================================================================================
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 MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 1-9977
MERITAGE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 86-0611231
(State or Other Jurisdiction (I.R.S. Employer of
Incorporation or Organization) Identification No.)
6613 NORTH SCOTTSDALE ROAD, SUITE 200
SCOTTSDALE, ARIZONA 85250
(Address of Principal Executive Offices) (Zip Code)
(480) 998-8700
(Registrant's Telephone Number, Including Area Code)
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 [ ].
AS OF MAY 1, 2000, 5,563,796 SHARES OF MERITAGE CORPORATION COMMON STOCK WERE
OUTSTANDING.
================================================================================
<PAGE>
MERITAGE CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999..................................... 3
Consolidated Statements of Earnings for the Three
Months ended March 31, 2000 and 1999.................. 4
Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2000 and 1999............ 5
Notes to Consolidated Financial Statements............ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................... 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK........................................... 13
PART II. OTHER INFORMATION
ITEMS 1-5. NOT APPLICABLE........................................ 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................... 14
SIGNATURES ............................................................ S.1
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MERITAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2000 1999
------------- -------------
ASSETS
Cash and cash equivalents $ 5,384,805 $ 13,422,016
Real estate under development 183,941,966 171,012,405
Deposits on real estate under
option or contract 18,412,244 15,699,609
Other receivables 3,462,987 1,643,187
Deferred tax asset 717,436 698,634
Goodwill 18,474,847 18,741,625
Property and equipment, net 4,088,618 4,040,134
Other assets 1,541,579 1,301,286
------------- -------------
Total Assets $ 236,024,482 $ 226,558,896
============= =============
LIABILITIES
Accounts payable and accrued liabilities $ 31,189,845 $ 41,950,761
Home sale deposits 10,101,617 8,261,000
Notes payable 100,077,727 85,936,601
------------- -------------
Total Liabilities 141,369,189 136,148,362
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
50,000,000 shares authorized; issued
and outstanding - 5,563,796 shares at
March 31, 2000, and 5,474,906 shares
at December 31, 1999 55,638 54,749
Additional paid-in capital 100,464,215 100,406,745
Accumulated deficit (3,377,652) (8,148,535)
Less cost of shares held in treasury
(237,667 shares) (2,486,908) (1,902,425)
------------- -------------
Total Stockholders' Equity 94,655,293 90,410,534
------------- -------------
Total Liabilities and Stockholders' Equity $ 236,024,482 $ 226,558,896
============= =============
See accompanying notes to consolidated financial statements
3
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended March 31,
------------------------------
2000 1999
------------ ------------
Home sales revenue $ 91,652,660 $ 51,306,197
Land sales revenue 757,511 79,900
------------ ------------
92,410,171 51,386,097
Cost of home sales (74,956,349) (41,322,288)
Cost of land sales (681,205) (34,500)
------------ ------------
(75,637,554) (41,356,788)
Home sales gross profit 16,696,311 9,983,909
Land sales gross profit 76,306 45,400
------------ ------------
16,772,617 10,029,309
Commissions and other sales costs (5,778,560) (3,415,817)
General and administrative expense (4,001,961) (3,146,047)
Interest expense (1,522) (835)
Other income, net 532,271 318,432
------------ ------------
Earnings before income taxes 7,522,845 3,785,042
Income taxes (2,751,962) (1,460,000)
------------ ------------
Net earnings $ 4,770,883 $ 2,325,042
============ ============
Basic earnings per share $ .90 $ .43
============ ============
Diluted earnings per share $ .82 $ .38
============ ============
See accompanying notes to consolidated financial statements
4
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,770,883 $ 2,325,042
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 694,065 458,978
(Increase) decrease in deferred tax asset (18,802) 1,214,000
Stock option compensation expense 58,359 148,329
Increase in real estate under development (12,929,561) (23,685,192)
Increase in deposits on real estate under
option or contract (2,712,635) (2,225,055)
(Increase) decrease in other receivables
and other assets (2,060,093) 598,500
Decrease in accounts payable and accrued
liabilities (5,602,910) (5,695,430)
Increase in home sale deposits 1,840,617 2,822,855
------------ ------------
Net cash used in operating activities (15,960,077) (24,037,973)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for merger/acquisition (5,158,006) (6,966,890)
Purchases of property and equipment (475,771) (749,857)
------------ ------------
Net cash used in investing activities (5,633,777) (7,716,747)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 97,251,332 66,203,003
Repayment of borrowings (83,110,206) (39,464,652)
Purchase of treasury shares (584,483) --
Stock options exercised -- 11,240
------------ ------------
Net cash provided by financing activities 13,556,643 26,749,591
------------ ------------
Net decrease in cash and cash equivalents (8,037,211) (5,005,129)
Cash and cash equivalents at beginning of period 13,422,016 12,386,806
------------ ------------
Cash and cash equivalents at end of period $ 5,384,805 $ 7,381,677
============ ============
See accompanying notes to consolidated financial statements
5
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
We develop, construct and sell new high-quality, single-family homes in the
semi-custom luxury, move-up and entry-level markets. We operate in the
Dallas/Fort Worth, Austin and Houston, Texas markets as Legacy Homes, in the
Phoenix and Tucson, Arizona metropolitan markets under the Monterey Homes and
Meritage Homes of Arizona brand names, and in the San Francisco Bay and
Sacramento, California markets as Meritage Homes of Northern California.
BASIS OF PRESENTATION. Our consolidated financial statements include the
accounts of Meritage Corporation and our subsidiaries. Intercompany balances and
transactions have been eliminated in consolidation and certain prior period
amounts have been reclassified to be consistent with current financial statement
presentation. In the opinion of management, the unaudited consolidated financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present our financial position and results of
operations for the periods presented. The results of operations for any interim
period are not necessarily indicative of results to be expected for a full
fiscal year.
NOTE 2 - REAL ESTATE UNDER DEVELOPMENT AND CAPITALIZED INTEREST
The components of real estate under development follow (in thousands):
March 31, December 31,
2000 1999
--------- ---------
Homes under contract, in production $ 82,131 $ 71,987
Finished homesites and homesites under
development 68,725 63,610
Model homes and homes held for resale 29,468 31,797
Land held for development 3,618 3,618
--------- ---------
$ 183,942 $ 171,012
========= =========
We capitalize certain interest costs incurred during development and
construction. Capitalized interest is allocated to real estate under development
and charged to cost of sales when the property is delivered. Summaries of
interest capitalized and interest expensed follow (in thousands):
March 31,
-------------------
2000 1999
------- -------
Beginning unamortized capitalized interest $ 3,971 $ 1,982
Interest capitalized 1,868 1,089
Amortized in cost of home and land sales (1,565) (811)
------- -------
Ending unamortized capitalized interest $ 4,274 $ 2,260
======= =======
Interest incurred $ 1,870 $ 1,090
Interest capitalized (1,868) (1,089)
------- -------
Interest expense $ 2 $ 1
======= =======
6
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 3 - NOTES PAYABLE
Notes payable consist of the following (in thousands):
March 31, December 31,
2000 1999
--------- ---------
$70 million bank revolving construction line of
credit, interest payable monthly approximating
prime (9.0% at March 31, 2000) or LIBOR (30 day
LIBOR 6.1% at March 31, 2000), plus 1.75% payable
December 31, 2001, secured by first deeds of
trust on real estate $ 55,141 $ 37,411
$65 million bank revolving construction line of
credit, interest payable monthly approximating
prime or LIBOR plus 2.0%, payable at the earlier
of close of escrow, maturity date of individual
homes within the line or July 31, 2000, secured
by first deeds of trust on real estate 28,285 26,104
$15 million unsecured bank revolving line of
credit, interest payable monthly at prime,
matured January 17, 2000 -- 6,000
Acquisition and development credit facilities
totaling $4.5 million, interest payable monthly,
ranging from prime to prime plus .25%; payable
at the earlier of funding of construction
financing or the maturity date of the individual
projects, secured by first deeds of trust on
real estate 1,628 1,396
Senior unsecured notes, maturing September 15, 2005,
annual interest of 9.10% payable quarterly,
principal payable in three equal installments
on September 15, 2003, 2004 and 2005 15,000 15,000
Other 23 26
--------- ---------
Total $ 100,077 $ 85,937
========= =========
7
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - EARNINGS PER SHARE
A summary of the reconciliation from basic earnings per share to diluted
earnings per share for the three months ended March 31, 2000 and 1999 follows
(in thousands, except per share amounts):
2000 1999
------ ------
Net earnings $4,771 $2,325
Basic EPS - Weighted average shares outstanding 5,287 5,425
------ ------
Basic earnings per share $ .90 $ .43
====== ======
Basic EPS - Weighted average shares outstanding 5,287 5,425
Effect of dilutive securities:
Contingent shares and warrants 73 71
Stock options 458 563
------ ------
Dilutive EPS - Weighted average shares outstanding 5,818 6,059
------ ------
Diluted earnings per share $ .82 $ .38
====== ======
Antidilutive stock options not included in diluted EPS 280 282
====== ======
NOTE 5 - INCOME TAXES
Components of income tax expense at March 31 are (in thousands):
2000 1999
------- -------
Current taxes:
Federal $ 2,419 $ 83
State 352 163
------- -------
2,771 246
------- -------
Deferred taxes:
Federal (17) 1,213
State (2) 1
------- -------
(19) 1,214
------- -------
Total $ 2,752 $ 1,460
======= =======
8
<PAGE>
MERITAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 6 - SEGMENT INFORMATION
We classify our operations into three primary geographic segments: Texas,
Arizona and California. These segments generate revenues through the sale of
homes to external customers. We are not dependent on any one major customer.
Operational information relating to the different business segments
follows. Certain information has not been included by segment due to the
immateriality of the amount to the segment or in total. We evaluate segment
performance based on several factors, of which the primary financial measure is
earnings before interest and taxes (EBIT). The accounting policies of the
business segments are the same as those described in Notes 1 and 2. There are no
significant transactions between segments.
Three Months Ended March 31,
----------------------------
2000 1999
-------- --------
(in thousands)
HOME SALES REVENUE:
Texas $ 49,430 $ 30,334
Arizona 21,942 19,628
California 20,281 1,344
-------- --------
Total $ 91,653 $ 51,306
======== ========
EBIT:
Texas $ 7,010 $ 3,735
Arizona 995 1,890
California 2,311 (422)
Corporate and other (1,227) (606)
-------- --------
Total $ 9,089 $ 4,597
======== ========
AMORTIZATION OF CAPITALIZED INTEREST:
Texas $ 635 $ 300
Arizona 578 503
California 352 8
-------- --------
Total $ 1,565 $ 811
======== ========
At March 31,
----------------------------
ASSETS: 2000 1999
-------- --------
Texas $ 99,725 $ 97,832
Arizona 85,040 77,195
California 48,737 43,773
Corporate 2,522 7,759
-------- --------
Total $236,024 $226,559
======== ========
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements. The
words "believe," "expect," "anticipate," and "project" and similar expressions
identify forward-looking statements, which speak only as of the date the
statement was made. Such forward-looking statements are within the meaning of
that term in Section 27A of the Securities Act of 1993, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements may
include, but are not limited to, projections of revenues, income or loss,
capital expenditures, plans for future operations, financing needs or plans, the
impact of inflation, the impact of changes in interest rates, plans relating to
our products or services, potential real property acquisitions, and new or
planned development projects, as well as assumptions relating to the foregoing.
Statements in Exhibit 99 to this Quarterly Report on Form 10-Q and in our
Annual Report on Form 10-K for the year ended December 31, 1999, including the
Notes to the Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," describe factors,
among others, that could contribute to or cause such differences. Additional
factors that could cause actual results to differ materially from those
expressed in such forward-looking statements are set forth in "Business" and
"Market for the Registrant's Common Stock and Related Stockholder Matters" in
the our December 31, 1999 Annual Report on Form 10-K.
RESULTS OF OPERATIONS
The following discussion and analysis provides information regarding our
results of operations for the quarters ended March 31, 2000 and March 31, 1999.
All material balances and transactions between us and our subsidiaries have been
eliminated. In management's opinion, the data reflects all adjustments,
consisting of only normal recurring adjustments, necessary to fairly present our
financial position and results of operations for the periods presented.
HOME SALES REVENUE
Home sales revenue is the product of the number of homes closed during the
period and the average sales price per home. Comparative first quarter 2000 and
1999 home sales revenue follow (dollars in thousands):
Quarter Ended
March 31, Dollar/unit Percentage
-------------------- Increase Increase
2000 1999 (Decrease) (Decrease)
-------- -------- -------- --------
Total
Dollars $ 91,653 $ 51,306 $ 40,347 79%
Homes closed 440 257 183 71%
Average sales price $ 208.3 $ 199.6 $ 8.7 4%
Texas
Dollars $ 49,430 $ 30,334 $ 19,096 63%
Homes closed 302 200 102 51%
Average sales price $ 163.7 $ 151.7 $ 12.0 8%
Arizona
Dollars $ 21,942 $ 19,628 $ 2,314 12%
Homes closed 79 53 26 49%
Average sales price $ 277.7 $ 370.3 $ (92.6) (25%)
California
Dollars $ 20,281 $ 1,344 $ 18,937 1,409%
Homes closed 59 4 55 1,375%
Average sales price $ 343.7 $ 336.0 $ 7.7 2%
10
<PAGE>
The increase in total home sales revenue and number of homes closed in 2000
compared to 1999 results mainly from our strong market performances in Texas and
California. Also in 2000, we closed a higher percentage of homes in beginning
backlog than usual for our first quarters.
HOME SALES GROSS PROFIT
Gross profit is home sales revenue, net of housing cost of sales, which
include developed homesite costs, home construction costs, amortization of
common community costs (such as the cost of model complexes and architectural,
legal and zoning costs), interest, sales tax, warranty, construction overhead
and closing costs. Comparative 2000 and 1999 housing gross profit follows
(dollars in thousands):
Quarter Ended
March 31, Dollar/percentage Percentage
------------------ Increase Increase
2000 1999 (Decrease) (Decrease)
------- ------ ------ ------
Dollars $16,696 $9,984 $6,712 67%
Percent of home sales
revenue 18.2% 19.5% (1.3%) (7%)
The dollar increase in gross profit for the three months ended March 31,
2000 over the prior year period is attributable to the increase in number of
homes closed. The gross profit margin decreased somewhat due to the increased
deliveries of our new lower-priced, lower margin Arizona products.
COMMISSIONS AND OTHER SALES COSTS
Commissions and other sales costs, such as advertising and sales office
expenses, were approximately $5.8 million, or 6.3% of home sales revenue in the
first quarter of 2000 compared to $3.4 million, or 6.6% of home sales revenue in
the first quarter of 1999. The slight decrease in these expenses as a percentage
of home sales revenue was caused by holding down increases in advertising and
other marketing costs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were approximately $4.0 million, or
4.3% of total revenue, in the first three months of 2000, as compared to
approximately $3.1 million, or 6.1% of revenue, in 1999, a decrease as a percent
of total revenue of 1.8%. The decrease in these amounts as a percentage of
revenue was caused by holding down increases in these costs, while expanding
home sales revenue. 1999 amounts include charges of approximately $600,000 (1.2%
of revenue) related to the employment agreement buyout of a former Managing
Director.
OTHER INCOME
The increase in other income primarily is due to management fees paid to
the California division by unconsolidated parties and an increase in revenue
from the mortgage operations in Texas.
INCOME TAXES
The increase in income tax expense to approximately $2,752,000 for the
quarter ended March 31, 2000 from $1,460,000 in the prior year was caused by
higher taxable income offset by a slightly lower effective tax rate
SALES CONTRACTS
Sales contracts for any period represent the number of homes ordered by
customers (net of cancellations) multiplied by the average sales price per home
ordered. Comparative 2000 and 1999 sales contracts follow (dollars in
thousands):
11
<PAGE>
Quarter Ended
March 31, Dollar/unit Percentage
-------------------- Increase Increase
2000 1999 (Decrease) (Decrease)
-------- -------- -------- --------
Total
Dollars $148,900 $103,738 $ 45,162 44%
Homes ordered 629 555 74 13%
Average sales price $ 236.7 $ 186.9 $ 49.8 27%
Texas
Dollars $ 60,920 $ 64,356 $ (3,436) (5)%
Homes ordered 355 431 (76) (18)%
Average sales price $ 171.6 $ 149.3 $ 22.3 15%
Arizona
Dollars $ 43,937 $ 30,992 $ 12,945 42%
Homes ordered 137 99 38 38%
Average sales price $ 320.7 $ 313.1 $ 7.7 2%
California
Dollars $ 44,043 $ 8,390 $ 35,653 425%
Homes ordered 137 25 112 448%
Average sales price $ 321.5 $ 335.6 $ (14.1) (4)%
We do not include sales contingent upon the sale of a customer's existing
home as a sales contract until the contingency is removed. Historically, we have
experienced a cancellation rate of approximately 20% of gross sales. Total sales
contracts increased in 2000 compared to 1999 due mainly to the expansion into
California and continued economic strength in our operating markets.
NET SALES BACKLOG
Backlog represents net sales contracts that have not closed. Comparative
2000 and 1999 net sales backlog follows (dollars in thousands):
At March 31, Dollar/unit Percentage
-------------------- Increase Increase
2000 1999 (Decrease) (Decrease)
-------- -------- -------- --------
Total
Dollars $256,692 $197,725 $ 58,967 30%
Homes in backlog 1,074 987 87 9%
Average sales price $ 239.0 $ 200.3 $ 38.7 19%
Texas
Dollars $105,473 $111,199 $ (5,726) (5)%
Homes in backlog 619 734 (115) (16)%
Average sales price $ 170.4 $ 151.5 $ 18.9 12%
Arizona
Dollars $ 94,873 $ 77,743 $ 17,130 22%
Homes in backlog 274 227 47 21%
Average sales price $ 346.3 $ 342.5 $ 3.8 1%
California
Dollars $ 56,346 $ 8,783 $ 47,563 542%
Homes in backlog 181 26 155 596%
Average sales price $ 311.3 $ 337.8 $ (26.5) (8)%
12
<PAGE>
Total dollar backlog at March 31, 2000 increased 30% over the 1999 amount
due to a corresponding increase in homes in backlog. The number of homes in
backlog at March 31, 2000 increased 9% over the same period in the prior year
due to the increase in net orders caused by expansion into California and strong
housing markets in which Meritage operates.
LIQUIDITY AND CAPITAL RESOURCES
Our principal uses of working capital are land purchases, homesite
development and home construction. We use a combination of borrowings and funds
generated by operations to meet our working capital requirements.
At March 31, 2000, we had short-term secured revolving construction loan
and acquisition and development facilities totaling $139.5 million, of which
approximately $85 million was outstanding. An additional $27.2 million of
unborrowed funds supported by approved collateral were available under our
credit facilities at that date. We also have $15 million outstanding in
unsecured, senior subordinated notes due September 15, 2005, which were issued
in October 1998.
In May 1999, we announced a stock repurchase program in which our Board of
Directors approved the buyback of up to $6 million of outstanding Meritage
stock. This amount was increased to $10 million at the first quarter, 2000 board
meeting. As of March 31, 2000, 237,667 shares had been repurchased for an
aggregate price of approximately $2.5 million.
Management believes that the current borrowing capacity, cash on hand at
March 31, 2000 and anticipated cash flows from operations are sufficient to meet
liquidity needs for the foreseeable future. There is no assurance, however, that
future amounts available from our sources of liquidity will be sufficient to
meet future capital needs. The amount and types of indebtedness that we incur
may be limited by the terms of the indenture governing our senior subordinated
notes and our credit agreements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not trade in derivative financial instruments and at March 31, 2000,
had no significant derivative financial instruments. We do have other financial
instruments in the form of notes payable and senior debt, which are at fixed
interest rates. Our lines of credit and credit facilities are at variable
interest rates and are subject to market risk in the form of interest rate
fluctuations.
13
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit Page or
Number Description Method of Filing
------ ----------- ----------------
10.1 Modification to Guaranty Federal Bank Loan, Filed herewith
Dated as of March 29, 2000
10.2 $3.3 Million Construction Loan Agreement, Filed herewith
by and among the Company and Compass Bank,
Dated as of February 10, 2000
10.3 Change of Control Agreement between the Filed herewith
Company and Steven J. Hilton
10.4 Change of Control Agreement between the Filed herewith
Company and John R. Landon
10.5 Change of Control Agreement between the Filed herewith
Company and Larry W. Seay
10.6 Change of Control Agreement between the Filed herewith
Company and Richard T. Morgan
27 Financial Data Schedule Filed herewith
99 Private Securities Reform Act of 1995 Filed herewith
Safe Harbor Compliance Statement for
Forward-Looking Statements
(b) REPORTS ON FORM 8-K
We filed no reports on Form 8-K during the quarter ended March 31, 2000.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly cause this report on Form 10-Q to
be signed on its behalf by the undersigned, thereunto duly authorized, this 14th
day of May, 2000.
MERITAGE CORPORATION,
a Maryland Corporation
By /s/ LARRY W.SEAY
-------------------------------------
Larry W. Seay
Chief Financial Officer and
Vice President-finance (Principal
Financial Officer and Duly
Authorized Officer)
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 5,384,805
<SECURITIES> 0
<RECEIVABLES> 3,462,987
<ALLOWANCES> 0
<INVENTORY> 183,941,966
<CURRENT-ASSETS> 212,743,581
<PP&E> 8,021,361
<DEPRECIATION> 3,932,743
<TOTAL-ASSETS> 236,024,482
<CURRENT-LIABILITIES> 41,291,462
<BONDS> 100,077,727
55,638
0
<COMMON> 0
<OTHER-SE> 94,599,655
<TOTAL-LIABILITY-AND-EQUITY> 236,024,482
<SALES> 92,410,171
<TOTAL-REVENUES> 92,410,171
<CGS> 75,637,554
<TOTAL-COSTS> 5,778,560
<OTHER-EXPENSES> 3,469,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,522
<INCOME-PRETAX> 7,522,845
<INCOME-TAX> 2,751,962
<INCOME-CONTINUING> 4,770,883
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,770,883
<EPS-BASIC> .90
<EPS-DILUTED> .82
</TABLE>
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), Congress encouraged public companies to make "forward-looking
statements" by creating a safe-harbor to protect companies from securities law
liability in connection with forward-looking statements. Forward-looking
statements can be identified by the use of words such as "estimate," "expect,"
"believe," "project," "forecast," "anticipate," "plan," and similar expressions.
Meritage intends to qualify both its written and oral forward-looking statements
for protection under the PSLRA.
To qualify oral forward-looking statements for protection under the PSLRA,
a readily available written document must identify important factors that could
cause actual results to differ materially from those in the forward-looking
statements. Meritage provides the following information in connection with its
continuing effort to qualify forward-looking statements for the safe harbor
protection of the PSLRA.
Important factors currently known to management that could cause actual
results to differ materially from those in forward-looking statements include,
but are not limited to, the following: (i) changes in national and local
economic and other conditions, such as employment levels, availability of
mortgage financing, interest rates, consumer confidence, and housing demand;
(ii) risks inherent in homebuilding activities, including delays in construction
schedules, cost overruns, changes in government regulation, increases in real
estate taxes and other local fees; (iii) changes in costs or availability of
land, materials, and labor; (iv) fluctuations in real estate values; (v) the
timing of home closings and land sales; (vi) Meritage's ability to continue to
acquire additional land or options to acquire additional land on acceptable
terms; (vii) a relative lack of geographic diversification of Meritage's
operations, especially when real estate analysts are predicting that new home
sales in certain markets may slow during 2000; (viii) Meritage's inability to
obtain sufficient capital on terms acceptable to Meritage to fund its planned
capital and other expenditures; (ix) changes in local, state and federal rules
and regulations governing real estate development and homebuilding activities
and environmental matters, including "no growth" or "slow growth" initiatives,
building permit allocation ordinances and building moratoriums; (x) expansion by
Meritage into new geographic or product markets in which Meritage has little or
no operating experience, such as Northern California; (xi) the inability of
Meritage to identify acquisition candidates that will result in successful
combinations; (xii) the failure of Meritage to make acquisitions on terms
acceptable to Meritage, or to successfully integrate acquired operations, such
as Northern California, into Meritage; and (xiii) the loss of key employees of
the Company, including Steven J. Hilton and John R. Landon.
Forward-looking statements express expectations of future events. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties, which could cause actual
events or results to differ materially from those projected. Due to these
inherent uncertainties, the investment community is urged not to place undue
reliance on forward-looking statements. In addition, Meritage undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of anticipated events or changes to projections over
time.
