET-INCOME> 22,655
<EPS-PRIMARY> 3.30
<EPS-DILUTED> 2.38
</TABLE>
